Monday, August 01, 2005                                               The Daily Battle Against Subjectivity
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Are We Losing or Winning The War On Terror?
SOTT

What is becoming increasingly clear is that the net result of the current conflict known as the "war on terrorism" is not the eradication of terrorism around the world but rather it's promotion and the restriction of civil rights of ordinary citizens. This much is beyond doubt because we can all verify that this is indeed what has occurred. Terrorist attacks have increased dramatically since the "war" began, and the steady abolition of civil freedoms continues unabated.

The matter of real importance then, is to understand to which warring party in this 21st century conflict such goals belong. Who really wants to embroil the world in a terror attack nightmare and sweep away our basic social rights? If it is the terrorists' goal to exterminate "freedom and civilisation" and if it is the goal of Bush and Blair to protect our freedoms and our lives, then clearly the terrorists are winning the war and Bush and Blair are losing.

The argument that the draconian measures undertaken by the British and American governments have prevented worse attacks from occurring is disingenuous as there is no way to verify this claim and, in any case, progress in "making the world a safer place" should be gauged in terms of a comparison between the level of global security before and since Bush and Blair decided to lie to the world about the reasons for their collaborative, illegal invasion of Iraq.

Bush and Blair have repeatedly claimed that the goal of the terrorists is to turn back the clock on civilisation and install a fundamentalist Islamic regime across the globe. Whatever else we say about the terrorists, we cannot accuse them of setting their sights too low.

In a recent press conference Blair stated:

That is why I don’t even agree actually … that in the end they just want us out of Arab countries, they don’t, it is far more fundamental than that, they want a war between Islam and other religions, that is what they want, that is why they keep referring to this as the crusader Zionist alliance and all this sort of rubbish. That is what they want, they want a situation in which we end up being divided.

This statement however, is simply Blair's opinion, and flies in the face of past statements made by terrorists to the effect that their attacks are revenge for decades-old Western meddling in Arab nations, particularly the more recent invasion and appropriation of the countries of Afghanistan and Iraq.

The problem for Bush and Blair now is that, since they have been exposed as having lied about their reasons for the invasion of Iraq, and that the real reasons had much more to do with occupying a foreign country and pillaging it's oil wealth than fighting terrorism, they can reasonably be accused of actually promoting terrorism by inspiring ordinary Iraqis and Afghanis to fight back using the age old guerilla warfare tactics, aka "terrorism", that have been used by dozens of groups that faced the overwhelming superior military power of a nation state aggressor. It is for this reason that the Bush and Blair governments are now talking about a "global struggle against violent extremism" rather than a "war on terror". It is a subtle maneuver which vectors attention away from the lies of the war on terror and onto the idea that the "civilised" world is under threat from an extremist form of Islam that is as old as the religion itself.

For the people of the world however, this is an ominous turn of events which serves nicely as justification for the Bush and Blair government's continued repression of basic civil rights and the fomenting of a potentially violent division along ethnic and religious lines in their respective countries.

But what then is the answer to the central question of who is really winning the "war on terror" or the "global struggle against violent extremism"? How do we explain that, despite their best efforts, the actions of the Bush and Blair governments appear to directly playing into the hands of the "terrorists" and fulfilling their alleged goals?

For the answer, we need look no further than the increasing volume of evidence to suggest that both the 9/11 attacks and the recent London bombings were, at the very least, carried out with the consent of the Bush and Blair governments themselves. Indeed, that the Islamic terrorists are actually agents of the very governments that claim to be fighting the war on Islamic terrorism.

From this we can draw the conclusion that, when Blair says that is "not about Western government presence in Arab countries", that it is "far more fundamental than that, that "they" want a war between Islam and other religions, that "they" want a situation in which we end up being divided," he is actually revealing his own agenda and that of his war on terror allies.

As if to confirm his duplicitous strategy in the same recent Press conference Blair clarified the situation:

Israel shouldn't’t exist, yes American foreign policy is evil, yes what happened in Iraq or Afghanistan was designed to suppress Islam, [if people accept those as ideas it is far less of a step into the extremism of terrorism.]

As has so often been the case throughout the history of modern civilisation, - the truth is usually to be found approximately 180 degrees from the official government version of events.

Just in case there remains any doubt as to the true goals of Bush and Blair's war on terror, consider the net results:

  • Worldwide terrorism has increased dramatically since the war on terror started; in societies where there was little or no evidence of social and ethnic strife, wedges are being driven between Christians and Muslims, Whites or Westerners and "people of Middle Eastern origin" or "Asians" in European and American society;
  • an innocent Brazilian electrician was recently gunned down in cold blood for no obvious reason by London anti-terrorist police;
  • hundreds of innocent men are currently confined, and routinely tortured in Guantanamo Bay with no recourse to legal representation and in flagrant violation of the Geneva Convention on human rights;
  • 100,000 (and counting) innocent Iraqi men, women and children have been slaughtered by US forces; women's rights in "free" Afghanistan are as neglected, if not more so, as under the Taliban;
  • opium (heroin) production in that country has skyrocketed;
  • invasive 'biometric' ID cards will soon be introduced for the British population;
  • British police will be granted sweeping new powers to counter the "terrorist threat", including the right to detain a suspect for up to three months without charge instead of the current 14 days. They will also be granted powers to attack and close down web sites and to "suppress inappropriate internet usage", with the simple act of exposing government lies potentially falling into the "inappropriate internet usage" category;

and all of it in the name of fighting a war on terror - and yet the terror attacks continue, ensuring that there is no end in sight to these drastic and, dare we say, "fascist" measures. Plainly, either the "Islamic terrorists" and the Bush and Blair governments share the same goals, or they are in fact one and the same.

The age-old maxim, "by their fruits ye shall know them" is certainly as true today as it ever was, and it may be the only clear-cut method at our disposal to understand the truth behind the dark future that is beckoning us all.

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Finger points to British intelligence as al-Qaeda websites are wiped out
Times Online
July 31, 2005

Over the past fortnight Israeli intelligence agents have noticed something distinctly odd happening on the internet. One by one, Al-Qaeda's affiliated websites have vanished until only a handful remain, write Uzi Mahnaimi and Alex Pell.

Someone has cut the line of communication between the spiritual leaders of international terrorism and their supporters. Since 9/11 the websites have been the main links to disseminate propaganda and information.

The Israelis detect the hand of British intelligence, determined to torpedo the websites after the London attacks of July 7.

The web has become the new battleground of terrorism, permitting a freedom of communication denied to such organisations as the IRA a couple of decades ago.

One global jihad site terminated recently was an inflammatory Pakistani site, www.mojihedun.com, in which a section entitled How to Strike a European City gave full technical instructions. Tens of similar sites, some offering detailed information on how to build and use biological weapons, have also been shut down. However, Islamic sites believed to be "moderate", remain.

One belongs to the London-based Syrian cleric Abu Basir al-Tartusi, whose www.abubaseer.bizland.com remained operative after he condemned the London bombings.

However, the scales remain weighted in favour of global jihad, the first virtual terror organisation. For all the vaunted spying advances such as tracking mobile phones and isolating key phrases in telephone conversations, experts believe current technologies actually play into the hands of those who would harm us.

"Modern technology puts most of the advantages in the hands of the terrorists. That is the bottom line," says Professor Michael Clarke, of King's College London, who is director of the International Policy Institute.

Government-sponsored monitoring systems, such as Echelon, can track vast amounts of data but have so far proved of minimal benefit in preventing, or even warning, of attacks. And such systems are vulnerable to manipulation: low-ranking volunteers in terrorist organisations can create background chatter that ties up resources and maintains a threshold of anxiety. There are many tricks of the trade that give terrorists secure digital communication and leave no trace on the host computer.

Ironically, the most readily available sources of accurate online information on bomb-making are the websites of the radical American militia. "I have not seen any Al-Qaeda manuals that look like genuine terrorist training," claims Clarke.

However, the sobering message of many security experts is that the terrorists are unlikely ever to lose a war waged with technology.

Comment: Israel suspects it was British intelligence that closed down the "terrorist" sites... Here's a good question: Has anyone actually visited one of these alleged sites? Of course not! We would all be afraid of being associated with terrorists, right?

It is quite possible that in the near future, the internet will be shut down - or at the very least, any sites that are deemed to be questionable will be eliminated, leaving only those pages approved by the powers that be. We already have seen it happening with our own web site. It would be all too easy for those in power to label a web site or discussion group as "related to terrorism" and simply pull the plug.

Note also the comment about how modern technology puts all the advantages in the hands of the terrorists. "Terrorists" do not have stealth bombers, smart bombs, spy satellites, and microwave death rays. While we are told that the US military is the most advanced on the planet, it is incapable of finding a bunch of supposed terrorists hiding in caves. If we are really supposed to believe that such a group of evildoers exists and that they can outsmart the US military by using the internet of all things, then the only conclusion to reach is that the US military must be incompetent - which directly contradicts the idea that it is the greatest.

