Saturday, March 28, 2009

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US Military Dogs Sent On Multiple War Tours, Suffer From Stress, Nightmares Top
Rambo sounds the warning as soon as the kennel door at Bolling Air Force Base creaks open, a ferocious, thunderous bark as loud and persistent as a jackhammer. In the next stalls, Rocky goes berserk, spinning in tight circles like a top, and Jess, ears perked, bounces excitedly up and down. More on Animals
 
Queen Rania of Jordan: My Visit to South Africa Part 2 Top
I've never walked into a library to the sound of stomping, rattling, and rhythmic gumboots pounding the floor, but I did today, thanks to two amazing dance groups from Soweto and Thembisa. Not only did it wake me up, but it set the tone for some pretty lively storytelling and discussion with them. Sitting in a cozy and colorful little amphitheater in Sandton Library, we talked about books...the joy they give us, the friends we meet through them, the new experiences they teach us, and the imaginary places they transport us to. Larger than life, Gcina Mhlope, South Africa's popular poet and inspirational storyteller, held us spellbound with her animated and expressive tales. Gcina has a rare gift, made all the more remarkable by the fact that until she was 20, she had never set foot in a library. Her aunt was illiterate, but she collected words and books in a suitcase. Now, in her memory, Gcina travels around schools and centers putting those words to work, and encouraging children to read. She leaves a suitcase of books behind everywhere she goes. Luggage for life. (P.S. I later discovered that the children dance at the weekends to earn money for gumboots, drums, and to help them with school expenses.) But sadly, today, there are nearly 800 million adults around the world who cannot read or write. The majority of them are girls and women. They can't read newspapers, or instructions on medicine bottles. They can't fill out application forms, or use the internet. Learning to read and write changes lives; it means jobs, money, health, and dreams fulfilled. Next month, the Global Campaign for Education will organize a global call to put children into classrooms by focusing on literacy. It's called, The Big Read. Please check it out and lend your support so that we can all turn to a new page together. www.campaignforeducation.org A chance encounter with rugby legend, François Piennar, after that event meant I, quite unexpectedly, found myself at the Liberty Life Wanderers' Stadium watching cricket. The ICC World Twenty 20 tournament to be precise. South Africa vs. Australia. Until a few hours ago, what I knew about cricket could have been carved on the back of a postage stamp with an ice axe, but after a crash course, I now know my overs from my batsmen and my runs from my sixes. What an amazing atmosphere: celebratory fireworks lit up the dusky sky; there were victory dances to booming drums; endless Mexican waves, and rousing choruses of "We Will Rock You!" But even amidst the gasps and cheers of a cricket match, South Africa's history bubbled to the surface. In a stadium of 34,000 people, Dr. Essop Pahad, former Minister in the Presidency, pointed to around 400 seats under the scoreboard that, in the Apartheid era, were reserved for non whites, like him. Because, at midday, those were the hottest, least desirable seats. Little wonder he sat so proudly in the Presidential box today. Sport has a special status here. It's unified this country. In 1995, when South Africa won the World Cup, whites and non whites rallied around rugby to help heal the wounds of apartheid. A TV commentator asked François, captain back then, what it felt like to have such passionate support from 63,000 people packed into Ellis Park. He replied: "We did not have 63,000 fans behind us today, we had 43 million South Africans." Nelson Mandela later wrote: "It was under François Pienaar's inspiring leadership that rugby became the pride of the entire country. He brought the nation together." I can only imagine what it must feel like to have Madiba describe you as the 'man who brought the nation together.' Such humility and charm are typical of the father of this nation. Walking around the incredibly moving Apartheid Museum in Soweto, I struggled to understand how he could have endured 27 years of imprisonment and emerge as compassionate as he is. The museum shocks from the outset. Your ticket randomly labels you by race so that some visitors experience the humiliation of walking through the dark, non-white entrance. Faded identity papers cover the walls. Visitors glimpse each other through a metal grid. Hundreds of nooses hang, symbolizing state executions. The tour takes you into Mandela's tiny cell to experience his numbing, stifling, isolation. His voice echoes everywhere. A priceless array of artifacts, footage, photography and text tell the chilling apartheid story, and bring to life the struggle...the sacrifice. Mandela has said that, "True reconciliation does not consist in merely forgetting the past." If we are truly to move forward, we need to understand the past. We need to reflect on how after 27 stolen years, he built a new nation from the fragments of conflict. We need to learn his lessons. We need to live up to his example. The curator told me that there are plans afoot to adapt the photographs and footage so that Madiba's legacy of peace and reconciliation can travel the world, and reach even more people. What did I take away from my visit? That reconciliation is achievable. That deep-rooted hatreds can be addressed. But as I came out into the sunlight, I was shaken and sad. In my part of the world, we haven't learned those lessons. Our long walk to freedom continues. Click here to read Queen Rania's first blog post about her trip to Africa. More on South Africa
 
