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Archive for December 31st, 2010

Prosecuting Wall Street Fraud: The US Economy is A Giant Ponzi Scheme

Posted by Admin on December 31, 2010

http://www.globalresearch.ca/index.php?context=va&aid=22395

Global Research, December 14, 2010
 

Bill Gross, Nouriel Roubini, Laurence Kotlikoff, Steve Keen, Michel Chossudovsky and the Wall Street Journal all say that the U.S. economy is a giant Ponzi scheme

Virtually all independent economists and financial experts say that rampant fraud was largely responsible for the financial crisis. See this and this.

But many on Wall Street and in D.C. – and many investors – believe that we should just “go with the flow”. They hope that we can restart our economy and make some more money if we just let things continue the way they are.

But the assumption that a system built on fraud can continue without crashing is false.

In fact, top economists and financial experts agree that – unless fraud is prosecuted – the economy cannot recover.

Fraud Leads to a Break Down in Trust and Instability in the Markets

As Alan Greenspan said recently:

Fraud creates very considerable instability in competitive markets. If you cannot trust your counterparties, it would not work

Similarly, leading economist Anna Schwartz – co-author of the leading book on the Great Depression with Milton Friedman told the Wall Street journal in 2008: 

“The Fed … has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is that [uncertainty] that the balance sheets of financial firms are credible.”

So even though the Fed has flooded the credit markets with cash, spreads haven’t budged because banks don’t know who is still solvent and who is not. This uncertainty, says Ms. Schwartz, is “the basic problem in the credit market. Lending freezes up when lenders are uncertain that would-be borrowers have the resources to repay them. So to assume that the whole problem is inadequate liquidity bypasses the real issue.”

***

Today, the banks have a problem on the asset side of their ledgers — “all these exotic securities that the market does not know how to value.”

“Why are they ‘toxic’?” Ms. Schwartz asks. “They’re toxic because you cannot sell them, you don’t know what they’re worth, your balance sheet is not credible and the whole market freezes up. We don’t know whom to lend to because we don’t know who is sound. So if you could get rid of them, that would be an improvement.”

And economics professor and former Secretary of Labor Robert Reich wrote in 2008:

The underlying problem isn’t a liquidity problem. As I’ve noted elsewhere, the problem is that lenders and investors don’t trust they’ll get their money back because no one trusts that the numbers that purport to value securities are anything but wishful thinking. The trouble, in a nutshell, is that the financial entrepreneurship of recent years — the derivatives, credit default swaps, collateralized debt instruments, and so on — has undermined all notion of true value.

Robert Shiller – one of the top housing experts in the United States – said recently that failing to address the legal issues will cause Americans to lose faith in business and the government:

Shiller said the danger of foreclosuregate — the scandal in which it has come to light that the biggest banks have routinely mishandled homeownership documents, putting the legality of foreclosures and related sales in doubt — is a replay of the 1930s, when Americans lost faith that institutions such as business and government were dealing fairly.

Nobel prize-winning economist Joseph Stiglitz says about the failure to prosecute Wall Street fraud:

The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that’s really the problem that’s going on.

***

I think we ought to go do what we did in the S&L [crisis] and actually put many of these guys in prison. Absolutely. These are not just white-collar crimes or little accidents. There were victims. That’s the point. There were victims all over the world.

***

Economists focus on the whole notion of incentives. People have an incentive sometimes to behave badly, because they can make more money if they can cheat. If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties.

Wall Street insider and New York Times columnist Andrew Ross Sorkin writes:

“They will pick on minor misdemeanors by individual market participants,” said David Einhorn, the hedge fund manager who was among the Cassandras before the financial crisis. To Mr. Einhorn, the government is “not willing to take on significant misbehavior by sizable” firms. “But since there have been almost no big prosecutions, there’s very little evidence that it has stopped bad actors from behaving badly.”***

Fraud at big corporations surely dwarfs by orders of magnitude the shareholders’ losses of $8 billion that Mr. Holder highlighted. If the government spent half the time trying to ferret out fraud at major companies that it does tracking pump-and-dump schemes, we might have been able to stop the financial crisis, or at least we’d have a fighting chance at stopping the next one.

Economics professor James Galbraith says:

There will have to be full-scale investigation and cleaning up of the residue of that, before you can have, I think, a return of confidence in the financial sector. And that’s a process which needs to get underway.

No wonder Galbraith says that economists should move into the background, and “criminologists to the forefront”

Failure to Stop Fraud and Prosecute Criminals Causes a Loss of Trust in Government, Which Makes Government Less Effective

As Shiller stated in the quote above, the failure of government officials to stop fraud and prosecute the financial fraudsters has caused a lack of trust in government itself.

Indeed, polls show that people no longer trust our economic “leaders”. See this and this.A psychologist wrote an essay published by the Wharton School of Business arguing that restoring trust is the key to recovery, and that trust cannot be restored until wrongdoers are held accountable:

According to David M. Sachs, a training and supervision analyst at the Psychoanalytic Center of Philadelphia, the crisis today is not one of confidence, but one of trust. “Abusive financial practices were unchecked by personal moral controls that prohibit individual criminal behavior, as in the case of [Bernard] Madoff, and by complex financial manipulations, as in the case of AIG.” The public, expecting to be protected from such abuse, has suffered a trauma of loss similar to that after 9/11. “Normal expectations of what is safe and dependable were abruptly shattered,” Sachs noted. “As is typical of post-traumatic states, planning for the future could not be based on old assumptions about what is safe and what is dangerous. A radical reversal of how to be gratified occurred.”

People now feel more gratified saving money than spending it, Sachs suggested. They have trouble trusting promises from the government because they feel the government has let them down.

He framed his argument with a fictional patient named Betty Q. Public, a librarian with two teenage children and a husband, John, who had recently lost his job. “She felt betrayed because she and her husband had invested conservatively and were double-crossed by dishonest, greedy businessmen, and now she distrusted the government that had failed to protect them from corporate dishonesty. Not only that, but she had little trust in things turning around soon enough to enable her and her husband to accomplish their previous goals.

