Archive for November, 2008

Buy/Sell or Sell/Buy? 
Whichever we do, the results will be excellent. This is the paradoxical answer to the quiz posed by our stock markets recently. They’ve now become one of those IQ puzzles we’re so accustomed to. The market is volatile and everyone plus his dog is forecasting wild swings in the foreseeable future. Volatility itself is the clue to winning a fortune. Assume the worst, that the market swings down after you’ve bought. Just wait a day or two till it swings back up and sell pronto. In any other scenario, one’s options are easier. No problemo. You could even buy and sell the same amount of stock on Monday. If it drops in price, buy to cover your earlier sale. Wait a couple more days and sell the other half when it swings back up. Glory days. Talk about a sure thing. But don’t follow our advice. Goodness, no. Our lawyers tell us to make sure this is clear: do not follow our advice.
 
Calgary Mensa is growing by leaps and bounds. One explanation is Patricia Almost. Check out this month’s Events section for a sample of what’s happening. And get on board the prep for next year’s Regional Gathering. We’re talking games and puzzles and stretching the intellect till the pips squeak, all in the world’s most gorgeous setting.

This month, we do not study Calgary’s health care system, waiting times at hospitals, public transit interruptions, or traffic delays (inversely proportionate to expenditure). We publish no reports on political apathy. We ignore the performance of Alberta’s heritage fund compared to Alaska’s equivalent. Why? It’s provocative to foster dissent. We live in paradise. We’re content to send soldiers to die in a war they can’t win, that’s true, and the war is on the other side of the world, a country whose dominant product is heroin, that’s also true, but criticizing the war is frowned upon. It’s definitely gauche. We take another innocent look at it this month.

 

We glance at the colossal sums spent on war compared to pulling back from a global depression. Human beings are weird. It’s acceptable to dump vast sums into slaughter, but we meanly and with thin lips parcel out smaller amounts to prevent famine, disease, unemployment, illiteracy, and the like. Add currency shortage to the economic firestorms sweeping the globe and it’s a small stretch to food shortages and hoarding. Iceland is a harbinger of things to come in Canada, and we vouchsafe ourselves a brief look at the problems we may soon face. Other problems involve civil liberties and our propensity to throw them out the window. If you’re brown-skinned or have a brown-skinned friend, you may find your name on a CSIS or RCMP watch list. But you wouldn’t know till it’s too late. Best to stick to white sliced bread, right? Wrong? Safer surely to solve math puzzles than grapple with a government gone mad. Life’s too short.

Dirty tricks and politics seem to go hand in hand in the US. This isn’t a recent phenomenon. We look at a potted history of American lies and deception in the public arena. Joe the Plumber temporarily gained renown or notoriety; we see how and why, and gaze a bit behind the scenes.

The price of oil, now there’s a topic we can’t avoid. We get an ounce of historical perspective and, hey presto, things don’t look quite so bad. In fact, delusion and panic are the main elements in the picture. Good time for a vacation from the newspapers and TV. Read a book, fiction preferred. Though when we re-enter the world of suits, we have to ask where to place the few shekels we’ve saved. A bank, someone says. But which bank? Out of England comes the first systematic method which ordinary savers can apply to test the reliability of their financial institutions. Don’t judge by the Doric columns outside.

The sexist bias directed by the media against Sarah Palin should embarrass us all. Whatever her capacities or lack thereof, the double standard applied to men and women is degrading and a sobering reminder that prejudice is alive and well and as powerful as ever in public life. The same gender discrimination was directed against Hillary Clinton, but for the moment we look at Palin. See the study of the wardrobe issue in our Features section. And we remind ourselves that tribal and ethnic hatreds rage just below the surface of 21st century life. It follows that there will be other major wars. The only question is when and where. The longer we can delay them, the better. Or does this merely foster the foolish illusion that it’s as easy to finish a war as to start?

Contact us with your comments, articles and queries.

General

Feel life is passing you by? Activities with fellow Mensans will turn this around. Think coffees, martinis, movies, dinners, quizzes, anything that ravels up the tired sleeve of care. We’re informal and unstructured, on occasion intellectually stimulating. Mensa Calgary is a community where members interact, network, support each other, and enjoy each other’s company. For further info, contact Patricia at kathleen4057@yahoo.ca ["There's no pleasure on earth that's worth sacrificing for the sake of an extra five years in the geriatric ward of the Sunset Old People's Home.” (John Mortimore)]

Mensa Test

We’ve scheduled a session at 6:30pm on Thursday, November 6, 2008. If any readers work at a post-secondary institution such as U of C, SAIT, or Mount Royal, or if you think potential Mensans are affiliated with your company or organization, we’d appreciate if you post a notice on a bulletin board, in the corporate classified ads or other appropriate location. For the notice format, contact Vicki at vherd@shaw.ca or (403) 243-6144. We’ll advertise future tests or generally in some local community newsletters commencing December. If you have any other ideas for advertising Mensa Calgary, please let Vicki know.  Also, if you have friends or colleagues who may qualify for Mensa, please let them know about the upcoming test. 

The testing fee is $90. This covers the cost of writing 2 tests, receiving feedback on eligibility for Mensa membership, plus the first year’s membership fee if you qualify. You write 2 tests so you have 2 chances to qualify for Mensa.  Full time students pay only $70.

A pictorial test is available if your mother tongue is not English and you do not want your test scores to be disadvantaged by language.

You need to score in the top 2% of the population in one of the two tests to qualify.

Contact Vicki with questions about Mensa or the testing, and let her know if you want to write the tests so she can plan resources and give detailed directions to the testing site, likely at meeting Room 2, Basement, W R Castell Central Library, 616 Macleod Trail SE, Calgary.

MensaGenerationX

Viva the under-30s!! Ideas and participation are welcome. Beat the winter blues by contacting Leslie Joanne at august_83@hotmail.com

CoffeeFests

Brighten dark November by attending our coffee soirees, Tuesday November 18th and Thursday November 27th. 7:00 pm both evenings at Kaffa (2138-33rd Ave SW, corner of 33rd Ave & 21st St).  Parking on 21st.  A copy of Harry Potter will be at the table. RSVP not required, atmosphere great, munchies superb. Really funky. Visit Casablanca afterwards for a DVD; they have the best selection in the city. Cash only at Kaffa.

DinnerNight

November’s Dinner Night will be held at Bolero’s located at 6920 McLeod Trail (above Smugglers) on Friday November 21, 2008 @ 6:00 pm.  Bolero’s is a popular place and it took time to get a reservation for our group. The restaurant is Brazilia-inspired, a steakhouse featuring rodizio-style dining. Gaucho chefs bring churrasco (sword-like skewers) to the tables, slicing off pieces of tender meat, vegetables and even sweet grilled pineapple for tasting. A gourmet fresco and hot bar offset the meat selections. All you can eat. There are also plenty of gourmet salads, cheeses and vegetables if you aren’t into meat. Check the place out at http://www.ffwdweekly.com/article/life-style/food/big-beef/  You must RSVP for this one, so call Patricia asap: almostp@shaw.ca.

BookClub

The Mensa Book Club will meet on Friday November 14th, 2008 @ 7:00 pm at Patricia’s home in Bankview, hosted by Jeff Pugh. We’ll each discuss a book of our choice. Please contact Patricia (almostp@shaw.ca) if you want to join or try it. The club is basically fun, full of novel ideas (groan). Our membership has been pretty steady but we’re always looking for new members. You can talk about any book at all for the November meeting, so consider joining us. 

 SecondTuesdays(of the Month)

Second Tuesday will be held (naturally) on Tuesday November 11th, 2008, at the home of Vicki Herd (2469 Sorrel Mews SW) @ 7:30 pm (near the Safeway in Garrison Woods). Contact Vicki (vherd@shaw.ca / 243-6144) or Patricia ( almostp@shaw.ca / 212-1461) for additional information.  RSVP not required. Second Tuesday is a casual open house. Drop by and meet some of the other members.

OtherUpComings

Movie night is scheduled for Friday, November 7th, 2008.  Details to follow.  Suggestions? Contact Patricia, you know the email address.

Jeff and Leslie will host a Novemdrums party. Place? Bookers. When? Saturday, November 15th, 2008 at 6:00 pm. Check it out: 316 3rd Street SE, just off the 4th Avenue fly-over with free parking in front. Members and guests welcome to drop in for dinner and/or drinks.  http://www.bookersbbq.com/F23.cfm

If anyone wants to host a games night or video night in November, let Patricia know. Suggestions and comments always welcome.

Last Month:

October was busy.

We had about a dozen attendees for the lecture: A Calgary Pilot At War (Squadron Leader Thomas H. Hoare DFC), Air Combat Over Western Europe 1942-45, presented by the dynamic Stéphane Guevremont. The lecture was outstanding and we plan to have Stephane back in January. For those of you who did not attend, you missed out. Stéphane can lecture on many subjects related to WWI or II. We’ll narrow the choices in December, then select the next topic.  Perhaps WWI this time. We’re always on the lookout for lecture suggestions so please let us know if you have ideas/contacts. We’re keen to develop a regular lecture series.

The October book club discussed The Great Depression by Pierre Burton. Only a couple of us actually read the book, but everyone learned something from it. Sobering material.

Jeff, Maria, David and Colleen enjoyed the day trip to the Drumheller Museum, Gopher Museum and area. Jeff will host more road trips next spring. Ellis Bird Farm, Head Smashed in Buffalo Jump/Ft. Macleod, Frank Slide, Reynolds Museum, Waterton Lakes and Great Falls/Ft. Benton are possibilities. 

Eight members attended the dinner at SAIT. The food was elegant and delicious, consisting of five courses served over approximately two hours. Plenty of time for chat. There’s a fabulous buffet on Thursdays.

We welcome six new members to Mensa Calgary. Congratulations to Robert, Andrew, Raihan, Brad, Jeanette and Joey. 

For other and general event queries, email Patricia (almostp@shaw.ca).

1) A mouse has built a home inside a perfect circle of straw. The diameter is 5 feet. The door is at the point furthest north. His armchair is one foot due south of the door. The mouse gets out of the chair and walks west till he reaches his wall. Then he walks south for a foot and a half to his fridge. How far is the fridge from the chair?

2) A mouse stores up grain for winter. On Monday, she stores x bags full. On Tuesday, twice that number. On Wednesday, twice the total so far filled, and so each day doubling the total of all previous days. By the end of the seventh day, one-third of the bags were filled. How long in all did the job take?