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London faces lockdown to thwart third terror strike
Times Online
By Daniel McGrory and Sean O'Neill
August 01, 2005

THOUSANDS of police marksmen will be on London's streets and rooftops again today after warnings that another team of suicide bombers is plotting a third attack on the capital.

The new group is believed to be made up of British Muslims who were understood to be close to staging an attack on the Underground network last week. According to security sources the men are thought to be of Pakistani origin but born and brought up in this country. They have links with the Leeds-based terrorist cell that staged the July 7 attacks, in which 52 innocent people died.

Even with the transport system so heavily guarded, police and intelligence sources believe that the bombers are intent on once more attacking London's bus and Underground network. Another multiple suicide strike is also intended to demonstrate how the network can call on more recruits. The men are said to have access to explosives.

US security sources said yesterday that this third group of would-be bombers met at Finsbury Park mosque in North London, where some of the July 7 terrorists are also known to have stayed. There are reports that this team originally planned to strike last Thursday, which is why more than 6,000 police, half of them armed, were present at Underground stations. Scotland Yard said at the time that this exercise, the biggest since the Second World War, was to test their resources and reassure a nervous public.

As commuters return to work today police chiefs say that the arrest of five suspected bombers in house raids in Birmingham, London and Rome has not ended this threat. Deputy Assistant Commissioner Peter Clarke, head of the anti-terrorist branch, said: "The threat remains and is very real."

There is concern among ministers and police at how long officers can continue such an intensive operation to "lock down" London while a threat remains. Although reinforcements have been brought in and leave has been cancelled, resources are stretched to keep up the guard on the capital, which is costing £500,000 a day. Sir Ian Blair, the Metropolitan Police Commissioner, admitted that his officers were "very, very tired".

Comment: Well, gee, it looks like there are only two solutions:

  1. Deport anyone who has dark skin or anyone that questions the government's actions in the war on terror to purge the country of "terrorists"
  2. Institute a police state

While the priority is to thwart another strike, police are still investigating links between the attacks on July 7 and the botched operation a fortnight later. They are also hunting for what officers describe as "key logistical players" behind the attacks.

Seven more people - six men and a woman - were arrested in raids in Brighton yesterday, bringing the number of people under arrest in Britain to 18. A Scotland Yard spokesman said: "This is a further indication of the fact this is a fast-moving investigation and we continue to progress. We are searching for other people in connection with this ongoing inquiry.

"There were quite a few other people involved in the incidents of the 7th and the 21st. It's extremely likely there will be other people involved in harbouring, financing and making the devices."

The major link between the two sets of bombers is that the alleged leaders of both groups attended Finsbury Park mosque. Experts are studying similarities between the bombs used on July 7 and 21. [...]

Ethiopian-born Hussain, 27, who has a British passport, claimed that the plot was orchestrated by another of those arrested on Friday, Muktar Said-Ibrahim. Hussain said that he had been recruited in an underground gym in Notting Hill.

Immigration officials are trying to find out how he managed to slip out of Waterloo station on a Eurostar train to Paris and make way to Italy where he met his brother, who lives in Rome. Officials want to know why Hussain, who says his real name is Hamdi Isaac and who has Italian citizenship, came to Britain posing as a Somali asylum-seeker in 1996. [...]

Italian police say they are using Hussain's phone records to unpick the international network that has been helping him. Alfredo Mantovano, an Interior Ministry official, said that the network "confirms the presence in our country of autonomous Islamic cells . . . which could represent a concrete threat." Italy is worried that it is the next target for Islamic terrorists.

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Blair and ministers go on holiday despite terror crisis
By George Jones, Political Editor
01/08/2005

Tony Blair will leave London for a family holiday this week despite concern that he will be out of the country at the same time as Charles Clarke, the Home Secretary, and Jack Straw, the Foreign Secretary.

Mr Blair and senior ministers have decided to continue with planned summer breaks even though the country is in the midst of its biggest security alert after the bombings. [...]

Comment: Blair and his ministers have gone on holiday, safe in the knowledge that the backroom boys have everything under control. After all, since the Blair government is the one directing Islamic terrorism in the UK, he can rest assured that he will never be caught unawares.

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Spokesman: Loss of Uzbek hub should not hinder mission
Associated Press
August 01, 2005

KABUL, Afghanistan - Uzbekistan's decision to end an agreement that let U.S. military aircraft use a base - an important hub for American operations in Afghanistan - will not hinder the battle against militants here, a U.S. military spokesman said Monday.

The Karshi-Khanabad air base, commonly referred to as K2, has been a critical staging point for U.S. military operations in Afghanistan since the earliest days of the war, which began in October 2001.

More recently, the base has been used to move supplies, including humanitarian aid, into northern Afghanistan. It also is a refueling point for transport planes.

"Our presence there is an integral part of Operation Enduring Freedom here in Afghanistan and to support the Afghanistan people," U.S. military spokesman Col. James Yonts said. However, he said, "our ability to execute combat operations ... will not be hindered by this decision." He said operations would be reorganized to use air bases at Bagram, just north of the Afghan capital, Kabul; at Kandahar, in southern Afghanistan; and at Manas, in neighboring Kyrgyzstan.

His comments echoed those of Defense Secretary Donald H. Rumsfeld, who said last week that he did not believe American operations in Afghanistan would be hurt by the decision that prevents U.S. aircraft from using the Uzbek base.

The Uzbek government offered no reason for evicting U.S. forces.

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United States losing allies
RIA Novosti political analyst Arseny Oganesyan
17:22 | 01/ 08/ 2005

Moscow - The withdrawal of a base from Uzbekistan by a six-month deadline set by Tashkent is not a big problem militarily.

But politically, the loss of an ally is quite serious for the United States. On the one hand, the West will exert much more pressure on the Islam Karimov regime. But on the other, China and Russia are not likely to abandon their partner in the Shanghai Cooperation Organization.

U.S. Undersecretary of State for Political Affairs Nikolai Burns has conspicuously cancelled his visit to Tashkent. He told The New York Times that it was considered inexpedient to pay a visit to Tashkent after they got notification about the withdrawal of the U.S. military base. He added that Uzbekistan was isolated because its government had failed to carry out reforms.

But this is very far from the truth. Tashkent has not become an international outcast just because the West is displeased with lack of democracy there, or because it makes every effort to prevent the extradition of Uzbek refugees from Kyrgyzstan. To the contrary, both China and Russia approve to a different extent Tashkent's tough action against Muslim radicals.

Moreover, the West's desire to encourage Central Asian nations to make a fast leap to democracy finds no support in Moscow. Director of the Russian Institute for Strategic Studies Yevgeny Kozhokin: " Imperfect schemes of democratization may produce a social and political explosion, as a result of which secular regimes will be replaced with Muslim, or even Muslim fundamentalist forces. This threat exists in Central Asia, especially in Uzbekistan and Tajikistan." [...]

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America seeks to accelerate end of Castro's regime with new post
By Harry Mount in New York
01/08/2005

The 46-year stand-off between Cuba and America has taken a turn for the worse after Washington appointed a "transition co-ordinator" to hasten the downfall of President Fidel Castro.

Condoleezza Rice, the US secretary of state, chose Caleb McCarry to "accelerate the demise of Castro's tyranny" on the Caribbean island that the Communist dictator has run since a coup in 1959.

The appointment is part of President George W Bush's plan to tighten the 40-year programme of sanctions against Cuba.

In addition, the American government has been beaming in extra aircraft-transmitted radio and television broadcasts to Cuba to avoid Castro's jamming of Miami-based ones.

Over the weekend, both Cuba's government and the dissidents it has repressed criticised the appointment, which was made last week. President Castro called the move "especially aggressive".

"Surely he will receive a juicy salary in his new job, but Caleb McCarry - I assure you - will retire without setting foot in Cuba," Felipe Perez Roque, the Cuban foreign minister, said.

Cuban dissidents have been subject to a government crackdown in recent weeks, with dozens of arrests. President Castro called them "mercenaries", "traitors", "bums" and "delinquents" in a speech last week. But they do not approve of the latest American move.

"Any transition in Cuba is for Cubans to define, lead, organise and co-ordinate," said Oswaldo Paya, leader of the Christian Liberation Movement and promoter of a petition seeking democracy in Cuba. [...]

Comment: Why should we be surprised? Over the course of the long and bloody years of American 'Democracy', successive American governments have shown nothing but contempt for the will of the people, regardless of which country they live in.

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Signs Economic Commentary
Donald Hunt
August 1, 2005

The U.S. dollar closed at 0.8208 euros on Friday, down one percent from the previous week's close of 0.8293. That put a euro at 1.2184 dollars, compared to 1.2058 on the previous Friday. Gold closed at 435.80 dollars an ounce, up sharply (2.4%) from $425.40 a week earlier. In euro terms, an ounce of gold closed at 357.68 euros up 1.4% from last week's close of 352.79. Oil closed at $60.83 a barrel, up 3.7% from 58.65 dollars a barrel the previous week. In terms of euros, a barrel of oil cost 49.93 euros, up 2.6% compared to 48.64 a week earlier. The gold/oil ratio closed at 7.16 compared to 7.25 a week earlier for a drop in gold terms of 1.3%. In the U.S. stock market the Dow Jones Industrial Average closed at 10,640.91, down a tenth of a percent from last week's close of 10,651.18. The NASDAQ closed at 2184.83 on Friday, up 0.2% from 2,179.74 the week before. The yield on the ten-year U.S. Treasury bond closed at 4.29 percent, up seven basis points from 4.22 the previous Friday.

