Carlyle’s David Rubenstein: The Recession Is Not Over
Posted by Kelly EvansDavid Rubenstein, co-founder and managing director of The Carlyle Group, gave a rapid-fire speech to kick off today’s afternoon session in which he rattled off one troubling fact about the U.S. economy after another and asserted that despite what most economists think, what he calls the “Great Recession” is not yet over.
“We’re now twenty-two months into this recession and it will probably go another month or two,” he said.
Adding insult to injury, he went on to say the U.S. government has outsourced the dating of recessions to the “Bureau of National Economic Research” — the correct name for the group is actually the National Bureau of Economic Research.
One thing was clear from Mr. Rubenstein’s speech — he is not a very bullish guy.
He likened the recession to a hurricane that “comes through and destroys territory” after which the sun opens and there are clear skies, “but what’s on the ground is still pretty bad.”
The recession “may be over in a month or two,” he said, “but we’re going to have some serious, serious problems,” including: the deficit, inflation, taxes, unemployment, Social Security/Medicare/Medicaid, savings, interest rates, and energy.
Whew.
He also expressed concern about the U.S. dollar.
“The dollar is going to be less and less significant to the global economy,” said Mr. Rubenstein, “and that’s a problem for Americans,” since the nation will have to cut its debt and increase taxes to fix the problem.
“We also probably have to get used to the fact that the dollar probably won’t be the reserve currency it has been in recent years,” he said.
So where does he think investors should put their money? Distressed companies, energy (including alternative energy), healthcare, natural resources (oil and particularly water), and emerging markets — specifically India, Taiwan, Saudi Arabia and Turkey.
One silver lining to his speech, perhaps: Mr. Rubenstein emphasized the importance of giving back to communities, saying he had recently purchased documents — including the Magna Carta, Declaration of Independence, and Emancipation Proclamation signed by Abraham Lincoln — and given them to the National Archives.
Let’s hope he didn’t consider them “distressed” investments.
Pickens Says U.S. Deserves a Preferred Purchase on Iraqi Oil
By Paul Glader
Texas investor T. Boone Pickens says he told President Bush that the war in Iraq should give America a preferred deal on Iraqi oil, at least parallel to what the Chinese have brokered.
“He said it would look like we were at war for oil,” said Mr. Pickens at the World Business Forum on Tuesday in New York. “He didn’t do anything. His term was up.”
- Bloomberg News
- T. Boone Pickens, founder and chairman of BP Capital LLC, speaks during the World Business Forum at Radio City Music Hall in New York.
He said China has charted a much wiser path in oil policy. Although it imports 50% of its daily oil use, China has been out arranging bulk oil purchases and ownership in the Middle East, including in Iraq. He thinks ”it’s crazy” the U.S. has fought a war in Iraq but has not placed calls on oil there to avoid accusations that the war was about oil. China “did not lose a person over there and never paid a dime on the war. They will get a call on one of the biggest oil fields in Iraq!”
“In a lot of cases, we are buying oil from people who really don’t like us,” he said. “A lot of people can figure out we are paying for both sides of the war.”
He rattles off the statistics that the U.S. now imports 67% of its oil consumption from foreign countries. “It’s not going to go down. It’s going to go up unless we do something about it,” he said. He said he spends 75% of the 600 hours on his private jet each year touting the Pickens plan and has overspent his original $58 million ad budget by $4 million.
ASIDE: During a Question and Answer period, one questioner mentioned that the Economist magazine suggested that tackling climate change means leaving fossil fuels - including natural gas - behind completely.
“You know what an economist is, don’t you,” Mr. Pickens said to the Wall Street Journal’s Alan Murray, who was interviewing Mr. Pickens. “An economist is a guy that did not have the personality to be a CPA.” When the laughter died down, he said he expressed skepticism that the nation can wean itself off fossil fuels completely. “How do you like riding a bicycle?” he asked.
Jeffrey Sachs Rails against Ex-Fed Chief Greenspan
By Kelly Evans
Jeffrey Sachs, a prolific economist, author and professor at Columbia University, had unusually harsh words in his speech today directed at Alan Greenspan, former chairman of the Federal Reserve — placing him with much of the blame for the current financial crisis.
