U.S. Stocks rose fairly sharply last week. The Dow closed at 10,471.91 on Friday, up 3.3% compared to the previous Friday's close of 10,140.12. The NASDAQ closed at 2,046.42, up 3.5% from the 1976.80 close from a week earlier. The yield on the ten-year U.S. Treasury bond fell one basis point to 4.12% on Friday the 20th from it's 4.12% close the previous Friday. The dollar closed at .7960 euros on Friday up 0.3% from .7933 euros a week earlier. That put the euro at 1.2563 dollars compared to 1.2606 the previous Friday. Oil closed at $47.50 a barrel on Friday, down again (2.5%) from $48.67. That represents a drop of 7.3% for the past two weeks. Comparing oil to euros, the price of oil converted to euros was 37.81 per barrel on Friday, down 2.1% from the previous Friday's 38.61. Gold closed at $417.60 an ounce, down 0.7% from the previous week's $420.60. In euros, gold closed at 332.40 euros an ounce, down 0.38% from last Friday's 333.66. At Friday's close an ounce of gold would buy 8.79 barrels of oil compared to 8.64 a week earlier, a decrease in the price of oil in gold terms of 1.8%.

It made for a strange contrast this past week, with the United States economy appearing stronger against the background of some disturbing stories from the United States' wars in southwest Asia and in that country's domestic politics. In fact, the Christian Science Monitor ran a story on Thursday that seems to encapsulate the subtle mix of scary facts, clever distortions and reassuring talk that we in the United States have been receiving from our media on both military and economic matters:

The rising economic cost of the Iraq war

By Peter Grier, Staff writer of The Christian Science Monitor
Thu May 19, 4:00 AM ET

Fighting in Iraq has been prolonged and remains intense enough that it has pushed the total cost of US military operations since Sept. 11, 2001, close to that of the Korean War.

Despite the yawning federal deficit, Congress hasn't blinked at this price. And while annual defense spending is now as high as it ever was during the Reagan buildup, the US economy as a whole is much larger, making it easier, in economic terms, for the nation to shoulder the bill.

Yet the costs for Pentagon operations are likely to pile up in years ahead. By 2010, war expenses might total $600 billion, according to the Congressional Budget Office. Much depends on when - and how many - US military personnel can be withdrawn from the Iraqi theater of operations.

"We can't be any more certain about the trend of the defense budget than we can be about the number of troops that will be deployed overseas," says Steven Kosiak, director of budget studies for the Center for Strategic and Budgetary Assessments.

The demands and unpredictability of war have, in essence, turned the defense budget into a two-part allocation. First is the regular budget request, which contains acquisition and research and development funds as well as personnel and operations costs, and which Congress considers in its normal appropriations process. Second is the supplemental appropriations - the add-on emergency spending requested by the administration later in the year.

Here the normally left-of–center Monitor is parroting the Republican party line, that the reason they don't write the costs of the Iraq and Afghanistan wars into the defense appropriation bill is that they don't know how much it will cost. That is clearly nonsense since at the time the bill is being written, "unnamed sources" tell us how much the next supplemental appropriation will be for. What is really happening, is that the Bush administration is reluctant to put the full amount the wars are costing into the main appropriation bill so as not to reduce support for either the wars or for their tax cuts for the rich.

Congress gave final passage to a 2005 supplemental defense bill just last week. Of the $82 billion contained in the bill, all but $76 billion will pay for Defense Department operations costs. The cost of the US military in Iraq is running about $5 billion a month, estimated the former Pentagon comptroller earlier this year.

Fighting in Iraq "is lasting longer, and is more intense, and the cost to keep troops in the theater of operations is proving to be much greater than anyone anticipated," wrote Rep. John Spratt (news, bio, voting record) (D) of South Carolina, ranking minority member of the House Budget Committee, in a recent Democratic report on war costs.

Speak for yourself, Rep. Spratt! SOME people anticipated just this sort of Vietnam-style quagmire.

Overall, Congress has approved about $192 billion for the Iraq war itself, according to an analysis by the Congressional Research Service. Another $58 billion has been allocated for Afghanistan, and some $20 billion has gone for enhanced air security and other Pentagon preparedness measures in the US.

That totals $270 billion for all military operations since 2001, according to the CRS analysis. The cost of war in Iraq by itself has already far exceeded the $85 billion inflation-adjusted price tag of the 1991 Gulf War, notes Mr. Kosiak. Plus, that war was largely paid for by contributions from US allies.

As for all military operations combined, add in the $50 billion in war spending the Senate Armed Services Committee last week added to the fiscal 2006 defense budget bill, and the total will surpass $320 billion in US funds. "That's close to the Korean war level of $350 billion [in today's dollars]," says Kosiak.

Unsurprisingly, operations and maintenance constitute the single largest extra expense of the Iraq war. Almost half of the just-passed emergency spending bill's defense funds went for ground operations, flying hours, fuel, and travel.

Iraq fighting has been particularly grinding, noted Secretary of Defense Donald Rumsfeld at a Senate budget hearing in February. On average, combat vehicles are experiencing four and a half years of peacetime wear in one year.

"A bradley fighting vehicle that usually runs about 800 miles a year - that's in peacetime training - now sometimes is being driven in the range of 4,000 miles in Iraq," said Secretary Rumsfeld.

About half of the remaining emergency defense funds was devoted to personnel. This means not basic pay but incremental costs: the extra money paid reserve troops when they are called to active duty, for instance, as well as hazard pay and other special compensation.

The rest went largely to weapons procurement, such as replacement of six National Guard UH-60 helicopters lost in Iraqi and Afghan operations.

More spending on the war is sure to come - even if the US begins to draw down troops levels. While it is difficult to estimate precisely, it is sure to be in the hundreds of billions, experts say. The Congressional Research Service pegs the cost of US operations in Iraq and Afghanistan at an additional $458 billion through 2014.

This is hardly cheap, but given the overall size of the US economy, and the levels of defense spending maintained during the cold war, it is well within the bounds of recent experience, according to Center for Strategic and International Studies military expert Anthony Cordesman.

Total defense spending in 2006 will probably be around 4 percent of gross national product, notes Mr. Cordesman. The average since 1992 for this measure has been 3.6 percent.