“By no means a sophisticated economist, she knew … that some people had become fantastically wealthy by misusing other people’s money — hers included,” Sachs said. “In short, John and Betty had done everything right and were being punished, while the dishonest people were going unpunished.”

Helping an individual recover from a traumatic experience provides a useful analogy for understanding how to help the economy recover from its own traumatic experience, Sachs pointed out. The public will need to “hold the perpetrators of the economic disaster responsible and take what actions they can to prevent them from harming the economy again.” In addition, the public will have to see proof that government and business leaders can behave responsibly before they will trust them again, he argued.

Government regulators know this – or at least pay lip service to it – as well. For example, as the Director of the Securities and Exchange Commission’s enforcement division told Congress:

Recovery from the fallout of the financial crisis requires important efforts on various fronts, and vigorous enforcement is an essential component, as aggressive and even-handed enforcement will meet the public’s fair expectation that those whose violations of the law caused severe loss and hardship will be held accountable. And vigorous law enforcement efforts will help vindicate the principles that are fundamental to the fair and proper functioning of our markets: that no one should have an unjust advantage in our markets; that investors have a right to disclosure that complies with the federal securities laws; and that there is a level playing field for all investors.

If people don’t trust their government to enforce the law, government will become more and more impotent in addressing our economic problems. If government leaders take action, the market will not necessarily respond as expected. When government leaders make optimistic statements about the economy, people will no longer believe them.

Trying to Cover Up the Truth Extends Financial Crises

Elizabeth Warren, William Black and others say that attempting to cover up the truth extended Japan’s financial problems into an entire “Lost Decade”.

As Joseph Stiglitz said about Wall Street fraud:

So the whole strategy of the banks has been to hide the losses, muddle through and get the government to keep interest rates really low.

***
As long as we keep up this strategy, it’s going to be a long time before the economy recovers ….

Pam Martens – who worked on Wall Street for 21 years – writes:

The massive losses by big Wall Street firms, now topping those of the Great Depression in relative terms, have yet to be adequately explained. Wall Street power players are obfuscating and Congress is too embarrassed or frightened to ask, preferring to just throw money at the problem and hope it goes away. But as job losses and foreclosures mount and pensions and 401(k)s shrink, public policy measures to address the economic stresses require a full set of unembellished facts…

It was four years after the crash of 1929 before the major titans of Wall Street were forced to give testimony under oath to Congress and the full magnitude of the fraud emerged. That delay may well have contributed to the depth and duration of the Great Depression. The modern-day Wall Street corruption hearings in Congress … must now resume in earnest and with sworn testimony if we are to escape a similar fate.

To the extent that the government tries to cover up – instead of openly discuss – financial fraud, it will only extend America’s economic malaise.Failing to Prosecute Fraud Encourages Financial Players to Take Bigger and More Blatantly Illegal Actions

Nobel prize winning economist George Akerlof has demonstrated that failure to punish white collar criminals – and instead bailing them out- creates incentives for more economic crimes and further destruction of the economy in the future. Joseph Stiglitz, Professor Black, and many others agree. See this, this and this.

It was largely fraud which brought down the financial system in 2008. Unless we prosecute the fraudsters, they will do even bigger, stupider and more blatantly illegal things in the future which will lead to even bigger crises.

Failure to Prosecute Fraud Exacerbates the Sovereign Debt Crisis

The governments of the world have spent trillions trying to paper over the fraud and prop up the big, insolvent banks, instead of forcing them to restructure and forcing bondholders and shareholders to take a haircut.

A study of 124 banking crises by the International Monetary Fund found that propping banks which are only pretending to be solvent drives up the costs to the country:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.

***

All too often, central banks privilege stability over cost in the heat of the containment phase: if so, they may too liberally extend loans to an illiquid bank which is almost certain to prove insolvent anyway. Also, closure of a nonviable bank is often delayed for too long, even when there are clear signs of insolvency (Lindgren, 2003). Since bank closures face many obstacles, there is a tendency to rely instead on blanket government guarantees which, if the government’s fiscal and political position makes them credible, can work albeit at the cost of placing the burden on the budget, typically squeezing future provision of needed public services.

The American banks and government have certainly pretended that all of the big banks are solvent. As ABC wrote in October 2009:

The Treasury Department and the Federal Reserve lied to the American public last fall when they said that the first nine banks to receive government bailout funds were healthy, [the special inspector general for the Troubled Asset Relief Program] states in a new report released today.

Similarly, the stress tests were a complete and utter sham.The government has given the giant banks huge amounts in loans and guarantees based upon their false representations about their financial health. The Fed has larded up its balance sheet with toxic assets from the banks.

Debt levels are also getting dangerously close to the level that they become a drag on the economy. See this and this. When Keynesian economists argue that debt does not harm the economy, they are talking about debt incurred to pay for stimulus and productive things for the economy. But throwing trillions at the giant banks – who are mainly using the money to gamble – is not stimulus. It helps the executives of the big banks and their shareholders and bondholders, butnot the broader economy.

Indeed, attempting to prop up big, insolvent banks is preventing stimulus from getting out into the economy.

Fraud Causes Growing Inequality, Which Undermines the Economy

Growing inequality is very harmful to our economy. Indeed, if wealth is concentrated in too few hands, the “poker game” ends, as only too few fat cats are left with all of the chips. See this, this, this and this.

Fraud benefits the wealthy more than the poor, because the big banks and big companies have the inside knowledge and the resources to leverage fraud into profits. Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market. The giants (especially Goldman Sachs) have also used high-frequency program trading (making up between 40- 70% of all stock trades) which not only distorts the markets, but which also lets the program trading giants take a sneak peak at what the real traders are buying and selling, and then trade on the insider information. See this, this, this, this and this.