The answers to October’s puzzles were supplied in the October issue.

Here are the answers to this month’s puzzles:
1) The walk from chair to fridge places the mouse on the east-west diameter of his house. His walk forms two sides of a rectangle, and the diagonal is the circle’s radius, hence two and a half feet.

2) Each day, the mouse doubles the number of all previous days. On day eight, all previous days amounted to one-third. The mouse therefore filled two-thirds on day eight, and the job accordingly took eight days.

Feature1 – WarMachine

There has been much moaning, air-sucking, and outrage about the $700 billion that the U.S. government is thinking of throwing away on rich New York bankers who have been ripping us off for the past few years and then letting greed drive their businesses into a variety of ditches. In fact, we dole out similar amounts of money every year in the form of payoffs to the armed services, the military-industrial complex, and powerful senators and representatives allied with the Pentagon.

On Wednesday, September 24th, right in the middle of the fight over billions of taxpayer dollars slated to bail out Wall Street, the House of Representatives passed a $612 billion defense authorization bill for 2009 without a murmur of public protest or any meaningful press comment at all. (The New York Times gave the matter only three short paragraphs buried in a story about another appropriations measure.)

The defense bill includes $68.6 billion to pursue the wars in Iraq and Afghanistan, which is only a down-payment on the full yearly cost of these wars. (The rest will be raised through future supplementary bills.) It also included a 3.9% pay raise for military personnel, and $5 billion in pork-barrel projects not even requested by the administration or the secretary of defense. It also fully funds the Pentagon’s request for a radar site in the Czech Republic, a hare-brained scheme sure to infuriate the Russians just as much as a Russian missile base in Cuba once infuriated us. The whole bill passed by a vote of 392-39 and will fly through the Senate, where a similar bill has already been approved. And no one will even think to mention it in the same breath with the discussion of bailout funds for dying investment banks and the like.

  

 This is pure waste. Our annual spending on "national security" — meaning the defense budget plus all military expenditures hidden in the budgets for the departments of Energy, State, Treasury, Veterans Affairs, the CIA, and numerous other places in the executive branch — already exceeds a trillion dollars, an amount larger than that of all other national defense budgets combined. Not only was there no significant media coverage of this latest appropriation, there have been no signs of even the slightest urge to inquire into the relationship between our bloated military, our staggering weapons expenditures, our extravagantly expensive failed wars abroad, and the financial catastrophe on Wall Street.

The only Congressional "commentary" on the size of our military outlay was the usual pompous drivel about how a failure to vote for the defense authorization bill would betray our troops. The aged Senator John Warner (R-Va), former chairman of the Senate Armed Services Committee, implored his Republican colleagues to vote for the bill "out of respect for military personnel." He seems to be unaware that these troops are actually volunteers, not draftees, and that they joined the armed forces as a matter of career choice, rather than because the nation demanded such a sacrifice from them.

We would better respect our armed forces by bringing the futile and misbegotten wars in Iraq and Afghanistan to an end. A relative degree of peace and order has returned to Iraq not because of President Bush’s belated reinforcement of our expeditionary army there (the so-called surge), but thanks to shifting internal dynamics within Iraq and in the Middle East region generally. Such shifts include a growing awareness among Iraq’s Sunni population of the need to restore law and order, a growing confidence among Iraqi Shiites of their nearly unassailable position of political influence in the country, and a growing awareness among Sunni nations that the ill-informed war of aggression the Bush administration waged against Iraq has vastly increased the influence of Shiism and Iran in the region.

The continued presence of American troops and their heavily reinforced bases in Iraq threaten this return to relative stability. The refusal of the Shia government of Iraq to agree to an American Status of Forces Agreement — much desired by the Bush administration — that would exempt off-duty American troops from Iraqi law is actually a good sign for the future of Iraq.

In Afghanistan, our historically deaf generals and civilian strategists do not seem to understand that our defeat by the Afghan insurgents is inevitable. Since the time of Alexander the Great, no foreign intruder has ever prevailed over Afghan guerrillas defending their home turf. The first Anglo-Afghan War (1838-1842) marked a particularly humiliating defeat of British imperialism at the very height of English military power in the Victorian era. The Soviet-Afghan War (1979-1989) resulted in a Russian defeat so demoralizing that it contributed significantly to the disintegration of the former Soviet Union in 1991. We are now on track to repeat virtually all the errors committed by previous invaders of Afghanistan over the centuries.

In the past year, perhaps most disastrously, we have carried our Afghan war into Pakistan, a relatively wealthy and sophisticated nuclear power that has long cooperated with us militarily. Our recent bungling brutality along the Afghan-Pakistan border threatens to radicalize the Pashtuns in both countries and advance the interests of radical Islam throughout the region. The United States is now identified in each country mainly with Hellfire missiles, unmanned drones, special operations raids, and repeated incidents of the killing of innocent bystanders.

The brutal bombing of the Marriott Hotel in Pakistan’s capital, Islamabad, on September 20, 2008, was a powerful indicator of the spreading strength of virulent anti-American sentiment in the area. The hotel was a well-known watering hole for American Marines, Special Forces troops, and CIA agents. Our military activities in Pakistan have been as misguided as the Nixon-Kissinger invasion of Cambodia in 1970. The end result will almost surely be the same.

We should begin our disengagement from Afghanistan at once. We dislike the Taliban’s fundamentalist religious values, but the Afghan public, with its desperate desire for a return of law and order and the curbing of corruption, knows that the Taliban is the only political force in the country that has ever brought the opium trade under control. The Pakistanis and their effective army can defend their country from Taliban domination so long as we abandon the activities that are causing both Afghans and Pakistanis to see the Taliban as a lesser evil.

One of America’s greatest authorities on the defense budget, Winslow Wheeler, worked for 31 years for Republican members of the Senate and for the General Accounting Office on military expenditures. His conclusion, when it comes to the fiscal sanity of our military spending, is devastating:

"America’s defense budget is now larger in inflation-adjusted dollars than at any point since the end of World War II, and yet our Army has fewer combat brigades than at any point in that period; our Navy has fewer combat ships; and the Air Force has fewer combat aircraft. Our major equipment inventories for these major forces are older on average than any point since 1946 — or in some cases, in our entire history."

This in itself is a national disgrace. Spending hundreds of billions of dollars on present and future wars that have nothing to do with our national security is simply obscene. And yet Congress has been corrupted by the military-industrial complex into believing that, by voting for more defense spending, they are supplying "jobs" for the economy. In fact, they are only diverting scarce resources from the desperately needed rebuilding of the American infrastructure and other crucial spending necessities into utterly wasteful munitions. If we cannot cut back our longstanding, ever increasing military spending in a major way, then the bankruptcy of the United States is inevitable. As the current Wall Street meltdown has demonstrated, that is no longer an abstract possibility but a growing likelihood. We do not have much time left.

(Copyright 2008 Chalmers Johnson)
(by chalmers johnson, 30 September 2008)

Feature2 – BioFuels

The federal government has primarily used biofuels as a way to boost the rural economy. What’s more surprising is that it was a wise move.

September’s Science Cafe in Calgary was an odd one for me. The topic that evening was biofuels, and their role in our economy and ecology. As a mild supporter of alternative fuels, I was hoping the two speakers would offer a few tantalizing developments that could turn me into a true believer.

Instead, all stressed that biofuels were a small part of our CO2 reduction plans. There are simply too many problems, and too many inefficiencies to be solved.

Richard Gibson even started his speech on that note. He holds the title of Business Development Manager of Industrial Bioproducts, for the Alberta Research Council, and provided most of the science that night. David Layzell, Executive Director of ISEEE (the Institute for Sustainable Energy, Environment, and Economy), focussed more on what will be possible and brought up the trendy topic of “energy security.” The moderator, Adam Gagnon, spent most of his nine minutes giving ideas about what to talk about during the ten-minute break. Honest! His day job is the Program Manager at Climate Change Central.

Returning to what I learned, transportation is one problem with biofuels. Most of them must be grown in wide-ranging fields, scattered across the country. Gathering up all that material for processing takes a lot of energy. There’s also the cost to grow biofuels. You need a small army of machinery to gather all this material up, and they don’t run on sunshine and smiles. Oil does not need to be fertilized or sprayed with pesticides, either.

Even if you could solve the above problems, biofuels would still be less efficient to process. If you want numbers, the most effective methods to generate biofuels run at 50% efficiency, but the overall average is closer to 25%. In contrast, oil refineries return 80% or more of the energy they need to create diesel or gasoline.

There are advantages, of course. Mixing wood, straw, pellets and char in with coal cuts down the total amount of CO2 emitted. Insert some of the coal industry’s latest carbon-capture technology, and you could actually become carbon-negative for a tolerable cost. Creating Ethanol from wheat and corn is inefficient, as it currently stands, but if farmers start planting more cellulose-rich crops, and we can perfect newer processing methods that use the entire plant (and not just the starches), that gasoline additive will be much easier to stomach.

Speaking of which, there’s no need to remove food crops to make way for fuel crops. Machines don’t care what sort of soil their fuel was grown in, so marginal or fallow fields can be reserved for that purpose. This keeps biofuel and food crops separate, and gives farmers an extra income.

And yes, by combining biofuels with other concepts we can throw more money back to the rural crowd. A spider-web of processing centers could be set up across the country, churning out building materials and animal feed as well as biofuels. It brings jobs to areas that are desperate for them, and partially solves the transportation issue mentioned above.

It just doesn’t solve the environmental crisis we’re in. While biofuels are the easiest way to cut CO2 emissions, and have been doing this for decades, they are too expensive and ineffectual to be our primary method of doing so.

(by hj hornbeck)

Feature3 – CurrencyCrisis

After a four-year spending spree, Icelanders are flooding the supermarkets one last time, stocking up on food as the collapse of the banking system threatens to cut the island off from imports.

“We have had crazy days for a week now,” said Johannes Smari Oluffsson, manager of the Bonus discount grocery store in Reykjavik’s main shopping center. “Sales have doubled.”

Bonus, a nationwide chain, has stock at its warehouse for about two weeks. After that, the shelves will start emptying unless it can get access to foreign currency, the 22-year-old manager said, standing in a walk-in fridge filled with meat products, among the few goods on sale produced locally.

Iceland’s foreign currency market has seized up after the three largest banks collapsed and the government abandoned an attempt to peg the exchange rate. Many banks won’t trade the krona and suppliers from abroad are demanding payment in advance. The government has asked banks to prioritize foreign currency transactions for essentials such as food, drugs and oil.