"When it does come to economic and federal 'overstretch,' defense is unlikely to be the cause," Cordesman argues in a recent report.

One of the reasons that apologists for the war such as Cordesman can be so reassuring about the United States' economy to handle the war, is the fact that much of the money spent on the war went to fatten the balance sheets of the Halliburtons, Lockheed-Martins and the shadowy "private security companies" (mercenaries) of the world. Note also how much was spent on "incremental personnel costs," much of it in the form of inducements for people to enlist or reenlist, not to mention death benefits for surviving families and medical costs for the large number of injured soldiers. That money certainly is a short-term stimulus for the domestic consumer economy. Such wars, however, only act as a stimulus to the economy of the perpetrator if they are short and successful, and this war will be neither.

Clearly, however, something is keeping the U.S. economy afloat. It appears to be those countries who have increased holdings of U.S. government debt lately, i.e., those most dependent politically on the success of the United States. First on the list of holders of U.S. Treasury debt is Japan who is far ahead of anyone else at nearly $700 billion followed by China at roughly $200 billion. Next comes the Caribbean offshore banking havens for the people who own the world (politicians, financiers, ruling-class wealthy, corporations, organized criminals, etc.). These entities combine for holdings in the $100 billion range. Then comes Tony Blair's United Kingdom, also in the 100s. It drops off a bit after that to the 40 to 70 billion dollar range where we find OPEC countries, Taiwan, Germany, Switzerland, Canada and Mexico. These are the countries that hold U.S. government debt. Why does Japan hold so much? Richard Duncan:

How Japan financed global reflation

May 17, 2005

Richard Duncan is a financial analyst based in Asia and author of "The Dollar Crisis: Causes, Consequences, Cures" (John Wiley & Sons, 2003), now available in a "Revised & Updated" paperback edition with 7 new chapters.

In 2003 and the first quarter of 2004, Japan carried out a remarkable experiment in monetary policy – remarkable in the impact it had on the global economy and equally remarkable in that it went almost entirely unnoticed in the financial press. Over those 15 months, monetary authorities in Japan created ¥35 trillion. To put that into perspective, ¥35 trillion is approximately 1% of the world's annual economic output. It is roughly the size of Japan's annual tax revenue base or nearly as large as the loan book of UFJ, one of Japan's four largest banks. ¥35 trillion amounts to the equivalent of $2,500 for every person in Japan and, in fact, would amount to $50 per person if distributed equally among the entire population of the planet. In short, it was money creation on a scale never before attempted during peacetime.

Peacetime? 2003? Perhaps this was Japan's contribution to the U.S. invasion of Iraq...

Why did this occur? There is no shortage of yen in Japan. The yield on two year JGBs is 10 basis points. Overnight money is free. Japanese banks have far more deposits than there is demand for loans, which forces them to invest up to a quarter of their deposits in low yielding government bonds. So, what motivated the Bank of Japan to print so much more money when the country is already flooded with excess liquidity?

The Bank of Japan gave the ¥35 trillion to the Japanese Ministry of Finance in exchange for MOF debt with virtually no yield; and the MOF used the money to buy approximately $320 billion from the private sector. The MOF then invested those dollars into US dollar- denominated debt instruments such as government bonds and agency debt in order to earn a return.

The MOF bought more dollars through currency intervention then than during the preceding 10 years combined, and yet the yen rose by 11% over that period. Historically, foreign exchange intervention to control the level of a currency has met with mixed success, at best; and past attempts by the MOF to stop the appreciation of the yen have not always succeeded. They were very considerably less expensive, however. It is also interesting, and perhaps important, to note that the MOF stopped intervening in March 2004 just when the yen was peaking; that the yen depreciated immediately after the intervention stopped; and that when the yen began appreciating again in October 2004, the MOF refrained from further intervention.

So, what happened in 2003 that prompted the Japanese monetary authorities to create so much paper money and hurl it into the foreign exchange markets? Two scenarios will be explored over the following paragraphs.

Duncan doesn't mention it, but clearly the most important historical event of 2003 was the U.S. invasion of Iraq. Could that, with a possible guarantee to Japan of oil supplies, be part of it?

In 2002, the United States faced the threat of deflation for the first time since the Great Depression. Growing trade imbalances and a surge in the global money supply had contributed to the credit excesses of the late 1990s and resulted in the New Paradigm technology bubble. That bubble popped in 2000 and was followed by a serious global economic slowdown in 2001. Policy makers in the United States grew increasingly alarmed that deflation, which had taken hold in Japan, China and Taiwan, would soon spread to America.

Deflation is a central bank's worst nightmare. When prices begin to fall, interest rates follow them down. Once interest rates fall to zero, as is the case in Japan at present, central banks become powerless to provide any further stimulus to the economy through conventional means and monetary policy becomes powerless. The extent of the US Federal Reserve's concern over the threat of deflation is demonstrated in Fed staff research papers and the speeches delivered by Fed governors at that time. For example, in June 2002, the Board of Governors of the Federal Reserve System published a Discussion Paper entitled, "Preventing Deflation: Lessons from Japan's Experience in the 1990s." The abstract of that paper concluded "...we draw the general lesson from Japan's experience that when inflation and interest rates have fallen close to zero, and the risk of deflation is high, stimulus-both monetary and fiscal- should go beyond the levels conventionally implied by baseline forecasts of future inflation and economic activity."

From the perspective of mid-2002, the question confronting those in charge of preventing deflation must have been how far beyond the conventional levels implied by the base case could the economic policy response go? The government budget had already swung back into a large deficit and the Federal Funds rate was at a 41 year low. How much additional stimulus could be provided? A further increase in the budget deficit seemed likely to push up market determined interest rates, causing mortgage rates to rise and property prices to fall, which would have reduced aggregate demand that much more. And, with the Federal Funds rate at 1.75% in mid- 2002, there was limited scope left to lower it further. Moreover, given the already very low level of interest rates, there was reason to doubt that a further rate reduction would make any difference anyway.