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| Jeffrey Sachs (The Earth Institute) |
“The essence of the current downturn is finance,” Mr. Sachs said. “It’s a Wall Street crisis. A crisis made down the block.” He said, and “if you look under the rubble you can figure out what happened and why.”
First, “a long bout of easy credit championed by Alan Greenspan and the Fed outside of the normal boundaries of monetary policy,” which came together with “a nearly complete deregulation of the financial sector contrary to almost everything we know about the risks of a highly leveraged financial system.”
“This is flagrant irresponsibility,” he said. “This isn’t a matter of one’s market philosophy, just profound irresponsibility.” Later, though, he said Mr. Greenspan’s ideology was possibly at fault, given his “Ayn Rand” philosophy that markets take care of themselves “until he discovered the flaw of his theory later.”
Mr. Sachs also spoke harshly of the Clinton and Bush administrations. “We arrived at this cliff through the aggressively irresponsibility of two U.S. administrations in a row,” he said, accusing them of bending to the will of the nation’s biggest lobbying group — the financial industry.
“Where were the regulators? Consciously and deliberately kept out of the scene,” he said. “This led to a bubble financially that was most notable in the housing sector…and Alan Greenspan added fuel to the fire by keeping interest rates around 1%” from 2002 through early 2005.
“You get credit for stopping a Depression but I don’t want to give too much credit because the people who stopped it were the people who started it also,” said Mr. Sachs.
By Rita Nazareth and Margot Habiby
Oct. 6 (Bloomberg) -- U.S. stocks rose, extending a worldwide rally, on speculation third-quarter earnings will top estimates and growing conviction the global economy is improving. The dollar slid after Australia unexpectedly raised interest rates, boosting oil and sending gold to a record.
Alcoa Inc. and Newmont Mining Corp. climbed at least 3.5 percent, while Exxon Mobil Corp. gained 1.6 percent as crude oil traded near $71 a barrel. Corning Inc., the world’s biggest maker of glass for liquid-crystal display panels, added 4.7 percent on an upgrade at UBS AG. The MSCI World Index of 23 developed countries added 1.9 percent, the most in two months.
“The stock market wants to go up,” said Keith Wirtz, chief investment officer at Fifth Third Asset Management Inc., which oversees $20 billion in Cincinnati. “Investors are braced for better-than-expected third-quarter earnings. And the rate hike in Australia suggests that global growth is back to positive territory.”
The Standard & Poor’s 500 Index increased 1.4 percent to 1,054.72 at 4:07 p.m. in New York. The Dow Jones Industrial Average gained 131.5 points, or 1.4 percent, to 9,731.25. The 30-stock gauge has climbed 2.6 percent so far this week, its steepest two-day advance in almost three months. Five stocks rose for each that fell on the New York Stock Exchange.
U.S. equities also advanced as President Barack Obama, responding to widening job losses, considered a mix of spending programs and tax cuts that would amount to an additional economic stimulus without carrying that label.
Commodities Increase
Gains in commodities came as the dollar slid to its weakest level in almost two weeks versus the euro and fell against most other major currencies as the Australian rate hike boosted demand for higher-yielding assets.
The Reserve Bank of Australia’s decision to lift the overnight cash rate target to 3.25 percent from a 49-year low of 3 percent followed the first expansion this year in U.S. service industries. Manufacturing in emerging markets increased the most in the past three months since the second quarter of 2008, according to the HSBC Emerging Markets Index of data from purchasing managers.
Gold touched a record $1,045 an ounce in New York on speculation that currencies will depreciate, spurring inflation and boosting the appeal of the precious metal for investors seeking to preserve their wealth. Gold futures previously hit a record $1,033.90 in March 2008.
Gold, Oil
The spot price is heading for a ninth straight annual gain, the longest rally since at least 1948. The dollar fell as much as 0.7 percent against a basket of six major currencies.
Obama has increased the U.S. marketable debt to an unprecedented $6.94 trillion as he borrows to spur the world’s largest economy. Goldman Sachs Group Inc. predicts the country will sell about $2.9 trillion of debt in the two years ending next September.
Gold futures for December delivery climbed $21.90, or 2.2 percent, to $1,039.70 on the Comex division of the New York Mercantile Exchange. Gold for immediate delivery gained as much as 2.6 percent to a record $1,043.78. The metal has climbed 18 percent this year.