 

The crisis is already hitting clothing retailers. A short walk from Bonus in the capital’s Kringlan shopping center, Ragnhildur Anna Jonsdottir, 38, owner of the Next Plc clothing store, said she can’t get any foreign currency to pay for incoming shipments and, even if she could, the exchange rate would be prohibitively high.

“We aren’t getting new shipments in, as we normally do once a week,” Jonsdottir said. “This is the third week that we haven’t had any shipments.”

Iceland’s 320,000 inhabitants have enjoyed four years of economic growth in excess of 4 percent as banks and businesses expanded abroad, buying up companies from brokerages to West Ham United soccer club. Now, the three biggest banks, Kaupthing Bank hf, Landsbanki Island hf and Glitnir Bank hf have collapsed under the weight of about $61 billion in debts, 12 times the size of the economy, according to data compiled by Bloomberg.

The central bank, or Sedlabanki, ditched its attempt to peg the krona to a basket of currencies on Oct. 9, after just two days, citing “insufficient support” in the market. Nordea Bank AB, the biggest Scandinavian lender, said the same day that the krona hadn’t been traded on the spot market, while the last quoted price was 340 per euro, compared with 122 a month ago.

“There is absolutely no currency in the country today to import,” said Andres Magnusson, chief executive officer of the Icelandic Federation of Trade and Services in Reykjavik. “The only way we can solve this problem is to get the IMF into the country.”

The International Monetary Fund sent a delegation to the island last week. Prime Minister Geir Haarde said on Oct. 9 his country may ask it for money after failing to get “the response that we felt that we should be able to get” from European governments and central banks. The state will also start talks with Russia over a possible 4 billion-euro ($5.5 billion) loan.

Iceland’s rugged, treeless terrain, a barren stretch of volcanic rock, geysers and moss, means the country imports most food, other than meat, fish and dairy products.

Magnusson said last week that one of Iceland’s largest supermarket chains was unable to get any foreign currency to make purchases abroad and another retailer’s electronic payment didn’t go through. Iceland will begin to see shortages of “regular goods” by the end of the week if nothing changes, he said.

“We are struggling to make the economy survive from hour to hour,” Magnusson said. “There is an enormous amount of capital that wants to get out of the country.”

Sedlabanki told lenders on Oct. 10 that residents who want foreign currency should first prove they need the money for traveling by providing documentation for their trip.

Wholesalers are demanding that importers pay before any goods are shipped, said Knutur Signarsson, head of the Reykjavik-based Federation of Icelandic Trade. Under normal circumstances, wholesalers abroad would extend credit for 30 to 90 days, he said.

“Many of them ask us to pay cash before they send the goods to Iceland,” Signarsson said. “Because of the situation, Iceland has become a country that no one trusts any longer.”

Bogi Thor Siguroddsson, owner of Johan Roenning, an import and retail business which has about 7 billion krona ($71 million) in annual sales, says he’s instructed his purchasing managers to only import the core goods, including light bulbs, lamps and electrical cables, they need to serve their customers.

“It’s enough to have the credit crisis,” he said. “Then you have the currency crash. Unfortunately, we have shown that we can’t handle it ourselves.”

Icelanders, whose per capita gross domestic product is the fifth highest in the world, according to the United Nations 2007/2008 Human Development Index, will have to tighten their belts.

Shoppers are paying more for the goods they do get. The cost of fruits and vegetables, nearly all of which are imported, have gone up about 50 percent in recent months, said Steinunn Kristinsdottir, a 33-year-old Reykjavik resident who was leaving the Bonus store with her cart full.

“This situation really has been a bit troubling for people,” she said. “They don’t know what’s going to happen.”

(by chad thomas, bloomberg, 13 October 2008)

Feature4 – Secrecy&BiasInCanada

An inquiry looking into whether federal government officials played a role in the detention of three Canadians in Syria was flawed, unfair and secretive, a human rights activist has charged.

"This inquiry process has been so deeply flawed that we are all united in saying that it should never be used again," Alex Neve, secretary-general of Amnesty International Canada, said Friday in a news conference in Ottawa.

Abdullah Almalki, Muayyed Nureddin and Ahmad El Maati claim they were tortured while imprisoned in Syria. An inquiry was launched a year and a half ago that focuses on whether their detentions resulted from the actions of Canadian officials and whether Canadian consular officials acted appropriately in the cases. Former Supreme Court judge Frank Iacobucci was chosen to lead the inquiry.

A report is expected next week.

The process, Neve said, has been "profoundly unfair" to the men, failed to be open, and sacrificed the principles of thoroughness and fairness.

Neve criticized the terms of reference, which established that the bulk of the proceedings would be conducted behind closed doors. The government has cited the need to protect national security and quicken the inquiry process as a justification for keeping proceedings out of the public eye.

Only three days of public hearings were held, dealing only with limited procedural matters. Witnesses weren’t examined publicly or in the presence of lawyers of the three men so they couldn’t challenge allegations against them.

Documents made available were summaries of evidence, but only the lawyers for the three men were allowed to review them and couldn’t discuss it with their clients.

"For the past four months they have not been unable to read how their lawyers sought to defend their rights," Neve said.

El Maati told the news conference that he has been very concerned from the start of the inquiry that he had not been allowed to see a single document, witness or finding.

"[We] have been completely shut out of the process that bears our name," he said. “How can we trust the findings of an inquiry that has only heard one side of the story?"

El Maati said for the past two years, he has felt like he’s "been in a prison whose bars you cannot see."

"I feel hurt, I feel frustrated and I feel fearful that when this report is released I will not be any closer to finding any truth."

All three men allege they were tortured, accused of al-Qaeda links and told by their interrogators that information about them had come from Canada.

(CBC News, 17 October 2008. See Feature 7 this month for more.)
[ps. For balance, here is a possible defence. We aren’t mistreated by our police or government. Nobody suffers harm in this country unless he did something wrong to begin with. A typical Joe Kegger who works his eight hours, picks up KFC for dinner, then watches TV till bedtime, has nothing to worry about. The people who rant about civil liberties are the ones we have to watch.]

Feature5 – MadnessInAfghanistan

Will the war on credit outspend the war on terror? Or will one crash bring an end to another? Washington, London, Baghdad and Kabul last week saw concerted moves by the West to disengage from its seven-year war on militant Islam. When it comes to stupefying public spending, even super-policemen cannot walk and chew gum at the same time.

The cost of the Iraq and Afghanistan wars still far outstrips that of the credit crunch rescues of the past fortnight. Joseph Stiglitz, the economist, has put the cost of Iraq alone at $3 trillion, although he did impute the value of lives lost and other investment opportunities forgone. Even official figures are close to $1 trillion. The British war effort has topped £10 billion, and a further £3.5 billion was added this year alone. Such money might seem tolerable when it was “skim” from the West’s two decades of wealth. With national budgets collapsing, it is simply unaffordable.

Hence the onrush of realism. Last Wednesday America reached a draft agreement with the Baghdad government of Nouri al-Maliki to bring American troops under Iraqi sovereignty at the end of this year and to leave Iraq, in some shape or form, by 2011. Two days earlier the British government had agreed with Maliki’s statement that its 4,100 troops in the country were “not necessary” and should also leave soon, possibly next year.

As so often before, an invading power sucked into the vortex of occupation is now crafting a way of declaring victory and departing. The American election
campaign offers a crucial rite of passage, with John McCain declaring Iraq a “success” and the recent “surge” a triumph. American voters overwhelmingly want to get out. They have even found a general, David Petraeus, whom they believe can deliver that outcome.

Petraeus’s surge, a delicate mix of high-intensity policing, tactical alliances with enemies and cool diplomacy with Shi’ite politicians, has capitalised on sheer exhaustion. The anarchy of 2005-7 could not last. Petraeus offers a sort of punctuation. The mind numbs at the waste of people and resources before his common-sense approach was tried.

Talking to Petraeus in London last month, I found him not just intelligent but extraordinarily hesitant for a soldier. His answer to any question about how he intended to progress the conflict was a crisp “by agreement”. Yet his standing-down of 80% of the Sunni Awakening militias is highly risky. The movement of insurgents north to Mosul and the Kurdistan border is full of foreboding. Christians and other minorities there are being driven from their homes and murdered.

Iraq is still the world’s most violent and precarious nation (after Somalia), and its infrastructure is not back to pre-invasion levels. There could hardly be a more damning indictment of the West’s incompetence. America’s voters have had enough. Iraqis, too, have had enough. It is a matter of how to retreat in reasonably good order.

 The British abandonment of Basra last year led to Shi’ite militias and Iraqi soldiers fighting each other to a swift finish. It was the final chapter of what should have happened immediately after the invasion. You can topple a dictator but you cannot order the resulting strife. Donald Rumsfeld, the US defence secretary, at least understood this with his “invasion-lite” strategy of hit and run, aborted by the neoconservatives.

Most tragic is that the painful lessons of Iraq have yet to be learnt by Nato and American commanders in Afghanistan. Even the otherwise sane Barack Obama campaign is in denial over that war. The same belligerence against the insurgents and reckless use of air power fuels rebellion and acts as a magnet for terrorists from all over the globe.

Briefings in 2006 by the gung-ho Nato commander General Sir David Richards (now head of the British Army) seem a distant fantasy. He talked of Malaya and winning hearts and minds. Now Vietnam is a better parallel, with talk of needing ever more troops to establish security. As in Vietnam there is the daily use of kill rates and assassinations of enemy leaders to imply impending victory.

The reassessments coming out of Kabul are devastating. A leaked White House report talks of a “downward spiral” in the war against the Taliban. Admiral Mike Mullen, head of the US joint chiefs of staff, told Congress that America was not winning, echoing similar phrases from the CIA. Sir Sherard Cowper-Coles, the British ambassador, reportedly gave the Foreign Office the gloomiest possible account of “the worsening security situation” and the corrupt state of the Kabul government – as if newspapers were not reporting the same.

The British and other Nato powers remain in the grip of Washington. They agreed to stage this summer’s absurdly expensive trek to get a generator to a Helmand dam to help the Americans at election time. They have agreed to a new drive against the Afghan poppy crop, a task of lunatic counterproductivity equalled only by the daily bombing of Pashtun villages in border areas. The rebels are handed on a plate the lucrative privilege of guarding Afghan peasants and their staple harvest against the devilish foreigner.