The U.S. economic situation is being spun positively by the Mainstream Media in the United States as can be seen by this wire service article:

Economy kept growing solidly in Q2

By Glenn Somerville
Sat July 30,12:03 AM ET

The U.S. economy grew at a solid 3.4 percent annual rate in the second quarter, setting the stage for steady second-half expansion as inventories fell and Midwest manufacturing picked up, government and industry reports on Friday showed.

The quarterly report on gross domestic product, or GDP, showed core inflation well contained but analysts said there was enough price pressure after nine quarters of growth exceeding 3 percent to keep U.S. interest rates on the rise.

A price index based personal consumption expenditures rose at a 3.3 percent rate that topped the first quarter's 2.3 percent. However, when food and energy were stripped out -- a formulation that Federal Reserve Chairman Alan Greenspan favors -- the rate of price rises slowed to 1.8 percent in the second quarter from 2.4 percent.

But with oil topping $60 a barrel on Friday, investors bet the Fed's policy of pushing interest rates steadily higher -- as it has done nine times since June last year -- will remain in place for some time.

Stock prices dropped, with the Dow Jones industrial average down 64.64 points, or 0.6 percent, to end at 10,640.91. The tech-laden Nasdaq Composite Index lost 13.61 points, or 0.62 percent, to end at 2,184.83.

Similarly, bond prices sagged on the expectation that interest rates will keep rising. Prices for 30-year U.S. Treasury bonds plunged 1-9/32s points and their yield rose to 4.48 percent from 4.40 percent. Ten-year Treasury notes dropped 21/32 of a point while their yield gained to 4.28 percent from 4.20 percent on Thursday.

Other reports showed U.S. Midwest manufacturing gathered momentum in July while consumer sentiment brightened slightly. Wages and salaries -- regarded as a potential strong influence on inflation -- increased at a modest pace.

The strong second-quarter GDP performance followed a 3.8 percent growth rate in the first quarter and reflected well-balanced strength in consumer spending, business investment and exports.

"Strong, broad-based growth is just the ticket the Fed needs to support its interest-rate hike program," economist Joel Naroff of Naroff Economic Advisors in Holland, Pennsylvania, wrote. "And the members can point to this report and say the economy is in good shape and does not need much stimulus, if any."

GDP measures the value of all goods and services produced within U.S. borders.

Separately, the Labor Department reported that employment costs continued to gain moderately in the second quarter, by 0.7 percent, matching the first quarter's pace.

The Employment Cost Index is a broad measure of what employers pay in wages and benefits. The second-quarter data showed pay increased 0.6 percent in the April-June period, matching the gain recorded in the January-March quarter.

Most measures of GDP activity remained healthy in the second quarter, with consumer spending increasing at a 3.3 percent rate after growing at a 3.5 percent rate in the first quarter. Business investment advanced at a 9 percent rate after growing 5.7 percent in the first three months of the year.

Companies drew down inventories at a $6.4 billion annual rate during the second quarter -- the first time they reduced stocks since the second quarter of 2003. Carmakers restrained production while dealers used sales incentives to clear their lots of unsold goods, clearing the way for stronger production in coming months.

Another gauge of economic activity in the industrial Midwest -- the Chicago Purchasing Management Index -- posted a sharp jump in July to 63.5 from 53.6 in June. Every one of its separate measures, from new orders to current production levels, strengthened in July.

A University of Michigan consumer confidence index rose modestly to a 2005 high of 96.5, implying consumers are likely to keep adding their purchasing punch to the economy.

Analysts said the employment costs data was encouraging, since it did not point to hefty wage demands that can foster inflation. Over a 12-month period ending June 30, wages and salaries have grown just 2.4 percent.

Again we see a bifurcation between the conclusions reached looking at snapshot-data for the U.S. economy and those reached by looking at the big picture and at historical trends. People interested in the latter would have spent the week thinking about the unpegging of the yuan, the passage of CAFTA and the new U.S. energy bill as well as the continuing disaster of the war in Southwest Asia.

The implications of the Chinese move are clear: rising U.S. interest rates, which could be disastrous when combined with an out-of-control housing bubble. Here's Al Martin:

China acted to revalue its currency, the yuan, on July 20 -- by removing the dollar peg and substituting it for a basket of foreign currencies on a trade-weighted basis. Essentially, the Bank of China duplicated its own DL dollar contract that trades on the NYBOT. This means that China will substitute the U.S. dollar for other currencies belonging to countries they do business with on a weighted basis – that is, based on the amount of trade they conduct with these countries. The U.S. dollar will still be included in this peg, but will only be 1/5th of the weight ascribed to it before. What does this mean for the US economy?

The effect of this will be that the Bank of China will now need to maintain in its reserves far fewer U.S. dollars -- perhaps only 1/5th as many U.S. dollars as it did before. It also means that the Bank of China will be purchasing fewer U.S. Treasury securities in the future.

It should be noted that the Bank of China has been the largest purchaser of U.S. Treasury securities in the last 5 years and is now, indeed, the largest holder of U.S. Treasury securities. It was the Bank of China's buying of U.S. Treasury securities which led, in part, to the conundrum which Fed Chairman Alan Greenspan talks about -- as the Fed has pushed short-term interest rates, through the Fed funds, higher, long-term rates actually declined. That's because of the demand for U.S. Treasury instruments in dollars coming from China.

This demand is now removed. Therefore, what will happen is that longer-term U.S. Treasury bond rates must rise, as they did on Thursday and Friday after China announced this new action. Why? Treasury rates will have to rise in order to attract foreign capital from other sources–now that the Bank of China is not a ready, and virtually compelled, buyer – in order to re-circulate U.S. dollars that China accrues through its enormous trade surpluses with the United States.

Furthermore, Chinese absorption of U.S. dollars, through these trade surpluses, has effectively been a supporting factor of the U.S. dollar in the past. This will no longer happen.

Therefore, what is also likely to happen is that the U.S. dollar will decline in value without this support, no matter the counter-trend rally that the dollar has had over the last 3 months; thus making the dollar, for investors, an attractive short-selling opportunity at current levels.

This will be inflationary for the U.S. economy, in that it will force longer-term rates up, and it will exert downward pressure on the U.S. dollar, as well as increasing the cost of Chinese goods being imported into the United States. This acts, more so than the monetary action of any other country, as a triple inflationary whammy on the United States.

This action by China then will A) force up long-term U.S. interest rates; B) force down the value of the U.S. dollar and C) force up the cost of consumer goods and services imported from China, which are substantial. (WalMart, the nation's largest retailer imports 83% of everything it sells from China.)

See also this by Peter Schiff:

China's decision to change the nature of its currency peg means that it will no longer be in the dollar buying business, or by extension, the U.S. Treasury buying business. That means that America will be losing its biggest benefactor. China will no longer act as the principal enabler of America's irresponsible extravagance, ending its subsidies to American consumers and borrowers.

Changing the nature of the yuan peg is a first step in the ultimate direction of either allowing the Yuan to float freely or possibly pegging it to gold. In the meantime the Yuan will remain undervalued, as it will likely be pegged to a basket of other currencies using current exchange rates that clearly undervalue the Yuan. Chinese imbalances will continue to grow, along with all the domestic inflationary implications that result.

However, the pressure on China to prop up the dollar will be greatly diminished. To maintain the peg against its new basket, Chinese monetary authorities will most likely now be buyers of those other currencies likely to be included in its basket, such as the Euro or Yen. Since its reserves are already disproportionately held in dollars, it will likely rebalance those reserves to more accurately mirror the basket to which the Yuan will be pegged. Such a rebalancing will only exacerbate the dollar's decline. However, a declining dollar will not automatically require offsetting dollar buying by the Chinese as it has during the period of the yuan-dollar peg. As long as dollar weakness is offset by strength in other currencies in its basket, the peg can be maintained.

The implications for America are enormous. Far from being the panacea that American politicians proclaim, China's decision to alter its peg could be the pin that finally pricks America's bubble economy.

Does that mean that U.S. politicians have been actively pursuing a policy (encouraging China to remove the dollar peg) that would pop the U.S. economic bubble? It would seem so.

For America, the direct result of this action will be the following:

1. Higher consumer prices.
2. Higher interest rates.
3. Reduced profits for American companies, particularly those dependent on domestic consumption and consumer debt.
4. Lower stock prices, as earnings decline and multiples contract.
5. The busting of the housing bubble, as tighter credit standards and higher interest rates squeeze current home prices.
6. Rising unemployment, as higher interest rates and vanishing home equity slow consumer spending and reduce jobs dependant on that spending.
7. A severe recession as a result of all of the above.
8. Rising federal budget deficits, as recession reduces tax revenue, while higher interest rates and escalating outlays increase expenditures.