Critics Call Freedom Tower Name Change Unpatriotic Top
NEW YORK — Even without the name, the symbolism of the Freedom Tower as an American response to the Sept. 11 terror attacks was hard to miss. The original architect designed a twisting form he wanted to imitate the Statue of Liberty, with a spire that rose to the deliberate height of 1,776 feet to recognize the year of American independence. Politicians called the tower proof of the country's triumph over terrorism. Former Gov. George Pataki said visitors to the iconic skyscraper "will know our determination to overcome evil" in a 2003 speech that first gave the Freedom Tower its name. The tower _ still under construction with a projected completion date of 2013 _ no longer has the same architect, design or footprint on the 16-acre site. And this week, the owners of ground zero publicly parted ways with the Freedom Tower name, saying it would be more practical to market the tallest building in New York as the former north tower's name, One World Trade Center. Critics called the name drop an unpatriotic shedding of symbolism by the Port Authority of New York and New Jersey. Some newspaper editorials blasted the agency for years of missed deadlines and changing plans for the site. "When you've broken your promises on everything else to do with redeveloping ground zero, it's no big deal to discard the name by which the public has come to know the iconic skyscraper at the heart of the plan," the New York Daily News wrote on Friday. But others privately repeated fears that have plagued the building as negotiations with major corporations to take up space in the tower came and went: that the 102-story Freedom Tower's name could make it more susceptible to future attacks than a symbol of defiance against it. "The fact is, more than 3 billion dollars of public money is invested in that building and, as a public agency, we have the responsibility to make sure it is completed and that we utilize the best strategy to make certain it is fully occupied," the agency said in a statement Friday. Agency chairman Anthony Coscia was more critical in remarks Thursday, when the Port Authority announced its first corporate lease at the tower with a Chinese business center. "As we market the building, we will ensure the building is presented in the best possible way," he said. One World Trade Center is "easiest for people to identify with, and frankly, we've gotten a very interested and warm reception to it." Coscia had expressed concerns about the Freedom Tower three years earlier, saying he would never ask Port Authority employees to move into the tallest, most symbolic skyscraper being built at the site because they had survived 1993 and 2001 terrorist attacks and would find it too emotionally difficult to return. Several other government offices were located in the original trade center, and the Port Authority is trying to finalize leases with the federal and state governments that would lease half the building. No other corporate tenants have signed on. The Port Authority has agreed to lease space in another tower being built at the site. Pataki _ who named the Freedom Tower in his 2003 speech and continued to refer to it in rebuilding speeches as a symbol of America's ability to come back after Sept. 11, took offense at the loss of the Freedom Tower moniker and its replacement. "Where One and Two World Trade Center once stood, there will be a memorial with two voids to honor the heroes we lost. In my view, those addresses should never be used again," he said. The Daily News and New York Post published editorials backing the former governor. But The New York Times on Saturday wrote that Pataki's name for the building became "its burden," and said the Port Authority was "quietly and sensibly" using another name to market the tower to high-profile commercial tenants. The Port Authority suggested that people could still call the building the Freedom Tower; the name has stuck despite the fact that the agency quietly stopped it on first reference years ago. The agency made One World Trade Center the building's legal name when it took over its construction in 2006, although it also acquired the trademark for the Freedom Tower name. Mayor Michael Bloomberg _ who said Friday he prefers the name Freedom Tower _ said the building's true name may be left to the public. "One of the things is we call things what we want to call them. So Avenue of Americas is a good example. It's Sixth Avenue to most people," the mayor said. "If they name this One World Trade Center, people will still call it the Freedom Tower."
 
White House Debate Led To Plan To Widen Effort In Afghanistan Top
President Obama's plan to widen United States involvement in Afghanistan came after an internal debate in which Vice President Joseph R. Biden Jr. warned against getting into a political and military quagmire, while military advisers argued that the Afghanistan war effort could be imperiled without even more troops. All of the president's advisers agreed that the primary goal in the region should be narrow -- taking aim at Al Qaeda, as opposed to the vast attempt at nation-building the Bush administration had sought in Iraq. The question was how to get there. More on Barack Obama
 
Diamond Industry Rocked By Recession Top
Last fall, recession-wary Americans more concerned about basics than bling began to lose interest in diamonds and other jewelry, and now the sales slump is reverberating around the world. Retailers are taking a big hit. Tiffany said Monday that its profit dropped more than 75 percent in the fourth quarter. Lynn Jewelers, a downtown Washington presence since 1946, closed its doors last month. Christian Bernard Jewelers, a national chain with several stores in the Washington area, has shut down, as well. They are among 1,000-plus jewelers across the country to go out of business in the past year.
 
Connecticut School Bans Physical Contact Top
A Connecticut middle school principal has laid down the law: You put your hands on someone -- anyone -- in any way, you're going to pay. A violent incident that put one student in the hospital has officials at the Milford school implementing a "no touching" policy, according to a letter written by the school's principal.
 