The reckless use of force along the border alienates Pakistan, without which any curtailment of the uprising is impossible. Western policy fails to understand that Islamabad has a massive vested interest in not antagonising the semi-autonomous tribes along its border.

The Afghan insurgency is widespread, tribal and conducted by the world’s toughest guerrillas, the Pashtun. They will never be beaten. They would prefer to hold sway only over their own uplands, but the war has drawn them into a wider, and to them nobler, conflict with the hated West, making them easy prey for the ideological warlords of Al-Qaeda.

Policy in Afghanistan has gone haywire. As a result, with painful slowness, Nato is sketching the scenario of withdrawal, even behind a smokescreen of force enhancement.

The code is that we must “talk to the Taliban”. This murky entity is in reality a roaming coalition of clans and opium traders along the Pakistan border. Its once horrific image is being softened by coalition spokesmen portraying it as sophisticated, good at public relations and ready to bring order to the country’s south and east.

The Taliban are suddenly not the problem but the solution. I wonder how long it will be before Al-Qaeda achieves this exotic status, one that it enjoyed in the 1980s during the fight alongside the CIA against the Russians.

Waging war in Afghanistan ranks with marching on Moscow in the canon of military folly. Yet such was the bombast of the Bush-Blair alliance that this folly was widely supported by liberal opinion. Now others must end it and also the slaughter spreading into the world’s most unstable nuclear power, Pakistan. It is obscene to justify this carnage by citing a few rebuilt Afghan schools and roads, as British ministers do. The country will never be at peace and Pakistan never safe until the West withdraws its troops – and probably not even then. We shall leave another nation in ruins.

The thesis that nation-building cannot start “until security is established” is an old soldier’s make-work scheme. It begs the question of how to achieve that security. Security is meaningless until foreign troops no longer claim authority over lands that are not their own. Politics must be left to work its messy magic. The West must get out with as much dignity as it can muster. Then it can afford to put its own house in order.

(by simon Jenkins, the Sunday Times, 19 October 2008)

Feature6 – Lies&Politics

An already nasty race is getting even nastier with both parties trading allegations of voting irregularities and underhand tactics. Here, I take a look at the 10 dirtiest incidents in US electoral history – in no particular order.

Thomas Jefferson and James Callender

The long and inglorious history of dirty tricks in US electoral politics stretches right back to 1800, in what was only the second contested presidential election. Vice-President Thomas Jefferson hired Scottish-born journalist and pamphleteer James Thomas Callender to slander his opponent, the incumbent president and formerly great friend, John Adams. In published writings, Callender accused Adams of being a “repulsive pedant” and “a hideous hermaphroditical character which has neither the force and firmness of a man, nor the gentleness and sensibility of a woman”. In return, Adams’ camp called Vice-President Jefferson "a mean-spirited, low-lived fellow, the son of a half-breed Indian squaw, sired by a Virginia mulatto father." The attacks sunk ever lower with Adams being labelled a criminal and Jefferson an atheist, but Jefferson’s smears-by-proxy were ultimately more successful with Callender convincing most Americans that Adams was set on attacking France, clinching the election for him.

However the tactics later backfired as Callender, after serving jail time for the slander of Adams, turned on Jefferson and began to train his attacks on him. Callender wrote in a series of articles that Jefferson had fathered children by his slave, Sally Hemings, and later, after that scandal ran its course, eventually blew over, exposed the President’s attempt to seduce a married neighbor years earlier.

Benjamin Harrison and the Murchison letter

Historian Rick Shenkman claims that the first election in which the outcome was definitively altered by dirty tricks was in 1888, when Republican Benjamin Harrison launched a series of efforts to discredit incumbent President Grover Cleveland in the eyes of the all-important Irish community by painting him as in step with the hated British empire. After a failed attempt to force Cleveland to defend a treaty which would have defused a trading war but angered Irish voters, Republicans arranged for a party official in California to write to the British ambassador to the US in the guise of an Englishman, "Charles F. Murchison", inquiring as to London’s preferred candidate. The ambassador, Sir Lionel Sackville-West, wrote back indiscreetly suggesting that Cleveland would probably be the best option. The Republicans published the letter two weeks before the vote and Cleveland duly lost the Irish vote, the state of New York and the election.

JFK and the Cook County controversy

The 1960 was one of the first in which allegations of voter fraud seriously marred the election. Advisers to Richard Nixon challenged John F. Kennedy’s victories in a number of states including Illinois – and thus in the whole election – claiming that in Cook County, the populous area including the city of Chicago, the polls were rigged to ensure a win for the Democrat. Investigations and recounts ensued in 11 states, continuing into the summer of 1961, but only resulted in the state of Hawaii being stripped from Nixon and awarded to Kennedy. To this day, there is no universally accepted version of the affair.

Lyndon B. Johnson and Barry Goldwater

In what has been described as one of the most corrupt elections in US history, Democratic incumbent Lyndon B. Johnson launched a series of corrosive attacks on his opponent, Barry Goldwater, setting up a group of political operatives named the "five o’ clock club" to smear him ahead of the 1964 vote. The group distributed a Goldwater joke book, a children’s colouring book featuring the Republican dressed in the robes of the Ku Klux Klan, fed misinformation to the press and wrote letters to columnists purporting to be from citizens terrified of a Goldwater presidency. They also sent a CIA agent, Edward E. Hunt, to infiltrate Goldwater’s campaign as a volunteer and fed his plans and initiatives back to the White House, enabling it to preempt his every move.

Richard Nixon and the CRP

In the run-up to the election of 1972, the Republican incumbent established the Committee to Re-elect the President, a group which was ostensibly a fundraising outfit but was later found to have been involved in numerous shadowy and criminal activities including the Watergate scandal. In order to uncover incriminating material on Nixon’s opponents, the organisation conducted a number of burglaries and illegal wiretapping operations, including the break-in at the offices of the Democratic National Committee in the Watergate building which ultimately led to the unravelling of the Nixon presidency.

Lee Atwater, x2

As campaign consultant to Republican incumbent Floyd Spence in the 1980 congressional elections, Atwater instigated push polling in which fake pollsters claimed in calls to white voters that his Democratic challenger Tom Turnipseed was a member of the National Association for the Advancement of Coloured People and had been hooked up to “jumper cables” as a teenager undergoing electroshock therapy for depression. Later in a career founded on dirty electoral practices, he encouraged ads on behalf of 1988 Republican presidential candidate George H.W. Bush which linked Democratic opponent Michael Dukakis to the case of Willie Horton, a convicted murderer in Massachusetts who committed a rape while on weekend release, a policy supported by then-governor Dukakis – but in fact initiated by his Republican predecessor.

After being diagnosed with a brain tumour in 1990 Atwater converted to Catholicism and in an act of repentance wrote a number of public letters apologising to former opponents including Dukakis and Turnipseed. Writing to the latter, he expressed deep regret for the jumper cable incident in particular, saying it remained one of the low points of his life.

George W. Bush and McCain’s “lovechild"

In the 2000 Republican primary campaign, then-governor of Texas George W. Bush hired Warren Tompkins to wipe out his opponent, John McCain. Tompkins and his team spread race-baiting rumours in South Carolina that McCain had secretly fathered a black lovechild (in fact his adopted Bangladeshi daughter Bridget). Bush also brought in Jeff Larson and his firm FLS-Connect to conduct robo-calls highlighting McCain’s "interracial child" and his wife Cindy’s addiction to prescription drugs.

At the time, McCain said of Larson and Tompkins that “there is a special place in hell for people like these.” He has since had a change of heart and hired Larson to run similar robo-calls against current presidential opponent Barack Obama, accusing the Democrat of “close” ties to former domestic terrorist Bill Ayers, of having an “extreme leftist” agenda and not sharing American values. Last week McCain brought in Tompkins to advise him on tactics in the battleground state of North Carolina in the final days of the campaign.

Florida and the Supreme Court

The month-long dispute which blighted the 2000 election began on election night, when confusion erupted among news networks over who had won the state of Florida. Initially, the state was declared for Gore before the strongly Republican panhandle, one hour behind the eastern counties, had released its results. When the mistake was realised, the networks retracted that call before calling the state for Bush, but then retracted it again, declaring it too close to call. Gore then made a concession call to Bush, but rescinded it after learning just how close the vote was.

Though Bush won the initial count in Florida by some 2,000 votes, state law required a recount for such a close result, which reduced the Republican’s margin to just 537 votes. A lengthy legal wrangle ensued and a manual recount ordered, but, amid time restrictions and disputes over methods of counting ballots, the case ultimately ended up in the Supreme Court. The court voted to halt the recount, allowing Florida’s Republican Secretary of State, Katherine Harris, who had been Bush’s campaign chair in the state, to certify the results in his favour.

A number of related controversies also tainted the Florida vote, including disputes over ballots on which chads had not been punched out correctly due to machine faults or confusing layouts. Hundreds of thousands of African-Americans – who tend to vote Democrat – were wrongly purged from the electoral roll as felons, and accusations of legal strong-arming and conflicts of interests abounded. To this day, many Democrats believe that the election was stolen from Al Gore.

John Kerry and Swift Boat Veterans for Truth

As the 2004 election approached, incumbent George W. Bush was struggling to fend off attacks on his weak military record from his Democratic opponent John Kerry, a recipient of numerous military honours for his service in Vietnam. But it was not long before a 527 group named the Swift Boat Veterans for Truth swept to the rescue. The organisation, formed specifically to oppose Kerry’s candidacy, released a letter signed by some 250 Swift boat veterans claiming the Democrat had lied about his acts of heroism and taking issue with statements he had made in support of the anti-war movement following his return from the conflict. It also ran a series of ads and released a book labelling Kerry a liar and coward. It later emerged that only 16 of the veterans had ever served in the same division as Kerry and only one had been present during an incident for which he was decorated. That veteran, Larry Clayton Lee, said Kerry had earned his Silver Star but that based on conversations with other SBVT members had come to question his awards for other incidents. Some members later acknowledged that their motivation was less Kerry’s record but his later statements against the war, while the Democrat’s actual crew members dismissed their claims outright, but by that time, the damage had been done. So successfully, in fact, that the term "swiftboating" has entered the US political lexicon as a synonym for dirty tricks and smears.

2008 – the dirtiest campaign yet?