Similarly, JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley together hold 80% of the country’s derivatives risk, and 96% of the exposure to credit derivatives. They use their dominance in the market to manipulate the market.

Fraud disproportionally benefits the big players (and helps them to become big in the first place), increasing inequality and warping the market.
Fraud Increases the Severity of Boom-Bust Cycles

More and more people – such as the Bank of International Settlements and Barons – are saying that bubbles inevitably lead to busts, thus destabilizing the economy.

Professor Black says that fraud is a large part of the mechanism through which bubbles are blown.

Without strong laws against fraud, bubble after bubble will be blown, guaranteeing that the financial system cannot be stabilized in a fundamental sense.

Failure to Prosecute Fraud Is Worsening the Housing Crisis

Finally, failure to prosecute mortgage fraud is arguably worsening the housing crisis. See this and this.


The Global Economic Crisis

Michel Chossudovsky
Andrew G. Marshall (editors)
This book can be ordered directly from Global Research

Global Research Articles by Washington’s Blog

 

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Ivory Coast on the ‘brink of genocide’

Posted by Admin on December 31, 2010

Ivorian President Laurent Gbagbo, 2007

Ivorian President Laurent Gbagbo

http://www.headlinenewsbureau.com/siterun_data/news/world/doc57e3a35c5aebc34917033c0384ae6cf0.html

Ivory Coast on the \'brink of genocide\'

Ivory Coast on the ‘brink of genocide’

UN ambassador says houses are marked by tribal allegiance and calls for international intervention

Ivory Coast is on the “brink of genocide” and the world must take urgent action, the country’s new ambassador to the UN has warned.

Youssoufou Bamba expressed alarm that houses in certain areas were being marked according to the tribe of the person who lives there.

World leaders have stepped up pressure on President Laurent Gbagbo to quit in favour of Alassane Ouattara, who is widely recognised as having won last month’s elections.

Speaking in New York, Bamba, appointed as ambassador to the UN by Ouattara, described him as the rightful ruler of Ivory Coast. “He has been elected in a free, fair, transparent, democratic election,” he said. “The result has been proclaimed by the independent electoral commission, certified by the UN. To me the debate is over, now you are talking about how and when Mr Gbagbo will leave office.”

Bamba alleged there had been a “massive violation of human rights”, with more than 170 people killed during street demonstrations in Ivory Coast. “Thus, one of the messages I try to get across during the conversations I have conducted so far, is to tell we are on the brink of genocide. Something should be done.”

He implied that Ouattara supporters, whose strongholds are largely in the north, could be targeted by Gbagbo backers, saying: “If houses are being marked according to your tribe, what is going to be next?”

Bamba said he planned to meet every member of the UN security council. “I intend to meet all the 15 members to explain to them the gravity of the situation … We expect the United Nations to be credible and the United Nations to prevent violation and to prevent the election to be stolen from the people.”

The 28 November election was meant to reunite Ivory Coast, the world’s top cocoa producer, after a 2002-03 civil war. But a dispute over the results has provoked lethal street clashes and threatens to restart open conflict.

The UN general assembly last week recognised Ouattara as Ivory Coast’s legitimate president by unanimously deciding that the list of diplomats he submitted be recognised as the sole official representatives of Ivory Coast at the UN.

The UN’s peacekeeping chief, Alain Le Roy, said his troops had become a target of violence in Ivory Coast after a campaign of “disturbing lies” on state television suggested the UN was arming and transporting anti-Gbagbo rebels.

The US state department spokesman, Mark Toner, said America was planning for the possible evacuation of its embassy in Ivory Coast amid concerns of a full-blown conflict.

Ouattara and his prime minister, Guillaume Soro, remain holed up in a hotel in the commercial capital, Abidjan, protected by UN forces. Supporters of Gbagbo, the Young Patriots, have threatened to storm the hotel.

The group’s leader, Charles Bl� Goud�, who is also Gbagbo’s youth minister, warned the west African regional bloc, Ecowas, not to send troops. “They should prepare themselves very well because we are thinking about totally liberating our country, and soon I will launch the final assault,” he said.

West African leaders have backed off their threat of military action for now. On Tuesday the presidents of Sierra Leone, Benin and Cape Verde delivered an ultimatum on behalf of Ecowas, hoping to escort Gbagbo into exile. He refused to budge.

An Ouattara adviser, speaking on condition of anonymity, said Gbagbo demanded a vote recount during the negotiations with the visiting delegation and wants amnesty if he leaves office.

The Nigerian president, Goodluck Jonathan, said the leaders would return to Ivory Coast on Monday. “Whenever there is a dispute, whenever there is disagreement, it is dialogue that will solve issues,” Jonathan said in the Nigerian capital, Abuja, where Ecowas is based. “The dialogue is on. They are encouraging us to go back.”

Ivory Coast United Nations Human rights David Smith

 

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Australia floods: Towns could be swamped for week

Posted by Admin on December 31, 2010

The Great Barrier Reef

Great Barrier Reef

http://www.headlinenewsbureau.com/siterun_data/news/world/doc2a32bdda702aee363cb5138deea9d6d1.html

Posted: Wednesday, December 29, 2010 9:00 pm

Flooded communities across eastern Australia could be under water for more than a week, with the cleanup bill expected to hit billions of dollars, a state official said Thursday.

Days of torrential downpours have left parts of central and southern Queensland state inundated, flooding thousands of homes and businesses, cutting off roads and forcing the entire populations of two towns to evacuate.

The rain eased Thursday, but river levels continued to rise in many locations as high waters made their way toward the sea. Communities already swamped could remain under water for up to 10 days, Queensland state Premier Anna Bligh warned Thursday.

“It’s an enormous disaster,” she told Australian Broadcasting Corp. radio. “The recovery … is going to require literally billions of dollars from federal, state and local governments (and) insurance companies.”