Schiff ends the article with this somewhat bizarre paragraph:

In conclusion, July 21, 2005 will be another date likely to live in infamy. This time the aggressor is China not Japan, and the bombs are purely economic. Though there will be no immediate loss of life, and no American retaliation, the financial damages will be devastating. History will remember this date as the beginning of Chinese independence, and the beginning of the end of America's ability to depend on China.

How can he use the war metaphor when all prominent U.S. politicians have been urging China to adopt this policy? That would be like the United States urging Japan to attack Pearl Harbor in 1941 (hmm…). Or like the United States urging Japan and Germany to send troops overseas in wars (wait, hasn't the United States been urging them to do that?). Should he then invoke the "treason" metaphor? Maybe war is not the right analogy for what is happening. Or maybe it is, but not for the reason most people would think. War may be a good metaphor if we note the staged aspects of many wars and the fact that many corporations flourish during wartime and that many powerful fortunes are established on war-profiteering.

Doug Wakefield, on the other hand, uses a natural disaster metaphor: the Tsunami.

In December 2004 we watched the devastating impact of a Tsunami. For those living away from the area, what we saw, horrifying as it was, was impossible to grasp. How could so much destruction occur? How could over 240,000 people die from a natural disaster that started from shifting plates on the earth's floor? How can water top speeds of 500 mph? We heard stories of individuals looking at the ocean as it pulled back hundreds of yards from the beach only to then be totally surprised by the high wall of water that returned. It left the observer no time to prepare.

Today, as we look at our financial markets, most of the talk is of comfortable retirements, funded pension plans, and safe Social Security and Medicare Benefits. And yet, as the event of last December has shown, things are not always what they seem and they can change quickly. Now is the time for every investor to ask, "What evidence is there that a major decline could occur in the financial markets and what actions can I take to address any systemic risks?"

As we look out across the exchanges, everything appears calm. The bond market continues the bull that started in the early 1980's. The Dow Jones Industrial, after dipping below 7200 in 2002, looks to be safely resting on a 10,000 floor. Nationally, real estate has appreciated moderately for years, and substantially in the last few.

However, as we look below the happy talk about "how the Dow has held strong above the 10,000 level since late 2003" or "how resilient the American markets are", we begin to notice that long term investing records are still tarnished by the "downturn" of 2000 - 2002. When we consider that the S&P500 is still down 10.64% over the 6-year period ending June 30, 2005, or that the Dow is down 3.17% during the same timeframe, then the first signs of concern start to creep into our thinking.

…In June of 1999, total mortgages in the USA stood at $6,021 billion. At the end of March 2005, the number is $10,774. This is a 79% increase. Keep in mind our incomes have only risen 34% while our credit card bill has grown by 58%. So, what have we, as a nation, done? The answer is painful, if not obvious. We have borrowed the money with our homes as collateral for the loan. As our credit has gotten increasingly splotchy and our cash flow needs have increased, institutions have lowered their lending standards and moved toward riskier finance products. In a May 5th 2005 report issued by Fannie Mae, we see that the share of interest only Adjustable Rate Mortgages (ARMs) "A" paper selling in the Mortgage Backed Securities (MBS) market has grown from 3% in 2001 to 50.9% in 2004, while ARMs for the same class and timeframe have grown from 18% to 72.1%. The Jumbo MBS market has grown from 5.4% to 52.5% during the same period. In addition to this we learn that the sub-prime MBS finished 2004 with 66% of their loans as 2 year ARMs. In other words 66% of these notes face a likely upward adjustment in payments as early as 2006. 5 These are astonishing numbers.

Ok, before we go any further, let's look at this huge and growing risk that will affect our financial markets. The question is not if, but when. In a society where everything is focused on how we can make payments, versus what can we afford to purchase, the lending environment must become more lax when the consumer starts tapping out. If we cannot afford the house payment with a fixed mortgage, we can buy the house with a lower payment with the understanding that the payments will adjust upward in the future. If we still cannot afford the payment, the lender cuts the loan terms to interest only for a period of time, so that even less may be required of our consumer today. Tomorrow, well, why worry about that today? Besides, house prices have been increasing and players in the real estate game, like condoflip.com, give us the impression that our property will only be valued higher in 2 - 4 years when we look to either refinance or sell. So again, we ask, what's the problem?

On the surface, nothing. But let's look at this a little closer. If this only affected the consumer doing this, then this would only be an issue for the lending institution reckless enough to allow it. However, since each of these mortgages are packaged in groups and sold in the bond markets as mortgage backed securities to investors, it becomes a concern. When those investors are mutual funds, large endowments, or pension funds, the problem now becomes an issue for thousands of investors who never intended to flip condos. Pretty pie graphs and the last quarterly statement are nice, but they do not go far enough in disclosing the true risk each investor is taking.

While it would be easy to blame one politician, investment institution, or Federal Reserve official and demand changes, the size of the markets make it extremely improbable that one individual could "fix" these problems. History reveals that the pressures we now face have been building for decades.

According to Marshall Auerback, there is increasing evidence that the housing bubble is popping as could be predicted to happen with rising long-term interest rates.

Americans have been using their homes as ATM machines, refinancing their mortgages in order to fund their spending. But even in the sluggish economy of 2000-2002, housing prices have soared.

Because of these rising prices, American consumers have long been seduced into believing that despite all the ups and downs in stocks and salaries, their overall situation was okay. Homes are the biggest asset most families own, and their value has been rising nicely. For that reason, Americans have felt more comfortable buying big-ticket items, from SUVs to new computers to Disney World vacations. Much of that spending has gone right onto the VISA card. But that debt has been kept somewhat manageable by another factor in housing prices: mortgage refinancing, where China's importance cannot be overstated. Coming at a time of increasing vulnerabilities in the US housing market, a higher risk premium on forward US interest rates needs to rise to cover this uncertainty, which is clearly not going to help the mortgage market. (As an example, the Washington Post recently reported that Philadelphia, its suburbs and indeed much of Pennsylvania had experienced a foreclosure epidemic as low-income homeowners took on mortgage debt they could not afford. In 2000, the Philadelphia sheriff auctioned 300 to 400 foreclosed properties a month; now he handles more than 1,000 a month. Allegheny County, which includes Pittsburgh, had record auctions of foreclosed homes, and officials speak of a "Depression-era" problem). Could this be repeated across the country?

The passage last week of CAFTA, the Central American Free Trade Agreement, also did not go unnoticed as an ominous portent:

How the West Was Lost
CAFTA and the Disassembling of America

By NIRANJAN RAMAKRISHNAN

I am working on my computer when I discover that the House has passed CAFTA. I turn on the TV for the eleven-o-clock news. The local channels are full of reports...about an uptown homicide. On cable, both Fox and MSNBC each have a specialist standing near a pond in Aruba talking with great earnestness (I have the sound turned off). On CNN, Paula Zahn is interviewing an expert on the size of the debris from the space shuttle.

The House has just passed CAFTA, and the discussion on television is all about Natalee Holloway and flakes of foam.

CAFTA comes twelve years after NAFTA, about which every dire prediction -- job losses, erosion of the manufacturing base, mounting trade imbalances -- has been borne out in spades. Against this background the Senate voted 54-45 for the bill a few days back, and the House has followed with 217-215.

Watching CSPAN the following day when the Senate re-voted on the revised version of the CAFTA bill after just 20 minutes of debate, I saw a couple of senators extoll the bill, saying how it would remove tariffs on American exports to Central America. I was reminded of an old remark by my cousin, "If we had ham, we could have ham and eggs ---- if we had eggs!" When all the manufacturing has fled, Senator, I felt like shouting, what do you plan to export? Like the morning-after pill, Democrats complained the next day about the House vote (took place at midnight, was kept open for forty-five minutes until a majority was....assembled), complaining how the rules were bent after the original tally actually rejected CAFTA by five votes. Why did they then not stage a sit-in or register a vociferous protest? One Democratic senator referred to this ploy, but when the vote came, I counted many Democrats -- Dianne Feinstein, both the Washington Senators, and the Old Reliable, Joe Lieberman himself, all voting for CAFTA.

Any other country would have made a huge stink about a re-enactment of such a fire-sale of its wealth. But not America of the New American Century. If Socrates died cheerfully sipping hemlock from a chalice, we will likely reach our end propped up on a couch, watching the latest 'breaking news' of a high-speed car chase or a disappeared bride, maybe even to the background music of 'Suicide is Painless'.

Unlike many others, I have somehow admired President Bush for his knack, like Mr. Dick (he of David Copperfield, not he of the undisclosed location), of revealing profound truths even when appearing to speak in toungues. Remember his interview last year where he said he didn't think something like the 'War on Terror' could be won? Or during the 2000 campaign when he thundered, "They think Social Security is some kind of a Federal Program"?