Well perhaps not. But according to historian and author Joseph Cummins, it is certainly a contender. Allegations of underhand tactics have proliferated since the start of the primary race, with Barack Obama and Hillary Clinton exchanging allegations of racial smears and voting irregularities. Since Obama’s nomination the contest has taken an even more vicious turn, with ongoing internet rumours that the African-American candidate is a secret Muslim, associates with terrorists and plans to push an extremist agenda from the White House. As detailed above, robo-calls are again being deployed to make the case, while McCain’s running mate, Sarah Palin, regularly paints Obama as anti-American, foreign and unpatriotic. In turn, the Democrat has accused his rival of being old, out-of-touch and erratic and raised questions about Palin’s lack of experience, while liberal bloggers have accused the Alaskan governor of trying to ban books, having an affair with her husband’s friend and lying about the parentage of her son. And as the election draws nearer, the familiar legal dance around voting registration and methods is once again in full swing. With two weeks to go, this already nasty contest could still get a great deal nastier.

(by hannah strange, Times Online, 21 October 2008)

Feature7 – CanadaStrong&Free [they must be guilty of something]

The actions of Canadian officials contributed indirectly to the torture of three Arab-Canadian men in Syria, a federal inquiry has concluded.

"I found no evidence that any of these officials were seeking to do anything other than carry out conscientiously the duties and responsibilities of the institutions of which they were a part," former Supreme Court of Canada justice Frank Iacobucci concluded in his report, made public Tuesday, 22 months after the inquiry began.

The probe focused on whether the detentions of Abdullah Almalki, Muayyed Nureddin and Ahmad El Maati resulted from the actions of CSIS, the RCMP and the department of Foreign Affairs and whether Canadian consular officials acted appropriately in the cases.

"It is neither necessary nor appropriate that I make findings concerning the actions of any individual Canadian official, and I have not done so," Iacobucci wrote.

Former Supreme Court of Canada justice Frank Iacobucci concluded that the three men were indeed tortured. He also said the actions of the RCMP and CSIS indirectly led to the torture of El Maati; "two actions of the RCMP" indirectly led to the torture of Almalki; and that certain instances of information sharing by CSIS and RCMP officials indirectly led to the torture of Nureddin. 

All three men asserted they were imprisoned, tortured, accused of links to al-Qaeda and told by their interrogators that information about them had come from the RCMP and the Canadian Security Intelligence Service. All of the men have denied any links to al-Qaeda.

Iacobucci found there was no direct action by any Canadian official that led to the detention of any of the men. But in two cases, there were indirect contributions.

He noted three instances of information sharing by Canadian officials that led indirectly to El Maati’s detention. The Toronto truck driver was arrested by Syrian officials in 2001 when he was in Damascus to attend his wedding. He was later transferred to Egypt, spending a total of 26 months in prison.

The report said that in September 2001, the RCMP described El Maati to foreign law officials, including Syrian officials, as "linked through association to al-Qaeda" and an "imminent threat to public safety."

"The RCMP appears to have described Mr. El Maati in its way without taking steps to ensure that the description was accurate or properly qualified," Iacobucci wrote, adding that the source of the information did not come from the force’s own investigation.

 

The report said no consideration was given to how Syria or Egypt might respond to an inflammatory label like "imminent threat."

As well, the report noted that in 2000 and 2001, CSIS described El Maati to foreign intelligence agencies as "involved in the Islamic extremist movement" and an "associate" of an Osama bin Laden aide.

Iacobucci concluded that when CSIS received an alleged confession from El Maati, the service sent a number of clarification questions to a foreign agency to be sent to Syrian authorities, which resulted indirectly to his mistreatment.

Iacobucci also said the actions of Canadian officials led indirectly to Nureddin’s imprisonment, including the decision by CSIS and the RCMP to share information about Nureddin’s suspected involvement in terrorist activities with foreign agencies, including in the U.S. Nureddin, a Toronto geologist, was detained by Syrian officials in December 2003 as he crossed the border from Iraq. He was held for 34 days before being released.

Iacobucci said he couldn’t determine, based on the evidence, whether or not the actions by officials had indirectly led to the imprisonment of Almalki, an Ottawa communications engineer, who was arrested in 2002 in Syria and kept in custody for 22 months.
But Iacobucci criticized the RCMP for suggesting that Almalki was somehow linked to al-Qaeda, was engaged in activities that posed an "imminent threat" and was an "Islamic extremist."

He said the force did not substantiate these accusations on its own and took the information from other foreign agencies.

Canadian documents which contained information about raids on Almalki’s home, also made their way into the hands of Syrian officials, the report said. This, along with questions submitted by the RMCP to Syrian officials to be posed to Almalki, indirectly led to Almalki’s mistreatment, the report states.

The men have compared their cases to that of Maher Arar, a Syrian-born Canadian who was exonerated by a separate inquiry and paid more than $10 million in compensation by the federal government.

Iacobucci was appointed in December 2006 to investigate the cases, but he admitted that he could have used more information.

"We did not get any information from some very important sources, namely the governments of Syria, Egypt, the United States and Malaysia. We do not know the full story."

The three men have been joined by human rights groups such as Amnesty International in decrying the inquiry process, saying it was unfair, flawed and secretive.

The government has cited the need to protect national security and quicken the inquiry process as a justification for keeping proceedings out of the public eye.

But the three men said Tuesday they were happy to have some answers and some vindication but, Almalki said, "government needs to step up to the plate and do the right thing."

"It’s the right thing to do, for the Canadian government, is to issue a public apology. When Canadian citizens are treated in the way we were treated. Tortured in the most severe methods a human being can imagine.

Almalki said he doesn’t see any distinction between Canada directly or indirectly causing his torture.

"The RCMP fully knew that I would be tortured if they sent questions. They sent it anyways. Does it make a difference if Justice Iacobucci said directly or indirectly? Well apparently directly means that the Canadian official would be the one holding the whip."

But Public Safety Minister Stockwell Day points out that Iacobucci himself found no fault with any individual RCMP, CSIS or Department of Foreign Affairs staff.

"I think it’s more a case of good people acting with deficient procedures and deficient policies," he said.

Day said he’s been assured those procedures have since been corrected.

As for the question of compensation, Iacobucci wasn’t asked to address it and Day said it would be inappropriate to comment since all three men are suing the federal government.

(CBC, 21 October 2008)

Feature8 – JoeThePlumber

A week is a long time in presidential politics, a week in plumbing less so, one might think. But the fusion of the two can have unpredictable results, as seen in the strange case of Samuel Joseph Wurzelbacher and his political alter ego, Joe the Plumber. 
Since being thrust into the national spotlight as the unwitting star of last week’s presidential debate, Joe has experienced at first hand the ferocities and fickleness of the media glare, portrayed variously as national hero, self-centred semi-criminal and liberal voodoo doll.

Yesterday, he woke to find himself at the centre of a new political storm, this time over his alleged ill-treatment by the Obama campaign. John McCain, for whom Joe has become the ultimate pawn in the electoral endgame of these ebbing days, accused his rival of mounting a witchhunt against the Ohio plumber, a claim Mr Obama angrily rejected on the campaign trail today. Though the game may have changed, Joe looks to remain a political football for some time to come.

But it hasn’t been all bad. Feeling for his plight, a radio show in Oregon started a campaign to “Save Joe the Plumber”, raising the money to pay his back taxes and buy him a plumbing license. Despite his avowed stance against handouts as “socialism”, Joe so far appears to have welcomed the help.

Meanwhile a political career could be on the cards. The star of the latest McCain ad in Ohio, he is expected to join the Republican nominee on the campaign trail later this week. A number of Republican groups have even launched an online effort to draft him for Congress in 2010, running against Democratic incumbent Marcy Kaptur in Ohio’s 9th district.

It is all a long way from the day of the final presidential debate, when the thirty-something family man awoke in his suburban Ohio home as plain old Joe Wurzelbacher, plumber, sports fan and otherwise ordinary American. Twelve hours and 26 primetime mentions later he was a household name, propelled to instant national celebrity by two politicians seeking to establish him as a poster child for the average, hard-working American at the heart of their electoral tug-of-war.

Twelve hours after that, Joe the Plumber awoke to a very different world. The media hordes had descended on his front lawn, peering into his life and views with klieg lights and telescopic lenses, while on computers across the nation bloggers tapped feverishly through campaign records, tax documents and state databases in search of any speck of dirt that could explode his newfound iconic status.

At first, Joe the Plumber happily courted the limelight. He gave confident performances on CNN, Fox, ABC and a number of local channels. He respectfully elucidated his views on both candidates but maintained silence on which box he planned to tick come election day, only urging Americans to “find out about the issues for themselves.” He was glad to have done his “duty” in highlighting issues of importance to the nation, he said, and simply took the phone off the hook if the constant ringing bothered him.

Another 24 hours, and the limelight had begun to turn toxic. His name wasn’t really Joe, liberal blogs triumphantly proclaimed, and he wasn’t even a plumber, at least not a fully licensed one. Far from being an undecided voter carefully weighing the issues, Samuel Joe Wurzelbacher was a registered Republican who had voted in the party’s primaries. Most scandalously of all, he owed over $1000 to the state of Ohio in unpaid property taxes – hardly the conscientious grafter held up to the nation as an example of how Barack Obama’s tax plan would shatter the American dream.

Even the very claim which elevated him to national prominence was debunked. The plumbing company he planned to buy wasn’t making the $250,000 that would see his taxes increase under Mr Obama – in fact it was making roughly half that. Joe himself was earning some $40,000 a year – a sum which would instead make him eligible for substantial tax cuts under the Democratic plan. Meanwhile cries of “selfish!” began to ring out from low-earners and the socially conscious alike – surely someone making a quarter of a million dollars a year could afford to shell out a few extra bucks to ensure poor kids had healthcare, couldn’t they?

Just as rapidly as he had seen his star rise, Joe watched dolefully as it plummeted back to the suburban Toledo earth. By the weekend, with the media feeding frenzy only growing in intensity, he had had enough. Ever more conspiratorial theories were appearing on the internet – Joe was a plant, some bloggers claimed, possibly even a relative of John McCain’s one time cohort Charles Keating (via an identically named son-in-law), with all the sleazy political chumminess that implied. Others, upon discovering that Joe had once lived in Alaska, began to allege connections with Mr McCain’s running mate, Sarah Palin.

"I felt about that small," he complained of the media attention, during an appearance on Mike Huckabee’s Fox News show.

"The media’s worried about whether I’ve paid my taxes, they’re worried about any number of silly things that have nothing to do with America," he said.

