Fresh scent may hide toxic secret

Source: LISA STIFFLER, Seatle P-I.

Innocuous-sounding ‘perfume’ in detergents, air fresheners made with dangerous chemicals

The scented fabric sheet makes your shirts and socks smell flowery fresh and clean. That plug-in air freshener fills your home with inviting fragrances of apple and cinnamon or a country garden.

But those common household items are potentially exposing your family and friends to dangerous chemicals, a University of Washington study has found.

Trouble is, you have no way of knowing it. Manufacturers of detergents, laundry sheets and air fresheners aren’t required to list all of their ingredients on their labels — or anywhere else. Laws protecting people from indoor air pollution from consumer products are limited.

When UW engineering professor Anne Steinemann analyzed of some of these popular items, she found 100 different volatile organic compounds measuring 300 parts per billion or more — some of which can be cancerous or cause harm to respiratory, reproductive, neurological and other organ systems.

Some of the chemicals are categorized as hazardous or toxic by federal regulatory agencies. But the labels tell a different story, naming only innocuous-sounding “perfume” or “biodegradable” contents.

“Consumers are breathing these chemicals,” she said. “No one is doing anything about it.”

Industry representatives say that isn’t so.

“Dr. Steinemann’s statement is misleading and disingenuous,” said Chris Cathcart, president of the Washington, D.C.-based Consumer Specialty Products Association, in a statement.

“Air fresheners, laundry products and other consumer specialty products are regulated under the Federal Hazardous Substances Act and subsequently have strict labeling requirements,” he said. “Companies producing products that are regulated under FHSA must name on the product label each component that contributes to the hazard.”

Millions are spent annually to ensure that fragrances in the products are safe, according to a joint statement from the Fragrance Materials Association, which represents fragrance manufacturers, and the Research Institute for Fragrance Materials, which works closely with the association.

Ingredients are routinely tested, and chemicals that are considered dangerous are present at levels much too low to cause harm, according to the groups.

But there are numerous reports of people — particularly those with asthma, chemical sensitivities and allergies — having strong adverse reactions, researchers said.

That’s a problem when public restrooms in restaurants or airplanes use air fresheners, or when hotels wash towels and sheets in scented laundry supplies. And even when the concentrations are low in individual products, people are exposed to multiple sources on a daily basis.

Aileen Gagney, Asthma and Environmental Health Program manager with the American Lung Association in Seattle, herself an asthma sufferer, has a rule of thumb to help avoid exposure: “If it smells bad, it’s bad; if it smells good, it’s bad.”

But even that won’t always work.

According to Steinemann, even products labeled “unscented” sometimes contain a fragrance and a “masking” fragrance to make them odor-free.

People, Puget Sound at risk?

For Steinemann’s research, published Wednesday in Environmental Impact Assessment Review, she selected a top-selling item from six categories of products: dryer sheets, fabric softeners, detergents, and solid, spray and plug-in air fresheners.

Then she contracted with a lab to test the air around the items to identify the chemicals people could be breathing.

Ten of the 100 volatile organic compounds identified qualified under federal rules as toxic or hazardous, and three of those — 1,4-dioxane, acetaldehyde and chloromethane — are “hazardous air pollutants” considered unsafe to breathe at any concentration, according to the study.

The labels gave no indication that the irritating and potentially dangerous chemicals were present, so Steinemann checked the product’s Material Safety Data Sheets. These technical documents provide ingredient information for the safety of workers and emergency responders. They, too, disclosed little detail, mostly citing ingredients such as “essential oils” and “organic perfume.”

“It’s a reasonable expectation to think that laundry products and air fresheners would be free of chemicals that can cause cancer,” said Erika Schreder, a staff scientist with the Washington Toxics Coalition.

“But as this UW study shows, it’s disturbingly easy to find toxic chemicals in everyday products like these because companies don’t have to say what’s in their products.”

Cathcart, of the Consumer Specialty Products Association, said the information’s not on the package because the “chemicals are not present in the products at levels deemed hazardous under the law. Given the limited space on product labels, it is important to include the relevant information consumers need to make intelligent use, storage and disposal decisions.”

The threat isn’t limited to people. Steinemann and others worry that the chemicals in consumer products flow from homes to the outdoors.

“These chemicals get into our water systems and into Puget Sound,” she said. They are “extraordinarily hard to get out of the environment.”

Steinemann’s research was paid for using discretionary money awarded to her as a UW professor; she wanted to avoid any appearance of a conflict of interest. She has also submitted for publication a study that goes further to examine ingredients in cleaning and personal-care products.

Regulatory gaps

With fears growing over chemicals in consumer products — lead in toys, bisphenol A in plastic baby bottles, phthalates in shower curtains and cosmetics — environmentalists and health advocates are calling for stricter regulations of chemicals in everyday goods. They also want shoppers to have more readily accessible information.

Manufacturers and trade groups representing consumer products routinely counter that there’s plenty of testing and oversight from within the industries and from government regulations to ensure safety.

In the fragranced-products arena, they point to industry Web sites with information on product ingredients and suggest contacting companies with specific questions.

Critics maintain that’s not enough.

“There’s obviously a loophole,” said Michael Robinson-Dorn, a UW law professor who aided Steinemann’s research. “We regulate many of these chemicals in other circumstances, yet when they’re in products that we’re in contact with daily, in some cases, we don’t wind up finding out about them.”

He said the items can slip between regulatory cracks by falling into the jurisdiction of multiple government agencies, none taking ownership.

“Any time you have a product that is regulated by many different agencies, it’s easy for them not to react,” he said.

In the absence of strong laws, the marketplace is starting to regulate itself.

After the Natural Resources Defense Council last fall found troubling levels of phthalates — plasticizing chemicals that can potentially harm developing babies — in air fresheners, Walgreens pulled the products from its shelves.

Last month, NRDC and other environmental groups sued the Environmental Protection Agency to force manufacturers to test air freshener safety and label products with a full ingredient list.

Steinemann’s study could push the process along.

“Consumer demand for less-toxic products will encourage companies to reformulate their products,” she said. “This is a case where a little information could have a great public benefit.”

P-I reporter Lisa Stiffler can be reached at 206-448-8042 or lisastiffler@seattlepi.com. Read her blog on the environment at datelineearth.com.

THE AMERICAN MIDDLE CLASS CAN’T TAKE MUCH MORE PUNISHMENT

By Matt Taibbi, RollingStone.com via Alternet.

I am a single mother with a 9-year-old boy. To stay warm at night my son and I would pull off all the pillows from the couch and pile them on the kitchen floor. I’d hang a blanket from the kitchen doorway and we’d sleep right there on the floor. By February we ran out of wood and I burned my mother’s dining room furniture. I have no oil for hot water. We boil our water on the stove and pour it in the tub. I’d like to order one of your flags and hang it upside down at the capital building… we are certainly a country in distress.
— Letter from a single mother in a Vermont city, to Senator Bernie Sanders

The Republican and Democratic conventions are just around the corner, which means that we’re at a critical time in our nation’s history. For this is the moment when the country’s political and media consensus finally settles on the line of bullshit it will be selling to the public as the “national debate” come fall.

If you pay close attention you can actually see the trial balloons whooshing overhead. There have been numerous articles of late of the Whither the Debate? genus in the country’s major dailes and news mags, pieces like Patrick Healy’s “Target: Barack Obama. Strategy: What Day is it?” in the New York Times. They ostensibly wonder aloud about what respective “plans of attack” Barack Obama and John McCain will choose to pursue against one another in the fall.

In these pieces we already see the candidates trying on, like shoes, the various storylines we might soon have hammered into our heads like wartime slogans. Most hilarious from my viewpoint is the increasingly real possibility that the Republicans will eventually decide that their best shot against Obama is to pull out the old “He’s a flip-flopper” strategy — which would be pathetic, given that this was the same tired tactic they used against John Kerry four years ago, were it not for the damning fact that it might actually work again. (I’m actually not sure sometimes what is more repulsive: the bosh they trot out as campaign “issues,” or the enthusiasm with which the public buys it.)

Naturally we’ll also see the “Patriotism Gap” storyline whipped out and reused over and over again. There will also be much talk emanating from the McCain camp about “experience,” although this line of attack will not be nearly as fruitful for him as it was for Hillary Clinton, mainly because the word “experience” in McCain’s case also has a habit of reminding voters that the Arizona senator is, well, wicked old.