But his purest vision of clarity came some weeks back, when he introduced 'disassembling' back into the popular lexicon. Everyone laughed at his not knowing that the word he wanted was 'dissembling'.

But they were misunderestimating him once more. He was right. Disassembling is mot juste. My only regret is that he didn't save the word till January -- he could have uttered just that one word and delivered the shortest and most accurate State of the Union speech in history.

Disassembling covers everything that's happening around us. The government's sole purpose seems to be to dismantle every protection the country has, leaving the borders unguarded, splurging on an empire project that sputters even before getting under way, and financing foreign reveries and domestic revelries with borrowed money hiding the bottom of a Hubbardian treasure chest. The loyal opposition -- loyal not to the nation's interests but to focus groups -- silent or spouting cant while freedoms are freely curtailed, jobs vanish abroad, and economic security disappears. The press is rotted (I have reported only the facts in the opening paragraph), and a once proud people, now riven by anxiety at one level and addled by a half-century of don't-worry-be-happy television at another, have no idea what to do after two generations of systematic alienation from politics. The notion of a nationalist bourgeoisie seems to have vanished too, and big industry is no longer American in any meaningful sense, being indifferent to American plight in more ways than a Bermudan or Caymanian registered address alone might suggest.

And, finally, the U.S. Energy Bill passed the House of Representatives last week. I don't know about you but I have been stressed out lately, wondering how we, as a society, were going to funnel many more billions of dollars to (already highly profitable) oil companies. Well, I needn't have worried, the United States Congress was hard at work tackling this problem the whole time.

US energy bill funnels billions to oil, utility corporations

By Patrick Martin
29 July 2005

Congressional Republican and Democratic negotiators reached agreement Monday night on major elements of a new energy bill promoted by the Bush administration to reward its corporate backers in the oil, coal and utility industries.

The resulting legislation is set to provide as much as $14.5 billion in tax breaks over the next 10 years to corporations that are already immensely profitable. At the same time, the bill will relax environmental regulations, thereby permitting greater industrial pollution with all of the harmful consequences for public health.

… It is impossible to overstate the importance of sheer greed in determining both the policies of the Bush administration and the actions of Congress. A case in point is oil drilling in the ANWR: if not a solution to the impending energy crisis, it is nonetheless a source of enormous potential profits. At the current price of nearly $60 a barrel, it would provide $600 billion in revenue for Big Oil.

All the environmental and regulatory decisions of both the White House and Congress have corporate dollar signs plastered all over them. A recent emergency military spending bill, for instance, had four paragraphs that allowed energy exploration in the Gulf Islands National Seashore, a national park that comprises ecologically sensitive barrier islands on the Gulf coast of Mississippi. The first step will be seismic testing, which involves detonating explosions in an area that is home to sea turtles, dolphins and a wide range of fish and birds, and using the resulting sound waves to locate pockets of oil and gas.

During 2004, the federal Bureau of Land Management issued 6,052 permits to drill oil and gas wells on federal land, triple the number issues 10 years before. Some 40 million acres of public land in the continental US have been leased out to oil and gas development.

In the meantime, oil industry profits have reached stratospheric levels. In May, Exxon Mobil Corp. announced first-quarter revenues of $82 billion and first-quarter profits of $7.86 billion, up 44 percent over the same period last year. This works out to an annual profit of more than $30 billion for the biggest US oil company.

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Former ECB Chief Duisenberg Found Dead
By JAMEY KEATEN
Associated Press
August 1, 2005

PARIS - Wim Duisenberg, the former European Central Bank chief who helped create the euro currency, was found dead Sunday in his swimming pool in southeastern France, officials said. He was 70.

An autopsy showed Duisenberg had drowned after an unspecified cardiac problem, a regional prosecutor said. He was found unconscious in the swimming pool at his home in the town of Faucon and could not be resuscitated, police said.

Duisenberg "died a natural death, due to drowning, after a cardiac problem," said Jean-Francois Sanpieri, a state prosecutor in the nearby town of Carpentras. He did not give further details about the autopsy.

Duisenberg was the first head of the ECB, serving from 1998 to 2003. Having shepherded the euro through its introduction in 1999, he became known as the father of the 12-nation European common currency.

"With his calm manner, he established people's basic trust in the euro," German Finance Minister Hans Eichel told The Associated Press in Berlin. "We will remember his personality and what he achieved."

Tall and stoop-shouldered, with a large mane of white hair, Duisenberg sometimes appeared more of a professor than a heavyweight policy-maker. A chain-smoking golf lover, he kept a decidedly low profile as the ECB chief but was a major figurehead bearing overall responsibility for price stability in the euro zone of more than 300 million people.

During his tenure at the bank, Duisenberg was known for his cautious monetary policy and was eager to defend the euro through its early years.

He sometimes frustrated financial markets and politicians by sticking to the bank's inflation-fighting stance, keeping rates higher than some investors and officials would have liked.

"I hear, but I don't listen" to such pleas, was one of his typically blunt responses. Duisenberg repeatedly said it was up to European governments to pursue structural reforms - such as loosening rigid rules on hiring and firing - if they wanted more growth.

Higher rates are the bank's main tool to fight inflation, but they can crimp economic growth. The bank's tight policy helped keep the euro a strong, stable currency even as it is criticized as a drag on growth.

One of Duisenberg's biggest achievements was the smooth introduction of euro notes and coins in early 2002. Twelve national currencies were removed from circulation by banks and shops and replaced with the new money in a huge logistical effort that defied predictions of long lines and consumer confusion.

Duisenberg, who unabashedly sought to model the ECB on the U.S. Federal Reserve Bank, was at times referred to as "Europe's Greenspan" - a reference to Fed chief Alan Greenspan.

His selection as ECB chief was championed by Germany - Europe's biggest economy - but faced controversy when France proposed its central banker, Jean-Claude Trichet, as a rival candidate. Trichet took over in 2003.

Trichet, in a statement, called Duisenberg's death a "terrible loss," and credited him with a decisive role in setting up EU monetary institutions, overseeing the euro launch and building confidence in the currency.

Willem Frederik Duisenberg was born July 9, 1935, in the Dutch city of Heerenven. He became a member of the Dutch Labor party, and received a doctorate in economics from Groningen University, writing his dissertation on the economic consequences of disarmament.

Duisenberg also served as finance minister and central bank chief in the Netherlands, and once ran the European Monetary Institute - an ECB predecessor - in Frankfurt, Germany.

He is survived by his wife, Gretta Duisenberg-Bedier de Prairie, and two adult sons.

Comment: It seems Duisenberg's wife Gretta was none too happy with the actions of the Israeli Zionists. From Wikipedia:

Duisenberg was married to the controversial political activist Gretta Duisenberg. She created a furor when she announced a plan to collect six million signatures in protest of Israeli policies in the Occupied Territories (the figure is thought to have been an allusion to the number of Jewish victims of World War II).

According to an alleged 2003 Reuters article that is no longer available, Duisenberg supported his wife's efforts:

In a one-page letter released Wednesday, Europe's top banker broke his silence to react to allegations by Dutch Foreign Minister Jaap de Hoop Scheffer that Gretta Duisenberg was misusing her diplomatic passport while on a trip to Israel and the Palestinian territories.

"As my (ECB) position requires, I had stayed out of my wife's affairs," Duisenberg wrote de Hoop Scheffer. "But I can tell you I support her 100 percent."

In any case, Duisenberg's death also reminded us of the death of banker Arthur Zankel just a few days ago:

Ex-Citigroup banker Zankel dead in fall

Sat Jul 30, 2005 4:20 PM ET

NEW YORK (Reuters) - Arthur Zankel, a former Citigroup financier and patron of the arts, died in a fall from the ninth floor of his Manhattan apartment building, a family member said.

Zankel, 73, in a fall from the Fifth Avenue building on Thursday, his son Tom Zankel said.

He had been suffering from depression, The New York Times on Saturday quoted Sanford Weill, a close friend and the chairman of Citigroup as saying. [...]

A few days before Zankel's unfortunate "suicide", the US-Israel crisis seems to have been bumped up a notch:

US - Israel crisis deepens over Israel - China arms deal

George Rishmawi - IMEMC & Agencies
Wednesday, 27 July 2005

The U.S. administration has deepened the crisis with Israel over the Israel's weapon-related exports by refusing to rescind the sanctions against Israel, Ze'ev Schiff, a prominent military expert wrote in Haaretz newspaper on Wednesday.

In June, the U.S. House of Representatives voted to place a five-year ban on the purchase of defense items from any country that sells military-related items to China. The crisis erupted, says Haaretz, when Israel sold China replacement parts for "harpy attack drones."

The U.S. demanded Israel prove that it has increased monitoring of military exports. A trip by Israeli Defense Minister Shaul Mofaz to the U.S. to discuss this issue was cancelled following mounting Israeli pressure.

The U.S. demands the Israeli Knesset enact legislation within 18 months that increases monitoring of military exports. It also demanded that a memorandum of understanding be signed, in addition to a written apology from Israel and Mofaz.