He couldn’t even get to work with all the journalists camped on his front lawn, he said. "You know, I am a plumber. Just a plumber.”

"When you can’t ask a question of your leaders anymore, that gets scary," he added.

But those sacrificed on the political pyre can sometimes become martyrs, and among the conservative-minded workers of small town America, Joe has become just that, whether he wants it or not.

“Plunge the crap out of Washington,” the website, www.joewurzelbacher2010.com, implores visitors. A campaign slogan in the making, perhaps.

(by hannah strange, the Times Online, 22 October 2008)

Feature9 – PriceOfOil

Over dinner with John Duffield in April, we got talking about the oil price. The New Star founder, hardly a meek conformist, was persuaded by the consensus view. Brent crude, which was then at $110 a barrel, was going higher and staying higher, he argued. I was less convinced. What odds would he give me that at some point in the next 12 months crude would fall below $30 a barrel?

I wanted long odds, naturally. A collapse to such a low level was almost unthinkable. The world would have to slip into some kind of economic catatonia to bring crude back to those levels. Eventually we settled on 25-1. Over the starter, I handed over my tenner, not expecting to see it ever again, but reckoning £250 would be a spectacular coup if it could be landed.

My chances looked even slimmer in the months that followed. The price soared, hitting $146 in July. All the talk then was of the price surging on to $200 and beyond. The days of cheap energy were permanently over, almost everyone agreed.

But oil’s reversal since then has been just as spectacular. By this week it was down to less than $70 a barrel and the decision yesterday by Opec to proclaim production cuts of 1.5 million barrels a day failed to stem the slide. It dipped another $3 to $63.

 My bet was based, not on any profound insight into the oil market, but on two thoughts. First, the oil price is fiendishly difficult to forecast. Solemn predictions of the past have proved risibly inaccurate. Ten years ago not a single pundit could be found to forecast oil above $10. The Economist famously predicted $5 a barrel.

Secondly, cartels almost always ultimately fail and they fail miserably in miserable times. Opec, for all its perceived power, is permanently plagued by cheating. Member countries want others to restrict production while themselves turning on the tap.

The last time Opec decided on a dramatic production cut was in April 1998, when cuts of 1.8 million barrels a day were proudly announced. From that point, the crude price continued to fall for another 14 months, slumping by a further 32 per cent.

Two forces are pushing oil lower. One is the unwinding of huge speculative positions. The other is the spreading of the economic slowdown to Asia. The price fall is welcome, curbing inflation and making it easier for central banks to bring forward meaty interest rate cuts.

With six months to go, I still expect to lose my bet. But it no longer looks such a ridiculous outside chance.

(by patrick hosking, The Times,  25 October 2008)

Feature10 – AnalysisOfBanks

It is extremely unlikely the UK Government will allow any bank operating in the UK to fail. Moreover, the Financial Compensation Scheme guarantees £50,000 per person. However, the scheme is untried on a large scale and nobody wants his or her savings to be with a failing bank. So how do you know who to trust?

Confidence in the banks has been severely dented over recent weeks. The nationalisation of Bradford & Bingley, Lloyds TSB’s’ rescue of HBOS, and the collapse of the Icelandic banking system have made many people question how safe their money is.

Judging a bank’s reliability is difficult even for professional market watchers. However, there are a number of indicators that you should look out for.

Ratings

Ratings agencies such as Standard & Poor’s, Fitch and Moody’s assess the credit-worthiness of banks and other financial institutions, including insurance companies. The ratings are designed to let other financial institutions know how safe it is to lend money to them, but they can be used by ordinary savers to get an idea of a bank’s reliability (see table).

They are not perfect. Over the past year they have been criticised for failing to spot many bank’s dangerous exposure to toxic mortgage-related securities. But they still have huge influence. The ratings system works differently at all three agencies but they are broadly similar. At Standard & Poor’s the gradings run from AAA (the best) down to D (when a company has defaulted on its payments).

Equally fascinating are the agencies’ outlooks, which are the agencies’ opinion of the way a rating may move. Outlooks fall into three main categories: positive (may be raised), negative (may be lowered) and stable (unlikely to change).

Financial strength

Another indication of financial strength is the Tier 1 Capital ratio. This appears in annual reports and interim results and the higher it is the better. However, because it depends on market conditions it can change frequently and it is difficult for ordinary savers to find out what the latest position is.

The ratios included in the table show where the UK banks stood before the government announced its £37 billion bailout. Once that money is pumped into the system the ratios should rise. Meanwhile the figures for the foreign banks, ICICI and First Bank of Nigeria, are several months old and so shouldn’t be relied on.

Who is safe?

So, taking all of these factors together what can we conclude. The strongest banks out there are HSBC and Abbey, backed by the Spanish banking giant Banco Santander.

HSBC, in particular, looks rock solid, being one of the few big banks to have deposits worth more than its loans. (Its loan to deposit ratio is 90 per cent which means for every 90p of loans it has 100p of deposits).

Of the biggest banks HBOS and RBS Natwest look weakest. However, presuming HBOS’s takeover by Lloyds goes ahead savers should be fine.

Meanwhile, RBS is about to accept £20 billion in Government assistance and hand over 63 per cent of its shares in the process. After taking such a big stake the Government is not going to let it go under.

Bank Credit rating  Outlook Tier1Capital ratio
Banco Santander (Abbey, Alliance & Leicester) AA Stable 9.25%
Barclays AA Watch Negative 7.9%
HBOS A+ Watch Positive 7.3%
HSBC AA Stable 8.8%
Lloyds TSB AA Watch Negative 8.6%
RBS (Natwest) A+ Stable 6.7%
Nationwide building society A+ Stable 9.7%
Post Office (Bank of Ireland) A+ Stable 8.1%
ING AA Stable 8%**
First Bank of Nigeria BB -Stable 17.4%
ICICI BBB -* Stable 11.29%

 Source: Standard & Poor’s/company accounts
*Fitch rating
**Tier 1 Capital Ratio following the €10 billion cash injection by the Dutch Government
(from Money Central, The Times, October 17, 2008)

Feature11 – Sexism

Sarah Palin’s folksy, down-home image took a bit of a battering last week with the revelation that the Republican party had spent $150,000 (£96,000) since September on sprucing up their vice-presidential candidate’s wardrobe and that of her family. The bill was paid out of campaign donations. Palin’s spokesman said last week that the clothes would be given away to charity once the campaigning was over; Palin said that the fuss people were making over the cost amounted to sexism.

“I think Hillary Clinton was held to a different standard in her primary race,” Palin said. “Do you remember the conversations that took place about her? Say, superficial things that they don’t talk about with men – her wardrobe and her hairstyles, all of that? That’s a bit of that double standard.”

Many of the clothes were sitting untouched on her campaign plane, she added. “Oh, if only people knew how frugal we are. It’s kind of painful to be criticised for something when all the facts are not out there and are not reported.”

It would be the most gigantic understatement to say that I don’t hold a candle for Palin, but she does have a point. When it comes to women and public life, the wardrobe question, from Marie-Antoinette on, is almost impossible to get right (unless you are Carla Bruni-Sarkozy, the former model, and obliged to wear John Galliano’s creations for Dior on grounds of patriotism – a tough job, granted, and God bless her for selflessly stepping up to the plate).

You can throw money at the problem, as the Republican party did, and you still end up with a candidate whose garments, despite being perfectly all right individually, end up looking oddly banal. You don’t think, “Sarah Palin, what a nightmare, but I really love her outfits”; you just think, “Sarah Palin, what a nightmare, wears red a lot”, even though it now turns out that she sometimes changes her outfits two or three times a day.

It also emerged last week that the highest paid staff member on the McCain campaign is Palin’s make-up artist, who earned $22,800 for a fortnight’s work (the make-up artist’s technique seems to involve slapping on a bit of eyeliner and then dunking the client in a pot of bronzer). Obviously these are vast sums of money, but they say more about the quandary that female politicians find themselves in than they do about female vanity.

For women in the public eye, who have a vested interest in looking as though they mean business, the whole business of dressing is fraught with pitfalls (I nearly typed “pitbulls”). As if it weren’t irritating enough to know in advance that every garment you wear is going to be scrutinised by teams of reporters as well as the public, who may also become overly preoccupied with your hairstyle or your shade of lipstick. You can never come out on top.

If you are unfortunate enough to have a decent figure, as Palin does, all those pencil skirts and little fitted jackets make you look weirdly vampy (my theory about the American public’s initial burst of enthusiasm for the vice-presidential candidate hinged on the fact that she looks like a porn star in some scenario involving a library, the unclasping of hair and the removal of glasses). Had Palin hidden her figure under smocky tops and giant ponchos, editorials would have been speculating on whether she had body dysmorphia, or an eating disorder, or both.

If you’re dumpy, which may not be your fault, you are doomed to years of media reports that always allude to your thick waist, or stumpy legs, or matronly frocks: the late Mo Mowlam, before she had announced she was being treated for cancer and was therefore bloated and balding from chemotherapy, was once compared to a truck driver in drag. The fact that I remember this years later is indicative of the power of the sartorial insult when directed at women, who use clothes as armour in the first place.

I can’t think of any male politician who has ever been so belittled in the name of aesthetics: “scruffy” or “unkempt" is as bad as it gets, which is not very bad at all since the implication is that the man is so busy thinking with his giant male brain that the egg on his tie is the least of his concerns.

Caroline Flint, who is a looker, is constantly getting it in the neck from parliamentary sketch writers for wearing attractive clothes; the subtext being that the minister for Europe must either be extraordinarily shallow or some sort of crazed, preening narcissist. Condoleezza Rice once wore knee-high leather boots of the kind millions of women pull on every winter; let’s just say the media reaction was such that she didn’t wear them in public again. Cherie Blair and Pauline Prescott were both ridiculed over their devotion to their coiffures, as though women shouldn’t mind walking around in a perpetual bad hair day. If they had, of course, walked around with haystacks on their heads, they would have been the source of endless hilarity.

In the real world, which politics constantly seeks to mirror, we have more or less got over the idea that you have to dress like a drudge to be taken seriously, or that anyone whose bosoms have the temerity to protrude is some sort of casting-couch imbecile. In politics, looking as though you have a chest is still seen as indicative of the fact that you’re stupid, or a slapper, or both.

There are, surely, enough sticks to beat women with for no one to have to resort to pulling apart their wardrobes. Nobody becomes a politician because they want to have the height of their heels dissected and even Palin deserves (a little) more respect than the acres of print devoted to the question of whether her lips are tattooed (especially as what the acres of print are trying to say, but don’t, is that tattooed lipliner is common).