Lane Hudson: Dear Bill O: I doubt your mother would approve Top
Dear Bill (the real villain): Hillary Clinton, former O'Reilly Factor producer Andrea Mackris, rape and murder victim Jennifer Moore, and now blogger Amanda Terkel. You seem to think women are expendable, or at least not worth valuing as equal. About a year and a half ago, you took a break from your ridiculous characterizations of progressive bloggers as 'worse than the Ku Klux Klan' to distract America from the fact that your followers at BillOreilly.com are so vile that they fancy offing Hillary Clinton with their shotgun. At no point, did you condemn your misguided minions. Instead you said I was a liar and insane for being a stand up citizen and notifying the Secret Service of a threat to a protected person. Where do you get our values from? I doubt your mother would approve. Your former producer, Andrea Mackris, sued your for sexual harassment. Instead of addressing her allegations (such as your propensity for loofah and language usually only found in hard core porn videos), you quietly settled out of court, paying her millions of dollars to stay quiet. I doubt your mother would approve. Recently, ThinkProgress.org, which has a rather impeccable record for accuracy, reported on the hypocrisy of your propensity to blame rape victims like Jennifer Moore for the horrific crimes committed against her and your willingness to speak at a fundraiser for the Alexa Foundation, which seems to be diametrically opposed to the beliefs that you have espoused on your teevee and radio shows. At no point did you apologize your misguided beliefs. Instead, you sent your minions to stalk ThinkProgress.org blogger Amanda Terkel, a diminutive and kind human being, on her vacation. Your minions even ambushed her unexpectedly on camera. (That is so classy and professional!) Instead of denouncing the highly unprofessional conduct of your minion (otherwise known as producer Jesse Watters), you proceeded to use highly edited footage of said minion's ambush of knowledgeable and fact-conscious blogger Amanda Terkel to cast her as a villain . How in the world could someone (like a highly partisan talk show host with the most fragile of egos) take someone (like a highly ethical writer) and cast her as a villan? It's a very simple and well-known tactic to some people (like talk show hosts who must defend their fragile egos at all costs). It's known as abandoning any semblance of journalistic integrity. I doubt your mother would approve. Now, instead of calling highly ethical professional writers names just because they called out your hypocrisy, it would have been really refreshing if you showed us that Ms. Terkel jumped the gun because of your pending plans to acknowledge your past mistakes of blaming innocent women for rapes committed against them. After all, the entire notion boggles any kind of logical thinking. You're not that unreasonable of a person, right? Alas, I guess it wasn't in the cards. You must be that unreasonable. I'm not sure why I even suggested you might be. In spite of this, I'll give you some advice that you should already know. Stay away from Amanda Terkel. She's way out of your league. Her integrity is something you have never had in your career and never will. I'm sure you (or your minion of a producer) made a strategic decision not to invite her on your show before you attempted to smear her because you already knew that you couldn't hold your own against her (knowing you could cut her microphone off wasn't enough of a comfort). So, instead of a highly edited 'interview' conducted by a shady producer stalking and ambushing someone on vacation, could you find a way to not be so lame? Even people like me, who know how pathetic you are, think this is a new low. Your mother would probably agree. Hugs and Kisses, Lane Hudson More on Bill O'Reilly
 
Late Night Jokes Of The Week: CNN, Schwarzenegger, Barack Obama And More (VIDEO) Top
It's everyone's favorite time again, when we can look back at the late night jokes that week and say here are the ones you need to see. In this edition, Jay Leno takes on CNN's new anchor model, Jimmy Kimmel takes on the Governator, and David Letterman shows us why George Bush is uncool. WATCH: More on Late Night Shows
 
Brazil: Abortion Debate Flares Amid Widespread Abuse Of Girls Top
SÃO PAULO, Brazil -- The waiting room at Pérola Byington Hospital resembles a small day care center many days. Young girls play on the cold tile floors or rock hyperactively in plastic chairs, while their mothers stare pensively at the red digital readout on a wall, signaling their place in line. More on Crime
 
Newsweek's Krugman Cover Story: Obama's Loyal Opposition Top
Traditionally, punditry in Washington has been a cozy business. To get the inside scoop, big-time columnists sometimes befriend top policymakers and offer informal advice over lunch or drinks. Naturally, lines can blur. The most noted pundit of mid-20th-century Washington, Walter Lippmann, was known to help a president write a speech--and then to write a newspaper column praising the speech. Paul Krugman has all the credentials of a ranking member of the East Coast liberal establishment: a column in The New York Times, a professorship at Princeton, a Nobel Prize in economics. He is the type you might expect to find holding forth at a Georgetown cocktail party or chumming around in the White House Mess of a Democratic administration. But in his published opinions, and perhaps in his very being, he is anti-establishment. Though he was a scourge of the Bush administration, he has been critical, if not hostile, to the Obama White House. More on Barack Obama
 