Floodwaters inundated 120 homes in the southeast Queensland town of Bundaberg, forcing the evacuation of about 400 people overnight, Deputy Mayor Tony Ricciardi said. Police had to rescue two people from the roof of their flooded home.

“This is a one-in-100-year event,” Ricciardi said. “We won’t see this again in our lifetime. Well, I hope.”

Officials were evacuating all 100 residents of the town of Condamine by helicopter on Thursday, county Mayor Ray Brown said. A river running through Condamine was still rising and threatening to put the whole town under water, he said.

In the town of Theodore, the military evacuated all 300 residents by helicopter Wednesday.

Queensland launched a disaster relief fund for flood victims with 1 million Australian dollars ($1 million) in state money. Prime Minister Julia Gillard pledged to match that amount with federal funds.

 

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US drone attacks are no laughing matter, Mr Obama

Posted by Admin on December 31, 2010

drone

http://www.headlinenewsbureau.com/siterun_data/news/world/doc537c4f0415b3bbdf7218ade83cf2648c.html

The president’s backing of indiscriminate slaughter in Pakistan can only encourage new�waves of militancy

Speaking at the White House Correspondents’ Association dinner in May, Barack Obama spotted teen pop band the Jonas Brothers in the audience. “Sasha and Malia are huge fans, but, boys, don’t get any ideas,” deadpanned the president, referring to his daughters. “Two words for you: predator drones. You will never see it coming.” The crowd laughed, Obama smiled, the dinner continued. Few questioned the wisdom of making such a tasteless joke; of the US commander-in-chief showing such casual disregard for the countless lives lost abroad through US drone attacks.

From the moment he stepped foot inside the White House, Obama set about expanding and escalating a covert CIA programme of “targeted killings” inside Pakistan, using Predator and Reaper drones armed with Hellfire missiles (who comes up with these names?) that had been started by the Bush administration in 2004. On 23 January 2009, just three days after being sworn in, Obama ordered his first set of air strikes inside Pakistan; one is said to have killed four Arab fighters linked to al-Qaida but the other hit the house of a pro-government tribal leader, killing him and four members of his family, including a five-year-old child. Obama’s own daughter, Sasha, was seven at the time.

But America’s Nobel-peace-prize-winning president did not look back. During his first nine months in office he authorised as many aerial attacks in Pakistan as George W Bush did in his final three years in the job. And this year has seen an unprecedented number of air strikes. Forget Mark Zuckerberg or the iPhone 4 – 2010 was the year of the drone. According to the New America Foundation thinktank in Washington DC, the number of US drone strikes in Pakistan more than doubled in 2010, to 115. That is an astonishing rate of around one bombing every three days inside a country with which the US is not at war.

And the carnage continues. On Monday, CIA drones fired six missiles at two vehicles in a “Taliban stronghold” in north Waziristan, on the Pakistani side of the border with Afghanistan, killing 18 “militants” . Or so said “Pakistani intelligence officials”, speaking under condition of anonymity to the Associated Press. Today another round of drone strikes is thought to have killed at least 15 “militants” in the same area.

These attacks by unmanned aircraft may have succeeded in eliminating hundreds of dangerous militants, but the truth is that they also kill innocent civilians indiscriminately and in large numbers. According to the New America Foundation, one in four of those killed by drones since 2004 has been an innocent. The Brookings Institute, however, has calculated a much higher civilian-to-militant ratio of 10:1. Meanwhile, figures compiled by the Pakistani authorities suggest US strikes killed 701 people between January 2006 and April 2009, of which 14 were al-Qaida militants and 687 were civilians. That produces a hit rate of just 2% – or 50 civilians dead for every militant killed.

The majority of Pakistanis are against the use of drones in the tribal areas on the Afghan border. Their own government, however, despite public opposition to the bombings, has in private expressed support for America’s drones. “I don’t care if they do it as long as they get the right people,” Pakistani Prime Minister Yousuf Raza Gilani is quoted as saying, in a 2008 cable released by WikiLeaks. ” We’ll protest in the National Assembly and then ignore it .”

This is not a left/right issue; criticisms of the drone strikes have come from figures as diverse as Sir Brian Burridge, the UK’s former air chief marshal in Iraq, who has described the aerial slaughter inflicted from afar by unmanned, remote-controlled aircraft as a “virtueless war”; and Andrew Kilcullen, a counterinsurgency expert and former adviser to General David Petraeus, who says that each innocent victim of a drone strike “represents an alienated family, a new revenge feud, and more recruits for a militant movement that has grown exponentially as drone strikes have increased”.

Kilcullen is spot on. The cold-blooded killing of Pakistani civilians in a push-button, PlayStation-style drone war is not just immoral and perhaps illegal, it is futile and self-defeating from a security point of view. Take Faisal Shahzad , the so-called Times Square bomber. One of the first things the Pakistani-born US citizen said upon his arrest was: “How would you feel if people attacked the United States? You are attacking a sovereign Pakistan.” Asked by the judge at his trial as to how he could justify planting a bomb near innocent women and children, Shahzad responded by saying that US drone strikes “don’t see children, they don’t see anybody. They kill women, children, they kill everybody.”

But the innocent victims of America’s secret drone war have become “unpeople”, in the words of the historian Mark Curtis – those whose lives are seen as expendable in the pursuit of the west’s foreign policy goals. Killed via remote control, they remain unseen and unremembered. Forgive me, Mr President, for not seeing the funny side.

Pakistan Barack Obama al-Qaida Global terrorism United States US foreign policy Mehdi Hasan

 

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57 journalists killed in 2010

Posted by Admin on December 31, 2010

http://www.headlinenewsbureau.com/siterun_data/news/world/doc20112409e961f9c5e061f7af70da84e2.html

57 journalists killed in 2010

• Reporters being targeted by criminal gangs, study shows • Pakistan has been the deadliest country for journalists this year

Fifty-seven journalists worldwide have been killed this year, according to the media advocacy group Reporters Without Borders, adding that fewer reporters were being killed in war zones and more were being targeted by criminals or traffickers.