Even though such a memorandum will not put an end to the crisis, it may allow a gradual lifting of sanctions. Yet opposition in Israel against singing this memorandum is mounting. [...]

Then we have the following tidbit from the September 12, 2004 Signs page:

9/11 WHITEWASH – A DIRTY LAUNDRY LIST REVISITED

[...]

7.Trading of an abnormally large amount of commercial airlines put options, a 1200% increase above average volume, just days before 9/11/2001, nets $5,000,000. $2,500,00 of which goes unclaimed to this day.

Who made these transactions?

Maybe A.B. "Buzzy" Krongard, presently the number three Executive Director at the C.I.A. and former Chairman at the investment bank A.B. Brown, could shed some light on this one. A.B. Brown later became Deutsche - A.B. Brown, where Krongard continued on as a personal client consultant. Deutsche - A.B. Brown was the firm used to place most of these put options. [...]

Are all these pieces related? Could these recent "banker deaths" be related to the apparently deteriorating relations between the US and Israel, and possible even the 9/11 airline put options? Perhaps. Many assassinations have historically been presented as heart attacks and suicides.

If any of our readers have further information on this topic, please e-mail us.

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Bush plans 50th ranch trip in five years
AP
July 29, 2005

WASHINGTON - Following the Congress in a midsummer exodus, President Bush plans a Texas ranch respite for several weeks, while Supreme Court nominee John Roberts has August to think about Senate confirmation hearings.

White House press secretary Scott McClellan said Friday that Bush will leave after signing into law the Central American Free Trade Agreement that Congress gave final approval to earlier this week.

It will be the president's 50th trip to the ranch since he was elected nearly five years ago.

McClellan said Bush looks forward to being able to "shed the coat and tie" at his more casual home near the small town of Crawford, Texas. Bush plans to travel to seven states from the ranch and hold at least 10 events to tout his agenda, including the war on terror and his economic priorities.

Members of Congress can pick among meetings to reacquaint themselves with their constitutents, march in parades and attend barbecuers and, doubtless, take some official trips as well. [...]

McClellan said Bush also will be preparing for a busy September, when he plans to deliver major addresses on the war on terror and push the Senate to confirm Roberts.

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Carter: Guantanamo Detentions Disgraceful
By CASSANDRA VINOGRAD
The Associated Press
Saturday, July 30, 2005; 5:32 PM

BIRMINGHAM, England -- Former President Carter said Saturday the detention of terror suspects at the Guantanamo Bay Naval base was an embarrassment and had given extremists an excuse to attack the United States.

Carter also criticized the U.S.-led war in Iraq as "unnecessary and unjust."

"I think what's going on in Guantanamo Bay and other places is a disgrace to the U.S.A.," he told a news conference at the Baptist World Alliance's centenary conference in Birmingham, England. "I wouldn't say it's the cause of terrorism, but it has given impetus and excuses to potential terrorists to lash out at our country and justify their despicable acts."

Carter said, however, that terrorist acts could not be justified, and that while Guantanamo "may be an aggravating factor ... it's not the basis of terrorism."

Critics of President Bush's administration have long accused the U.S. government of unjustly detaining terror suspects at the Guantanamo Bay Naval Base on the southeastern tip of Cuba. Hundreds of men have been held indefinitely at the prison, without charge or access to lawyers.

"What has happened at Guantanamo Bay ... does not represent the will of the American people," Carter said Saturday. "I'm embarrassed about it, I think its wrong. I think it does give terrorists an unwarranted excuse to use the despicable means to hurt innocent people." [...]

Comment: Apparently, world leaders DO sometimes tell the truth, at least after their terms have ended...

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5,000 US Troops Have Gone AWOL

Getting Out of Iraq...One Way or Another
By PATRICK COCKBURN
July 31, 2005

Donald Rumsfeld intends to cut the number of US troops in Iraq

The United States military says it is hoping to make a substantial reduction in its forces in Iraq, beginning next spring and summer. General George Casey, the senior US commander in Iraq, said that if political developments continued positively and Iraqi security forces became stronger then there could be sharp cuts in his 135,000-strong force.

The announcement will signal in Iraq that American desire to stay in the country is weakening. The latest opinion poll in the US shows that 53 per cent believe the US will not win in Iraq.

At a briefing with Donald Rumsfeld, the Defence Secretary, in Baghdad, General Casey said troop reductions would come after the Iraqi elections at the end of the year.

Many Iraqi officials are sceptical about US claims that an effective Iraqi army and police force is being rapidly trained by the US. They said insurgents are capable of taking over Sunni Arab districts almost at will.

The US remains very much in charge of security in Iraq despite the nominal authority of the Defence and Interior Ministries. No military action happens except on American command. A US plan to cut the number of foreign troops in Iraq to 66,000 by mid-2006 was outlined in a British Government document leaked in the US this month.

The Iraqi Prime Minister, Ibrahim al-Jaafari, said at a joint press conference with Mr Rumsfeld that the Americans should leave as soon as Iraqis are ready. He said: "The great desire of the Iraqi people is to see the coalition forces on their way as soon as [the new Iraqi security forces] take more responsibility." He added that there should be no surprise pull-out.

Ordinary Iraqis in Baghdad ascribe their problems to the US military presence and say nothing would happen if they pulled out. The tendency of US soldiers to treat all Iraqis as potential suicide bombers has led to frequent shootings of innocent Iraqi.

The police general in charge of the serious crime squad was shot in the head by US soldiers. Iraqis also blame the US presence for the lack of personal security, notably the frequent kidnappings and robberies. But, given the weakness of the Iraqi security forces, a rapid US departure might lead to a disintegration of government authority in much of the country. Mahmoud Othman, an independent Kurdish member of parliament, thinks the real figure for the numbers of men in the Iraqi security forces is 40,000, not 150,000 as claimed.

The US has always had an ambivalent attitude to rebuilding the Iraqi armed forces. It has wanted them strong when facing the insurgents but has been slow to arm them with effective weapons. Iraqi officials say that "at the end of the day the Americans do not trust us".

Al-Qa'ida in Iraq has said it has killed two kidnapped Algerian envoys because of their government's support for the United States. The statement on a website often used by the group led by Abu Musab al-Zarqawi read: "It [Algeria] had sent these two apostates as allies to the Jews and Christians in Iraq. Haven't we warned you against allying yourselves with America?"

Algerian radio interrupted its programming to broadcast an announcement from the office of President Abdelaziz Bouteflika, which said that Ali Belaroussi and Azzedine Belkadi had been executed.

The US military has divided Iraq into six major Areas of Responsibility (AORs) maintained by multinational forces from 26 countries. The US 11th Armored Cavalry Regiment from Fort Irwin, California, leads the Baghdad mission, while the US 42nd Infantry Division from New York State covers Kirkuk, Tikrit and Samarra.

Since the invasion began, 1,785 American soldiers have died in Iraq, 348 of them since the 31 January elections. About 5,500 US troops have gone absent without leave since the beginning of operations in 2003.

At least 23 members of a California National Guard battalion serving in Iraq are under investigation for the alleged abuse of Iraqi detainees and for a $30,000 extortion scheme involving promises to protect shopkeepers from insurgents, the Los Angeles Times reported on Thursday.

Patrick Cockburn was awarded the 2005 Martha Gellhorn prize for war reporting in recognition of his writing on Iraq over the past year. His new memoir, The Broken Boy, has just been published in the UK.

Comment: Given that the number of American soldiers killed in action in Iraq that is presented by the Bush administration has been widely ridiculed as a complete lie, we have wonder how many US troops have actually gone AWOL. One might suspect it is a lot higher than 5,500...

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King Fahd of Saudi Arabia dies
BBC
Monday, 1 August 2005, 10:22 GMT 11:22 UK

King Fahd, Saudi Arabia's ruler since 1982, has died.

Saudi state television announced that Crown Prince Abdullah had been named as King Fahd's successor.

King Fahd had been frail since suffering a stroke a decade ago and had delegated the running of the kingdom's affairs to Crown Prince Abdullah.

Defence Minister Prince Sultan is next in line to the throne after Abdullah, and was named crown prince, state television announced.

Members of the royal family have already pledged allegiance to Abdullah. An official ceremony confirming him as the new king is due to be held on Wednesday.

'Sorrow and sadness'

"With all sorrow and sadness, the royal court in the name of his highness Crown Prince Abdullah bin Abdel Aziz and all members of the family announces the death of the servant of the two holy mosques, King Fahd bin Abdel Aziz," Minister of Information Iyad bin Amin Madani announced on state television.

"He died after suffering an illness. God now allows the custodian of the two holy mosques, King Fahd, with great mercy and forgiveness, to reside in his wide heaven."

The Associated Press news agency says the king died early on Monday at the King Faisal Specialist Hospital in the capital, Riyadh, where he was admitted on 27 May for unspecified medical tests.