Afghan War Rationale Questioned By Some Key Strategists: Analysis Top
WASHINGTON, Mar 28 (IPS) - The argument for deeper U.S. military commitment to the Afghan War invoked by President Barack Obama in his first major policy statement on Afghanistan and Pakistan Friday - that al Qaeda must be denied a safe haven in Afghanistan - has not been subjected to public debate in Washington. A few influential strategists here have been arguing, however, that this official rationale misstates the al Qaeda problem and ignores the serious risk that an escalating U.S. war poses to Pakistan. Those strategists doubt that al Qaeda would seek to move into Afghanistan as long as they are ensconced in Pakistan and argue that escalating U.S. drone airstrikes or Special Operations raids on Taliban targets in Pakistan will actually strengthen radical jihadi groups in the country and weaken the Pakistani government's ability to resist them. The first military strategist to go on record with such a dissenting view on Afghanistan and Pakistan was Col. T. X. Hammes, a retired Marine officer and author of the 2004 book "The Sling and the Stone", which argued that the U.S. military faces a new type of warfare which it would continue to lose if it did not radically reorient its thinking. He became more widely known as one of the first military officers to call in September 2006 for Defence Secretary Donald Rumsfeld's resignation over failures in Iraq. Col. Hammes dissected the rationale for the U.S. military presence in Afghanistan in an article last September on the website of the "Small Wars Journal", which specialises in counterinsurgency issues. He questioned the argument that Afghanistan had to be stabilised in order to deny al Qaeda a terrorist base there, because, "Unfortunately, al Qaeda has moved its forces and its bases into Pakistan." Hammes suggested that the Afghan War might actually undermine the tenuous stability of a Pakistani regime, thus making the al Qaeda threat far more serious. He complained that "neither candidate has even commented on how our actions [in Afghanistan] may be feeding Pakistan's instability." Hammes, who has since joined the Institute for Defence Analysis, a Pentagon contractor, declined to comment on the Obama administration's rationale for the Afghan War for this article. Kenneth Pollack, the director of research at the Saban Centre for Middle East Policy of the Brookings Institution, has also expressed doubt about the official argument for escalation in Afghanistan. Pollack's 2002 book, "The Threatening Storm," was important in persuading opinion-makers in Washington to support the Bush administration's use of U.S. military force against the Saddam Hussein regime, and he remains an enthusiastic supporter of the U.S. military presence in Iraq. But at a Brookings forum Dec. 16, Pollack expressed serious doubts about the strategic rationale for committing the U.S. military to Afghanistan. Contrasting the case for war in Afghanistan with the one for war in Iraq in 2003, he said, it is "much harder to see the tie between Afghanistan and our vital interests." Like Hammes, Pollack argued that it is Pakistan, where al Qaeda's leadership has flourished since being ejected from Afghanistan, which could clearly affect those vital interests. And additional U.S. troops in Afghanistan, Pollack pointed out, "are not going to solve the problems of Pakistan." Responding to a question about the possibility of U.S. attacks against Taliban sanctuaries in Pakistan paralleling the U.S. efforts during the Vietnam War to clean out the Communist "sanctuaries" in Cambodia, Pollack expressed concern about that possibility. "The more we put the troops into Afghanistan," said Pollack, "the more we are tempted to mount cross-border operations into Pakistan, exactly as we did in Vietnam." Pollack cast doubt on the use of either drone bombing attacks or Special Operations commando raids into Pakistan as an approach to dealing with the Taliban sanctuaries in Pakistan. "The only way to do it is to mount a full-scale counterinsurgency campaign," said Pollack, "which seems unlikely in the case of Pakistan." The concern raised by Hammes and Pollack about the war in Afghanistan spilling over into Pakistan paralleled concerns in the U.S. intelligence community about the effect on Pakistan of commando raids by U.S. Special Operations forces based in Afghanistan against targets inside Pakistan. In mid-August 2008, the National Intelligence Council presented to the White House the consensus view of the intelligence community that such Special Forces raids, which were then under consideration, could threaten the unity of the Pakistani military if continued long enough, as IPS reported Sep. 9. Despite that warning, a commando raid was carried out on a target in South Waziristan Sep. 3, reportedly killing as many as 20 people, mostly apparently civilians. A Pentagon official told Army Times reporter Sean D. Naylor that the raid was in response to cross-border activities by Taliban allies with the complicity of the Pakistani military's Frontier Corps. Although that raid was supposed to be the beginning of a longer campaign, it was halted because of the virulence of the political backlash in Pakistan that followed, according to Naylor's Sep. 29 report. The raid represented "a strategic miscalculation," one U.S. official told Naylor. "We did not fully appreciate the vehemence of the Pakistani response." The Pakistani military sent a strong message to Washington by demonstrating that they were willing to close down U.S. supply routes through the Khyber Pass talking about shooting at U.S. helicopters. The commando raids were put on hold for the time being, but the issue of resuming them was part of the Obama administration's policy review. That aspect of the review has not been revealed. Meanwhile airstrikes by drone aircraft in Pakistan have sharply increased in recent months, increasingly targeting Pashtun allies of the Taliban. Last week, apparently anticipating one result of the policy review, the New York Times reported Obama and his national security advisers were considering expanding the strikes by drone aircraft from the Tribal areas of Northwest Pakistan to Quetta, Baluchistan, where top Taliban leaders are known to be located. But Daniel Byman, a former CIA analyst and counter-terrorism policy specialist at Georgetown University, who has been research director on the Middle East at the RAND corporation, told the Times that, if drone attacks were expanded as is now being contemplated, al Qaeda and other jihadist organisations might move "farther and farther into Pakistan, into cities". Byman believes that would risk "weakening the government we want to bolster", which he says is "already to some degree a house of cards." The Times report suggested that some officials in the administration agree with Byman's assessment. The drone strikes are admitted by U.S. officials to be so unpopular with the Pakistani public that no Pakistani government can afford to appear to tolerate them, the Times reported. But such dissenting views as those voiced by Hammes, Pollack and Byman are unknown on Capital Hill. At a hearing on Afghanistan before a subcommittee of the House Government Operations Committee Thursday, the four witnesses were all enthusiastic supporters of escalation, and the argument that U.S. troops must fight to prevent al Qaeda from getting a new sanctuary in Afghanistan never even came up for discussion. *Gareth Porter is an investigative historian and journalist specialising in U.S. national security policy. The paperback edition of his latest book, "Perils of Dominance: Imbalance of Power and the Road to War in Vietnam", was published in 2006. Read more from Inter Press Service. More on War Wire
 