In a speech entitled, "Deflation: Making Sure 'It' Doesn't Happen Here", delivered on November 21, 2002, Federal Reserve Governor Ben Bernanke explained to the world exactly how far beyond conventional levels the policy response could go. Governor Bernanke explained that the Fed would not be "out of ammunition" just because the Federal Funds rate fell to 0% because the Fed could create money and buy bonds of longer maturity in order to drive down yields at the long end of the yield curve as well. Moreover, he said, "In practice, the effectiveness of anti-deflation policy could be significantly enhanced by cooperation between the monetary and fiscal authorities. A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices."

He made similar remarks in Japan in May 2003 in a speech entitled, "Some Thoughts on Monetary Policy in Japan". He said, "My thesis here is that cooperation between the monetary and fiscal authorities in Japan could help solve the problems that each policymaker faces on its own. Consider for example a tax cut for households and businesses that is explicitly coupled with incremental BOJ purchases of government debt-so that the tax cut is in effect financed by money creation." These speeches attracted tremendous attention and for some time financial markets believed the Fed intended to implement the "unorthodox" or "unconventional" monetary policy options Governor Bernanke had outlined.

In the end, the Fed did not resort to unorthodox measures. The Fed did not create money to finance a broad-based tax cut in the United States. The Bank of Japan did, however. Three large tax cuts took the US budget from a surplus of $127 billion in 2001 to a deficit of $413 billion in 2004. In the 15 months ended March 2004, the BOJ created ¥35 trillion which the MOF used to buy $320 billion, an amount large enough to fund 77% of the US budget deficit in the fiscal year ending September 30, 2004. It is not certain how much of the $320 billion the MOF did invest into US Treasury bonds, but judging by their past behavior it is fair to assume that it was the vast majority of that amount.

Was the BOJ/MOF conducting Governor Bernanke's Unorthodox Monetary Policy on behalf of the Fed? There is no question that the BOJ created money on a very large scale as the Fed would have been required to do under Bernanke's scheme. Nor can there be any question that the money created was used to buy an increasing supply of US Treasury bonds being issued to finance the kind of broad-based tax cuts Governor Bernanke had discussed. Moreover, was it merely a coincidence that the really large scale BOJ/MOF intervention began during May 2003, while Governor Bernanke was visiting Japan? Was the BOJ simply serving as a branch of the Fed, as The Federal Reserve Bank of Tokyo, if you will? This is Scenario One.

If this was globally coordinated monetary policy (unorthodox or otherwise) it worked beautifully. The Bush tax cuts and the BOJ money creation that helped finance them at very low interest rates were the two most important elements driving the strong global economic expansion during 2003 and 2004. Combined, they produced a very powerful global reflation. The process seems to have worked in the following way:

US tax cuts and low interest rates fueled consumption in the United States. In turn, growing US consumption shifted Asia's export-oriented economies into overdrive. China played a very important part in that process. With a trade surplus vis-à-vis the United States of $124 billion, equivalent to 9% of its GDP in 2003 (rising to approximately $160 billion or above 12% of GDP in 2004), China became a regional engine of economic growth in its own right. China used its large trade surpluses with the US to pay for its large trade deficits with most of its Asian neighbors, including Japan. The recycling of China's US Dollar export earnings explains the incredibly rapid "reflation" that began across Asia in 2003 and that was still underway at the end of 2004. Even Japan's moribund economy began to reflate.

Whatever its motivation, Japan was well rewarded for creating money and buying US Treasury bonds with it. Whereas the BOJ had failed to reflate the Japanese economy directly by expanding the domestic money supply, it appears to have succeeded in reflating it indirectly by expanding the global money supply through financing the sharp increase in the MOF's holdings of US Dollar foreign exchange reserves. There is no question as to if this happened. It did. The only question is was it planned (globally coordinated monetary policy) or did it simply occur by coincidence, driven by other considerations?

What other considerations could have prompted the BOJ to create ¥35 trillion over 15 months? A second scenario is that a "run on the dollar" forced the monetary authorities in Japan to intervene on that scale to prevent a balance of payments crisis in the United States. This is Scenario Two.

During the Strong Dollar Trend of the late 1990s, foreign investors, both private and public, invested heavily in the United States. Those investments put upward pressure on the dollar and on US asset prices, including stocks and bonds. The trend became self-reinforcing. The more capital that entered the US, the more the dollar and dollar denominated assets rose in value. The more those assets appreciated, the more foreign investors wanted to own them. Because of the large sums entering the country, the United States had no difficulty in financing its giant current account deficit, even though that deficit nearly tripled between 1997 and 2001.

By 2002, however, with the US current account deficit approaching 5% of US GDP, it became increasingly apparent that the Strong Dollar Trend was unsustainable. The magnitude of the current account deficit made a downward adjustment in the value of the dollar unavoidable. At that point, the Strong Dollar Trend gave way and the Weak Dollar Trend began. Foreign investors who had invested in US dollar denominated assets during the late 1990s naturally wanted to take their money back out of the United States once it became clear that a sharp correction of the dollar was underway. Moreover, many US investors, and hedge funds in particular, also began selling dollar- denominated assets and buying non-US dollar-denominated assets to profit from the dollar's decline.

The change in the direction of capital flows can be seen very clearly in the breakdown of Japan's balance of payments.

… Traditionally, Japan runs a large current account surplus and a slightly less large financial account deficit, with the difference between the two resulting in changes (usually additions) to the country's foreign exchange reserves.

Beginning in 2003, however, there was a startling change in the direction of the financial account. Instead of large financial outflows from Japan to the rest of the world, there were very large financial inflows. For instance, in May 2003, Japan's financial account reflected a net inflow of $23 billion into the country. The net inflow in September was $21 billion. These amounts increased considerably during the first quarter of 2004, averaging $37 billion a month.

The capital inflows into Japan at that time were massive, even relative to Japan's traditionally large annual current account surpluses. But, why did Japan, which normally exported capital, suddenly experience net capital inflows on a very large scale in the first place? The most likely explanation is that very large amounts of private sector money began fleeing the dollar and seeking refuge in the relative safety of the yen.

When the Strong Dollar Trend broke, had the BOJ/MOF not bought the dollars that the private sector sold in such large quantities, the United States would have faced a balance of payments crisis, in which, in addition to having to fund a half a trillion dollar a year trade deficit, it would have had to find a way to fund a deficit of several hundred billion on its financial account as well.