The dollar slid versus the euro after the Australian interest rate increase spurred demand for higher-yielding assets. It declined 0.5 percent to $1.4717 per euro at 4:01 p.m. in New York, from $1.4648 yesterday. It reached $1.4762, the weakest level since Sept. 24. The dollar fell 0.8 percent to 88.79 yen, from 89.53.
Dollar Slides
Also pressuring the greenback was a report that Persian Gulf states and Japan, Russia and China discussed dropping the U.S. currency for oil trades. The report in the U.K.’s Independent newspaper cited unidentified sources.
Saudi Arabia’s Central Bank Governor Muhammad al-Jasser and Kuwaiti Oil Minister Sheikh Ahmed Al-Abdullah Al-Sabah denied any talks were held.
Crude oil for November delivery rose 47 cents, or 0.7 percent, to $70.88 a barrel at 2:41 p.m. on the New York Mercantile Exchange, the highest settlement since Sept. 22. Prices have gained 59 percent this year.
Natural gas futures fell for the first day in three after the government raised its forecast for winter stockpiles of the heating fuel.
Natural Gas Gains
Gas inventories will probably reach 3.85 trillion cubic feet by the end of this month, up from a forecast 3.84 trillion in September, according to a report today from the Energy Department’s Energy Information Administration. Supplies have already risen to a record as the worst recession since the 1930s cut demand from industrial consumers.
Natural gas for November delivery declined 10.7 cents, or 2.2 percent, to settle at $4.880 per million British thermal units at the 2:48 p.m. close on the Nymex. The contract traded between $4.801 and $5.12 today. Gas has almost doubled since settling at $2.508 per million Btu on Sept. 3, the lowest price in more than seven years.
Gas stockpiles in the U.S. rose to a record 3.589 trillion cubic feet in the week ended Sept. 25.
Treasuries fell, led by longer-maturity debt, after the government sold a record $39 billion of three-year notes, the second of four note and bond auctions this week totaling $78 billion.
The auction drew a yield of 1.445 percent, more than the 1.441 percent forecast in a Bloomberg News survey of 10 of the Federal Reserve’s 18 primary dealers that underwrite the sales. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.76 compared with an average of 2.57 percent at the last 10 auctions.
The yield on the benchmark three-year note rose three basis points to 1.38 percent at 3:49 p.m. in New York, according to BGCantor Market Data. The 10-year note yield rose four basis points to 3.26 percent, while the yield on the 30-year bond climbed six basis points to 4.08 percent.
Today’s sale was the largest three-year note offering since the Treasury began regular auctions of the securities in 1981, according to data from the department’s Bureau of the Public Debt.
Report Says Gulf Oil Producers, Others Ready To Dump Dollar
Are its days numbered for oil transactions?
Just hours after the story was published, Saudi Arabia denied the report. Saudi Central Bank Governor Muhammad al-Jasser said his country has held no such talks.
"The Independent" names no sources for its information and gives no details about where the meetings took place.
But it says the meetings -- which have involved central bank governors and finance ministers from the Gulf Arab states, Russia, China, Japan, and Brazil -- have been confirmed by both Gulf Arab and Chinese banking sources.
The newspaper says that the oil producer and buyer states want to move away from the dollar to a basket of currencies including the Japanese yen, Chinese yuan, the euro, gold, and a new unified currency planned by the states of the Gulf Cooperation Council (GCC, which comprises Abu Dhabi, Bahrain, Kuwait, Oman, Saudi Arabia, and Qatar).
The paper concludes that the series of alleged meetings "augurs an extraordinary transition from dollar markets within nine years."
Oil industry analysts say the report is getting much attention in financial circles today but that there is also skepticism regarding many of its details.
That is because it is not surprising that officials may be exploring alternatives to the dollar as the sole currency for oil transactions. But it would be surprising if they are making any concrete plans to imminently change the existing situation.
"I don't think that this is something that would happen anytime soon," says Melanie Lovett, financial editor for the Middle East Economic Survey, based in Cyprus. "They may be talking about pricing in different currencies but I think that always you will find that commodity exporters are examining how they do business and that would be just one aspect of this and I don't think there is any particular significance in this respect."
