Bush Wants $50 Billion More for Iraq War

President Bush plans to ask Congress next month for up to $50 billion in additional funding for the war in Iraq, a White House official said yesterday, a move that appears to reflect increasing administration confidence that it can fend off congressional calls for a rapid drawdown of U.S. forces.

The request -- which would come on top of about $460 billion in the fiscal 2008 defense budget and $147 billion in a pending supplemental bill to fund the wars in Afghanistan and Iraq -- is expected to be announced after congressional hearings scheduled for mid-September featuring the two top U.S. officials in Iraq. Army Gen. David H. Petraeus and Ambassador Ryan C. Crocker will assess the state of the war and the effect of the new strategy the U.S. military has pursued this year.

BANKING CRISIS

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Since late July, both of the two "bookends" of Sir Alan Greenspan's last and greatest debt bubble have been collapsing in on it: the U.S. mortgage-securities bubble, on which the banks of Europe and Asia were feeding, and which had already grown to 49% of all bank assets in the United States; and the now-unwinding "yen carry trade," which was feeding some $500 billion annually in "free money," by some estimates, into that and related financial bubbles. That cheap-yen carry trade shrank as the yen rose steadily against the dollar during August, and more rapidly against the euro and, especially, the British pound sterling.

By the second half of August, financial news services were also reporting that the $1 trillion-plus asset-backed commercial paper (ABCP) market was in crisis, and thus the credit-market meltdown was starting to hit the savings of the general public directly. Some 40 million Americans, for example, invest savings in "money-market funds"; and those funds commonly invest in ABC paper because it is supposed to be both very safe—keeping the constant $1 value of every share in those money-market funds—and very liquid, allowing people to write checks on those funds.

Now, the ABC paper market is apparently anything but safe, and anything but liquid, with one big British bank, HBOS, attempting to organize a rescue Aug. 21 of its ABPC fund which could neither roll over, nor redeem, $30 billion of the stuff. The entire Canadian ABCP market froze up in the week of Aug. 13, and when temporarily bailed out, some of that "immediately liquid" commercial paper involuntarily became eight-year loans! One Canadian economist told EIR that the money-market funds—worth about $3 trillion total—have $100 billion invested in ABC paper, and another $100 billion in the mortgage derivatives called collateralized debt obligations (CDOs) which are laying low hedge funds and banks around the world.

The failures of major hedge funds, and banks, is now a matter of time. By early Fall, in the judgment of Lyndon LaRouche, the financial system will be unable to continue functioning, without bankruptcy reorganization carried out by governments to save their people's jobs, homes, and savings, and to invest in restoring their productivity.

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Dollar Falls on Reduced Concern Housing Will Slow Global Growth

The George W Bush Economy

Prices for key foods are rising sharply

An Economy Devasted by Years of Conservative Plundering

mneys worWal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) on Tuesday reported lower-than-expected second-quarter profit and said sales at U.S. stores open at least a year rose only 1.9 percent.

"It's no secret that many customers are running out of money toward the end of the month, said Lee Scott, chief executive of the world's largest retailer.

The company, which has more than 127 million customers in the United States alone every week, also said shoppers were spending more on lower-margin items like food and eschewing higher-margin goods such as apparel.

While economists tend to discount the impact of rising food prices in monthly inflation reports -- because food tends to be a volatile component -- consumers still feel the impact of widespread food price increases in their wallets.

More on China's Holding US economy over boiling oil with Bush help

"This administration, in order to fund a war that shouldn't be being fought and tax cuts that weren't needed for the wealthy — we're now in debt almost a trillion dollars — a trillion dollars to China. We better end that war, cut those taxes, reduce the deficit and make sure that they no longer own the mortgage on our home."

His comment drew this response from leading Democratic candidate Sen. Hillary Clinton: "I want to say 'Amen!' to Joe Biden, because he's 100 percent right."

The reality is that China is probably going to slow down its investment in U.S. bonds anyway. This is not so much because they don't like us, as it is because they are becoming savvy about where and how to spend their huge nest egg.

Low-interest U.S. bonds? According to an article in USA Today, some Chinese bankers say it would be better to start buying into businesses (U.S., European, Asian), where you get a better return and have long-term growth. Think the Japanese in the 1980s buying U.S. skyscrapers (Rockefeller Center) and golf courses (Pebble Beach).

Back to the nuclear option — oddly enough, many voices in the U.S., especially in the U.S. Senate, are pressing China to re-value its currency up against the dollar, making Chinese goods more expensive and U.S. goods cheaper for the Chinese to buy.