British Police Identify 200 Children As Potential Terrorists Top
Two hundred schoolchildren in Britain, some as young as 13, have been identified as potential terrorists by a police scheme that aims to spot youngsters who are "vulnerable" to Islamic radicalisation. The number was revealed to The Independent by Sir Norman Bettison, the chief constable of West Yorkshire Police and Britain's most senior officer in charge of terror prevention. He said the "Channel project" had intervened in the cases of at least 200 children who were thought to be at risk of extremism, since it began 18 months ago. The number has leapt from 10 children identified by June 2008. The programme, run by the Association of Chief Police Officers, asks teachers, parents and other community figures to be vigilant for signs that may indicate an attraction to extreme views or susceptibility to being "groomed" by radicalisers. Sir Norman, whose force covers the area in which all four 7 July 2005 bombers grew up, said: "What will often manifest itself is what might be regarded as racism and the adoption of bad attitudes towards 'the West'. "One of the four bombers of 7 July was, on the face of it, a model student. He had never been in trouble with the police, was the son of a well-established family and was employed and integrated into society. "But when we went back to his teachers they remarked on the things he used to write. In his exercise books he had written comments praising al-Qa'ida. That was not seen at the time as being substantive. Now we would hope that teachers might intervene, speak to the child's family or perhaps the local imam who could then speak to the young man." The Channel project was originally piloted in Lancashire and the Metropolitan Police borough of Lambeth in 2007, but in February last year it was extended to West Yorkshire, the Midlands, Bedfordshire and South Wales. Due to its success there are now plans to roll it out to the rest of London, Thames Valley, South Yorkshire, Greater Manchester, Leicestershire, Nottinghamshire, and West Sussex. The scheme, funded by the Home Office, involves officers working alongside Muslim communities to identify impressionable children who are at risk of radicalisation or who have shown an interest in extremist material - on the internet or in books. Once identified the children are subject to a "programme of intervention tailored to the needs of the individual". Sir Norman said this could involve discussions with family, outreach workers or the local imam, but he added that "a handful have had intervention directly by the police". He stressed that the system was not being used to target the Muslim community. "The whole ethos is to build a relationship, on the basis of trust and confidence, with those communities," said Sir Norman. "With the help of these communities we can identify the kids who are vulnerable to the message and influenced by the message. The challenge is to intervene and offer guidance, not necessarily to prosecute them, but to address their grievance, their growing sense of hate and potential to do something violent in the name of some misinterpretation of a faith. "We are targeting criminals and would-be terrorists who happen to be cloaking themselves in Islamic rhetoric. That is not the same as targeting the Muslim community." Nor was it criminalising children, he added. "The analogy I use is that it is similar to our well-established drugs intervention programmes. Teachers in schools are trained to identify pupils who might be experimenting with drugs, take them to one side and talk to them. That does not automatically mean that these kids are going to become crack cocaine or heroin addicts. The same is true around this issue." But Inayat Bunglawala of the Muslim Council of Britain said the police ran the risk of infringing on children's privacy. He warned: "There is a difference between the police being concerned or believing a person may be at risk of recruitment and a person actually engaging in unlawful, terrorist activity. "That said, clearly in recent years some people have been lured by terrorist propaganda emanating from al-Qa'ida-inspired groups. It would seem that a number of Muslim youngsters have been seduced by that narrative and all of us, including the Government, have a role to play in making sure that narrative is seen for what it is: a nihilistic one which offers no hope, only death and destruction." A Home Office spokesman said: "We are committed to stopping people becoming or supporting terrorists or violent extremists. The aim of the Channel project is to directly support vulnerable people by providing supportive interventions when families, communities and networks raise concerns about their behaviour." Related article: Charity Commission 'must monitor extremist links' Read more from the Independent.
 