The Obama camp, playing with a big halftime lead as the cliché goes, is going to play this one close to the vest, sticking to a strategy of using larger and larger fonts every week for their “CHANGE” placards, and getting the candidates’ various aides and spokesgoons to use the term “McCain-Bush policies” as many times as possible on political talk shows. Obama will also use this pre-convention period to do what every general election candidate does after a tough primary-season fight, i.e. ditch all the positions he took en route to securing the nomination and replace them with opinions subtly (or sometimes not-so-subtly) reconfigured to fit the latest polling information coming out of certain key swing states. Both sides as well as the pundit class will describe this early positioning for combat over swing-state electoral votes as a “race for the center” (AP, July 3: “Candidates Courting the Center”), as if the “political center” in America were a place where huge chunks of the population tirelessly obsessed over semi-relevant media-driven wedge issues like stem-cell research and gay marriage, even as they lacked money to buy food and make rent every month.

The press, meanwhile, is clearly flailing around for a sensational hook to use in selling the election, as the once-brightly-burning star of blue-red hatred seems unfortunately to have dimmed a little — just in time, perhaps, to torpedo the general election season cable ratings. They are working hard to come up with the WWF-style shorthand labels they always use to sell electoral contests: if 2000 was the “wooden” and - condescending - Al Gore versus the “dummy” Bush, and 2004 featured that same ‘regular guy’ Bush against the “patrician” and “bookish” John Kerry (who also “looked French”), in 2008 we’re going to be sold the “maverick” McCain against the “smooth” Obama, or some dumb thing along those lines. Time has even experimented with a “poker versus craps” storyline, feeding off the incidental fact that Obama is a regular poker player while McCain reportedly favors craps, which apparently has some electorally relevant meaning — and if you know what that something is, please let me know.

We’re also going to be fed truckloads of onerous horseshit about the candidate wives. The Michelle Obama content is going to go something like this: the Fox/Limbaugh crowd will first plaster her with Buckwheatesque caricatures (the National Review cover was hilariously over-the-top in that respect) and racially loaded epithets like “baby Mama” (that via Fox News spokeswhore Michelle Malkin, God bless her) and “angry black woman” (via self-aggrandizing, cop-mustached Chicago-based prune Cal Thomas). Next, the so-called “mainstream” press, the “respectable” press, which of course is above such behavior, will amplify those attacks 10 million-fold via endless waves of secondary features soberly pondering the question of whether or not Michelle Obama is a “political liability” — because of stuff like the Thomas column, and Malkin’s quip and the endless rumors about a mysterious “whitey” video. Cindy McCain, meanwhile, will generally be described as a political asset, as the pundit class tends to applaud mute, stoned-looking candidate wives who have soldiered on bravely while being martyred by rumors of their mostly absent husband’s infidelities. It will help on the martyrdom front that McCain launched his political career with her family money and drove her into an actual, confirmable chemical dependency. As long as she keeps gamely wobbling onstage and trying to smile into the camera, she’s going to get straight As from the political press, guaranteed.

Some combination of all of these things is going to comprise the so-called “national debate” this fall. Now, we live in an age where our media deceptions are so far-reaching and comprehensive that they almost smother reality, at times seeming actually to replace reality — but even in the context of the inane TV-driven fantasyland we’ve grown used to inhabiting, this year’s crude cobbling together of a phony “national conversation” by our political press is an outrageous, monstrously offensive deception. For if, as now seems likely, this fall’s election is ultimately turned into a Swan-esque reality show where America is asked to decide if it can tolerate Michelle Obama’s face longer than John McCain’s diapers, it will be at the expense of an urgent dialogue about a serious nationwide emergency that any sane country would have started having some time ago. And unless you run a TV network or live in Washington, you probably already know what that emergency is.

A few weeks back, I got a call from someone in the office of Vermont Senator Bernie Sanders. Sanders wanted to tell me about an effort his office had recently made to solicit information about his constituents’ economic problems. He sent out a notice on his e-mail list asking Vermont residents to “tell me what was going on in their lives economically.” He expected a few dozen letters at best — but got, instead, more than 700 in the first week alone. Some, like the excerpt posted above, sounded like typical tales of life for struggling single-parent families below the poverty line. More unnerving, however, were the stories Sanders received from people who held one or two or even three jobs, from families in which both spouses held at least one regular job — in other words, from people one would normally describe as middle-class. For example, this letter came from the owner of his own commercial cleaning service:

My 90-year-old father in Connecticut has recently become ill and asked me to visit him. I want to drop everything I am doing and go visit him, however, I am finding it hard to save enough money to add to the extra gas I’ll need to get there. I make more than I did a year ago and I don’t have enough to pay my property taxes this quarter for the first time in many years. They are due tomorrow.

This single mother buys clothes from thrift stores and unsuccessfully tried to sell her house to pay for her son’s schooling:

I don’t go to church many Sundays, because the gasoline is too expensive to drive there. Every thought of an activity is dependent on the cost.

Sanders got letters from working people who have been reduced to eating “cereal and toast” for dinner, from a 71-year-old man who has been forced to go back to work to pay for heating oil and property taxes, from a worker in an oncology department of a hospital who reports that clinically ill patients are foregoing cancer treatments because the cost of gas makes it too expensive to reach the hospital. The recurring theme is that employment, even dual employment, is no longer any kind of barrier against poverty. Not economic discomfort, mind you, but actual poverty. Meaning, having less than you need to eat and live in heated shelter — forgetting entirely about health care and dentistry, which has long ceased to be considered an automatic component of American middle-class life. The key factors in almost all of the Sanders letters are exploding gas and heating oil costs, reduced salaries and benefits, and sharply increased property taxes (a phenomenon I hear about all across the country at campaign trail stops, something that seems to me to be directly tied to the Bush tax cuts and the consequent reduced federal aid to states). And it all adds up to one thing.

“The middle class is disappearing,” says Sanders. “In real ways we’re becoming more like a third-world country.”

Here’s the thing: nobody needs me or Bernie Sanders to tell them that it sucks out there and that times are tougher economically in this country than perhaps they’ve been for quite a long time. We’ve all seen the stats — median income has declined by almost $2,500 over the past seven years, we have a zero personal savings rate in America for the first time since the Great Depression, and 5 million people have slipped below the poverty level since the beginning of the decade. And stats aside, most everyone out there knows what the deal is. If you’re reading this and you had to drive to work today or pay a credit card bill in the last few weeks you know better than I do for sure how fucked up things have gotten. I hear talk from people out on the campaign trail about mortgages and bankruptcies and bill collectors that are enough to make your ass clench with 100 percent pure panic.

None of this is a secret. Here, however, is something that is a secret: that this is a class issue that is being intentionally downplayed by a political/media consensus bent on selling the public a version of reality where class resentments, or class distinctions even, do not exist. Our “national debate” is always a thing where we do not talk about things like haves and have-nots, rich and poor, employers versus employees. But we increasingly live in a society where all the political action is happening on one side of the line separating all those groups, to the detriment of the people on the other side.

We have a government that is spending two and a half billion dollars a day in Iraq, essentially subsidizing new swimming pools for the contracting class in northern Virginia, at a time when heating oil and personal transportation are about to join health insurance on the list of middle-class luxuries. Home heating and car ownership are slipping away from the middle class thanks to exploding energy prices — the hidden cost of the national borrowing policy we call dependency on foreign oil, “foreign” representing those nations, Arab and Chinese, that lend us the money to pay for our wars.

And while we’ve all heard stories about how much waste and inefficiency there is in our military spending, this is always portrayed as either “corruption” or simple inefficiency, and not what it really is — a profound expression of our national priorities, a means of taking money from ordinary, struggling people and redistributing it not downward but upward, to connected insiders, who turn your tax money into pure profit.

You want an example? Sanders has a great one for you. The Senator claims that he has been trying for years to increase funding for the Federally Qualified Health Care (FQHC) program, which finances community health centers across the country that give primary health care access to about 16 million Americans a year. He’s seeking an additional $798 million for the program this year, which would bring the total appropriation to $2.9 billion, or about what we spend every two days in Iraq.