The Chinese are resisting. Their cheap currency helps them sell their goods. And that is where the nuclear (currency) option comes in… the U.S. is being warned to stop meddling in China's internal affairs.
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Crude falls below $71 a barrel amid concerns that economic growth may be derailed by growing credit crunch.

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The crisis in global financial markets triggered by the sub-prime mortgage problems in the United States deepened Friday, forcing Asian central banks to join a global campaign to inject liquidity into banking systems.

Asian and European stock markets fell further after U.S. stocks closed nearly 3 percent lower a day before.

"The S&P (index in the U.S.) endured its worst day since February, and European markets are down again today. The subprime effect... continues to weigh on the market," said Tom Nelson, analyst at Guinness Atkinson Asset Management.

Other analysts said commodity markets were finding it increasingly tough to keep their traditional "safe-haven" status.

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Nice Work Bush! China threatens 'nuclear option' of dollar sales

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

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"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.

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What kind of philosophy says that it's O.K. to subsidize insurance companies, but not to provide health care to children?

Speaking of Decaying Infrastructure and National Disasters

Bush administration backtracks on Katrina contracts.

A new congressional analysis finds that the “Bush administration has shown little progress — and in some cases backtracked — on its pledge to do a better job in awarding contracts to small, Gulf Coast businesses for Hurricane Katrina work.” Some highlights:

– Approximately “7.4 percent of Katrina contracts so far have gone to small businesses in Louisiana, down from 12.5 percent in April.”

– “Since April, only 6 percent of new GSA contracts for Katrina work _ about $61,000 out of roughly $978,000 _ went to small Louisiana businesses. At the VA, the percentage was even lower: 0.7 percent, or $25,435 out of $3.6 million.”

– “Out of the $95.6 million in total contracts that were inaccurately claimed as going to small business, more than $77 million, or 81 percent, were awards by the Defense Department.”

Bush Administration Provokes Russia to withdraw from arms treaty

President Vladimir Putin signed a decree suspending Russia's participation in the Conventional Forces in Europe Treaty due to "extraordinary circumstances ... which affect the security of the Russian Federation and require immediate measures," the Kremlin said in a statement.

Putin has in the past threatened to freeze his country's compliance with the treaty, accusing the United States and its NATO partners of undermining regional stability with U.S. plans for a missile defense system in former Soviet bloc countries in Eastern Europe.

Under the moratorium, Russia would halt inspections and verifications of its military sites by NATO countries and would no longer limit the number of its conventional weapons, the Foreign Ministry said in a statement.

Turkey has 140,000 troops on Iraq border: Iraq

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Turkey's armed forces have urged its government to allow an incursion into neighboring, mainly Kurdish, northern Iraq to crush up to 4,000 Turkish Kurdish militants who use the region as a base to attack security and civilian targets inside Turkey.

Rumors of a possible Turkish incursion have rattled financial markets and have drawn warnings from the United States, Ankara's NATO ally, to stay out of Iraq.

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Chimpy McFlightsuit Claims Israel is a Good Model for Iraq

US President George W Bush has appealed for people to give his strategy in Iraq a chance - holding up Israel as a model for defining success there. He said America would like to see Iraq function as a democracy while dealing with violence - just as Israel does.

True or False: U.S.'s Broadband Penetration Is Lower Than Even Estonia's

Although President George W. Bush promised during his re-election campaign that all Americans would have access to affordable broadband by 2007, many rural Americans have no way to connect. It's impossible to tell how many, in part because of the bizarre way the FCC measures the issue: if just a single building in an entire ZIP code is connected—a library, a school, a business—then all people in the area are counted as having access, even if there's no cable and their phone company won't give them DSL. (Because the signal deteriorates over distance, the telcos find it prohibitively expensive to offer the service to customers in far-flung areas.) Many rural homes can theoretically get broadband by satellite dish, but the cost is high and the service not as fast as other alternatives. In any case, a new study by the Pew Internet & American Life Project reports that fewer than one in four rural Americans has high-speed connections at home, compared with about 40 percent of suburban and urban dwellers. (A more recent survey pegs total U.S. penetration at 50 percent; South Korea's is 90 percent.)