Hale "Bonddad" Stewart: Krugman is Wrong Top
Paul Krugman is a Nobel prize winning economist and one of the leading thinkers in the Democratic Party. He is held in high regard by many people -- myself included. In fact, I have cited his work on several occasions and used his statements on television to refute several right wing talking points. However, in one of his latest columns Dr. Krugman advances a viewpoint which I disagree with because it is incorrect. From the NY Times: After 1980, of course, a very different financial system emerged. In the deregulation-minded Reagan era, old-fashioned banking was increasingly replaced by wheeling and dealing on a grand scale. The new system was much bigger than the old regime: On the eve of the current crisis, finance and insurance accounted for 8 percent of G.D.P., more than twice their share in the 1960s. By early last year, the Dow contained five financial companies -- giants like A.I.G., Citigroup and Bank of America. And finance became anything but boring. It attracted many of our sharpest minds and made a select few immensely rich. Underlying the glamorous new world of finance was the process of securitization. Loans no longer stayed with the lender. Instead, they were sold on to others, who sliced, diced and puréed individual debts to synthesize new assets. Subprime mortgages, credit card debts, car loans -- all went into the financial system's juicer. Out the other end, supposedly, came sweet-tasting AAA investments. And financial wizards were lavishly rewarded for overseeing the process. But the wizards were frauds, whether they knew it or not, and their magic turned out to be no more than a collection of cheap stage tricks. Above all, the key promise of securitization -- that it would make the financial system more robust by spreading risk more widely -- turned out to be a lie. Banks used securitization to increase their risk, not reduce it, and in the process they made the economy more, not less, vulnerable to financial disruption. Sooner or later, things were bound to go wrong, and eventually they did. Bear Stearns failed; Lehman failed; but most of all, securitization failed. ..... But the underlying vision remains that of a financial system more or less the same as it was two years ago, albeit somewhat tamed by new rules. As you can guess, I don't share that vision. I don't think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don't think the Obama administration can bring securitization back to life, and I don't believe it should try. Dr. Krugman's criticism of the financial sector boils down to the introduction of "securitization" into the financial world. His argument concludes: As you can guess, I don't share that vision. I don't think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don't think the Obama administration can bringsecuritization back to life, and I don't believe it should try. Let's begin with a definition of securitization: Securitization is a structured finance process that involves pooling and repackaging of cash-flow-producing financial assets into securities, which are then sold to investors. The term "securitization" is derived from the fact that the form of financial instruments used to obtain funds from the investors are securities. As a portfolio risk backed by amortizing cash flows - and unlike general corporate debt - the credit quality ofsecuritized debt is non-stationary due to changes in volatility that are time- and structure-dependent. If the transaction is properly structured and the pool performs as expected, the credit risk of all tranches of structured debt improves; if improperly structured, the affected tranches will experience dramatic credit deterioration and loss.[1] All assets can be securitized so long as they are associated with cash flow. Hence, the securities which are the outcome of securitization processes are termed asset-backed securities (ABS). From this perspective, securitization could also be defined as a financial process leading to an issue of an ABS. Let's put this into English by using a mortgage as an example. Your mortgage is a "cash flow product[ing] financial asset." What that means is when you take out your loan you must provide the lender with a predictable set of payments -- namely, your monthly loan payments. These payments are based on the length of time the loan will be outstanding, the borrowers overall credit risk, the amount of money borrowed etc..... The point is the lender will be receiving a predictable amount of money on a regular basis for a specific amount of time. Securitization takes your loan and combines it with loans that have similar qualities. For example, your loan is not the only loan where the borrower takes out a 30 year, 5% loan of $100,000; thousands of these loans are written every day. Securtization takes these loans and combines them into one big loan. Then it either sells that big loan as a whole or in pieces or cuts the pool of mortgages into different bonds which it sells to different investors. The former security is called a pass-through while the latter is called a collateralized mortgage obligation, or CMO. The central complaint against the process of securitization is it removes the oversight function from the lender. For example, it use to be that a bank held a loan for the entire life of the loan. As a result, the bank had a strong incentive to perform a large amount of due diligence to make sure the borrower would repay the loan. Compare that to a "lend to securitize" model where lenders make loans they never intend to hold as a long-term asset, thereby removing the incentive to actually perform an analysis of the borrower. Combine that with a ratings "system" that is at best incompetent, investment bankers providing pressure on loan originators for more and more product, a regulatory oversight system which is non-existent and incredibly cheap money and you get a disaster waiting to happen. Yet securitization provides two incredible advantages. First, it adds liquidity to the financial sector. Instead of having to hold a mortgage until it was paid off, a bank could sell it for cash and then use that cash to make another loan. This allows banks to increase the number of loans it can underwrite, thereby freeing up credit. Secondly, it allows individual investors to target needs and purchase products for those needs. For example, suppose an insurance company anticipated a financial payout in 3-5 years. Securitization allows investment banks to carve pools into specifically targeted assets which will fill the insurance company's need. This allows them to manage their portfolio far more effectively. In short, securitization increases overall credit and provides more tools for financial managment -- both of which increase overall economic growth when property structured. In correlation, the process of securitization has been around for almost 30 years, yet this is the first time it has been so prominently in the spotlight. If there were a fundamental problem with securitization in and of itself it would have been exposed when the program originated, not 30 years after its inception. The reality is securitization is not in and of itself a bad financial tool. Instead, the sum total of numerous inter-related issues such as the repeal of Glass Steagall, record low interest rates, a compromised ratings system and lack of oversight rather than are to blame, not merely "securitization". Finally, let me end by pulling the lens back to a much broader macro-level view. Over the last two years there has been an understandable criticism regarding the people who created this situation -- namely, the upper echelons of the financial sector. Many of the people involved in this sector made many mistakes which we are now paying for. The mistakes were large and spread into many areas of the economy. They are one of the primary causes of the current recession. Additionally, the system as a whole -- its overall organization -- needs to be significantly restructured to prevent this situation from happening again. As I have pointed out, the current mess is the combination of numerous factors, not merely one boogie man called "securitization." But that does not mean that finance in and of itself is evil or that all people involved in this area of the economy are corrupt. I have often read the criticism that "The US doesn't make thinks anymore" as if creating financial structures is somehow less valid than making a physical good. In fact, both activities are equally valid and should be treated as such. Individuals who prudently manage other's money and take well-thought out risks provide a valuable service to the economy; they should not be publicly vilified because other members of their profession have made huge mistakes. In essence, there are good practitioners and bad practitioners in any profession; but the presence of bad practitioners does not nullify the contributions of the professions as a whole. In addition, many finance people provided invaluable advice to their clients throughout this recession -- advice which preserved their client's money during an incredibly difficult time. Market watchers such as Barry Ritholtz, Mish Shedlock and Tim Iacona all provided invaluable advice to their clients and the public at large. Yet the criticism of finance groups all people in this industry together -- or provides asterisks and caveats regarding industry professionals who are agreed with while still spilling a fair amount of bile at the industry as a whole. Throughout this recession I am often reminded of the public's attitudes about criminal defense lawyers -- a profession which is ridiculed and roundly criticized on a regular basis until you need one. Then you can bet your bottom dollar that you want Johhny Cochran at your side saying, "If the glove does not fit, you must acquit." The point is broad brush strokes about any profession are inappropriate at best. In short, Dr. Krugman's analysis is wrong. Securitization has provided many benefits to the economy as a whole. It is not the sole problem with the current situation; we arrived at out present crisis because of a combination of numerous ill-thought out events and decisions. Finally, finance is not in and of itself bad and not all "wizards were frauds." Securitization has been around a long enough time to indicate that properly done it does not pose a threat to the economy as a whole. The current mess is not solely caused by securitization, but instead a combination of many inter-related events. In short, I respectfully disagree with Dr. Krugman's analysis. More on Economy
 