Any other country facing a large shortfall on its balance of payments would have experienced a reduction in its foreign exchange reserves. The United States, however, maintains only a limited amount of such reserves; only $75 billion as at the end of 2003, far too little to fund the private capital outflows occurring at that time.

Once those reserves had been depleted, market-determined interest rates in the US would have begun to rise, in all probability, popping the US property bubble and throwing the country into recession. Under that scenario, a reduction in consumption in the United States would have undermined global aggregate demand and created a severe world-wide economic slump.

The US current account deficit more or less finances itself since the central banks of the surplus countries buy the dollars entering their countries to prevent their currencies from appreciating and then recycle those dollars back into US dollar-denominated assets in order to earn interest on them.

Large scale private sector capital flight out of dollars presented the recipients of that capital with the same choice. The central bank of each country receiving the capital inflow had the choice of either printing their domestic currency and buying the incoming capital or else allowing their currency to appreciate as the private sector swapped out of dollars. The European Central Bank chose to allow the euro to appreciate. The Bank of Japan and the People's Bank of China chose to print yen and renminbe and accumulate the incoming dollars to prevent their currencies from rising. If some central bank had not stepped in and financed the private sector capital flight out of the dollar, then sharply higher US interest rates most likely would have thrown the world into a severe recession. It is quite likely that this consideration also played a role in influencing the actions of the Japanese monetary authorities during this episode.

…The BOJ/MOF stopped intervening in March 2004. By that time, the Fed had indicated that it planned to begin tightening interest rates. That put a stop to the private sector capital flight out of the dollar. Therefore no more intervention was required. At the same time, by the end of the first quarter of 2004, it was becoming clear that strong economic growth in the US was creating higher than anticipated tax revenues. That meant a smaller than expected budget deficit. In July, the President's Office of Management and Budget revised down its estimate of the budget deficit from $521 billion to $445 billion. The actual deficit turned out to be $413 billion. Thus less funding was required than initially anticipated.

So, what did motivate the monetary authorities in Japan to create the equivalent of 1% of global GDP and lend it to the United States? Was it simply, straightforward self interest to prevent a very sharp surge in the value of the yen? Was it globally coordinated monetary policy designed to pull the world out of the 2001 slump and prevent deflation in the United States? Or, was it necessary to stave off a US balance of payments crisis that would have produced a global economic crisis?

Perhaps it was only straightforward foreign exchange intervention to prevent a crippling rise in the value of the yen. Intentionally or otherwise, however, by creating and lending the equivalent of $320 billion to the United States, the Bank of Japan and the Japanese Ministry of Finance counteracted a private sector run on the dollar and, at the same time, financed the US tax cuts that reflated the global economy, all this while holding US long bond yields down near historically low levels.

In 2004, the global economy grew at the fastest rate in 30 years. Money creation by the Bank of Japan on an unprecedented scale was perhaps the most important factor responsible for that growth. In fact, ¥35 trillion could have made the difference between global reflation and global deflation. How odd that it went unnoticed.

How odd that Duncan doesn't notice that Japan enabled the United States to invade Iraq, just as Japan contributed massive sums to the first Iraq War under Bush I. This is the sort of thing financial writers don't like to look at. If the United States economy had collapsed in late 2002, could the war have been started? With Bush, who knows, but it is worth asking the question.

What does Japan fear? No oil and China. The United States can help them with both. Many people have commented on the poodle-like subservience of Blair, but few have mentioned Koizumi's strong support of the war and complete backing of U.S. foreign policy.

Adding fuel to the debate over U.S.-international trade, a tech industry group is blasting "Buy American" legislation passed by the House of Representatives this week.

On Friday, the Information Technology Association of America called the measure bad security policy and bad economic policy. The legislation, an amendment to the Homeland Security Authorization Act, would force the Department of Homeland Security to buy products mostly made in America.

The legislation was authored by Rep. Don Manzullo, an Illinois Republican, and passed by the House on Wednesday. It would require more than 50 percent of the components in any end product procured by the department to be mined, produced or manufactured inside the United States.

"With this purchasing prohibition, I guess (the department) will have to learn to do without computers and cell phones," ITAA President Harris Miller said in a statement. "I cannot think of a single U.S. manufacturer that could meet this 50 percent threshold for these devices, and I doubt that those charged with protecting our safety here at home can either."

Manzullo said the measure is in the tradition of the Buy American Act, passed during the Great Depression. "When U.S. taxpayers' dollars are spent, we must make sure the federal government is buying as much of their goods and services possible from U.S. manufacturers," Manzullo said in a statement Wednesday. "This legislation preserves the intent of the Buy American Act while helping to restore the U.S. industrial base and creating jobs for Americans."

According to Manzullo, the Buy American Act has been undermined by pacts between the United States and other countries that allow the substitution of foreign components for U.S. ones. The Pentagon, Manzullo said, has agreements with 21 countries that waive the Act. Manzullo's amendment would prevent the Department of Homeland Security from waiving the 50 percent "Buy American" content restrictions like the Pentagon has done without approval from Congress.

Conflict over global trade has resurfaced in the past few years, coinciding with the growing shipment of white-collar jobs like programming to lower-wage nations. In the past week or so, tensions over commerce have risen between China and the United States. China has been accused of subsidizing its exports by pegging its yuan to the dollar, resulting in a currency value that is artificially low.

As that trade dispute simmers, the U.S. tech industry is keen to see changes by the Asian giant--but opinions vary on how hard to push.

In the short run, at least, U.S. techies may be more the losers than gainers in global trade arrangements. A report last year sponsored by ITAA on offshore outsourcing of software and IT services indicated that sacrifices by American IT workers would result in an improved U.S. economy overall. [...]

They keep going through the motions in Washington, much like the Roman Senate used to meet in solemn conclaves and pretend that their flatulent oratory had some effect on the real engines of imperial power. Today, Congressional factions strive in fierce agon over profound constitutional issues: filibusters, judicial review, church and state, executive privilege. Commentators knit their brows in sage analysis of these historic events, while activists choose their champions and drive them on with partisan heat. Yet none of it means a thing.