The death toll was down 25% from 2009, when 76 journalists were killed. Last year’s record number of deaths was so high because of a massacre in the Philippines in which more than two dozen journalists and their staff were gunned down.

In its annual report, the Paris-based group said organised criminal gangs and militias posed the biggest threat to journalists. “If governments do not make every effort to punish the murderers of journalists, they become their accomplices,” Jean-François Julliard, the Reporters Without Borders secretary general, said.

Pakistan has been the deadliest country for reporters this year, with 11 killed. Seven journalists were killed in Mexico, seven in Iraq and four in the Philippines.

This month the Committee to Protect Journalists said 42 media workers have been killed worldwide in 2010.

The two groups have different criteria on what kind of reporters they include in their list and whether some reporters were targeted because of their profession, Julliard said.

Reporters Without Borders said this year has also seen a surge in abductions. Fifty-one reporters have been kidnapped in 2010, up from 33 in 2009, Reporters Without Borders said.

French TV journalists Herv� Ghesquière and St�phane Taponier and their three Afghan assistants have been held hostage in Afghanistan for more than a year.

“Journalists are seen less and less as outside observers,” Julliard said. “Their neutrality and the nature of their work are no longer respected.”

Journalist safety

 

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Khodorkovsky found guilty as protests mount against Putin and ‘charade’ trial

Posted by Admin on December 31, 2010

http://www.headlinenewsbureau.com/siterun_data/news/world/doc8ac71af75251466f60756bf50c507c62.html

Khodorkovsky found guilty as protests mount against Putin and ‘charade’ trial

Extended term expected for jailed former oil tycoon as supporters cite Kremlin influence in political trial

The fate of oil tycoon Mikhail Khodorkovsky was left hanging in the balance today after a court in Moscow found him guilty of theft and money laundering in a politically tinged trial that is seen as a weathervane for Russia’s future course.

Viktor Danilkin, the trial judge, told the packed court that Khodorkovsky, 47, and his business partner, Platon Lebedev, 54, “carried out the embezzlement of property entrusted to the defendants”.

But the trial remains delicately poised because Danilkin will not sentence until he finishes reading his full 250-page verdict, which could take several days.

Opposing factions in the Kremlin are said to be in dispute over how much longer the businessman, who has already spend seven years in jail on earlier fraud charges, should stay behind bars.

Khodorkovsky, wearing a scuffed black jacket, and Lebedev, in a white tracksuit top, whispered to each other inside the enclosed dock and ignored the judge as he said the court had established their guilt.

Hundreds of protesters outside the court in the Khamovniki district of southern Moscow shouted “freedom” and “Russia without Putin”. Police arrested about 20 people, dragging them out of the crowd and crushing their placards.

Speaking during a recess, Khodorkovsky’s lead lawyer, Vadim Klyuvgant, said: “The trial was a charade of justice, the charges were absolutely false, but I fear the sentencing will be very real.”

Yury Shmidt, another lawyer, said Danilkin was “not talking, but droning” through his verdict.

Supporters of Khodorkovsky, who part-owned the Yukos oil company and was once Russia’s richest man, say the Kremlin controls the court system and singled him out for punishment because he funded opposition politicians.

The oligarch has been in prison since he was seized by special forces as his plane landed to refuel on a Siberian runway in 2003. A court sentenced him and Lebedev to eight years in prison two years later, but a trial on fresh charges of embezzling $25bn (£16bn) of oil began last year.

Analysts say the length of the sentence, which is expected this week or in early January, will show which of two Kremlin clans – the siloviki (security and military veterans) associated with Vladimir Putin, the prime minister , and the liberals grouped mainly around the president, Dmitry Medvedev – has gained supremacy in the country.

Prosecutors want the men to stay in prison until 2017, and Putin said this month that “a thief should be in jail” when he was asked about the trial. Medvedev, however, has distanced himself from the case and said on Friday that “neither the president nor any other official in public service have the right to express their stance on this before the verdict is delivered.”

The friction over Khodorkovsky channels into a wider debate over which man from Russia’s “ruling tandem” will stand for the presidency in 2012. US diplomats believe Medvedev is “Robin to Putin’s Batman” and Putin will try to get back the post he held from 2000 to 2008, according to documents disclosed by WikiLeaks earlier this month. But Medvedev has given muted signals that he’d like to stay in the job.

Andrei Illarionov, a former economic adviser to Putin, told the Guardian outside the court that the liberal camp was unlikely to prevail.

“This prosecution is the result of a coup,” he said. “In 2003, the siloviki became afraid that Khodorkovsky and the political forces surrounding him were becoming too powerful, so they decided to arrest him. These people are still dominant in the country and for them it would be a defeat if Khodorkovsky was released.”

Vladimir Ryzhkov, a former MP and opposition politician who was also outside the court, said: “There has been open pressure on the judge from Putin who consistently expresses his hatred for Khodorkovsky and says publicly that he is guilty of theft.”

Ryzhkov added: “I believe they want to keep him in prison for another three or four years at least, so he is not released until well after the next presidential elections, in 2012.” He dismissed suggestions that Medvedev might ensure a softer sentence. “There is never any action behind Medvedev’s rhetoric,” he said.

One protester among the crowd opposite the court was Vladimir Yurovsky, 54, the manager of a small Moscow financial services company.

“I’ve seen the indictments and they are absurd,” he said, adding. “I once worked for a company that competed with Khodorkovsky’s business and he took away our clients. But it was done in a gentlemanly way that only demanded respect.”

The decision comes as leaked US embassy cables reveal that US diplomats believe attempts by the Russian government to demonstrate due process in the trial are “lipstick on a political pig” .

Despite the protests, many Russians are indifferent to Khodorkovsy’s fate, believing that oligarchs who grew rich in the turbulent 1990s should also be prosecuted.