“But for five billion a year,” Sanders insists, “we could provide basic primary health care for every American. That’s how much it would cost, five billion.”

As it is, though, Sanders has struggled to get any additional funding. He managed to get $250 million added to the program in last year’s Labor, Health and Human Services bill, but Bush vetoed the legislation, “and we ended up getting a lot less.”

Okay, now, hold that thought. While we’re unable to find $5 billion for this simple program, and Sanders had to fight and claw to get even $250 million that was eventually slashed, here’s something else that’s going on. According to a recent report by the GAO, the Department of Defense has already “marked for disposal” hundreds of millions of dollars worth of spare parts — and not old spare parts, but new ones that are still on order! In fact, the GAO report claims that over half of the spare parts currently on order for the Air Force — some $235 million worth, or about the same amount Sanders unsuccessfully tried to get for the community health care program last year — are already marked for disposal! Our government is buying hundreds of millions of dollars worth of Defense Department crap just to throw it away!

“They’re planning on throwing this stuff away and it hasn’t even come in yet,” says Sanders.

According to the report, we’re spending over $30 million a year, and employing over 1,400 people, just to warehouse all the defense equipment we don’t need. For instance — we already have thousands of unneeded aircraft blades, but 7,460 on the way, at a cost of $2 million, which will join those already earmarked for the waste pile.

This is why you need to pay careful attention when you hear about John McCain claiming that he’s going to “look at entitlement program” waste as a means of solving the budget crisis, or when you tune into the debate about the “death tax.” We are in the midst of a political movement to concentrate private wealth into fewer and fewer hands while at the same time placing more and more of the burden for public expenditures on working people. If that sounds like half-baked Marxian analysis… well, shit, what can I say? That’s what’s happening. Repealing the estate tax (the proposal to phase it out by the year 2010 would save the Walton family alone $30 billion) and targeting “entitlement” programs for cuts while continually funneling an ever-expanding treasure trove of military appropriations down the befouled anus of pointless war profiteering, government waste and North Virginia McMansions — this is all part of a conversation we should be having about who gets what share of the national pie. But we’re not going to have that conversation, because we’re going to spend this fall mesmerized by the typical media-generated distractions, yammering about whether or not Michelle Obama’s voice is too annoying, about flag lapel pins, about Jeremiah Wright and other such idiotic bullshit.

Bernie Sanders is one of the few politicians out there smart enough and secure enough to understand that the future of American politics is necessarily going to involve some pretty frank and contentious confrontations. The phony blue-red divide, which has been buoyed for years by some largely incidental geographical disagreements over religion and other social issues, is going to give way eventually to a real debate grounded in a brutal economic reality increasingly common to all states, red and blue.

Our economic reality is as brutal as it is for a simple reason: whether we like it or not, we are in the midst of revolutionary economic changes. In the kind of breathtakingly ironic development that only real life can imagine, the collapse of the Soviet Union has allowed global capitalism to get into the political unfreedom business, turning China and the various impoverished dictatorships and semi-dictatorships of the third world into the sweatshop of the earth. This development has cut the balls out of American civil society by forcing the export abroad of our manufacturing economy, leaving us with a service/managerial economy that simply cannot support the vast, healthy middle class our government used to work very hard to both foster and protect. The Democratic party that was once the impetus behind much of these changes, that argued so eloquently in the New Deal era that our society would be richer and more powerful overall if the spoils were split up enough to create a strong base of middle class consumers — that party panicked in the years since Nixon and elected to pay for its continued relevance with corporate money. As a result the entire debate between the two major political parties in our country has devolved into an argument over just how quickly to dismantle the few remaining benefits of American middle-class existence — immediately, if you ask the Republicans, and only slightly less than immediately, if you ask the Democrats.

The Republicans wanted to take Social Security, the signature policy underpinning of the middle class, and put it into private accounts — which is a fancy way of saying that they wanted to take a huge bundle of American taxpayer cash and invest it in the very companies, the IBMs and Boeings and GMs and so on, that are exporting our jobs abroad. They want the American middle class to finance its very own impoverishment! The Democrats say no, let’s keep Social Security more or less as is, and let that impoverishment happen organically.

Now we have a new set of dire problems in the areas of home ownership and exploding energy prices. In both of these matters the basic dynamic is transnational companies raiding the cash savings of the middle class. Because those same companies finance the campaigns of our politicians, we won’t hear much talk about getting private industry to help foot the bill to pay for these crises, or forcing the energy companies to cut into their obscene profits for the public good. We will, however, hear talk about taxpayer-subsidized bailouts and various irrelevancies like McCain’s gas tax holiday (an amusing solution — eliminate taxes collected by government in order to pay for taxes collected by energy companies). Ultimately, however, you can bet that when the middle class finally falls all the way down, and this recession becomes something even worse, necessity will force our civil government — if anything remains of it by then — to press for the only real solution.

“Corporate America is going to have to reinvest in our society,” says Sanders. “It’s that simple.”

These fantasy elections we’ve been having — overblown sports contests with great production values, decided by haircuts and sound bytes and high-tech mudslinging campaigns — those were sort of fun while they lasted, and were certainly useful in providing jerk-off pundit-dickheads like me with high-paying jobs. But we just can’t afford them anymore. We have officially spent and mismanaged our way out of la-la land and back to the ugly place where politics really lives — a depressingly serious and desperate argument about how to keep large numbers of us from starving and freezing to death. Or losing our homes, or having our cars repossessed. For a long time America has been too embarrassed to talk about class; we all liked to imagine ourselves in the wealthy column, or at least potentially so, flush enough to afford this pissing away of our political power on meaningless game-show debates once every four years. The reality is much different, and this might be the year we’re all forced to admit it.

Matt Taibbi is a writer for Rolling Stone.

Relentless Propaganda Alert! U.S. says Iran has missile that could hit Europe

Excellent comment about this from Signs of the Times:

Enough already! with this “Iran wants to destroy the world” nonsense. It is repeated ad nauseam, like some insane machine. This rabid ranting comes from the one regime that DOES seem hell bent on destroying the world, and as such represents the highest level of hypocrisy imaginable. Of course, this should be patently obvious to anyone willing to follow the threads of cause and effect, as documented daily here on SoTT, but somehow it still exerts its hypnotic and extremely dangerous effect on public opinion.

Source: David Morgan, Reuters.

The Pentagon said on Tuesday that Iran has the ability to launch a ballistic missile capable of hitting sections of eastern and southern Europe.

Air Force Lt. Gen. Trey Obering, director of the Missile Defence Agency, told reporters he believes Iran now has a missile with a range of 2,000 km, but he declined to say whether the weapon has been test-fired.

Iran said last week it conducted two missile tests involving a number of weapons including what Iranian state television called a “new” Shahab-3 missile, a medium-range missile that could be used to strike Israel.

Tensions over Iran’s missile arsenal and accusations from the United States and its allies that Tehran is pursuing nuclear weapons have roiled international financial markets with fears of a possible military confrontation.

Iran denies it wants nuclear weapons and says its nuclear program is designed to produce electricity to increase its output of oil and natural gas.

Older versions of the Shahab-3 have a 1,300-km range. But a new extended version is believed to have a range of up to 1,250 miles, making it capable of hitting targets as far away as Greece, Serbia, Romania and Belarus.

Iran is also developing a solid-fuel missile known as the Ashura with a range of 1,250 miles, according to the Pentagon.

U.S. officials and independent missile experts have said last week’s tests involved no new or enhanced technology, or even the latest generations of missiles known to be in Iran’s arsenal.

Obering did not dispute those assertions in a briefing for Pentagon officials on Tuesday.

But his description of Iran’s missile capability was stronger than what U.S. officials have said up to now.

“The Iranians themselves are describing … a 2,000-km range missile launch,” Obering said of last week’s tests, adding that Iran also claimed to have such a missile in November.

“I believe, based on what I have seen, that they have the ability to do that and to continue to advance in the future, based on what I have seen so far from those (Iranian state media) reports and from the intelligence reports,” he added.

“I won’t go into detail as to what was fired when. That’s something I think the intel community should answer,” he said.

The Pentagon’s Defence Intelligence Agency, which monitors major weapons threats to the United States and its allies, was more vague in its February 27 testimony to the Senate Armed Services Committee.