The U.S. Congress gave away its powers long ago to corporate interests and the almighty executive branch that every legislator secretly hopes to lead one day, Pentagon thunderbolts in hand. (Who would curb Caesar that might Caesar be?) This "degradation of the democratic dogma" has been the work of more than 50 years of bipartisan goonery, but it has now reached its nadir in the festering pit of blood and bile that is the Bush Regime. American public life is now almost entirely a facade, a deadening -- and deadly -- sideshow: the multibillion-dollar electoral circuses, the increasingly frenzied "culture wars," the epic clash of interest groups across the media battlefields, the endless making, unmaking and remaking of laws. All this sound and fury merely obscures the ugly reality: that there are no effective restraints on the arbitrary exercise of power by the imperial court of President George W. Bush.

He can wage aggressive war based on lies. He can order the assassination of anyone on earth, anywhere, at any time, without trial, without evidence, at his unchallengeable whim, as we've often detailed here. He can set up torture chambers all over the globe. He can dole out billions of public dollars to corporate cronies in no-bid contracts. There is no punishment for these crimes, no political price paid for this corruption, no genuine resistance at all to this rape of liberty from the very institutions and civic structures being ravaged.

What's more, a great many of "the people" also embrace -- even celebrate -- this brutal reality. It is not at all true, as some progressives contend, that there is some kind of collective goodness in "just plain folks" – some magical kernel of broad-minded, open-hearted, democratic wisdom just waiting to be tapped if only "the people" could be freed from the bedevilling lies of their wicked leaders. Most lies succeed because people want to believe them.

This is doubly true in politics. Not only history but also our own daily experience shows us that those in power (or those seeking power) routinely lie, shuffle, deceive and manipulate. Nothing they say can be taken simply on faith; it must be met with stringent skepticism, examined in the harshest light. This has proved true in every single human society, without fail, throughout all recorded time. Yet millions of people willingly, happily swallow the most blatant political lies at face value. They have no wish to be undeceived and lose the illusions of their own specialness, their own righteousness, their exalted place in the world. If there must be violence to maintain this place, if someone out there must die, if someone must starve, if someone must wail, then so be it. If the truth convicts us, undermines us, discomforts us, then let the truth be changed. This is the unspoken credo of vast swaths of "the people." Leaders play upon this, they encourage it and prosper by it -- but they don't create it out of whole cloth.

This literally unspeakable situation accounts for much of the strange hollowness and sense of dislocation that pervades political life today. Leaders can't possibly say what they really mean or tell the whole truth about their policies, which rest ultimately on violence, corruption, suffering and fear. Nor do their followers want to hear the truth. The pious masks required to hide such unmitigated greed for loot and power thus become more outlandish, more cartoonish. That's why the maskers (and the "just plain folks" who support them) strive ever more ruthlessly to suppress or discredit all dissent -- they know that honest skepticism could destroy their ludicrous fraud.

In Iraq, for example, the war criminals of the coalition cannot possibly admit that they are killing, torturing and despoiling innocent people in order to maintain and extend their own geopolitical dominance. Bush cannot possibly say, "I tore the eyeballs from that little girl's skull, I churned that woman's entrails with steel splinters, I sodomized that teenage boy and smeared him with his own filth to make a few of my cronies rich and keep the rubes out there fat and happy with big cars, cheap gas and 37 different brands of corn chips" -- although that's exactly what he's doing. He can't say, "We know Iraq posed no threat to us but we wanted to invade them anyway, so we 'fixed the facts and intelligence around the policy'" -- although that's exactly what was revealed in the just-leaked "Downing Street memo," the record of a 2002 strategy session between British Prime Minister Tony Blair and his advisers following top-level talks in Washington.

No, such undermining truths wouldn't do at all. Instead, we first get the implausible lies about WMD and now the laughable cant about a "noble mission" to bring democracy to the "dark places of the earth." This while Bush succors Islam Karimov even as the Uzbek despot massacres his own people and runs a regime several magnitudes worse than the factions recently overthrown -- with copious U.S. assistance -- in Georgia and Ukraine.

And so the imperial engines grind on, untouched, untroubled, unrestrained, churning the world's entrails behind the facade.

Citing security, Naperville libraries will make patrons prove their identities before using computers. Privacy advocates fear misuse of the data.

Before long, patrons wanting to use Naperville Public Library System computers without a hassle will have to prove their identity with a fingerprint.

The three-library system this week signed a $40,646 contract with a local company, U.S. Biometrics Corp., to install fingerprint scanners on 130 computers with Internet access or a time limit on usage.

The decision, according to the American Library Association, makes Naperville only the second library system in the country to install fingerprint scanners.

Library officials say the added security is necessary to ensure people who are using the computers are who they say they are.

Officials promise to protect the confidentiality of the fingerprint records.

But with Congress contemplating an expansion of the USA Patriot Act, which gives federal authorities access to confidential library records, and cameras watching the streets some Chicagoans drive or the sidewalks they stroll, privacy advocates are concerned about yet another erosion of personal liberty.

"We take people's fingerprints because we think they might be guilty of something, not because they want to use the library," said Ed Yohnka, spokesman for the American Civil Liberties Union of Illinois.
Yohnka said Naperville may mean well, but that does not mean the technology won't be used for something else at a later date.

"You're creating just another database of information about people," Yohnka said. "I'm sure they started out with the best of intentions of not sharing this information, but the reality is sometimes intentions go awry."

Currently patrons use their library cards and personal identification numbers to access the computers.

That will change once the scanners are installed. The glass-topped, silver metal boxes about the size of a package of Tic-Tacs read the print on a patron's index finger and use an algorithm to convert at least 15 specific points into a unique numeric sequence.

Once a patron's fingerprint has been recorded, accessing a computer will require only the touch of a finger.

Library Deputy Director Mark West said the system will be implemented over the summer beginning with a public education campaign in June. West said he is confident the public will embrace the technology once it learns its limitations.

The stored numeric data cannot be used to reconstruct a fingerprint, West said, nor can it be cross-referenced with other fingerprint databases such as those kept by the FBI or the Illinois State Police.

"Right now we give you a library card with a bar code attached to it. This is just a bar code, but it's built in," West said. [...]