“Given such significant international implications to the case, and given Khodorkovsky’s former stature, one might expect a large amount of focus on the Yukos case inside Russia,” noted a US diplomat in Moscow last year, according to the WikiLeaks documents . “However, most Russians continue to pay scant attention.”

The trial resumes tomorrow.

Profile

Mikhail Khodorkovsky was one of the most successful of the first wave of Russian oligarchs, politically connected businessmen who made good in the chaotic decade after the Soviet collapse in 1991. Born in Moscow in 1963, he was active as a student in the Communist youth movement, using his ties to devise a scheme to turn government subsidies into hard cash. He also sold imported computers.

In 1988, he set up Menatep, a commercial bank he later used to acquire control of the Yukos oil company. Yukos developed rapidly after major investment and Khodorkovsky turned it into a western-style quoted company. But he fell out of favour with Vladimir Putin, then president, when he began complaining about corruption, promoting private oil pipelines and funding opposition politicians. He was arrested in 2003 and later sentenced to eight years in prison for fraud.

Mikhail Khodorkovsky Vladimir Putin Russia Tom Parfitt

 

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North Korea threatens nuclear ‘holy war’ with the South

Posted by Admin on December 31, 2010

http://www.headlinenewsbureau.com/siterun_data/news/world/doc210846daf07da4d680356a2bc5db1771.html

North says live-fire exercises are raising tensions • Seoul promises ‘merciless counterattack’ if provoked

Tensions on the Korean pensinsula were at their most dangerous level since the 1950-53 war today when North Korea threatened to use nuclear weapons in a “holy war” against its neighbour after South Korean tanks, jets and artillery carried out one of the largest live-fire drills in history close to the border.

The military exercise at Pocheon, just south of the demilitarized zone, was the third such show of force this week by South Korea. Multiple rocket-launchers, dozens of tanks and hundreds of troops joined the drills, which the South Korean president, Lee Myung-bak, insisted was necessary for self-defence, following two deadly attacks this year. Last month, two civilians and two marines were killed by a North Korean barrage on Yeonpyeong island following a live-fire drill in disputed territory. In March, 46 sailors died when the South Korean naval ship, Cheonan, was sunk, apparently by an enemy torpedo.

“We had believed patience would ensure peace on this land, but that was not the case,” Lee told troops today. He earlier warned that he was ready to order a “merciless counterattack” if further provoked.

North Korea’s armed forces minister, Kim Yong-chun, also lifted the pitch of the sabre-rattling. “To counter the enemy’s intentional drive to push the situation to the brink of war, our revolutionary forces are making preparations to begin a holy war at any moment necessary based on nuclear deterrent,” North Korea’s KCNA news agency quoted him telling a rally in Pyongyang.

Bellicosity and brinkmanship are nothing new on the divided peninsula and there are doubts that North Korea is capable of an accurate nuclear strike, though it has conducted two bomb tests and is believed to have enough high-grade plutonium for at least six warheads.

But even with conventional artillery, the two neighbours are capable of inflicting horrendous casualties among their densely packed populations.

The political situation is less predictable than usual due to the ongoing transition of power in Pyongyang from Kim Jong-il to his son Kim Jong-un. There has also been a hardening of positions in Seoul, where president Lee is belatedly trying to demonstrate his toughness. After being criticised for his restrained response to the two earlier incidents, Lee has fired his top military advisers and replaced them with hardliners, who favour an escalated display of self-defence.

Efforts to defuse the crisis have not been helped by divisions among the other major players in the region.

Russia has proposed sending a special United Nations envoy to the region and China has called for restraint and expressed support for a fresh round of six-party denuclearisation talks. But Japan and the United States have backed the robust stance taken by Seoul, saying North Korea has not yet done enough to deserve new negotiations. Last weekend, the American ambassador to the United Nations proposed a security council statement condemning Pyongyang, but it was blocked by China.

The topic looks certain to be high on the agenda at a summit between US president Barack Obama and his Chinese counterpart Hu Jintao in Washington on 19 January. According to Japan’s Mainichi Shimbun newspaper, Obama called Hu earlier this month to say that if the government in Beijing did not restrain its old ally then the US would take action. Many analysts believe this is why North Korea has since refrained from further military steps.

China is the main supplier of food and fuel to its isolated and impoverished neighbour, but the extent of its influence over Pyongyang remains unclear. Policymakers in Beijing are divided. US diplomatic cables published by WikiLeaks show that senior Chinese foreign ministry officials have privately expressed considerable frustration with Pyongyang’s behaviour . But the Chinese Communist party‘s nationalist newspaper, Global Times, has accused South Korea of provocation.

“Many believe that if they try to be nice, Pyongyang will never stop; and if they play tough, the other side will back off. But the two Koreas are not street hoodlums, nor bullies in the schoolyard,” it noted in a recent editorial. The priority, it added, was to avoid regional instability and economic development. “It is unacceptable for regional interests that any side threatens the other with war, whatever the purpose may be.”

Hopes for an easing of tensions rose briefly earlier this week, when an unofficial US envoy returned from Pyongyang, where he said he noted a change of attitude. New Mexico governor Bill Richardson – a veteran intermediary – praised North Korea for stepping back from the brink and for promising to readmit international nuclear inspectors as well as sell Seoul thousands of used-nuclear fuel rods that could otherwise be used to make weapons.

However, he warned today that if military exercises continue near the border, the restraint may not last.

“The situation is still a tinderbox. There’s still enormous tension, enormous mistrust and I believe diplomacy is what is needed to get us out of this tinderbox,” Richardson said in an interview with the Associated Press. He described the tensions as “the worst I have ever seen on the peninsula”.

Korea’s year of living dangerously 27 March Forty-six sailors die in sinking of the Chenoan, a South Korean warship . North denies responsibility.