“Iran continues to develop and acquire ballistic missiles that can hit Israel and central Europe, including Iranian claims of an extended-range variant of the Shahab-3 and a new 2,000-km medium range ballistic missile called the Ashura,” DIA director Army Lt. Gen. Michael Maples told the panel.

U.S. officials and analysts dismissed last week’s missile tests as an angry Iranian response to recent military exercises including an Israeli air exercise in June that some have called a rehearsal for an attack on Iran.

The Bush administration has used concern about Iranian missiles to press forward with plans for a missile defence shield in Poland and the Czech Republic, capable of protecting both Europe and the United States from attack.

Washington and the Czech Republic signed an agreement last week to place missile-tracking radar on Czech soil. U.S. officials are now hoping for a deal to station the system’s interceptor missiles in Poland.

McSame gets $1,930 a month from ‘broken’ Social Security system

Source: San Francisco Business Times.

Republican presidential candidate John McCain cashes his monthly Social Security checks despite calling the federal program “a disgrace,” the Associated Press reports.

“I’m receiving benefits,” McCain told campaign reporters, but added, “the system is broken.”

In 2007, he received benefits of $23,157 from Social Security, approximately $1,930 a month. The maximum monthly benefit under Social Security is $2,185. Social Security benefits are determined by age at retirement.

McCain, who is 71, has received benefits since he was 65.

Last week, McCain told observers at a town-hall meeting in Portsmouth, Ohio, “Americans have got to understand that we are paying present-day retirees with the taxes paid by young workers … and that’s a disgrace.”

B.J. Jarrett from the Social Security Administration said that individuals can refuse retirement benefits.

In 2006, McCain’s wife Cindy earned $6 million, and has a net worth of approximately $100 million.

Whole Health Source Blog review of “The Human Diet: Its Origins and Evolution”

It’s one of the better nutrition blogs.

I recently read this book after discovering it on another health site. It’s a compilation of chapters written by several researchers in the fields of comparative biology, paleontology, archaeology and zoology. It’s sometimes used as a textbook. I’ve learned some interesting things, but overall it was pretty disappointing. The format is disjointed, with no logical flow between chapters. I also would not call it comprehensive, which is one of the things I look for in a textbook.

Here are some of the interesting points:

Humans in industrial societies are the only mammals to commonly develop hypertension, and are the only free-living primates to become overweight.

The adoption of grains as a primary source of calories correlated with a major decrease in stature, decrease in oral health, decrease in bone density, and other problems. This is true for wheat, rice, corn and other grains.

Cranial capacity has also declined 11% since the late paleolithic, correlating with a decrease in the consumption of animal foods and an increase in grains.

According to carbon isotope ratios of teeth, corn did not play a major role in the diet of native Americans until 800 AD. Over 15% of the teeth of post-corn South American cultures showed tooth decay, compared with less than 5% for pre-corn cultures (many of which were already agricultural, just not eating corn).

Childhood mortality seems to be similar among hunter-gatherers and non-industrial agriculturists and pastoralists.

Women may have played a key role in food procurement through foraging. This is illustrated by a group of modern hunter-gatherers called the Hadza. While men most often hunt, which supplies important nutrients intermittently, women provide a steady stream of calories by foraging for tubers.

We have probably been eating starchy tubers for between 1.5 and 2 million years, which precedes our species. Around that time, digging tools, (controversial) evidence of controlled fire and changes in digestive anatomy all point to use of tubers and cooked food in general. Tubers make sense because they are a source of calories that is much more easily exploited than wild grains in most places.

Our trajectory as a species has been to consume a diet with more calories per unit fiber. As compared to chimps, who eat leaves and fruit all day and thus eat a lot of fiber to get enough calories, our species and its recent ancestors ate a diet much lower in fiber.

Homo sapiens has always eaten meat.

The downside is that some chapters have a distinct low-fat slant. One chapter attempted to determine the optimal diet for humans by comparing ours to the diets of wild chimps and other primates. Of course, we eat more fat than a chimp, but I don’t think that gets us anywhere. Especially since one of our closest relatives, the neanderthal, was practically a carnivore.

They consider the diet composition of modern hunter-gatherers that eat low-fat diets, but don’t include data on others with high-fat diets like the Inuit.

There’s some good information in the book, if you’re willing to dig through a lot of esoteric data on the isotope ratios of extinct hominids and that sort of thing.

The Mainstream Media and Israel: Rendering public opinion irrelevant

Source: Glenn Greenwald, Salon.com.

One of the most striking aspects of our political discourse, particularly during election time, is how efficiently certain views that deviate from the elite consensus are banished from sight — simply prohibited — even when those views are held by the vast majority of citizens. The University of Maryland’s Program on International Policy Attitudes — the premiere organization for surveying international public opinion — released a new survey a couple of weeks ago regarding public opinion on the Israel-Palestinian conflict, including opinion among American citizens, and this is what it found:

A new WorldPublicOpinion.org poll of 18 countries finds that in 14 of them people mostly say their government should not take sides in the Israeli-Palestinian conflict. Just three countries favor taking the Palestinian side (Egypt, Iran, and Turkey) and one is divided (India). No country favors taking Israel’s side, including the United States, where 71 percent favor taking neither side.

The worldwide consensus is crystal clear — citizens want their Governments to be neutral and even-handed in the Israel-Palestinian conflict, not tilted towards either side. And that consensus is shared not just by a majority of American citizens, but by the overwhelming majority. Few political views, particularly on controversial issues, attract more than 70% support among American citizens. But the proposition that the U.S. Government should be even-handed — rather than tilting towards Israel — attracts that much support. That’s not an “anti-Israeli” view — to the contrary, it’s a position that America can and should resolve that violent, four-decades-long dispute by being even-handed rather than one-sided. 

Similarly, when asked “How well do you think Israel is doing its part in the effort to resolve the Israel-Palestinian conflict,” citizens around the world, by a large margin, believe that Israel is doing either “not very well” or “not well at all” (54% — compared to 23% that say it’s doing “very well” or “somewhat well”). And there, too, that worldwide view corresponds to American public opinion as well. 59% of Americans say Israel is doing either “not very well” or “not well at all” — compared to only 30% that say it’s doing “very well” or “somewhat well.” And Palestinians don’t fare much better worldwide (38-49%) and fare worse in the U.S. (15-75%).

Yet not only is the view of “even-handedness” completely unrepresented among mainstream political figures in the U.S., it’s deemed political death to go anywhere near expressing that view. Back in 2003, then-presidential-candidate Howard Dean expressed the exact position favored by an overwhelming majority of Americans, yet triggered an intense and even ugly controversy by doing so:

Dean’s Israel troubles began at a Sept. 3 campaign event in Santa Fe, N.M. When it comes to the Israeli-Palestinian conflict, he said that day, “It’s not our place to take sides.” Then, on Sept. 9, he told the Washington Post that America should be “evenhanded” in its approach to the region.

That’s all Dean said. It’s a view held by more than 70% of Americans. It ought to be completely uncontroversial — if anything, it ought to be that view that is deemed a political piety. But what happened? This, according to an excellent account of that “controversy” in Salon by Michelle Goldberg:

The media and the Democratic establishment reacted as if Dean had called Yasser Arafat a man of peace. On Sept. 10, 34 Democratic members of Congress, including House Minority Leader Nancy Pelosi, wrote Dean an open letter. “American foreign policy has been — and must continue to be — based on unequivocal support for Israel’s right to exist and to be free from terror . . .” they wrote. “It is unacceptable for the U.S. to be ‘evenhanded’ on these fundamental issues . . . This is not a time to be sending mixed messages; on the contrary, in these difficult times we must reaffirm our unyielding commitment to Israel’s survival and raise our voices against all forms of terrorism and incitement.” 

The Israeli newspaper Ha’aretz reported that Dean had badly damaged his own campaign. “Sources in the Jewish community say that Dean has wrecked his chances of getting significant contributions from Jews . . .” the paper wrote. “Many believe Dean’s statement will drive more Jews toward Lieberman and Kerry, enabling Kerry to take the lead again.”