Rick Smith: Why Right Now is the PERFECT Time to Start a Business Top
The economy is in the toilet. Consumer sentiment has been very negative for quite some time. But there are some early signs of hope, a chance that we may be approaching the beginning of the end. This was the mood when I first was thinking about starting a new business in 2002. This week I had a very real sense of de je vu. The beginning of the end of a recession is the perfect time to start a new company. Numerous businesses have been conceived and launched in a terrible economy, only to ride wave of economic recovery to success. Examples include Hyatt, American Express, Burger King, Lexis Nexis, FedEx, Microsoft, Wikipedia, Sports Illustrated, GE and HP, just to name a few. By January of 2003, I was seriously starting to play around with ideas for a new business. By January of 2004, my plan had been basically laid out. I incorporated World 50, in February of 2004, investing only $400.00 (to buy stationary for invoices). By the time 2008 rolled around we had grown into an eight-figure business, having never taken a dollar of investment capital. We did not do this in spite of the terrible market we launched in. We were able to do it because of it. Fact: There are 5 things that you need to successfully start a new business. 1) An Idea. An idea can be born in any economy. However, when things are changing at a rapid pace, the birth of new opportunities accelerates. 2) Time. Nearly every entrepreneurial idea starts out as crap. You need time to think things through, to give up and start again, to have people tell you that you're crazy, to tell you why you're wrong, and time to change things until you might be right. The tail of a recession gives you the time and space you need. 3) Money. If you are starting a company completely from scratch (with no track record), you won't get venture capital, period. This may have been possible in the boom times of 1998-2000, but not before and not since. You need to bootstrap a new business until you have a team together and your business model is at least partially working in the marketplace. Where you can get money is from friends and family. While they may be reluctant to invest in your business, at the beginning of the end of a recession, they are likely a) frustrated with their current investments, and b) starting to become optimistic that things will soon turn around. This is the time they may be most likely to take a chance on you. 4) Talent. A great idea without execution is no more valuable than the note inside a Fortune Cookie. You need great talent to execute. But in all other phases of the economic cycle, Talent is NOT interested in your low paying, unproven new business. Now is the time you can sell the vision. Now is the only time you have a realistic shot at attracting the very best people. 5) Attention. If a bear comes up with a GREAT new idea in the woods during a boom ecomony, does anyone hear him? NO! Everyone is too concerned with what they have going on that is already working. But in a recession? Everyone is still freaking out. They are trying to shake every tree to identify something that will pull them out of this mess. And they are not as busy. This is when they are MOST willing to listen to something new. All you can ask as a start up is for someone to give you a fair hearing. Court is now in session. Now is the time to begin vetting your new idea. Now is the time to bring some of the most talented people you know into the conversation. The door is beginning to crack open. Now is the time to prepare to walk through it. This post was originally published at RickSmith.me Friend me on Facebook . Follow me on Twitter .
 