An extraordinary Arab summit due be held Wednesday in the Egyptian resort of Sharm al-Sheikh has been postponed because of King Fahd's death.

France's President Jacques Chirac expressed "profound sadness" at the news in a message of condolence to the Saudi government.

"During his reign, King Fahd put the safety of his people above all else. In perilous times he was the guarantor of his country's cohesion and the defender of regional stability. He knew how to apply wisdom to the Kingdom's changes," the message said.

Absolute monarch

King Fahd ascended the throne in 1982 after seven years as crown prince, making him absolute monarch of the world's largest oil-producing country and home of Islam's two holiest sites, the mosques at Mecca and Medina.

He threw the weight of the kingdom behind Arab causes and was heavily involved in regional issues such as the search for a peaceful settlement to the Lebanese civil war which ended with an agreement signed in the kingdom.

The monarch's decision in 1990 to invite American forces into Saudi Arabia after Iraq's invasion of Kuwait was heavily criticised within the country.

Many say it contributed to the rise of al-Qaeda whose leader, Osama bin Laden, is a Saudi-born businessman.

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Oil rises above $61 as Saudi king dies
Reuters
August 1, 2005

LONDON - Oil prices climbed above $61 a barrel on Monday after the death of Saudi Arabia's King Fahd, but expectations that the new king would keep oil policy unchanged stemmed the rise.

U.S. light, sweet crude was up 52 cents at $61.09 a barrel after hitting a near three-week high of $61.23.

The price has risen 40 percent this year and is just over a dollar below the record high of $62.10 hit on July 7.

King Fahd died in hospital on Monday and will be succeeded by Crown Prince Abdullah, his half-brother who has been the de-facto ruler of Saudi Arabia since Fahd suffered a stroke in 1995.

Abdullah is expected to adhere to Saudi Arabia's long-standing oil policy aimed at ensuring global markets are well supplied, a Saudi source said on Monday.

"I am sure nothing will change regarding Saudi Arabia's oil policy," the Saudi source told Reuters.

Analysts also saw any changes in Saudi policy as unlikely, and expected the price impact to be minimal.

"It's not going to have a great deal of effect because Crown Prince Abdullah has been effectively running the country for several years," said Geoff Pyne, Energy Consultant to Standard Bank. [...]

REFINERIES UNDER STRAIN

Before the news of Fahd's death, prices had risen on Monday after a spate of refinery problems in the United States resurrected concerns about meeting strong fuel demand.

BP added to the anxiety at the weekend by shutting a gasoline-producing unit at its giant Texas City refinery -- the third-largest in the U.S. and source of 3 percent of its gasoline -- for maintenance, a regulatory filing showed.

It was unclear whether or not the shutdown was related to a Thursday night fire in a secondary unit that BP had said reduced the plant's overall gasoline production by 35,000 bpd.

That fire came four months after an explosion at the plant killed 15 workers, highlighting the rising risks to operations as refiners attempt to run flat-out to satisfy rising demand. [...]

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China emerging as chip design center - iSuppli
Reuters
August 1, 2005

SHANGHAI - Chips designed, or partly designed, in China will account for 14.8 percent of global semiconductor sales this year, making the country the world's third-biggest for chip design, according to an industry report.

Design activity in the United States will lead the market this year, with U.S.-based design houses accounting for 40.2 percent of new semiconductor sales this year, according to the report last week from technology consultant iSuppli.

Japan will come in second, accounting for the design activity behind 15.5 percent of sales this year. After China, Taiwan would be fourth at 10.1 percent.

China is gaining strength as a semiconductor manufacturing base.

Homegrown players such as number-three foundry Semiconductor Manufacturing International Corp. are expanding capacity and global names from Intel Corp. to Advanced Micro Devices Inc. and STMicroelectronics are assembling or planning to make microchips in China.

But chip design has been slower to take off, largely due to a lack of experienced chip designers.

Taken together, China, Hong Kong and Taiwan will collectively generate almost as much design activity this year as Japan, said Greg Sheppard, an executive vice president at iSuppli.

"By 2006, China/Hong Kong/Taiwan likely will surpass Japan and become the world's second-largest region for design-driven semiconductor sales after the United States," Sheppard wrote in a report.

China's semiconductor market has been growing rapidly in recent years, and was worth about $40 billion last year, according to various estimates.

By comparison, the global semiconductor market was worth about $213 billion last year, according to the U.S.-based Semiconductor Industry Association.

The China market is expected to keep growing at double-digit rates in the next two years -- compared with flat to low single-digit growth for the global industry this year -- as a growing number of players shift production to China to take advantage of lower costs and be closer to their customers.

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3.3-magnitude earthquake hits Mount St. Helens
August 1, 2005

A 3.3-magnitude earthquake trembled beneath Mount St. Helens early yesterday, the latest in a series of stronger-than-usual quakes at the volcano.

The quake at 2:34 a.m. likely triggered the overnight collapse of a large section of rock at the north end of the growing lava dome, U.S. Geological Survey scientists reported yesterday from the Cascades Volcano Observatory.

Much of the smooth surface of the ridge, which is created as rock extrudes from the vent, has been removed by rockfalls over the past few weeks.

After years of quiet, the mountain rumbled awake in September, and in October a flow of molten rock reached the surface, marking a renewal of dome-building activity that had stopped in 1986

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Earth shakes around the world
7/31/2005

It's been a shaky weekend for several countries around the world, with moderate earthquakes reported in Turkey, Japan, Taiwan, Indonesia and New Zealand. No serious injuries or property damage has been reported.

Turkey
An earthquake measuring 5,3 on the open-ended Richter scale shook north-western Turkey early on Sunday, seismologists said, but there were no reports of casualties or major damage.

The quake was centred on a rural area in the Bala district of Ankara province and struck at 9.45pm GMT on Saturday, the Kandilli seismology centre in Istanbul said.

It was followed by a series of aftershocks.

Authorities quoted by the Anatolia news agency said there were no immediate reports of casualties or major damage.

Earthquakes are frequent in Turkey, where about 20 000 people were killed in two massive tremors in August and November 1999.

Japan
An earthquake measuring 4,7 on the Richter scale shook central Japan on Sunday, the Japan Meteorological Agency said.

The quake occurred at 5.53am GMT in Yamanashi prefecture, about 95km west of Tokyo, with its focus located 20km underground, the agency said.

There were no immediate reports of injuries or any property damage.

On Saturday, an earthquake measuring 4,7 on the Richter scale also shook northern Japan, but there was no risk of a tsunami, the Japan Meteorological Agency said.

The quake occurred at 8.50am GMT in Iwate, about 450km north of Tokyo, with its focus located 50km below the seabed, the agency said.

There were also no immediate reports of injuries or property damage.

Taiwan
An earthquake measuring five on the Richter scale rocked Taiwan on Sunday, seismologists said. There were no immediate reports of damage or casualties.

The quake struck at 2.45am GMT, with an epicentre 17km north-east of the eastern Hualien county. It originated 22km underground.

Taiwan, lying near the junction of two tectonic plates, is shaken regularly by earthquakes. The country's worst, measuring 7,6 on the Richter scale, struck in September 1999 and left 2 400 people dead.

Indonesia
A strong earthquake has struck off the coast of the Indonesian island of Sumatra, Hong Kong seismologists said on Sunday. No damage or injuries were reported.

The tremor struck late on Saturday and was recorded in Hong Kong at 3.18pm GMT on Saturday, the Hong Kong Observatory said in a statement. It was centred off the coast of northern Sumatra, about 100km west-southwest of Banda Aceh, the statement said.

Indonesia has been repeatedly rocked by quakes since the massive temblor on December 26 that produced a deadly tsunami. The Indian Ocean disaster killed more than 200 000 people in 11 countries, and left about 50 000 missing and hundreds of thousands homeless.

New Zealand
The top of New Zealand's South Island has been shaken by two moderate earthquakes but no damage was reported, officials said on Saturday.

The earthquakes were centred on the prime grape-growing region of Blenheim.

The first tremor of 4,1 on the Richter scale occured on Friday and was followed by a jolt of 3,8 on Saturday, the Department of Geological and Nuclear Sciences said. -- Sapa-AP, Sapa-AFP

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Global Warming Making Hurricanes Stronger
By JOSEPH B.VERRENGIA
AP Science Writer
August 1, 2005

Is global warming making hurricanes more ferocious? New research suggests the answer is yes. Scientists call the findings both surprising and "alarming" because they suggest global warming is influencing storms now - rather than in the distant future.

However, the research doesn't suggest global warming is generating more hurricanes and typhoons.

The analysis by climatologist Kerry Emanuel of the Massachusetts Institute of Technology shows for the first time that major storms spinning in both the Atlantic and the Pacific since the 1970s have increased in duration and intensity by about 50 percent.

These trends are closely linked to increases in the average temperatures of the ocean surface and also correspond to increases in global average atmospheric temperatures during the same period.

"When I look at these results at face value, they are rather alarming," said research meteorologist Tom Knutson. "These are very big changes."