She notes that the same oil producers cited as holding the secret meetings are economically so strongly tied to the dollar that they can ill afford to now move away from it.
"We think that any move, on behalf of the Gulf players in particular, to move away from the dollar would be doubtful, especially given that their currencies are pegged to the dollar," says Lovett. "Even Kuwait, which isn't directly pegged to the dollar, has its currency pegged to a basket of dollar-weighted currencies."
Economic Might
Four of the biggest energy producers of the GCC -- Saudi Arabia, Kuwait, Qatar, and Abu Dhabi -- together hold an estimated $ 2 trillion in dollar reserves.
That could make them hesitate to weaken the value of the dollar by shifting toward a different oil currency standard. A weaker dollar would devalue their own holdings in dollars and weaken their own purchasing power.
China, a major oil buyer, faces a similar problem. Economists estimate that more that 70 percent of its foreign-currency holdings are in U.S. dollars or dollar-denominated assets. A weaker dollar would have a direct impact on China's economic states.
Still, analysts say that there are many pressures for countries to consider alternatives to the dollars as the standard oil currency, even if any imminent move away from the dollar seems unlikely.
One reason is that the dollar's weakness in the global currency crisis is raising doubts about whether it will always be strong and stable enough to safeguard the enormous portions of their wealth that countries have invested in it.
The doubts have risen further as other major currencies, notably the euro, have gained strength in recent years.
That means that states have to balance the losses they could suffer from moving away from the dollar against still greater losses they could suffer if the dollar were to become much weaker in the future. The possibility of reaching such a so-called tipping point unprepared is something that preoccupies every government in the world.
'Changed Relations'
But for states whose currencies might be included in any new currency basket to replace the dollar as the sole standard for oil transactions, there are still other things to consider.
Oil consumers China and Japan, for example, would have to weigh how much their dollar reserves would be weakened against how much the value of their own currency might rise if it become more widely used as a tender for international trade.
Russia, an oil producer, faces still a different choice. It would have to balance any weakening of its dollar reserves against the hope that oil consumer states -- freed from the dollar -- might equally turn to ruble to buy oil, even if rubles were not included in the currency basket.
As the global economic crisis continues, it is almost certain that both oil producer and consumer states will spend a lot more time thinking about such questions.
The president of the World Bank, Robert Zoellick noted this week that "one of the legacies of this crisis may be a recognition of changed economic power relations."
Speaking at a meeting of the IMF and World Bank in Istanbul, Zoellick was not referring specifically to the oil industry. But his statement may help explain why the article in "The Independent" is catching the attention of many people.
The only oil-producer state that has moved away from the dollar in recent years is Iran, which plans to keep all its future-currency reserves in euros. But that move is widely seen by analysts as politically rather than economically motivated.
Sean O'Grady: China will overtake America, the only question is when
Few things would be more powerfully symbolic of the shift in the balance of global economic power than to have oil traded in the Chinese renminbi rather than the American dollar.
True, no one is going to price a barrel of West Texas Intermediate Crude in renminbi tomorrow. But you can see how that could change. Oil is traded in dollars for economic reasons – not sentimental ones. The oil business pretty much started in the US (vividly portrayed in the film There Will be Blood), the giant oil companies are still mostly American, and the US has long been the world's largest consumer, importer and one of the largest producers of oil. The presidency of George W Bush offered ample evidence of the intimate connections between politics and oil. And the dollar is easily the most traded currency in the world. As such, it makes sense to trade oil in dollars.
Yet the financial tectonic plates are shifting – fast. Yesterday the president of the World Bank, Robert Zoellick, articulated what must be weighing on the minds of many Western policy-makers. A legacy of the current crisis "may be a recognition of changed economic power relations". In other words, the recession has accelerated the rise of China. The brutal truth is that for most of the next decade China's economy will grow by more than 10 per cent a year; America's by less than 2 per cent. China will soon be the world's largest economy, and largest creditor nation, a position enjoyed by a pre-eminent America in the 1950s. China will also be the largest consumer of oil, which will help push trading in it and other commodities towards a "basket" of currencies.