U.S. to Fingerprint E.U. Visitors

Joke of a Supreme Court Rules in Favor of Bush Constitutional Violations

By a 5-4 vote, the high court's conservative majority sided with the Bush administration by ruling that a Wisconsin group called the Freedom from Religion Foundation and three of its members had no legal right to bring the lawsuit in the first place. The ruling only addressed whether taxpayers can bring such challenges, not whether the program itself violated the U.S. Constitution's requirement on the separation of church and state. The majority opinion written by Justice Samuel Alito, who was appointed to the high court by President George W. Bush, overturned a lower-court ruling that allowed the lawsuit to proceed.

Lawmakers question Boeing on delays of border fence

The first phase of the project involves building nine towers that are dotted along 28 miles of the Arizona-Mexico border, and bracket the Sasabe, Ariz., port of entry.

Boeing, the world's largest aerospace company, in September won a three-year, $67 million contract to install the fence, the initial step in a multibillion-dollar plan to reduce illegal entry along 6,000 miles of U.S. borders with Canada and Mexico.

At the hearing on June 7, no problems or delays on so-called Project 28 were mentioned. But the next day Homeland Security officials notified congressional staff of a one-week lag caused by radar problems, according to a letter questioning how and when Congress was informed.

The letter was sent Tuesday to Homeland Secretary Michael Chertoff by House Homeland Security Committee Chairman Bennie Thompson, D-Miss., and Rep. Loretta Sanchez, D-Calif., chairwoman of the subcommittee that held the hearing.

"It is unacceptable that the department chose to disclose this information via telephone to committee staff, rather than providing a thorough assessment of the project's status directly to committee members at the hearing," the letter says.

Homeland spokesman Russ Knocke said Boeing did not tell the department about the radar issues, which were identified on the day of the subcommittee hearing, until June 8 when the information was promptly passed to the committee.

More on Privatization and Vance Security

To date, more than 4,300 private security officers have been put to work at 50 Army installations in the United States, according to Army documents obtained by The Times.

The work was awarded to four firms — two of which got the contracts without having to bid competitively. The contracts are worth as much as $1.24 billion.

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Two five-year contracts worth as much as $1 billion went to two small Alaska Native firms with little previous security experience. The firms, which operate under special contracting laws enabling them to avoid competitive bidding, subcontracted part of the work to two of the country's largest security firms: Wackenhut Services Inc. and Vance Federal Security Services.

Thirty-six bases are covered by the Alaska Native contracts — including three in California: Ft. Irwin, the Sierra Army Depot and the Presidio of Monterey.

"I'm concerned about the protection of our military facilities," said Rep. Lane Evans, an Illinois Democrat who serves on the House Armed Services Committee and has called for hearings on the contracts.

"Some of these installations house chemical weapons and intelligence materials and should not be compromised with questionable contracting processes and poor security."

Democrats, watchdog groups and independent contracting experts said that the Army's contracting arrangement with the Alaska Native firms amounted to a back-door deal to send taxpayer dollars to Wackenhut and Vance, which lost out the only time they faced open competition against other companies for the security contracts.

"It's a total abuse of the intent of the law," said Danielle Brian, the executive director of the Program on Government Oversight, a watchdog group. "The law was designed to benefit companies that need a special boost. At the end of the day, if Wackenhut is benefiting, it's just a blatant abuse of the system."

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"The overall performance of the [security guard program] has been excellent and to the standards of the contract," the Army said in a written response to questions from The Times.

The private security firms also dismissed the complaints.

Wackenhut said the criticisms were part of a labor battle against the company involving one of the country's largest service unions, Service Employees International Union, which wanted to unionize Wackenhut guards.

Alutiiq said its performance rating justified the Army's decision.

The firm's previous security experience consisted of fielding a 120-man private police force for Kwajalein Atoll, a missile test site in the South Pacific.

"We are paying [our guards] a little higher. But we're getting quality performance as a result. You get what you pay for," said Bruce Swagler, the head of Alutiiq's security program. "Quality-wise and performance-wise, as far as the government is concerned, we're doing a great job."

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While Chimpy McFlightsuit Fiddles New Photos Show Secret Pakistan Plutonium Plant; Fear of More Weapons Being Made

"With large stocks of plutonium, Pakistan can build a new generation of lighter, more powerful weapons that can more easily be launched via missiles and can cause far more damage," said David Albright, the president of the Institute for Science and International Security (ISIS), which, along with DigitalGlobe, provided the satellite image to ABC News.

The image, taken on June 3, indicates the new reactor is a replica of a second heavy water reactor, also under construction, at Khushab, approximately 109 miles south of Islamabad, Pakistan's capital.