Deborah Caldwell-Stone, deputy director of the ALA's office of intellectual freedom, acknowledged that requiring a fingerprint scan might dissuade some people from using library computers.

"There are going to be folks who come from different political situations, folks who come out of Central Europe who have had a history of living under authoritative regimes who may not be comfortable with this," Caldwell-Stone said.

Comment: Say it ain't so! Perhaps we should actually listen to these folks if they actually have experience with authoritative regimes and the loss of civil liberties and privacy... See next article.

But Caldwell-Stone said libraries already collect all kinds of personal information from patrons and at some point must be trusted to protect it.

U.S. Biometrics President Dave Delgrosso said his company's technology is seeping into the mainstream, popping up in banks, hospitals and other institutions where exact identifications are important.

Proposed legislation would compel people to spy on their family members and neighbors, forcing all Americans to become foot soldiers in the war on drugs.

Neighbors spying on neighbors? Mothers forced to turn in their sons or daughters? These are images straight out of George Orwell's 1984, or a remote totalitarian state. We don't associate them with the land of the free and the home of the brave, but that doesn't mean they couldn't happen here. A senior congressman, James Sensenbrenner (R-Wis.), is working quietly but efficiently to turn the entire United States population into informants--by force.

Sensenbrenner, the U.S. House Judiciary Committee Chairman, has introduced legislation that would essentially draft every American into the war on drugs. H.R. 1528, cynically named "Safe Access to Drug Treatment and Child Protection Act," would compel people to spy on their family members and neighbors, and even go undercover and wear a wire if needed. If a person resisted, he or she would face mandatory incarceration.

Here's how the "spy" section of the legislation works: If you "witness" certain drug offenses taking place or "learn" about them, you must report the offenses to law enforcement within 24 hours and provide "full assistance in the investigation, apprehension and prosecution" of the people involved. Failure to do so would be a crime punishable by a mandatory minimum two-year prison sentence, and a maximum sentence of 10 years.

Here are some examples of offenses you would have to report to police within 24 hours:

* You find out that your brother, who has children, recently bought a small amount of marijuana to share with his wife;
* You discover that your son gave his college roommate a marijuana joint;
* You learn that your daughter asked her boyfriend to find her some drugs, even though they're both in treatment.

In each of these cases you would have to report the relative to the police within 24 hours. Taking time to talk to your relative about treatment instead of calling the police immediately could land you in jail.

In addition to turning family member against family member, the legislation could also put many Americans in danger by forcing them to go undercover to gain evidence against strangers.

Even if the language that forces every American to become a de facto law enforcement agent is taken out, the bill would still impose draconian sentences on college students, mothers, people in drug treatment and others with substance abuse problems. If enacted, this bill will destroy lives, break up families, and waste millions of taxpayer dollars.

Despite growing opposition to mandatory minimum sentences from civil rights groups to U.S. Supreme Court Justices, the bill eliminates federal judges' ability to give sentences below the minimum recommended by federal sentencing guidelines. This creates a mandatory minimum sentence for all federal offenses, drug-related or not.

H.R. 1528 also establishes new draconian penalties for a variety of non-violent drug offenses, including:

* Five years for anyone who passes a marijuana joint at a party to someone who, at some point in his or her life, has been in drug treatment;
* Ten years for mothers with substance abuse problems who commit certain drug offenses at home (even if their children are not at home at the time);
* Five years for any person with substance abuse problems who begs a friend in drug treatment to find them some drugs.

These sentences would put non-violent drug offenders behind bars for as long as rapists, and they include none of the drug treatment touted in the bill's name.

At a time when everyone from the conservative American Enterprise Institute to the liberal Sentencing Project is slamming the war on drugs as an abject failure, Sensenbrenner is trying to escalate it, and to force all Americans to become its foot soldiers. Instead of enacting new mandatory minimums, federal policymakers should look toward the states. A growing number have reformed their drug sentencing laws, including Arizona, California, Kansas, Louisiana, Maryland, New Mexico, New York and Texas, and they have proved it is possible to both save money and improve public safety.

Simply put, there is no way H.R. 1528 can be fixed. The only policy proposal in recent years that comes close to being as totalitarian as this bill is Operations TIPS, the Ashcroft initiative that would have encouraged -- but not required -- citizens to spy on one another. Congress rightfully rejected that initiative and they should do the same with H.R. 1528. Big Brother has no business here in America.

The Food and Drug Administration may soon approve a medical device that would be the first new treatment option for severely depressed patients in a generation, despite the misgivings of many experts who say there is little evidence that it works.

The pacemaker-like device, called a vagus nerve stimulator, is surgically implanted in the upper chest, and its wires are threaded into the neck, where it stimulates a nerve leading to the brain. It has been approved since 1997 for the treatment of some epilepsy patients, and the drug agency has told the manufacturer that it is now "approvable" for severe depression that is resistant to other treatment.

But in the only rigorously controlled trial so far in depressed patients, the stimulator was no more effective than surgery in which it was implanted but not turned on.

While some patients show significantly improved moods after having the $15,000 device implanted, most do not, the study found. And once the device is implanted, it is hard to remove entirely; surgeons say the wire leads are usually left inside the neck.

Proponents say that many severely depressed patients do not respond to antidepressants or electroshock therapy and that those patients are desperate for any treatment to relieve their suffering.

"These people have no other options, so we need to consider anything that shows potential to help," said Dr. Harold A. Sackeim, chief of biological psychiatry at the New York State Psychiatric Institute, who consults for Cyberonics Inc., the Houston company that makes the stimulator.

But Dr. Michael Thase, a psychiatrist at the University of Pittsburgh who consults for the company, said there was "simply not a good enough basis in evidence" for approval. While the device is promising, Dr. Thase said, "the shaky state of the evidence means we have to be very cautious with this and prepare for the possibility that the hoped-for benefit isn't there." [...]

In the study, doctors implanted the device in 235 severely depressed people. The stimulator sends timed pulses of electricity to the vagus nerve, which has wide connections throughout the brain.

Half of the patients then had their stimulators turned on. The investigators did not know which of their patients had their stimulators on.