Dean was roundly attacked by the political elite for uttering “anti-Israel” comments, notwithstanding the fact that Dean is married to a Jewish woman, raised his children as Jews, and, most amazingly of all, had a campaign that was managed by Steve Grossman, a former President of AIPAC. But no matter: Dean had uttered a Forbidden Thought — forbidden even though it is embraced by the vast majority of Americans — and thus Grossman and Dean had to subject themselves to abject Apology Rituals:

According to the Dean campaign, the uproar involved semantics, not substance. “Here’s what I think happened,” says Grossman, Dean’s campaign co-chair. “Howard made some comments in someone’s backyard in New Mexico that were shorthand, if you will, for some of his Middle East views. In the course of those remarks and some others in the subsequent days, he used some language that gave people consternation, and it was immediately jumped on by Joe Lieberman and John Kerry that somehow Howard Dean was breaking faith with this 55-year tradition of the United States’ special relationship with Israel, which is patently absurd”. . . . 

If Dean’s Israel position really puts him far out on the left, it proves that not showing unequivocal support for the Jewish state remains a political poison pill — for members of either political party. . . .

After all, according to Grossman, the candidate remains in sync with the goals of Bush’s Israel policy. . . . No serious candidate took a position to the left of Bush. Indeed, it’s precisely because there’s no real leftist alternative that Dean’s been cast in that role. . . . . But a campaign is always more about images and impressions than carefully formulated positions, and that’s where Dean has blundered.

It was conventional wisdom that that Dean had committed some grave mistake even though, as The Nation’s John Nichols highlighted at the time, Dean was expressing the overwhelming majority view even back in 2003:

More troubling is the condemnation by Pelosi and other party leaders of even a hint of “evenhandedness.” That smacks of the old game of positioning Democrats to the right of the Republicans on Middle East policy — in a perceived contest for Jewish-American votes and contributions. The problem with this approach, as Middle East scholar Stephen Zunes points out, is that “this suggests you cannot be firmly committed to Israel and question [Israel's hawkish Prime Minister] Ariel Sharon’s policies. If that’s where Democrats put themselves, they don’t leave room to debate Bush on the issue.” They’ll also have a tougher time appealing to American voters — 73 percent of whom, according to a recent University of Maryland poll, prefer that the United States not take sides.

It’s pretty extraordinary that in a democracy, the political elite is able to render completely off-limits a view that the vast majority of Americans support. They actually render majority-held views unspeakable and then remove the issue entirely from what is debated. No matter what one’s views are, there is no denying that our policy towards Israel is immensely consequential for our country. Yet, by virtue of the fact that presidential candidates are required to affirm essentially the same orthodoxies, there’s very little difference in their positions towards Israel and therefore our current policy approach towards Israel will simply not be part of anything that is debated, even though most Americans overwhelmingly oppose that course. 

Indeed, as soon as he secured the Democratic nomination, Barack Obama made a pilgrimage to AIPAC in order to avoid the “Howard Dean mistake” and to vow that there would be no such debate over Israel in this election:

I have been proud to be a part of a strong, bi-partisan consensus that has stood by Israel in the face of all threats. That is a commitment that both John McCain and I share, because support for Israel in this country goes beyond party. . . . 

And then there are those who would lay all of the problems of the Middle East at the doorstep of Israel and its supporters, as if the Israeli-Palestinian conflict is the root of all trouble in the region. These voices blame the Middle East’s only democracy for the region’s extremism. They offer the false promise that abandoning a stalwart ally is somehow the path to strength. It is not, it never has been, and it never will be.

Our alliance is based on shared interests and shared values. Those who threaten Israel threaten us. Israel has always faced these threats on the front lines. And I will bring to the White House an unshakeable commitment to Israel’s security.

That starts with ensuring Israel’s qualitative military advantage. I will ensure that Israel can defend itself from any threat — from Gaza to Tehran. Defense cooperation between the United States and Israel is a model of success, and must be deepened. As President, I will implement a Memorandum of Understanding that provides $30 billion in assistance to Israel over the next decade — investments to Israel’s security that will not be tied to any other nation.

In fairness, Obama did attack what he called the “failed status quo”; disputed that “America’s recent foreign policy has made Israel more secure”; and pointed to “eight years of accumulated evidence that our foreign policy is dangerously flawed.” Moreover, Obama — to his great credit — spent the primary season making some important and unorthodox points about Palestinian suffering and pointing out that the President should not be blindly supportive of everything Israel’s right-wing does, that being “pro-Israel” doesn’t mean a refusal to oppose Israeli actions. 

But by uttering such Forbidden (though quite mainstream) thoughts, Obama was mercilessly attacked as anti-Israel and even anti-Semitic, and with the nomination secured, the crux of his June AIPAC speech was an affirmation of our political establishment’s mandated Israel orthodoxy: the continuation of America’s one-sided alliance with Israel, as highlighted by commitments such as this:

Finally, let there be no doubt: I will always keep the threat of military action on the table to defend our security and our ally Israel. Sometimes there are no alternatives to confrontation. . . . That is the change we need in our foreign policy. Change that restores American power and influence. Change accompanied by a pledge that I will make known to allies and adversaries alike: that America maintains an unwavering friendship with Israel, and an unshakeable commitment to its security. . . . 

As members of AIPAC, you have helped advance this bipartisan consensus to support and defend our ally Israel. And I am sure that today on Capitol Hill you will be meeting with members of Congress and spreading the word. But we are here because of more than policy. We are here because the values we hold dear are deeply embedded in the story of Israel.

Again, the point has nothing to do with one’s views of the best policy towards Israel. The point is that a position which the vast majority of Americans embrace is one that, simultaneously, is forbidden to be expressed, and the election consequently will involve no debate over that issue. 

That profoundly anti-democratic dynamic is by no means confined to Israel. That’s just an example. A different University of Maryland poll was released in April of this year, which surveyed public opinion in Iran and the U.S. regarding the disputes between those two countries. The populations of both countries have strikingly similar views with regard to those matters, with large majorities favoring the same deal to resolve the dispute (Iran has the right to develop nuclear energy accompanied by IAEA inspections to prevent weaponization), and large majorities also favor the NPT’s goal of “eliminating all nuclear weapons.” More strikingly, the citizens of both countries overwhelmingly favor the same policies of rapproachment and cooperation, rather than the bluster, threats, and ongoing provocative acts engaged in by both of their governments:

Remarkably, this desire for cooperation rather than confrontation is the view of most Americans despite the Iraq-level misinformation and propaganda which our political elite has disseminated about Iran:

And while Iranian President Ahmadinejad is depicted by our political class as the Equivalent of Adolf Hitler, savagely oppressing Iranians as some sort of insane, vicious tyrant, that isn’t how they see it:

Iranian public opinion distinguishes between the U.S. Government and the American people — holding favorable views towards the latter and unfavorable views towards the former (”some portrayed the American people, like the Muslim people, as victims of the American government”) — and to the extent there is “anti-Americanism” in Iran, it is based on this widespread assessment:

That, too, is a belief widely held in many places in the world, yet is one that no mainstream politician in the U.S. could express.

There are all sorts of reasons why our presidential elections center on personality-based sideshows (even Washington Post ombudsman Deborah Howell said as much about her own paper’s coverage today). Those gossipy matters are easier for our slothful, vapid media stars to digest and spout. They require very few resources to cover. The campaign consultants who run national political campaigns are experts in P.R. strategies for packaging personalities and indifferent to policy debates, etc. etc.

But one principal reason is that so many of the Government’s most consequential actions are concealed behind a wall of secrecy and thus not subject to public debate. Meanwhile, those policies which are publicly disclosed are kept off-limits from any real debate and, even when they are debated, public opinion is almost completely marginalized in favor of the minority elite consensus (see, for instance, the endless Iraq war even in the face of long-standing, overwhelming support for its end).

That remarkable dynamic of debate-suppression is most conspicuous — and most urgent — when the policies favored by the political establishment are ones that are vigorously rejected by the citizenry. Thus we have the extraordinary fact that a policy that has long been favored by the vast majority of Americans — even-handedness in the Israel-Palestinian conflict — is one that no mainstream American politician of any national significance can espouse without triggering an immediate end to their political career. That discrepancy is a rather potent commentary on how our democracy functions.

McCain-As-War-Hero Myth

Source: Ted Rall, Information Clearing House.