Now America is the world's greatest debtor, she can no longer sustain her role as protector of the world's only reserve currency in the long term. The humbling of Wall Street was proof that the American system was not invincible. Suddenly, a G20 embracing China, India and the other emerging powers is the only forum that matters. China has helped bail out our banks. Spats with the Americans and Europeans are set to grow more bitter. Yesterday the head of the IMF, Dominique Strauss-Kahn and the president of the European Central Bank, Jean-Claude Trichet, resumed their attack on the value of the yuan. Next will come an increasing US resentment at the vast debts built up with China, and, in turn, Chinese nervousness about their long-term worth.
And that is the paradox. China holds approaching $3 trillion in dollar assets, so she cannot afford to see the dollar collapse. Longer term, China does want to become less reliant on the dollar as a place to keep its savings. America needs China to buy her Treasury bills; and China needs America to buy her exports. They are like two drunken giants leaning on each other. Yet a sobering reckoning of some sorts seems inevitable; and it is difficult to see how both can be winners.
The demise of the dollar
In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."
This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.
The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states.
Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.
China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.
Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls. In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro.
Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America's trading partners have been left to cope with the impact of Washington's control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.
The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. "The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."
Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.
The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.
"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."
Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.
The Shame and Cowardice of the Chickenhawk
by Bob Wallace
The usual definition of a chickenhawk is someone who supports war but actively avoids fighting. Whenever I think of one, what comes to my mind are Young Republicans, but also leftists, who are just as bad if not worse.
A writer, whose name unfortunately completely escapes me, said the aforementioned definition is not totally accurate. A better one is that a chickenhawk is someone who believes supporting war is a sign of his personal bravery and patriotism, and is convinced that those who oppose war, for whatever principled and thoughtful reasons, are always cowards and traitors.
Still, chickenhawks are cowards. Why, then, can they not see what they are?
There is only one reason: They deceive themselves as to what they truly are. They idealize themselves as proud, brave and patriotic, while others, more clear-sighted, see them for what they are: cowards who will do nothing except stand on the sidelines and yell, "Okay, throw the ball here! Now throw it over there!"
When people refuse to see their bad qualities (what Jung called their Shadows), there is only one thing they can do to protect their self-delusion: project those qualities on other people. Here is an example: when leftists talk about "hate" (which they do all the time), they are projecting their own unacknowledged hate onto other people.
Chickenhawks are the same: They cannot acknowledge their own cowardice, so they must project it onto others. Those Others, to the chickenhawk, are the cowards and traitors, not the chickenhawk.
Yet, the chickenhawk must know, somewhere deep inside, that he is a coward, and so has to be ashamed of himself. How does he cover up his shame? With pride. Pride on top, hiding shame underneath.
The first time I ran across that formulation of pride covering shame was in John le Carre's novel, The Spy Who Came in from the Cold, when he wrote of Leamas' "protective arrogance concealing shame."
Plato once wrote, "The cause of all sins in every case lies in the
The social researcher James Gilligan, who spent 35 years dealing with prisoners, wrote, "Shame . . . motivates not confession but concealment of whatever one feels ashamed of." Guilt, he writes, can on the other hand lead to confession and penance.
He also writes, “…people who feel ashamed typically attempt to diminish that painful feeling both by assuming attitudes of arrogance, self-importance, and boastfulness.”
We'll never see confession and penance from chickenhawks, because they have no guilt. And it's a lot easier to admit guilt than shame. And chickenhawks' shame and cowardice is something they will not, cannot, admit. So they project it onto others: “You should be ashamed of yourself for being a coward who’s not supporting our country and its wars.”
I believe the average chickenhawk must be exceptionally
The late M. Scott Peck, a psychiatrist, called this kind of projection “the genesis of human evil.” If he’s correct, and I believe he is, then what chickenhawks are doing, in their self-deception, their unacknowledged cowardice, their arrogance and grandiosity, and their scapegoating of the innocent, is evil.
I sometimes wonder if chickenhawks ever think about how they
It's probably a good thing chickenhawks aren't in the military: their
There's an old saying -- and I have no idea where it's from -- that
The Right to a Guilty Verdict
Obama's empty promise of due process for terrorism suspects
In July the Defense Department's top lawyer declared that the president has the authority to detain people accused of belonging to or assisting terrorist groups even after they're acquitted. The only point of prosecuting them, it seems, is to create an impression of due process while continuing Bush detention policies that Obama has repeatedly condemned.