Knutson, who wasn't involved in the study, works in the National Oceanic and Atmospheric Administration's Geophysical Fluid Dynamics Laboratory in Princeton, N.J.

Emanuel reached his conclusions by analyzing data collected from actual storms rather than using computer models to predict future storm behavior.

Before this study, most researchers believed global warming's contribution to powerful hurricanes was too slight to accurately measure. Most forecasts don't have climate change making a real difference in tropical storms until 2050 or later.

But some scientists questioned Emanuel's methods. For example, the MIT researcher did not consider wind speed information from some powerful storms in the 1950s and 1960s because the details of those storms are inconsistent.

Researchers are using new methods to analyze those storms and others going back as far as 1851. If early storms turn out to be more powerful than originally thought, Emmanuel's findings on global warming's influence on recent tropical storms might not hold up, they said.

"I'm not convinced that it's happening," said Christopher W. Landsea, another research meteorologist with NOAA, who works at a different lab, the Atlantic Oceanographic & Meteorological Laboratory in Miami. Landsea is a director of the historical hurricane reanalysis.

"His conclusions are contingent on a very large bias removal that is large or larger than the global warming signal itself," Landsea said.

Details of Emanuel's study appear Sunday in the online version of the journal Nature.

Theories and computer simulations indicate that global warming should generate an increase in storm intensity, in part because warmer temperatures would heat up the surface of the oceans. Especially in the Atlantic and Caribbean basins, pools of warming seawater provide energy for storms as they swirl and grow over the open oceans.

Emanuel analyzed records of storm measurements made by aircraft and satellites since the 1950s. He found the amount of energy released in these storms in both the North Atlantic and the North Pacific oceans has increased, especially since the mid-1970s.

In the Atlantic, the sea surface temperatures show a pronounced upward trend. The same is true in the North Pacific, though the data there is more variable, he said.

"This is the first time I have been convinced we are seeing a signal in the actual hurricane data," Emanuel said in an e-mail exchange.

"The total energy dissipated by hurricanes turns out to be well correlated with tropical sea surface temperatures," he said. "The large upswing in the past decade is unprecedented and probably reflects the effects of global warming."

This year marked the first time on record that the Atlantic spawned four named storms by early July, as well as the earliest category 4 storm on record. Hurricanes are ranked on an intensity scale of 1 to 5.

In the past decade, the southeastern United States and the Caribbean basin have been pummeled by the most active hurricane cycle on record. Forecasters expect the stormy trend to continue for another 20 years or more.

Even without global warming, hurricane cycles tend to be a consequence of natural salinity and temperature changes in the Atlantic's deep current circulation that shift back and forth every 40 to 60 years.

Since the 1970s, hurricanes have caused more property damage and casualties. Researchers disagree over whether this destructiveness is a consequence of the storms' growing intensity or the population boom along vulnerable coastlines.

"The damage and casualties produced by more intense storms could increase considerably in the future," Emanuel said.

Comment: See our Climate and Earth Changes supplement for news of recent events related to this topic.

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Bombay flooded again as rains hit western India
By Rina Chandran and Braden Reddall
Reuters
August 1, 2005

BOMBAY - Heavy rain again flooded Bombay on Monday after a record downpour last week triggered floods and landslides that killed nearly 1,000 people in and around India's financial capital.

Floods closed key roads and delayed train services in the sprawling metropolis of more than 15 million people, but there were no reports of new casualties or serious damage.

"The speed of the relief operations has come down, but we have deployed personnel and equipment and we are working round the clock," said Suresh Kakine, director of relief for the western state of Maharashtra, of which Bombay is the capital.

He said 600 medical teams had been dispatched around the state to help treat the injured and cremate the dead.

Disease remains a serious threat as dead bodies and animal carcasses are still strewn around the city due to last week's floods, while clean water was scarce in parts as burst sewage pipes polluted supplies.

Financial markets were open and operating normally, though volumes were fairly thin as traders could not get to work, while schools were shut as police urged people to stay off the roads.

Smita Gaikwad, who works at a back-office services firm, said she had to move in to her brother's 10th floor apartment because her ground-floor flat was under two feet (0.6 meter) of water.

"The slums nearby are washed away," she said. "Dead buffaloes are floating on water. We didn't have power for 72 hours."

"Everybody is in a state of numbness."

Before a renewed downpour on Sunday, there were angry protests in the parts of the city where people have been without electricity and water since flooding started last Tuesday.

Film-makers in the city, home to India's prolific movie industry, have started legal action against the state government over its handling of the floods, newspapers reported. [...]

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Plenty of food - yet the poor are starving
Jeevan Vasagar in Tahoua, Niger
Monday August 1, 2005
The Guardian

The two faces of Niger

In Tahoua market, there is no sign that times are hard. Instead, there are piles of red onions, bundles of glistening spinach, and pumpkins sliced into orange shards. There are plastic bags of rice, pasta and manioc flour, and the sound of butchers' knives whistling as they are sharpened before hacking apart joints of goat and beef.

A few minutes' drive from the market, along muddy streets filled with puddles of rainwater, there is the more familiar face of Niger. Under canvas tents, aid workers coax babies with spidery limbs to take sips of milk, or the smallest dabs of high-protein paste.

Wasted infants are wrapped in gold foil to keep them warm. There is the sound of children wailing, or coughing in machine-gun bursts.

"I cannot afford to buy millet in the market, so I have no food, and there is no milk to give my baby," says Fatou, a mother cradling her son Alhassan. Though he is 12 months old he weighs just 3.3kg (around 7lbs).

Fatou, a slender, childlike young woman in a blue shawl, ate weeds to survive before her baby was admitted to a treatment centre run by the medical charity MSF.

This is the strange reality of Niger's hunger crisis. There is plenty of food, but children are dying because their parents cannot afford to buy it.

The starvation in Niger is not the inevitable consequence of poverty, or simply the fault of locusts or drought. It is also the result of a belief that the free market can solve the problems of one of the world's poorest countries.

The price of grain has skyrocketed; a 100kg bag of millet, the staple grain, costs around 8,000 to 12,000 West African francs (around £13) last year but now costs more than 22,000 francs (£25). According to Washington-based analysts the Famine Early Warning System Network (Fewsnet), drought and pests have only had a "modest impact" on grain production in Niger.

The last harvest was only 11% below the five-yearly average. Prices have been rising also because traders in Niger have been exporting grain to wealthier neighbouring countries, including Nigeria and Ghana.

Niger, the second-poorest country in the world, relies heavily on donors such as the EU and France, which favour free-market solutions to African poverty. So the Niger government declined to hand out free food to the starving. Instead, it offered millet at subsidised prices. But the poorest could still not afford to buy.

At Tahoua market the traders are reluctant to talk about the hunger crisis affecting their countrymen as they spread their wares under thatched verandas jutting out from mud buildings. Snatches of the Qur'an from tinny tape players compete with Bollywood songs and the growl of lorries bringing sacks of rice and flour.

One man opens his left palm to display half a dozen tiny scorpions, a living advert for the herbal scorpion antidote he is selling in his other hand.

Omar Mahmoud, 18, who helps sell rice at his father's shop, blames the famine on drought: "I know there is hunger. It is because there wasn't enough rain. The price of millet has gone up because there wasn't enough rain last year."

Last month around 2,000 protesters marched through the streets of the capital, Niamey, demanding free food. The government refused. The same month, G8 finance ministers agreed to write off the country's $2bn (£1.3bn) debt.

"The appropriate response would have been to do free food distributions in the worst-affected areas," said Johanne Sekkenes, head of MSF's mission in Niger.

"We are not speaking about free distribution to everybody, but to the most affected areas and the most vulnerable people."

The UN, whose World Food Programme distributes emergency supplies in other hunger-stricken parts of Africa, also declined to distribute free food. The reason given was that interfering with the free market could disrupt Niger's development out of poverty. [...]

Comment: Given the bad press that "globalisation" has received over the past few decades, the words "free market" are used when referring to first world country plans to solve Africa poverty. This does not however change the reality of the Western economic policies that have afflicted African nations for many, many years. Globalisation "encourages decreasing National control and increasing control over the (Internal) economy (of the state) by outside players.

The gospel of globalisation through its economic liberalism has been elevated to a position of absolute truth, a sort of single theory against which there is no credible alternative”. In short, globalisation, while claimed by Western nations as the solution to Africa poverty, is in fact the cause of African poverty, and the above article makes that very clear.

Western "free market" policies mean that many African nations are now essentially owned by large mulitnational corporations and Western governments. These corporations and governments put pressure on African governments to toe the "free market" line which encourages elevated food prices claiming that this will stimulate the economy in the long term and ultimately lead to an eradication of poverty. Yet what is not mentioned is the fact that the main motivation for Western government and multi-national corporation involvement in the economies of African nations is to generate vast profits, the majority of which end up in the bank accounts of Western nations.

'By their fruits we shall know them', and when the net result of "free market" policies is to force African governments to refuse to give surplus food to their starving population at no charge, we understand the true face of the globalisation movement.

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