Nothing Honorable About the Vietnam War

Every presidential candidacy relies on a myth. Reagan was a great communicator; Clinton felt your pain. Both storylines were ridiculous. But rarely are the constructs used to market a party nominee as transparent or as fictional as those we’re being asked to swallow in 2008.

Still more laughable than the notion of Obama as the second coming of JFK is the founding myth of the McCain campaign: (a) he is a war hero, and (b) said heroism increases his credibility on national security issues. “A Vietnam hero and national security pro,” The New York Times calls him in a typical media blandishment.

John McCain fought in Vietnam. There was nothing noble, much less heroic, about fighting in that war.

Some Americans may be suffering another of the periodic attacks of national amnesia that prevent us from honestly assessing our place in the world and its history, but others recall the truth about Vietnam: it was a disastrous, unjustifiable mess that anyone with an ounce of sense was against at the time.

Between one and two million Vietnamese and 58,000 Americans were sent to their deaths by a succession of presidents and Congresses - fed to the flames of greed, hubris, and stupidity. The event used to justify starting the war - the Tonkin Gulf “incident” - never happened. The Vietnam War’s ideological foundation, the mantra cited to keep it going, was disproved after we lost. No Southeast Asian “dominos” fell to communism. To the contrary, the effect of the U.S. withdrawal was increased stability. When genocide broke out in neighboring Cambodia in the late 1970s, it was not the U.S., but a unified Vietnamese army - the evil communists - who stopped it.

Not even General Wesley Clark, shot four times in Vietnam, is allowed to question the McCain-as-war-hero narrative. “Well, I don’t think riding in a fighter plane and getting shot down is a qualification to be president,” he argued. The Obama campaign, which sells its surrogates down the river with alarming regularity, promptly hung the former NATO commander out to dry: “Senator Obama honors and respects Senator McCain’s service, and of course he rejects yesterday’s statement by General Clark.”

Even in an article criticizing the media for repeatedly framing McCain as a war hero, the liberal website Media Matters concedes: “McCain is, after all, a war hero; everybody agrees about that.”

Not everyone.

I was 12 when the last U.S. occupation troops fled Saigon. I remember how I - and most Americans - felt at the time.

We were relieved.

By the end of Nixon’s first term most people had turned against the war. Gallup polls taken in 1971 found that about 70 percent of Americans thought sending troops to Vietnam had been a mistake. Some believed it was immoral; others considered it unwinnable.

Since then, the political center has shifted right. We’ve seen the Reagan Revolution, Clinton’s Democratic centrism, and Bush’s post-9/11 flirtation with neo-McCarthyite fascism. Nevertheless, the overwhelming majority of Americans - including Republicans - still think we should never have fought the Vietnam War.

“After the war’s 1975 conclusion,” Michael Tomasky wrote in The American Prospect in 2004, “Gallup has asked the question (”Did the U.S. make a mistake in sending troops to fight in Vietnam?”) five times, in 1985, 1990, 1993, 1995, and 2000. All five times…respondents were consistent in calling the war a mistake by a margin of more than 2 to 1: by 74 percent to 22 percent in 1990, for example, and by 69 percent to 24 percent in 2000.”

Moreover, Tomasky continued, “vast majorities continue to call the war ‘unjust.’” Even in 2004, after 9/11, 62 percent considered the war unjust. Only 33 percent still thought it was morally justified.

Vietnam was an illegal, undeclared war of aggression. Can those who fought in that immoral war really be heroes? This question appeared settled after Reagan visited a cemetery for Nazi soldiers, including members of the SS, at Bitburg, West Germany in 1985. “Those young men,” claimed Reagan, “are victims of Nazism also, even though they were fighting in the German uniform, drafted into service to carry out the hateful wishes of the Nazis. They were victims, just as surely as the victims in the concentration camps.”

Americans didn’t buy it. Reagan’s poll numbers, typically between 60 and 65 percent at the time, plunged to 41 percent after the visit. Those who fight for an evil cause receive no praise.

So why is the McCain-as-war-hero myth so hard to unravel? By most accounts, John McCain demonstrated courage as a P.O.W., most notably by refusing his captors’ offer of early release. But that doesn’t make him a hero.

Hell, McCain isn’t even a victim.

At a time when more than a fourth of all combat troops in Vietnam were forcibly drafted (the actual victims), McCain volunteered to drop napalm on “gooks” (his term, not mine). He could have waited to see if his number came up in the draft lottery. Like Bush, he could have used family connections to weasel out of it. Finally, he could have joined the 100,000 draft-eligible males - true heroes, to a man - who went to Canada rather than kill people in a war that was plainly wrong.

When McCain was shot down during his 23rd bombing sortie, he was happily shooting up a civilian neighborhood in the middle of a major city. Vietnamese locals beat him when they pulled him out of a local lake; yeah, that must have sucked. But I can’t help think of what would have happened to Mohammed Atta had he somehow wound up alive on a lower Manhattan street on 9/11. How long would he have lasted?

Maybe he would have made it. I don’t know. But I do know this: no one would ever have considered him a war hero.

Ted Rall is the author of the book “Silk Road to Ruin: Is Central Asia the New Middle East?,” an in-depth prose and graphic novel analysis of America’s next big foreign policy challenge. Visit his website www.tedrall.com

Swan Song for Fanny Mae — Eulogy For The “Ownership Society”

Source: Mike Whitney, CounterPunch.

The Fed’s emergency rescue plan for the financial markets is hopelessly flawed. It’s a scattershot approach that doesn’t address the real source of the problem; an unregulated, unsustainable structured finance system that emerged in full-force after 2000 and spawned a shadow banking system that creates trillions of dollars of credit without sufficient capital reserves. This is the heart of the problem and it needs to be debated openly. The present system doesn’t work; it’s as simple as that. It makes no sense to provide trillions of dollars of taxpayer money to shore up a system that is essentially dysfunctional. It’s just throwing money down a rat-hole.

The Federal Reserve and US Treasury want a blank check to prop up Fannie Mae and Freddie Mac, the two war-horses of the mortgage industry, that currently underwrite nearly 80 per cent of all new mortgages in the US. But by any objective standard both of these GSEs are already insolvent. Thus, the taxpayer is being asked to rescue a failed industry that has been used for private gain so that speculators will not have to suffer the losses. Even worse, Fannie and Freddie have written hundreds of billions of dollars worth of mortgages that have not yet defaulted, but will certainly default within the next two years. This is bound to batter the already faltering economy.

The bad paper held by Fannie and Freddie are mortgages that were made to unqualified applicants who are presently losing their homes in record numbers. Their loans were approved because there was no functioning regulatory body to oversee their issuance and because the mortgages were transformed into complex securities that were sold to credulous investors around the world. The ratings were fixed to meet the requirements of their employers, the investment banks, which marketed these exotic bonds to foreign banks, insurance companies and hedge funds. That puts Fannie and Freddie at the center of a system that needs radical surgery to eradicate the bad paper. If this doesn’t happen in a timely fashion, then foreign investors will stop purchasing US debt and the dollar will crash. By creating a backstop for Fannie and Freddie, the Fed is linking US sovereign debt with mortgages and derivatives that are already known to be fraudulent. This is a big mistake. According to Merrill Lynch, the US is already facing a long-term “financing crisis” as the weakening US economy and sluggish consumer spending could signal an end to the $700 billion in foreign investment that covers America’s current account deficit. By assuming the GSE’s enormous debts, the Bush administration is just speeding this process along and inviting disaster.

Treasury Secretary Henry Paulson has been intentionally oblique about the implications of the proposed bailout. On Tuesday, he delivered a statement in front of the massive stone columns of the Department of the Treasury, a towering monolith that arouses feelings of confidence in rock-solid institutions. He made it clear that Fannie Mae and Freddie Mac would have the “explicit” backing of the US government:

“First, as a liquidity backstop, the plan includes a temporary increase in the line of credit the GSEs have with Treasury. Treasury would determine the terms and conditions for accessing the line of credit and the amount to be drawn.

Second, to ensure the GSEs have access to sufficient capital to continue to serve their mission, the plan includes temporary authority for Treasury to purchase equity in either of the two GSEs if needed.

Third, to protect the financial system from systemic risk going forward, the plan strengthens the GSE regulatory reform legislation currently moving through Congress by giving the Federal Reserve a consultative role in the new GSE regulator’s process for setting capital requirements and other prudential standards.”