We already knew that Obama plans to keep 90 or so of the 229 men who remain at the Guantanamo Bay prison, which he has promised to close by January, in "prolonged detention" without trial. In a May speech the president said these prisoners "cannot be prosecuted" because there is not enough admissible evidence against them but cannot be released because they "pose a clear danger to the American people."
At the same time, Obama promised to minimize the number of detainees who fall into that category. "Whenever feasible," he said, "we will try those who have violated American criminal laws in federal courts." If that's not possible, he said, suspected terrorists can be tried by military commissions, which "allow for the protection of sensitive sources and methods of intelligence gathering" and "for the presentation of evidence gathered from the battlefield that cannot always be effectively presented in federal courts."
Obama, who criticized the Bush administration for failing to give detainees due process, bragged about strengthening protections for the accused. Thanks to his reforms, he said, defendants tried by military commissions will have "greater latitude in selecting their own counsel" and "more protections if they refuse to testify"; introducing hearsay evidence will be harder, and statements elicited through "cruel, inhuman, or degrading interrogation methods" will be banned.
But how "meaningful" can such due process rights be when a conviction is the only outcome the government plans to respect? "If you have the authority under the laws of war to detain someone," Pentagon General Counsel Jeh Johnson told the Senate Armed Services Committee in July, "it is true irrespective of what happens on the prosecution side.…If a review panel has determined this person is a security threat [and] if for some reason he is not convicted for a lengthy prison sentence…we would have the ability to detain him."
It's hard to imagine a situation in which the government thinks it has enough evidence to convict someone on terrorism charges but doesn't think he poses "a security threat." Since only guilty verdicts count, Obama might as well go directly to "prolonged detention" by presidential order, except that would reveal how little difference there is between him and his predecessor in this area.
Although Obama faults the Bush administration's "ad hoc legal approach," he too is leaving his options open. "We are indeed at war with Al Qaeda and its affiliates," he says. The implication is that anyone accused of ties to Islamic terrorism-which could mean anything from undergoing training or planning an attack to donating money or building a website-can be treated as a prisoner of war, held without trial until the "cessation of hostilities" (in effect, forever). Alternatively, he can be tried by a military commission for violating the laws of war, or he can be tried in federal court on a charge such as providing material support for terrorism.
"In our constitutional system," Obama says, "prolonged detention should not be the decision of any one man." Yet under the principles he and his underlings have laid out, the choice of how to treat a given terrorism suspect-whether apprehended here or abroad, on a battlefield or off, now or in the future-is entirely up to him.
In the end it may not matter much. When freedom is not a real possibility, due process is just for show.
Fascism: Why Can’t It Happen Here?
Posted by Kevin CarsonIt seems the right doesn’t have a monopoly on American exceptionalism, after all. We’re all used to hearing right-wingers like Liz Cheney using “American exceptionalism” as a shibboleth for weeding out heresy in the foreign policy realm.
But liberals have their own version of that doctrine when it comes to the domestic functions of the state, apparently.
Recently I saw Ed Schultz on MSNBC, in the context of a story on the murdered census worker in Kentucky, running a clip of Michelle Bachmann’s comments. She claimed that census data had been used by the government in the past to round up American citizens (namely the Japanese-American Nisei on the West coast in early 1942). “The government rounding up American citizens?” Schultz asked incredulously. “That goes beyond psycho talk.”
Now, I’ll be the first to stipulate that Michelle Bachmann goes beyond psycho.
But Schultz acted as though the idea of the U.S. government rounding citizens up was so ludicrous, on its very face, as not to deserve refutation.
Why? Because the U.S. government is run by the kinds of angels that James Madison wrote of? Because the American people are uniquely predisposed to resist authoritarianism? Or just because there’s something “different” about the American genetic makeup, or maybe something different in the water here?
The idea of the U.S. government as an object of fear, that its growing police state powers might be used against the American people for the wholesale suppression of dissent, is hardly a right-wing preserve, as Schultz seems to suggest.