So yes, $150,000 is an awful lot to spend on a wardrobe in a couple of months and no, the amount isn’t representative of the average hockey mom’s sartorial budget. That would be because – der! – Palin isn’t really a hockey mom: she’s an extremely savvy, ambitious woman who is trying to become vice-president of the United States. Besides, think of the stick she’d have got if she’d worn her own clothes. As I say, a woman dressing for public office can’t win. But it’s pretty low to blame her for trying.

(by india knight, The Sunday Times, 26 October, 2008)

Feature12 – HistoryMarchesOn

Those who think that there is such a thing as progress in international affairs – that we are capable of learning the lessons of history – have been brutally disabused by the Georgian crisis. You can have all the rules you like to discipline international behaviour; but they are not worth the paper they are written on if they run against fierce nationalisms and ethnic passion.

Ethnic and nationalist rivalry is as old as sin, and as inextinguishable. As a diplomat in Britain’s Moscow Embassy during the Cold War, I spent time in two of the Caucasian republics, Georgia and Azerbaijan. They were then under Moscow’s heel as part of the Soviet Union. Their loathing of Russians was palpable.

At the time of my visits, Stalin, a Georgian by birth, was still officially a non-person, airbrushed by his successors from the annals of Soviet history. But in defiance of Moscow his portraits could still be seen in Georgian state farms and government offices. I asked a Georgian official why this was so. “Because he killed so many Russians,” came the sardonic reply.

The feeling was mutual. Later in Moscow I related my Caucasian experiences to Leonid Brezhnev’s interpreter, Viktor Sukhodrev. “That’s no place for a white man,” he said with his impeccable North London accent (he had equally good American).

Recent events have shown no weakening in these ancient hatreds. But the Western powers behaved as if caught on the hop. Last year a French diplomat warned me that once Kosovo got its independence (itself the unnatural product of Balkan hatreds), Russia would feel free to make its move in Georgia. And so it has come to pass. As a Times leader put it recently, history has resumed, leaving Francis Fukuyama, the apostle of its end, trailing in its wake. But Professor Fukuyama was adrift from the very start. Once the iron fists of the former Soviet Union and Tito’s Yugoslavia had been removed, nationalist and ethnic tensions broke surface with the murderous velocity of the long suppressed. Contrary to what David Miliband has been telling us, the glacial years of the Cold War were “the period of calm”. The years since have been marked by the constant turmoil of history’s march. 

Globalisation and interdependence were supposed to have swept aside these ancient feuds and rivalries. Theories of the postmodern state now abound. Tony Blair preached how national interest would be trumped by the spread of “global values”. This is self-evident rubbish. For here is the paradox of the modern world. Money, people, culture, business and electronic information cross porous frontiers in ever-increasing volume. But as national boundaries dissolve in cyberspace, so everywhere the sense of nationhood and national interest strengthens. Five minutes in Beijing, Washington, Tehran or Moscow will tell you that. What is the European Union if not the 21st-century arena for the intense and competitive prosecution of the national interest by its 27 member states?

It is useless to say that nationalism and ethnic tribalism have no place in the international relations of the 21st century. If anything the spread of Western-style democracy has amplified their appeal and resonance. The supreme fallacy in foreign policy is to take the world as we would wish it to be and not as it actually is. In Britain’s case, the delusion is compounded when we are powerless to effect the outcome we desire. This has been particularly the case with Russia, where we have managed to be both impotent and provocative. If we really want to put a halt to bad Russian behaviour, let us do so where we can make a difference, and where it is justified – starting with the expulsion of the vast nest of Russian intelligence officers in London, as Labour and Conservative governments did not hesitate to do in the 1970s.

We can foolishly downgrade national interest within the armoury of British diplomacy, if we wish. But we had better not underestimate its driving force in the international behaviour of others. That is the road to dangerous miscalculation.

Take Russia, China and Iran. Each seethes at the recollection of what it considers historical humiliations visited on it by Western powers. For all three the beginning of the 21st century has opened opportunities for payback – for getting respect as a nation (just look at recent Russian newspapers). You don’t have to like or approve of these regimes. But not to understand their histories is not to understand the mainspring of their external policies – in Russia’s case its determination to rebuild its greatness, dismantled, as millions of Russians see it, by Mikhail Gorbachev and his Georgian Foreign Minister, Eduard Shevardnadze, aided and abetted by the West. I would bet a sackful of roubles that Russian foreign policy would not be one jot different if it were a fully functioning democracy of the kind that we appear keen to spread around the globe.

What is to be done, as Lenin once put it? The first thing is to sweep away any rose-tinted illusions left from the Blair-Bush era. For the democracies of North America and Europe, relations with Russia are always going to be awkward and bumpy, at best co-operative and adversarial in equal measure.

The fall of the Soviet Union did not wipe the slate clean. The Russia that we are dealing with today, with its fear of encirclement, its suspicion of foreigners and natural appetite for autocracy, is as old as the hills, long pre-dating communism. It is a Russia that will never be reassured by the West’s protestations of pacific intent as it pushes Nato and the EU ever eastwards.

Most important of all, Russia and the West need to draw up rules of the road for the 21st century. Mr Miliband and others have condemned the notion of returning to the geopolitics of the Congress of Vienna which, in 1815 after the Napoleonic Wars, divided Europe into spheres of influence between empires and nations. They perhaps forget that what was agreed at Vienna held at bay for almost a century a general European war.

Something similar is needed today, based again on spheres of influence. Nato must renounce the provocative folly of being open to Georgian or, worse, Ukrainian membership. This strikes at the heart of the Russian national interest and offers no enhanced security to either Tbilisi or Kiev. As for Russia, it must be made unambiguously clear where any revanchist lunge westwards would provoke a military response by Nato.

This may sound shocking and anachronistic to the modern sensibility. But, there is no other way to remove the scope for miscalculation, the mother of far too many wars.

(by sir christopher meyer, The Times, 2 September 2008)

 

N&Q1 – PalinSpeak

On the US Government Bailout Package:

"That’s what I say that I like every American I am speaking with we’re ill about this position that we have been put in where it is the taxpayers looking to bailout, but ultimately what the bailout does is help those who are concerned about the healthcare reform that is needed to help shore up our economy, um, helping the, oh, it’s got to be all about job creation, too, shoring up our economy and, and putting it back on the right track; so healthcare reform, and reducing taxes and reigning in spending has got to accompany tax reductions and tax relief for Americans and trade we have we got to see trade as opportunity not as, a, a, competitive, um, scary thing, but one in five jobs being created in the trade sector today we, we’ve got to look at that as more opportunity, all of those things under the umbrella of job creation, this bailout is a part of that."

N&Q2 – SupremeCourtOfCanada (Application for Leave to Appeal, Granted)

The Respondent trade union member was employed as a high pressure water blaster and joined the International Brotherhood of Painters and Allied Trades. In due course, he satisfied himself regarding the benefits of Policy No. G.6639 issued by the Co-operators Life Insurance Company. A term of the policy stated in part that the Applicant pay a benefit for paraplegia or loss of use of both legs upon proof that the loss results "directly and independently of all other causes from bodily injuries occasioned solely through external, violent and accidental means". The Respondent had unprotected sex with three women during January & February of 2003 and became infected with Herpes Simplex, initially causing "pelvic discomfort", later transverse myelitis (inflammation of the spinal cord), resulting in paralysis mid-abdomen down. A special case was put before the B.C.S.C., asking: did the Plaintiff sustain his paraplegia ‘directly and independently of all other causes from bodily injuries occasioned solely through external, violent and accidental means’ within the meaning of the Policy. Did the Respondent’s thoughts during the post-coital connubial bliss phase after the sessions noted above turn to
   – a semi-somnolent cigarette
   – or, the person then with him
   – or, how innately smart it is (or not) to have unprotected sex x3
or, rather did those thoughts drift (while reaching for his well-thumbed copy of Driedger on Construction of Statutes, 5th ed. on the bedside table) and focus more specifically on
   – the fine print in his Co-operators policy no. G.6639
   – and, what proper and appropriate statutory /contractual interpretation should be given to same.
The B.C.S.C. answered in the affirmative, and ordered the Co-operators to pay $200,000.  The B.C.C.A. let his award stand.
Co-operators Life Insurance Company/Co-operators Companie D’Assurance-Vie v. Randolf Charles Gibbens (B.C.C.A., April 15, 2008)(32677) "The application for leave to appeal…is granted with costs to the applicants in any event of the cause."

(Lang Michener LLP, 23 October 2008. Copyright Lang Michener, all rights reserved)

N&Q3 – Misc

(with thanks to Patricia Almost)

Best Microscopic Images:
http://news.nationalgeographic.com/news/2008/10/photogalleries/best-microscope-photos/index.html

Best Science Images:
http://news.nationalgeographic.com/news/2008/09/photogalleries/2008-best-science-photos/

A Playground for Thinkers:
http://www.arachnoid.com/index.html

Solar System Simulator:
http://space.jpl.nasa.gov/

And Lucy, dear child, mind your arithmetic…  What would
life be without arithmetic, but a scene of horrors?
Sydney Smith, 1835

I am somehow less interested in the weight and convolutions of Einstein’s brain than in the near certainty that people of equal talent have lived and died in cotton fields and sweatshops.
Stephen Jay Gould

Carpe diem! Rejoice while you are alive; enjoy the day; live life to the fullest; make the most of what you have. It is later than you think.
Horace

50% of IQ scores fall between 90 and 110
70% of IQ scores fall between 85 and 115
95% of IQ scores fall between 70 and 130
99.5% of IQ scores fall between 60 and 140

Amsterdam, Antwerp, Athens, Berlin, Cairo, Dresden, Dublin, Geneva, Lisbon, London, Marseilles, Milan, Moscow, Rome, Seville, Toronto, and Warsaw … are all towns in Ohio.
 