It was an impressive performance from a public relations point of view, but it didn’t fool anyone on Wall Street. What Wall Street wants is details not blather. Paulson gave no specifics about how much money the government would provide or what the nature of the new relationship would be; conservatorship, recievorship, nationalization? What is it?

The truth is that Paulson was deliberately vague because he and friend Bernanke would like to have it both ways; they’d like to provide a liquidity backstop and an endless line of credit for the two GSE’s without formally nationalizing them. That would avoid the further dilution of stock values while keeping the US government from taking another $5 trillion of mortgage debt onto their balance sheet. It is a delicate balancing act, but Paulson seems to think he carried it off. He’s wrong, though, and volatility in the stock market proves it. Investors are clearly skittish about the new arrangement. They want to know the facts about the government’s commitment. Paulson is discovering that deceiving investors is not as easy as duping the public about fictional WMD or Niger uranium. Sometimes even the dullest person can grasp the most complex matters when it comes to his own money.

Fannie and Freddie have been insolvent for ages, but it hasn’t stopped lawmakers from pushing the envelope and loading more debt on their balance sheets. Here’s how Barron’s summed it up more than six months ago:

“Fannie’s balance sheet is larded with soft assets and understated liabilities that would leave the company ill-equipped to weather a serious financial crisis. And spiraling mortgage defaults and falling home prices could bring a tsunami of credit losses over the next two years that will severely test Fannie’s solvency.

But, if the truth be known, a considerable portion of Fannie’s losses also came from speculative forays into higher-yielding but riskier mortgage products like subprime, Alt-A (a category between subprime and prime in credit quality) and dicey mortgages requiring monthly payments of interest only or less. For example, Fannie’s $314 billion of Alt-A — often called liar loans because borrowers provide little documentation — accounted for 31.4% of the company’s credit losses while making up just 11.9% of its $2.5 trillion single-family-home credit book. Fannie was clearly looking for love — and market share — in some of the wrong places.”

Rampant speculation, risky investments, and Enron-type accounting; hardly the stuff of solid portfolios. That’s why the two mortgage giants are stumbling headlong towards oblivion despite the Treasury’s panicky relief operation. By last Friday Fannie’s stock had fallen 47 per cent while Freddie was down 50 per cent. The public may still be in the dark about what is going on, but investors have a pretty good grip on the situation; they can see the great birds are already circling overhead and its just a matter of time before they descend on their prey. Paulson’s attempts to muddy the water have amounted to nothing. The fact remains that the two biggest mortgage-lenders in the world are busted and last week’s stock sell-off was tantamount to a run on the country’s largest bank. Paulson’s statement was really nothing more than a eulogy for the mortgage industry; a few heartfelt words over the rigid corpse of a close friend.

When the housing market started to tumble and Wall Street’s “securitization” model froze-up, Fannie had to take the lion’s share of the mortgages to keep the real estate market hobbling along. In a two year period, between the housing peak in 2005 and 2007, Fannie went from roughly 40 per cent of the market to about 80 per cent. The Congress even enlarged the size of the mortgages they could underwrite from $417,000 to over $700,000. The prospect of bankruptcy never diminished congress’s generosity.

Fannie and Freddie currently own or underwrite roughly half of the nation’s $12 trillion mortgage market. Basically, every home mortgage lender depends on them for financing. Their shares are owned by individual investors and banks around the world. Foreign investors have always believed that the GSE bonds were as risk-free as US government Treasuries. Now they are beginning to wonder. (Foreign central banks, led by China and Russia, hold at least $925 billion in U.S. agency debt, including bonds sold by Freddie and Fannie, according to official U.S. statistics)

Whatever happens to Fannie, the loss of investor confidence will send long term interest higher as investors demand bigger returns for the risk they’re taking on GSE bonds. That’ll put a straitjacket on home sales which are already flagging from soaring inventory and falling prices. Higher rates could bring the whole housing market to a standstill.

The Fed’s cheap credit policy under Greenspan created an artificial demand for housing which ballooned into the biggest equity bubble in history. Low interest rates are a subsidy which naturally lead to speculation and asset-inflation. At a certain point, however, the endless debt-pyramiding reaches its apex and the whole mechanism switches into reverse. Now the economy has entered deleveraging-hell where everything is primal blackness and the gnashing of teeth, the flip-side of speculative rapture.

By some estimates, Freddie Mac has a negative net-worth of $17 billion. It’s basically insolvent, although Paulson would like to see the charade go on a while longer. Investors purchased another $3 billion of the two GSEs last Monday, but the appetite for failing bonds is diminishing. What’s certain is that the collapse of Fannie and Freddie would be a watershed event and a mortal blow to the US financial system. $5 trillion in shaky mortgage-debt can’t be easily swept under the rug and ignored. Interest rates on everything would quickly rise; credit would become scarcer, economic growth would shrivel, unemployment would soar, and the dollar will plummet. As the two mortgage giants continue to get whipsawed by higher priced capital and waning investment, US government debt will likely to lose its much-vaunted triple A credit rating. On Friday, credit default swaps on government debt doubled, a sign that investors are losing confidence that the US will be able to manage its twin deficits or pay off its debts. It’s the end of the road for Washington’s free lunch throng and for a paper dollar that isn’t backed by much of anything except music videos, fast food and smart-bombs.

Paulson’s Power Grab

What Paulson is really wants is for congress to allow the Fed to regulate the financial system without congressional oversight. Paulson’s so-called blueprint for financial regulation is a blatant power-grab meant to expand the authority of the banking oligarchy giving them unlimited power over the markets. Journalist Barry Grey sums it up like this in his article on “US Bailout of Mortgage Giants: The politics of plutocracy”:

“The plan outlined by Treasury Secretary Henry Paulson would give him virtually unlimited and unilateral authority to pump tens of billions of dollars of public funds into the mortgage finance companies. At the same time, the Federal Reserve Board announced that it would allow the companies to directly borrow Fed funds… The Democrats…now march in lockstep with the minority party to rush through laws demanded by Wall Street… The buying of legislators and their votes by corporate interests is carried out openly and shamelessly. Members of Frank’s House Financial Services Committee received over $18 million from financial services, insurance and real estate firms this year. Frank himself raised over $1.2 million, almost half of which came from finance and related industries…Senator Dodd’s top contributor in the 2003-2008 election cycle was Citigroup, followed by SAC Capital Partners. He raised $4.25 million from securities and investment firms.
Senator Schumer’s top contributor was likewise Citigroup. He raised $1.4 million from securities and investment firms, his most lucrative corporate sector.”

The smell of political corruption is overpowering, and yet, the plan is moving forward regardless. Even if Paulson’s plan worked in the short term, the damage would be enormous. It would place the country’s regulatory powers and purse-strings in the hands of the same amoral banksters who created this mess to begin with. It is the fast-track to corporate feudalism on a nationwide scale.

Pitfalls for the GSEs

The biggest problem facing Fannie and Freddie is that wary investors will not roll over the debt of the two companies which will precipitate a collapse. This is where it pays to have people who can be trusted in positions of power. Henry Paulson is the worst thing that ever happened to the US Treasury. Paulson is to finance capitalism what Rumsfeld is to military strategy. To say that Paulson is lacking in credibility is an understatement. Nothing he says can be taken at face-value. When Paulson says “the worst is behind us” or the “subprime crisis is contained” or the Bush administration “supports a strong dollar policy”; most people know it is a fabrication. Besides, Paulson is completely out of his depth in the present crisis. His appearances on TV, with the beads of sweat glistening on his forehead, and his foolish repetition of the same stale mantra is eroding confidence in the financial system and sending waves of panic rippling through Wall Street. Enough is enough. He needs to go.

If the administration was serious about changing direction they would dump Paulson and reinstate Paul Volcker. Whatever one thinks about Volcker, his presence would calm the markets and send a message that the adults were back in charge. But that won’t happen. The Bush team still thinks they can finesse their way through the thicket of investor skepticism. That means that catastrophe is inevitable as more and more investors pick up their bets and head for the exits.