After three months, researchers "unblinded" the study and compared levels of depression in the two groups based on standard measures of disease severity, the F.D.A. documents show. They found that 17 of the 111 patients who had implants turned on and completed the trial showed significant improvement. But 11 of 110 who had no stimulation and completed the trial also felt significantly better. The difference between the two groups was small enough to be attributable to chance. [...]

"The feeling was that anything that gives these people hope is potentially worthwhile," the chairwoman, Dr. Kyra Becker, a neurologist at the University of Washington, said in an interview. "But the whole meeting was uncomfortable, and everyone wanted to see another trial done, no question about it." [...]

One of our neighbors is moving. I've been in this neighborhood for about six years now, but didn't really know them very well at all - just waves and nods, mostly.

So I heard the moving van pull up this morning. When I got home this evening I happened to spy my neighbor (he's like 85 years old - I don't know exactly, but he's old, talks and moves very slowly) standing on the sidewalk next to the van. I walked over and shook his hand, and we started talking. I asked him where he was moving, and he said, "Back to Germany."

I had been stationed in Germany for two years while in the military, so I lit up, and commented about how beautiful the country was, and inquired if he was going back because he missed it.

"No," he answered me. "I'm going back because I've seen this before." He then commenced to explain that when he was a kid, he watched with his family in fear as Hitler's government committed atrocity after atrocity, and no one was willing to say anything. He said the news refused to question the government, and the ones who did were not in the newspaper business much longer. He said good neighbors, people he had known all his life, turned against his family and other Jews, grabbing on to the hate and superiority "as if they were starved for it" (his words).

He said he was too old to see it happen right in front of his eyes again, and too old to do anything about it, so he was taking his family back to Europe on Thursday where they would be safe from George W. Bush and his neocons. He seemed resolute, but troubled, nonetheless, as if being too young on one end and too old on the other to fight what he saw happening was wearing on him.

I gotta tell you - it was chilling. I let him talk, and the whole time, my gut was churning, like I had mutated butterflies in my stomach. When he was finished, he shook my hand, gripping it really hard, until his knuckles turned white and he was shaking. He looked me in the eyes, hard, and said, "I will pray for your family and your country." He let go of my hand and hobbled away.

I have related this event to you in the hopes it will serve as a cautionary anecdote about the state of our Union, and to illustrate the path we Americans are being led down by a group of fanatics bent on global economic and military dominion. When a man who survived the fruits of fascism decides its time to leave THIS country because he's seeing the same patterns that led to the Holocaust and other Nazi horrors beginning to form here, it is time for us to recognize the underlying evil inherent in the actions of those who claim they work for all Americans, and for all mankind. And it is incumbent upon all Americans, Red and Blue, Republican and Democrat, to stop them.

If there is any one single and indisputable fact about the Bushcons, it is that they are liars and war criminals. So when photos of a supposedly captured and incarcerated Saddam Hussein appear in Britain's mass circulation tabloid newspaper, the Sun, I am skeptical - not of the veracity of the photos, but rather if the person in the photos is indeed Saddam Hussein. According to the Associated Press, the publication of the photos have "angered U.S. military officials, who launched an immediate investigation into who took and provided the photographs of the former Iraqi dictator." Pentagon careerists are angry because the "embarrassing photographs [of Saddam in his underwear] are expected to be regarded negatively throughout the Arab region, and anger some who still respect Saddam for standing up to the United States," according to the AP.

I do not believe Saddam was dragged out of a "spider hole" and I believe the man secreted away in a small prison cell somewhere in Baghdad is one of Saddam's doubles. Take a look at this photo comparison and this one and decide for yourself if the two men pictured are the same (note the differences in teeth and bite; the fake Saddam on the left has pronounced under bite and irregular teeth whereas the real Saddam on the right does not). Moslem al-Asadi, a doctor living in exile in Iran, told the Italian newspaper Corriere della Sera Saddam Hussein died in 1999 of cancer of the lymph nodes and "they're just showing his doubles." And then Sajida Heiralla Tuffah, Saddam's wife, the first of Hussein's relatives to meet him after his supposed capture, said "the person she encountered was not her husband, but his double," according to a report published by Pravda. Naturally, this assertion by somebody who knows Saddam quite intimately was given short shrift in the corporate media here in the United States. Instead, for theatrical and propaganda purposes, we were subjected ad nauseam to images of a fake Saddam having his mouth examined, told over and over how the dictator was found crouching in a hole, dirty and disheveled. It was impetrative to show a defeated and humiliated Saddam, especially after Osama bin Laden eluded capture (mostly because he is dead) and Saddam had to move aside for new boogeyman, for instance the mercurial Abu Musab al-Zarqawi.

"The embarrassing photographs are expected to be regarded negatively throughout the Arab region, and anger some who still respect Saddam for standing up to the United States," the AP reports, indicating the photos came from "U.S. military sources." Is it possible the Pentagon is not really "angered" by the release of the photos and purposely released them specifically to "anger some who still respect Saddam" as a part of ongoing psychological warfare directed at Muslims? Remarkably, the "U.S. military in Baghdad said in an announcement that the photos violated military guidelines 'and possibly Geneva Convention guidelines for the humane treatment of detained individuals,'" a quite absurd admission considering the massive violations of the Geneva Conventions committed by the United States against Muslims - specifically, "committing the supreme international crime, as defined by the Nuremberg Tribunal," by launching an unprovoked assault on Iraq in defiance of the UN Security Council, as noted by Lawyers Against the War. Bush's invasion and occupation is a "supreme international crime, differing only from other war crimes in that it contains within itself the accumulated evil of the whole," according to professor Michael Mandel of Canada's Osgoode Hall Law School.

So, obviously, the United States does not give a whit about the Geneva Convention guidelines. In fact, Bush's new AG, Alberto Gonzales, "warned more than [three] years ago that U.S. officials could be prosecuted for 'war crimes' as a result of new and unorthodox measures used by the Bush administration in the war on terrorism, according to an internal White House memo and interviews with participants in the debate over the issue," Michael Isikoff wrote for Newsweek (Mr. Isikoff was recently chopped off at the knees for telling the truth about the abuse of "detainees" [more accurately, abductees] and trashing of the Koran, so we should not expect any more scathing critiques of the Bush criminal cabal to emerge from his pen).