In 1936, the artist Isamu Noguchi was working on a commemorative sculpture in Mexico. He’d forgotten the precise formula E=mc2. Buckminster Fuller not only described the formula, but explained it — in 264 words:
EINSTEIN’S FORMULA DETERMINATION INDIVIDUAL SPECIFICS RELATIVITY READS QUOTE ENERGY EQUALS MASS TIMES THE SPEED OF LIGHT SQUARED UNQUOTE SPEED OF LIGHT IDENTICAL SPEED ALL RADIATION COSMIC GAMMA X ULTRA VIOLET INFRA RED RAYS ETCETERA ONE HUNDRED EIGHTY SIX THOUSAND MILES PER SECOND WHICH SQUARED IS TOP OR PERFECT SPEED GIVING SCIENCE A FINITE VALUE FOR BASIC FACTOR IN MOTION UNIVERSE STOP SPEED OF RADIANT ENERGY BEING DIRECTIONAL OUTWARD ALL DIRECTIONS EXPANDING WAVE SURFACE DIAMETRIC POLAR SPEED AWAY FROM SELF IS TWICE SPEED IN ONE DIRECTION AND SPEED OF VOLUME INCREASE IS SQUARE OF SPEED IN ONE DIRECTION APPROXIMATELY THIRTY FIVE BILLION VOLUMETRIC MILES PER SECOND STOP FORMULA IS WRITTEN QUOTE LETTER E FOLLOWED CLOSELY BY EQUATION MARK FOLLOWED BY LETTER M FOLLOWED BY LETTER C FOLLOWED CLOSELY BY ELEVATED SMALL FIGURE TWO SYMBOL OF SQUARING UNQUOTE ONLY VARIABLE IN FORMULA IS SPECIFIC MASS SPEED IS A UNIT OF RATE WHICH IS AN INTEGRATED RATIO OF BOTH TIME AND SPACE AND NO GREATER RATE OF SPEED THAN THAT PROVIDED BY ITS CAUSE WHICH IS PURE ENERGY LATENT OR RADIANT IS ATTAINABLE STOP THE FORMULA THEREFORE PROVIDES A UNIT AND A RATE OF PERFECTION TO WHICH THE RELATIVE IMPERFECTION OF INEFFICIENCY OF ENERGY RELEASE IN RADIANT OR CONFINED DIRECTION OF ALL TEMPORAL SPACE PHENOMENA MAY BE COMPARED BY ACTUAL CALCULATION STOP SIGNIFICANCE STOP SPECIFIC QUALITY OF ANIMATES IS CONTROL WILLFUL OR OTHERWISE OF RATE AND DIRECTION ENERGY RELEASE AND APPLICATION NOT ONLY OF SELF MECHANISM BUT OF FROM SELF MACHINE DIVIDED MECHANISMS AND RELATIVITY OF ALL ANIMATES AND INANIMATES IS POTENTIAL OF ESTABLISHMENT THROUGH EINSTEIN FORMULA

And finally, thanks to Jim Spajcher, is Northern Lights Posing as Rain, by Alexander Chernucho

TransferOfPower

Things are getting worse. On Friday morning, futures trading was halted for the first time ever after futures plunged more than 5 percent. The sell-off came after another 500-plus down day on the Dow followed by steep declines in equities markets across Europe and Asia. Japan’s benchmark index, the Nikkei, slipped more than 9.5 percent after Toyota and Samsung reported disappointing earnings. The news was equally bad in Europe where shares were battered across the continent on fears of a global recession. Since September, $16 trillion has been erased from global stock market value. Losses in the US–where the financial turmoil originated–have been much smaller than other, more vulnerable markets. The Dow is down less than 40 percent from its peak of 14,000, whereas Hong Kong, Poland and China have all tumbled more than 60 percent. Its a bloodbath.

The Chicago Board Options Exchange Volatility Index, "the Fear Index", surged to 79.13 on Friday, the highest in its 18-year history, while the Dow clawed its way back from 500 points down to a 312 point loss on the day. The massive blow-off in stocks is mainly the result of ongoing deleveraging among the hedge funds which are dumping shares in at a record pace to cover the dwindling value of their asset base. According to the New York Times: "Hedge funds lost an estimated $180 billion during the last three months and some are near collapse. Investors are demanding their money back, and Wall Street is bracing for a shake-out in the $1.7 trillion industry." If a large fund, like Citadel, goes down, it will create a black hole in the financial system, similar to the loss of Lehman Bros. and, once again, the US Treasury will have to come to the rescue by providing a multi-billion dollar taxpayer bailout. 

The dislocations caused by the unwinding of the hedge funds creates the possibility that US markets will have to be closed while assets are dumped on the market. New York University Professor Nouriel Roubini summed it up like this:

"Policy makers may soon be forced to close financial markets as the panic selling accelerates.

Indeed, we have now reached a point where fundamentals and long term valuation considerations do not matter any more for financial markets. There is a free fall as most investors are rapidly deleveraging and we are on the verge of a capitulation collapse. What matters now is only flows – rather than stocks and fundamentals – and flows are unidirectional as everyone is selling and no one is buying as trying to buy equities is like catching a falling knife. There are no buyers in these dysfunctional markets, only sellers and panic is the ugly state of this destabilizing game.

We have reached the scary point where the dysfunctional behavior of financial markets has destructive effects on the financial system and – much worse – on the real economies. So it is time to think about more radical policy actions and government interventions." (Nouriel Roubini’s Global EconoMonitor)

The stock market rout has triggered gigantic swings in the currency markets, too. The dollar has surged 16 percent against the euro in a matter of weeks while every other currency in the world has steadily lost ground, excluding the yen. The sudden fall in commodities and the unwinding of dollar-based bets in foreign capitals has bolstered the dollar and made US Treasurys the preferred "flight to safety" investment.

The volatility is causing problems everywhere, particularly where foreign companies must pay back loans in dollars which have risen steeply in relation to their own currencies. Emerging "commodities based" markets are getting clobbered. The stronger dollar also threatens to make it harder on US exports which have been the one economic bright spot in recent months. If present trends continue, then foreign governments will have to allocate more of their reserves to prop up their own currencies which will make it even more difficult for the US to fund its current account deficit as well as the Treasury’s expanding balance sheet. In other words, these violent and unprecedented currency swings foreshadow a funding crisis looming just ahead as credit is drained from the financial system and capital becomes even scarcer. For now the dollar is flying high, but the future is looking grimmer by the day.

The financial crisis is wringing credit from the system and pushing prices downward across the board. No asset class has been spared, including gold which posted its biggest one week loss in 28 years and has plummeted from $1,040 in March to $734 at Friday’s market close.

Oil has also been hammered by speculative bets made by the hedge funds which are now forced to sell their positions to cover downgrades on their mortgage-backed assets. The erratic movement in oil prices makes it possible to see the real destructive power of the unregulated market, particularly the opaque buying and selling by the hedge funds. In just 14 months oil went from $70 to $145 and back to $67 again on Friday. Wall Street speculators drove up prices with money they borrowed from the investment banks and delivered a knockout blow to the US consumer. The Fed played a critical role in this "gaming the system" by providing the low interest credit that created burgeoning profits for the investment class and falling living standards for everyone else.

Now that the currency bubble has popped, its effects are being felt worldwide. Countries that benefited from the high commodities prices are now getting slammed everywhere from Russia to the Persian Gulf. Ethanol producers are facing bankruptcy if things do not turnaround in the next 12 months. As the Wall Street Journal notes:

"The tragedy of the second bubble is that it has left the economy in a weaker position to ride out the housing slump and credit panic. The American consumer has been whipsawed with $4 dollar gas and food inflation, while entire industries have been put on the edge of bankruptcy. Detroit’s auto makers have spent the last year taking down their truck and SUV assembly lines while gearing up to make hybrids and electric cars, even as their cash flow has been ravaged. Their new investments are based on the expectation that oil will stay high permanently, but will the market for hybrids exist if oil is $50 a barrel?

As Congress plumbs the causes of our current mess, the main one is hiding in plain sight: Reckless monetary policy that did so much to create the credit mania and then compounded the felony with a commodity bubble and run on the dollar whose damage is now becoming apparent." (Wall Street Journal)

The effects of low interest rates and credit contagion are not limited to "bottom line" considerations. As Marketwatch’s Thomas Kostigen points out, monetary policy can be a death sentence for poor people across the planet who are invariably it biggest victims:

"The harsh reality of the economic fallout isn’t that Joe the plumber can’t buy his business or that people’s retirement funds are being lost or that unemployment is rising; the harsh reality is that people will die.

Already, since food prices began to rise 100 million more people have been pushed into poverty, according to the World Bank, with as many as two billion on the verge of disaster. Almost half the world’s population, let’s remember, live on less than $2.50 per day. Millions die annually of hunger and starvation, and more than a billion do not have access to fresh water.

These numbers are poised to rise dramatically with population growth, dwindling natural resources and higher consumer prices across all goods and services. So as the stock market tumbles and the world economy falters, it’s important to remember that it’s more than financial losses we are talking about, it’s the loss of life.

And increasingly it isn’t just people in far-off places around the world who are succumbing to such extreme hardships. Note this: Job losses in the state of Indiana have caused the child poverty rate there to spike 29% since 2000. The wealth gap in the United States and around the world is at record levels — and it has serious consequences.

The Organization for Economic Cooperation and Development reported this week that the gap between the rich and the poor is getting bigger around the world, and that the U.S. is experiencing the biggest dichotomy.

We are experiencing the largest wealth gap in history. Further erosion of the economic floor will only send more people plunging into destitution.

This is why it’s so important to fix the economic crisis — now.

We’re all linked." (MarketWatch)

The Bush administration has called for an economic summit to be held by the 20 largest economies sometime after the presidential elections. US and EU officials are hoping to stitch together another Bretton Woods wherein control of the global economic system was delivered to those same nations. It’s likely, however, that the outcome will turn out considerably different than anticipated. Already, under China’s leadership, 12 Asian nations have agreed to set up an 80-billion-dollar fund to protect their economies from currency-runs, capital flight or other financial disruptions. China has the world’s largest reserves at $1.9 trillion followed by Japan at more than $1 trillion. Clearly the two richest nations will set the agenda and play a central role in deciding how best to deal with the global recession.

The November summit in Washington could produce some unwelcome surprises which were hinted at by Thailand’s Deputy Prime Minister, Olarn Chaipravat, who told Bloomberg News: 

"The message of this initiative is for China to consider whether or not China would open up its banking system and allow the strongest currency in the world, which is the Chinese yuan, to be the rightful and anointed convertible currency of the world."

Surely, the present financial malaise which has its roots in Wall Street and at the Federal Reserve, has demonstrated that the dollar must be replaced as the world’s "reserve currency" and that America must be deposed as the de facto steward of the global economic system. Leadership implies responsibility and the US must be held to account for its failings. It’s time for a change.

(by mike whitney, Information Clearing House, 26 October 2008)