20 May South-led investigation concludes the Cheonan was sunk by North’s torpedo.

27 May North scraps pact aimed at preventing border skirmishes.

16 June Barack Obama renews sanctions against North over its nuclear programme.

29 October North’s troops open fire on South’s border post.

22 November US scientists are shocked to be shown uranium enrichment facility in the North.

23 November Two civilians and two marines are killed during the North’s artillery barrage, prompted by the South’s live-fire exercise in disputed waters.

20 December South’s troops conduct 45th live-fire exercise of the year. Pyongyang backs down from threat of “catastrophic” consequences.

21 December Washington and Seoul are dismissive about the North’s promise to readmit international nuclear inspectors.

23 December The South stages largest winter drill . Its president, Lee Myung-bak, says he is ready to order a “merciless counterattack”. North Korea warns it is prepared to go nuclear in “holy war”.

South Korea North Korea Nuclear weapons Jonathan Watts

 

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Medvedev welcomes US arms treaty

Posted by Admin on December 31, 2010

http://www.headlinenewsbureau.com/siterun_data/news/world/doc408f9d676abcb1764492d160e8a15470.html

Russian president says country is ready to ratify the arms reduction pact with the US

MPs in Russia could approve a new strategic arms reduction treaty with the US as early as tomorrow after President Dmitry Medvedev welcomed the pact.

The country’s overwhelmingly pro-Kremlin parliament is likely to push the agreement through swiftly, despite doubts over Washington’s desire to station a missile defence shield in Europe.

Medvedev’s office said today he was “pleased to learn that the United States Senate has ratified the Start Treaty and expressed hope that the State Duma and the Federation Council [lower and upper houses of parliament] will be ready to consider this issue shortly and to ratify the document”.

The US Senate voted 71 to 26 in favour of the treaty yesterday, despite expectations that Republican members might try to block its passage.

The speaker of the State Duma, Boris Gryzlov, said the Kremlin-controlled United Russia party, which dominates the chamber, was ready to approve the treaty at a parliamentary session scheduled tomorrow.

The speaker of the Federation Council, Sergei Mironov, said he could push it through the same day.

Under New Start, as the agreement is called, strategic nuclear warheads deployed by each country will be reduced to 1,550 within seven years. Deployed missile launchers would be cut to 700.

Mikhail Margelov, head of the Federation Council’s foreign relations committee, said the treaty “represents a shift away from cold war mentality and demonstrates that Russia and the US are focused on achieving 21st-century global security”.

Its ratification in both countries will be seen as step forward after a difficult period in bilateral relations since Medvedev and Barack Obama signed the treaty in Prague in April.

Two months after that meeting, the US exposed 10 Russian sleeper agents living in New York and Washington, although the fallout was partly defused when they were exchanged for four men jailed in Russia who had allegedly worked for western intelligence agencies.

Relations appeared to be warming last month when the Nato military alliance invited Russia to participate in a US-led missile defence system about which Moscow is deeply suspicious. But the thaw came under threat when WikiLeaks revealed US diplomatic cables suggesting Russia is a “mafia state”.

Analysts say the treaty overrides such irritants, showing progress in the attempts to improve ties with Russia, which began after Obama came to power.

Sergei Rogov, head of the influential US and Canada Institute in Moscow, told the RIA Novosti news agency: “It is, of course, a positive step and it shows that the ‘re-set’ in Russian-American relations is bringing real results, but the question now is, what next?”

Top of the agenda for the Kremlin will be hammering out details of its role in the missile defence project. Vladimir Putin, the prime minister, warned this month that Russia would be obliged to deploy “new strike forces” on its borders if talks with Nato over the system failed to show progress.

Dmitry Medvedev Russia Nuclear weapons United States Tom Parfitt

 

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Of luxury cars and lowly tractors

Posted by Admin on December 31, 2010

http://www.thehindu.com/opinion/columns/sainath/article995828.ece

P. SAINATH

Even as the media celebrate the Mercedes Benz deal in the Marathwada region as a sign of “rural resurgence,” the latest data show that 17,368 farmers killed themselves in the year of the “resurgence.”

Even as the media celebrate the Mercedes Benz deal in the Marathwada region as a sign of “rural resurgence,” the latest data show that 17,368 farmers killed themselves in the year of the “resurgence.”

 

When businessmen from Aurangabad in the backward Marathwada region bought 150 Mercedes Benz luxury cars worth Rs. 65 crore at one go in October, it grabbed media attention. The top public sector bank, State Bank of India, offered the buyers loans of over Rs. 40 crore. “This,” says Devidas Tulzapurkar, president of the Aurangabad district bank employees association, “at an interest rate of 7 per cent.” A top SBI official said the bank was “proud to be part of this deal,” and would “continue to scout for similar deals in the future.”

The value of the Mercedes deal equals the annual income of tens of thousands of rural Marathwada households. And countless farmers in Maharashtra struggle to get any loans from formal sources of credit. It took roughly a decade and tens of thousands of suicides before Indian farmers got loans at 7 per cent interest — many, in theory only. Prior to 2005, those who got any bank loans at all shelled out between 9 and 12 per cent. Several were forced to take non-agricultural loans at even higher rates of interest. Buy a Mercedes, pay 7 per cent interest. Buy a tractor, pay 12 per cent. The hallowed micro-finance institutions (MFIs) do worse. There, it’s smaller sums at interest rates of between 24 and 36 per cent or higher.

Starved of credit, peasants turned to moneylenders and other informal sources. Within 10 years from 1991, the number of Indian farm households in debt almost doubled from 26 per cent to 48.6 per cent. A crazy underestimate but an official number. Many policy-driven disasters hit farmers at the same time. Exploding input costs in the name of ‘market-based prices.’ Crashing prices for their commercial crops, often rigged by powerful traders and corporations. Slashing of investment in agriculture. A credit squeeze as banks moved away from farm loans to fuelling upper middle class lifestyles. Within the many factors driving over two lakh farmers to suicide in 13 years, indebtedness and the credit squeeze rank high. (And MFIs are now among the squeezers).