There have been plenty of left-wingers, like Frank Morales and Alexander Cockburn, who have chronicled with a great deal of alarm the upward ratcheting of the police state apparatus over the past three decades. And there were plenty of left-wingers, myself among them, who freely used the words “dictatorship” and “dictatorial” to describe the powers conferred on the U.S. government by USA PATRIOT and the weakening of the Posse Comitatus Act.
I vividly recall my own reaction, waking up on Tuesday morning, September 11, 2001, to hear the news of the WTC bombings on my clock radio. My first thought was not of the danger of further Al Qaeda attacks, or of the possibility that they would present a significant threat to the average American. I figured my chances of getting hurt by Al Qaeda were about as great as getting hit by lightning. No, I immediately thought of the heightened danger from the U.S. government. My first thought was “Well, Bush and Ashcroft will probably be able to railroad through the FBI’s entire laundry list of police state measures they didn’t manage to force through after the Oklahoma City bombing.” My next thought was “And they’ll give the national security state a blank check to make the world safe for corporate power, in the name of ‘fighting terrorism.’” And guess what my third thought was? “Oh, shit. My Wobbly red card’s probably gonna get me put in an internment camp before this is over.”
Anyone who thinks there’s something unique in the water or in the average person’s genetic makeup that means “It can’t happen here,” should bear in mind that it already has happened here—many times.
A few years ago Peggy Treiber, a local liberal columnist here in Northwest Arkansas, wrote a pro-gun control column ridiculing the idea of private firearm ownership as a defense against government tyranny. It was unthinkable, she said, that the government would turn against its own people.
Now, if she’d read Howard Zinn’s account of American history, she’d consider it more remarkable if the U.S. government ever STOPPED engaging in repressive action against its own people. My God, the most important direct spur to the formation of the U.S. government in the first place was Shays’ Rebellion. The people who’d fought the Revolution, seeing the Massachusetts state government taken over by the same Court Party that had governed them under the royal charter, decided it was time for another revolution. As a result, the Federalist clique of war bond speculators, mercantile and landed interests, seeing their own party almost defeated by a popular uprising in Massachusetts, perceived an urgent need for a strong central government to be ready to restore order when people like Shays’ militia took that “democracy” nonsense too seriously.
Since then, political repression of the left and of racial minorities has been a common theme throughout American history. Woodrow Wilson’s attorney general, A. Mitchell Palmer, carried out mass arrests of political prisoners during the war hysteria and Red Scare. Whether or not census data was actually used, FDR did in fact round up thousands of Japanese-Americans completely outside the framework of law. The McCarran Internal Security Act provided for preventive detention of “subversives” in the event of a national emergency, and a long series of Executive Orders issued under Eisenhower and Kennedy gave the U.S. government comprehensive power to nationalize the economy and conscript the entire civilian labor force in the event of a “national emergency.” COINTELPRO systematically destroyed a major portion of the American left in the late 1960s, through covert police action. Ronald Reagan, as governor of California, carried out joint martial law exercises between the National Guard and state and local police, under the terms of GARDEN PLOT. As President, Reagan conducted similar martial law exercises (REX-83 and REX-84). Jose Padilla, an American citizen arrested on American soil, was held without charge for years and tortured into a near-vegetative state, to the point that he was no longer fit to stand trial when the Bush junta finally decided to hand him over to the regular courts. Cheney, we recently found out, pushed to use the military to arrest the Lackawanna Six on American soil. You may have missed it in the mainstream press’s plain vanilla coverage, but the anarchist blogosphere in September was full of first-hand accounts of federal, state, and local police officers treating the locked-down population of New Orleans as an occupied enemy.
There’s absolutely nothing in the psychological makeup of American officialdom that immunizes it against the normal functioning of Acton’s Dictum. Walter Cronkite observed, in his early years as a newspaperman in Texas, that it was standard practice for local cops embarrassed by an unsolved crime to take some friendless drifter into a back cell and break his fingers until he “confessed,” so they could close the books on the crime. The phrase “shot trying to escape” (as in civil rights workers) deserves a prominent place in American Orwellianisms alongside “found no evidence of wrongdoing.”
Liberals who laugh at the know-nothingism implicit in right-wing outrage over talk of American Empire, and the like, should remove the beams from their own eyes.
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