Angering Muslims is precisely what the Bush Strausscons want. "In their view, invasion of Iraq was not merely, or even primarily, about getting rid of Saddam Hussein. Nor was it really about weapons of mass destruction, though their elimination was an important benefit. Rather, the administration sees the invasion as only the first move in a wider effort to reorder the power structure of the entire Middle East," writes Joshua Micah Marshall. "History reveals that wars often end in chaos that continues for years," writes Gen. Tommy Franks in his autobiography, and although Franks would never admit it this chaos is precisely what the Strausscons, beholden to Israel and its racist and expansionist ambitions, have in mind for Muslims and Arabs. Chaos, anger, ethnic strife, religious polarization - all of these are currently used to divide and render impotent the Arab world, part and parcel of well-orchestrated "[s]ubversive operations designed to dismember the Arab world, defeat the Arab national movement, and create puppet regimes which would gravitate to the regional Israeli power," as the late Livia Rokach, daughter of Israel Rokach, Minister of the Interior in the government of Moshe Sharett, second prime minister of Israel, writes in her booklet Israel's Sacred Terrorism: A Study Based on Moshe Sharett's Personal Diary and Other Documents.

The Strausscon recipe for chaos is really quite simple: attack and render impotent Arab and Muslim military capability (beginning with Iraq, considered the most ominous threat to Israel prior to the invasion) and then, through covert and false flag operations (for instance, the divisive presence of the fake Abu Musab al-Zarqawi), spread social and political chaos, most notably along ethnic and religious lines. It is a very old and tested version of the colonial tactic of "divide and conquer," used effectively by the British Raj, playing off Hindus against Muslims (a few years ago the legacy of this tactic nearly resulted in a nuclear war between India and Pakistan). "Invaders quite typically use collaborators to run things for them. They very naturally play upon any existing rivalries and hostilities to get one group to work for them against others," Noam Chomsky told David Barsamian in 1993. "If the United States was conquered by the Russians, Ronald Reagan, George Bush, Elliott Abrams and the rest of them would probably be working for the invaders, sending people off to concentration camps. They're the right personality types."

Indeed, it is the "right" personality type - Strausscon sociopaths dedicated to destroying the Muslim world in the name of Pax Israelica - that is busy at work sowing chaos and running black propaganda campaigns, most recently Saddam in his underwear, in order to turn up the heat a notch or two in the Arab world. But since the Strausscons and their vicious allies are historically retarded - unable to glean the lessons of history (most notably Vietnam and Algeria) - they will fail stupendously, as the gains of the actual Iraqi resistance (not the fake and counterproductive "insurgency" led by the mythical Abu Musab al-Zarqawi, a campaign of suicide bombing directed against civilians and the gruesome beheading of "infidels" ) make painfully obvious for the United States, although, as in Vietnam, denial runs deep and is not a river in Egypt.

Complaints by inmates in Afghanistan, Iraq and Cuba emerged early. In 2003, the Pentagon set a sensitivity policy after trouble at Guantanamo.

WASHINGTON - Senior Bush administration officials reacted with outrage to a Newsweek report that U.S. interrogators had desecrated the Koran at the Guantanamo Bay, Cuba, detention facility, and the magazine retracted the story last week. But allegations of disrespectful treatment of Islam's holy book are far from rare.

An examination of hearing transcripts, court records and government documents, as well as interviews with former detainees, their lawyers, civil liberties groups and U.S. military personnel, reveals dozens of accusations involving the Koran, not only at Guantanamo, but also at American-run detention facilities in Afghanistan and Iraq.

The Pentagon is conducting an internal investigation of reported abuses at the naval base in Cuba, led by Air Force Lt. Gen. Randall Schmidt. The administration has refused to say what the inquiry, still weeks from completion, has found so far.

But two years ago, amid allegations of desecration and hunger strikes by inmates, the Army instituted elaborate procedures for sensitive treatment of the Koran at the prison camp. Once the new procedures were in place, complaints there stopped, said the International Committee of the Red Cross, which monitors conditions in prisons and detention facilities.

The allegations, both at Guantanamo Bay and elsewhere, contain detailed descriptions of what Muslim prisoners said was mishandling of the Koran - sometimes in a deliberately provocative manner.

In one instance, an Iraqi detainee alleged that a soldier had a guard dog carry a copy of the Koran in its mouth. In another, guards at Guantanamo were said to have scrawled obscenities inside Korans.

Other prisoners said Korans were kicked across floors, stomped on and thrown against walls. One said a soldier urinated on his copy, and others said guards ridiculed the religious text, declaring that Allah's words would not save detainees.

Some of the alleged incidents appear to have been inadvertent or to have resulted from U.S. personnel's lack of understanding about how sensitive Muslim detainees might be to mishandling of the Koran. In several cases, for instance, copies were allegedly knocked about during scuffles with prisoners who refused to leave their cells.
In other cases, the allegations seemed to describe instances of deliberate disrespect.

"They tore it and threw it on the floor," former detainee Mohammed Mazouz said of guards at Guantanamo Bay. "They urinated on it. They walked on top of the Koran. They used the Koran like a carpet."

"We told them not to do it. We begged. And then they did it some more," said Mazouz, a Moroccan who was seized in Pakistan soon after the Sept. 11 terrorist attacks. Recently released, he described the alleged incidents in a telephone interview from his home in Marrakech.

Ahmad Naji Abid Ali Dulaymi, who was held at the Abu Ghraib prison in Iraq for 10 months, singled out a soldier or noncommissioned officer known to detainees only as "Fox." He said prisoners were forced to sit naked, were licked by dogs, and were soaked in cold water and then forced to sit in front of a powerful air-conditioner.

"But frankly," he said, "the worst insult and humiliation they were doing to us, especially for the religious ones among us, is when they, especially Fox, tore up holy books of Koran and threw them away into the trash or into dirty water.

"Almost every day, Fox used to take a brand new Koran, and tear off the plastic cover in front of us and then throw it away into the trash container."

The hunger strikes erupted in 2002 at Guantanamo when word swept the camp that Korans were being desecrated. In response, the Defense Department's Southern Command, which oversees