Time Is Running Out

Whatever the administration decides to do; time is short and they have one chance to get it right. The Treasury needs to find a way to ring-fence the garbage bonds and pray that the investing public won’t dump their holdings in a panic run on the market. Either way, it’s a gamble and there’s no guarantee of success. The Wall Street Journal outlined the doomsday scenario if Paulson’s plan fails:

“Falling house prices and nonpaying homeowners cause the value of the trillions of dollars in outstanding debt held by these government-sponsored enterprises (Fannie and Freddie) to plunge. Many banks have balance sheets stuffed full of this paper. They face huge losses, which some can’t survive. They and other investors, such as foreign central banks, then dump the GSE paper.

Fannie and Freddie would end up unable to lend, or at least to take up anything like their current 80% share of the U.S. mortgage market, further punishing the reeling housing market. This would add another twist to the spiral of falling prices, credit losses and failing lenders.

What should they do? First, devise a plan — and fast. There is no time to dither.” (Wall Street Journal)

If foreign banks and investors ditch their GSE debt, it will send shockwaves through the global economy. But if the Treasury provides unlimited funding for a sinking operation, it’s likely to trigger a sell-off of the dollar. It’s a lose-lose situation. For now, bond holders are sitting-tight even though the stock is tanking, but for how long? They’ve already been taken to the cleaners on hundreds of billions of dollars of mortgage-backed garbage; now there are rumors that the US government won’t back agency debt. What kind of shabby shell-game is the US playing anyway?

New York Times:

“If people lose faith in Fannie and Freddie, then the whole system freezes up, and nobody can buy a house, and the entire housing market can crash,” said Paul Miller of the Friedman, Billings, Ramsey Group in Arlington, Va. “There’s a fine line between having faith and losing it, and sometimes it’s unclear when it has disappeared. But when investors cross that line, bad things happen very quickly.”

And it affects more than the housing market, too. The bond and equities markets are handcuffed to real estate and they’re already listing from the slowdown in investment. The Fed thought they could keep the whole mess from going sideways by opening up “auction facilities” where the banks could get low interest capital in exchange for their mortgage-backed junk. But the banks have curtailed their lending and there’s bigger trouble ahead. Bridgewater Associates issued a warning last week that losses to the banking system would exceed $1.6 trillion, four times original estimates and enough to crash the entire banking system. So far, banks have only written down $450 billion, which means that they are only 25 per cent of the way through the current credit storm. Defaults are liable to skyrocket as hundreds of undercapitalized banks turn to a grossly underfunded FDIC ($52 billion in reserves) to cover the losses of their depositors. The prospect of a humongous taxpayer bailout seems nearly unavoidable.

What’s most disturbing is that nothing has been done to restore the markets to a functional model. The Fed’s strategy is still to try to keep the relatively new “structured finance” model (with all it’s bizarre-named debt instruments and derivatives) in place even though it failed its first stress-test and has demonstrated that it cannot withstand even moderate downward movement in the market. The current model is kaput; there needs to be a Plan B or the Fed is just wasting its time.

Fannie’s demise comes at a particularly difficult time for the banking system. According to a report by Paul Kasriel, Chief Economist at Northern Trust:

“The sharpest 13-week contraction in bank credit” since data were first available in 1973. Banks simply don’t have the capital on hand to avail “themselves of the cheap credit the Fed is offering to fund them at.”….This is what it means to be in a “credit crunch.” Banks have suffered hundreds of billions in losses, forcing them to pull credit out of the economy. Every time you read an article about banks cutting credit lines, exiting lending businesses, or eliminating mortgage products it represents more bank credit drying up.” (Option Armageddon, “Understanding Bernanke”)

Bank credit is drying up because the capital is being destroyed (from foreclosures and downgraded assets) faster than anytime in history. We are just now feeling the first stiff breezes from a Force-5 deflationary hurricane set to touch down in 2009. Fannie and Freddie are teetering towards insolvency while the country is entering the most vicious downward cycle since the Great Depression. Higher interest rates, negative home equity, mounting credit card debt, auto loan debt, commercial real estate debt and tightening lending standards will only curtail consumer spending more putting greater pressure on the dollar.

The Fed will have to be selective; not everything can be saved. Significant parts of the financial system will be reduced to ashes. It would be wiser to clear the brush away from as many of the solvent institutions as possible and prepare for the worst. Otherwise, the whole system is at risk of contagion. Hundreds of local and regional banks are expected to go under. (the average small bank has 67% of its assets in real estate) It can’t be avoided. They are holding too much bad paper and no way to make up for the losses. They’re following the same path as the 250 mortgage lenders that vaporised in the subprime meltdown. They couldn’t be saved either.

The bigger investment banks are in trouble too. That’s why the SEC has finally decided to act as a regulator and go after short-sellers:

“The Securities and Exchange Commission announced an emergency action aimed at reducing short-selling aimed at Wall Street brokerage firms, Fannie Mae and Freddie Mac, and will immediately begin considering new rules to extend new requirements to the rest of the market.”

The SEC never took an interest in naked shorting of stocks (or commodities speculators) while its fat-cat friends in the big brokerage houses were raking in billions. Now that many of these same institutions, including Fannie Mae and Freddie Mac, are in the crosshairs, SEC chief Christopher Cox is rushing to their rescue. It is utter duplicity, but it illustrates an important point; the system is cannibalizing itself just like Karl Marx predicted over 100 years ago. Unchecked greed is inevitably self-destructive.

A growing number of market analysts are beginning to notice the storm clouds forming on the horizon. The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months. The Bank of international Settlements (BIS) made a similarly ominous warning that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s. The bank suggests that government officials and market analysts have not fully grasped the financial turmoil that could result from the mortgage crisis and its effects of the global economic system. The body points out that the Great Depression was not anticipated because people ignored the implicit danger of “complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system.”

Ron Paul (R-Texas) is one of the few members of congress who has shown that he has a grasp of the impending economic disaster now facing the country if corrective action is not taken swiftly. In a speech he gave last week on the floor of the House, he said:

“There are reasons to believe this coming crisis is different and bigger than the world has ever experienced…The financial crisis, still in its early stages, is apparent to everyone: gasoline prices over $4 a gallon; skyrocketing education and medical-care costs; the collapse of the housing bubble; the bursting of the NASDAQ bubble; stock markets plunging; unemployment rising;, massive underemployment; excessive government debt; and unmanageable personal debt. Little doubt exists as to whether we’ll get stagflation. The question that will soon be asked is: When will the stagflation become an inflationary depression? “

The troubles at Fannie and Freddie are symptomatic of more deeply rooted problems related to abusive lending and the unsustainable expansion of credit. We’ve now reached our debt limit and the bills must be repaid or written off. The Bush administration is hoping to reflate the bubble by (stealthily) recapitalizing the GSEs, but it won’t be easy. As one blogger put it, we have reached “peak credit” and have nowhere to go except down.

Economist Michael Hudson summed it up like this:

“The reality is that Fannie, Freddie and the FHA gave a patina of confidence to irresponsible lending and outright fraud. This confidence game led them to guarantee some $5.3 trillion of mortgages, and to keep $1.6 trillion more on their own books to back the bonds they issued to institutional investors.”

It was a scam of Biblical proportions and now it is all starting to unravel. Bush’s “ownership society” was a cheap parlor trick engineered by the Fed’s low interest rates to trigger massive speculation and shift wealth from one class to another. Now, the housing bubble has crashed and the excruciating reality of insolvency is beginning to sink in.

Michael Hudson, again:

“All one hears is a barrage of claims that the government must preserve the financial fictions of Fanny Mae and Freddie Mac in order to ’save the market.’ The usual hypocrisy is being brought to bear claiming that all this is necessary to ’save the middle class,’ even as what is being saved are its debts, not its assets…The “way of life” that is being saved is not that of home ownership, but debt peonage to support the concentration of wealth at the top of the economic pyramid.

Mortgages are the major debts of most American families. In this role, real estate debt has become the basis for the commercial banking system, and hence the basis for the wealthiest 10 percent of the population who hold the bottom 90 percent in debt. That is what Fannie Mae, Freddie Mac and “the market” are all about.” (Michael Hudson; “Why the Bail Out of Fannie Mae and Freddie Mac is Bad Economic Policy”, counterpunch.org)

The housing boom never had anything to do with Bush’s Utopian-sounding “ownership society”. It was always just