What remained of farm credit was hijacked. A devastating piece in The Hindu(Aug. 13) showed us how. Almost half the total “agricultural credit” in the State of Maharashtra in 2008 was disbursed not by rural banks but by urban and metro branches. Over 42 per cent of it in just Mumbai — stomping ground of large corporations rather than of small farmers.

Even as the media celebrate our greatest car deal ever as a sign of “rural resurgence,” the subject of many media stories, comes the latest data of the National Crime Records Bureau. These show a sharp increase in farm suicides in 2009 with at least 17,368 farmers killing themselves in the year of “rural resurgence.” That’s over 7 per cent higher than in 2008 and the worst numbers since 2004. This brings the total farm suicides since 1997 to 216,500. While all suicides have multiple causes, their strong concentration within regions and among cash crop farmers is an alarming and dismal trend.

The NCRB, a wing of the Union Home Ministry, has been tracking farm suicide data since 1995. However, researchers mostly use their data from 1997 onwards. This is because the 1995 and 1996 data are incomplete. The system was new in 1995 and some big States such as Tamil Nadu and Rajasthan sent in no numbers at all that year. (In 2009, the two together saw over 1,900 farm suicides). By 1997, all States were reporting and the data are more complete.

The NCRB data end at 2009 for now. But we can assume that 2010 has seen at least 16,000 farmers’ suicides. (After all, the yearly average for the last six years is 17,104). Add this 16,000 to the total 2,16,500. Also add the incomplete 1995 and 1996 numbers — that is 24,449 suicides. This brings the 1995-2010 total to 2,56,949. Reflect on this figure a moment.

It means over a quarter of a million Indian farmers have committed suicide since 1995. It means the largest wave of recorded suicides in human history has occurred in this country in the past 16 years. It means one-and-a-half million human beings, family members of those killing themselves, have been tormented by the tragedy. While millions more face the very problems that drove so many to suicide. It means farmers in thousands of villages have seen their neighbours take this incredibly sad way out. A way out that more and more will consider as despair grows and policies don’t change. It means the heartlessness of the Indian elite is impossible to imagine, leave alone measure.

Note that these numbers are gross underestimates to begin with. Several large groups of farmers are mostly excluded from local counts. Women, for instance. Social and other prejudice means that, most times, a woman farmer killing herself is counted as suicide — not as a farmer’s suicide. Because the land is rarely in a woman’s name.

Then there is the plain fraud that some governments resort to. Maharashtra being the classic example. The government here has lied so many times that it contradicts itself thrice within a week. In May this year, for instance, three ‘official’ estimates of farm suicides in the worst-hit Vidarbha region varied by 5,500 per cent. The lowest count being just six in four months (See “How to be an eligible suicide,” The Hindu, May 13, 2010).

The NCRB figure for Maharashtra as a whole in 2009 is 2,872 farmers’ suicides. So it remains the worst State for farm suicides for the tenth year running. The ‘decline’ of 930 that this figure represents would be joyous if true. But no State has worked harder to falsify reality. For 13 years, the State has seen a nearly unrelenting rise. Suddenly, there’s a drop of 436 and 930 in 2008 and 2009. How? For almost four years now, committees have functioned in Vidarbha’s crisis districts to dismiss most suicides as ‘non-genuine.’ What is truly frightening is the Maharashtra government’s notion that fixing the numbers fixes the problem.

Yet that problem is mounting. Perhaps the State most comparable to Maharashtra in terms of population is West Bengal. Though its population is less by a few million, it has more farmers. Both States have data for 15 years since 1995. Their farm suicide annual averages in three-five year periods starting then are revealing. Maharashtra’s annual average goes up in each period. From 1,963 in the five years ending with 1999 to 3,647 by 2004. And scaling 3,858 by 2009. West Bengal’s yearly average registers a gradual drop in each five-year period. From 1,454 in 1999 to 1,200 in 2004 to 1,014 by 2009. While it has more farmers, its farm suicide average for the past five years is less than a third of Maharashtra’s. The latter’s yearly average has almost doubled since 1999.

The share of the Big 5 ‘suicide belt’ States — Maharashtra, Andhra Pradesh, Karnataka, Madhya Pradesh and Chhattisgarh — remains close to two-thirds of all farm suicides. Sadly 18 of 28 States reported higher farm suicide numbers in 2009. In some the rise was negligible. In others, not. Tamil Nadu showed the biggest increase of all States, going from 512 in 2008 to 1060 in 2009. Karnataka clocked in second with a rise of 545. And Andhra Pradesh saw the third biggest rise — 309 more than in 2008. A few though did see a decline of some consequence in their farm suicide annual average figures for the last six years. Three — Karnataka, Kerala and West Bengal — saw their yearly average fall by over 350 in 2004-09 compared to the earlier seven years.

Things will get worse if existing policies on agriculture don’t change. Even States that have managed some decline across 13 years will be battered. Kerala, for instance, saw an annual average of 1,371 farm suicides between 1997 and 2003. From 2004-09, its annual average was 1016 — a drop of 355. Yet Kerala will suffer greatly in the near future. Its economy is the most globalised of any State. Most crops are cash crops. Any volatility in the global prices of coffee, pepper, tea, vanilla, cardamom or rubber will affect the State. Those prices are also hugely controlled at the global level by a few corporations.

Already bludgeoned by the South Asian Free Trade Agreement (SAFTA), Kerala now has to contend with the one we’ve gotten into with ASEAN. And an FTA with the European Union is also in the offing. Kerala will pay the price. Even prior to 2004, the dumping of the so-called “Sri Lankan pepper” (mostly pepper from other countries brought in through Sri Lanka) ravaged the State. Now, we’ve created institutional frameworks for such dumping. Economist Professor K. Nagaraj, author of the biggest study of farm suicides in India, says: “The latest data show us that the agrarian crisis has not relented, not gone away.” The policies driving it have also not gone away.

 

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