Earl Ofari Hutchinson: Wave the White Flag in the Limbaugh War Top
President Obama and the Democrats should wave the white flag in their strawman war on Rush Limbaugh. The Media Research Center delivered the grim casualty figures for the Democrats. Since January, the top talk show gabber's ratings have soared off the charts. Radio affiliates that carry Limbaugh's syndicated show call the ratings boost he's gotten from the Democrat's orchestrated attack on him a "dramatic surge." This writer predicted as much when President Obama cracked to Congressional Republicans in late January that they should knock off listening to Limbaugh if they expected to get anything done in Congress and with his administration. The gabber instantly snatched at the quip and turned it into a multi show bonanza. No matter what topic Limbaugh gassed on, he managed to slide in a reference to Obama's prop up of him as the Democrat's prize punching bag. This did three things. It gave him an even bigger pile of fodder to puff himself up as the emperor of talk radio, claim to be the real kingmaker in the GOP, and in a perverse way paint himself as a credible and thoughtful political critic. It snapped many shell shocked Congressional Republicans out of their post election funk. Now suddenly feisty and combative, they draw a deep line in the sand against any and everything that Obama proposed. And it stiffened the spines of many timid Republicans and made them determined not to be bullied, or at least appear not to be bullied, by a mere talk show host into standing up to Obama. This should have been the red flag warning to the Democrats to drop Limbaugh from their enemies rolodex. But no, they continued to blunder on. They took out ads, radio spots, and email blasts bashing and trashing bogeyman Limbaugh. The idea was to make sure that when the public thought GOP, they thought Limbaugh. This was even more grist for Limbaugh. An he went on a tear. In quick succession he picked a fight with Republican National Committee chair Michael Steele, Newt Gingrich, a handful of GOP accomodationists, and the usual suspect to him liberal Democratic interest groups. But the real payoff was that it let him pad his bully pulpit to further whip up the pack to nit pick, poke fun at, and blow up any and every alleged slip or misstep by Obama. This in turn added even more steam to his inflammatory campaign of rumors, half truths, distortions, and flat out lies about Obama, liberals, and just about any other issue he rants on. Any other time this might be fun and games stuff, a side show distraction that bored reporters and TV talking heads used to fill up column space or a talk cast on off a slow news day, but the Democrats just couldn't let it go. And that insured that the Limbaugh as Democrat's foil ploy would continue to have shelve life. Limbaugh in a phony self-deprecating moment mockingly minimized his importance as a radio talk show host, feigning puzzlement at why the Democrats were so obsessed with him. He was right. They never should have been. Obama didn't need him to get Congressional Democrats and whipsaw a few Republicans into backing his program and to approve his cabinet appointees. He still doesn't. And that's all the more reason to wave the white flag in the Limbaugh war. Earl Ofari Hutchinson is an author and political analyst. His weekly radio show, "The Hutchinson Report" can be heard weekly in Los Angeles on KTYM Radio 1460 AM and nationally on blogtalkradio.com More on Michael Steele
 

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