Dr. Al-Arian Unjustly Indicted!
Government abuses grand jury system to punish prominent civil rights activist
Alexandria, Virginia, June 30, 2008
Last Thursday, three months after refusing to testify before a third grand jury, Dr. Sami Al-Arian - whose trial has been the single most important test case of the PATRIOT Act - was charged on two counts of contempt of court. Dr. Al-Arian refused to testify not only because the plea agreement he concluded with the government in 2006 clearly exempts him from having to do so, but also because it was a clear perjury trap.
The Assistant US Attorney who sought his testimony and who brought the contempt charges, Gordon Kromberg, has made no attempt to hide his bigotry towards Arabs and Muslims. Furthermore, Kromberg has publicly and in no uncertain terms declared his alleged right to use legal loopholes to punish people he cannot convict for any substantial crimes. (Click here for more information on this rogue prosecutor).
Criminal contempt has no maximum penalty; if convicted, Dr. Al-Arian, a loving father of five, could be sentenced for life.
These charges are an outrageous abuse of the grand jury system and a naked attempt by the government to punish an innocent man for exercising his first amendment rights. For more information on the indictment, click here. To watch the YouTube video which summarizes Dr. Al-Arian's case, click here.
PLEASE ACT!
2 phone calls + 1 fax = BIG difference!
Friends, please stand with us against this act of tyranny by doing these two simple things:
1. Call Senator Patrick Leahy ((202) 224- 4242) and Congressman John Conyers ((202) 225-5126) - the Judicial Committee chairmen of the Senate and House respectively - and ask them to meet with the Attorney General and have him stop Assistant US Attorney Gordon Kromberg from going forward with this unlawful indictment. Even if you are not their constituent, they are obliged to listen to your opinion since their duties extend to all Americans.
2. Fax a letter to the Office of Professional Responsibility at the US Department of Justice: (202) 514-5050. Click here for a letter template.
There are other very important things you can do to help out! To find out more, please visit this page.
Donate to Dr. Al-Arian's Legal Fund!
Dr. Al-Arian's talented team of attorneys urgently need funds to provide a full defence. Click here to donate online through PayPal or here to find the address to send a check.
Join our regular listserv today!
To receive all the latest updates on Dr. Al-Arian's case, simply send an email to tampabaycoalitionforpeaceandjustice-subscribe@yahoogroups.com .
Monday, June 30, 2008
Wednesday, June 25, 2008
Senator Chris Dodd Stands Up Against Telecom Immunity and Presidential Lawlessness
Thanks to Glenn Greenwald for his indefatigable work on this issue. --RB
http://dodd.senate.gov/index.php?q=node/4476
video available at url above
June 24, 2008
Chris Dodd's Speech on Telecom immunity etc.
Remarks as Prepared - Mr. President: I rise—once again—to voice my strong opposition to the misguided FISA legislation before us today. I have strong reservations about the so-called improvements made to Title I. But more than that, this legislation includes provisions which would grant retroactive immunity to telecommunications companies that apparently have violated the privacy and the trust of millions of Americans by participating in the president’s warrantless wiretapping program. If we pass this legislation, the Senate will ratify a domestic spying regime that has already concentrated far too much unaccountable power in the president’s hands and will place the telecommunications companies above the law.
I am here today to implore my colleagues to vote against cloture in the morning.
And let me make clear, at the outset of this debate, that this is not about domestic surveillance itself. We all recognize the importance of domestic surveillance – in an age of unprecedented threats. This is about illegal, unwarranted, unchecked domestic surveillance.
And that difference—the difference between surveillance that is lawful, warranted and that which is not—is everything.
Mr. President, I had hoped I would not have to return to this floor again under these circumstances – hoped that in these negotiations we would have been able to turn aside retroactive immunity on the grounds that it is bad policy and sets a terrible precedent.
As all of my colleagues know, I have long fought against retroactive immunity, because I believe, quite simply, it is an abandonment of the rule of law. I’ve fought this with everything I had in me—and I haven’t waged this fight alone.
In December, I opposed retroactive immunity on the Senate floor. I spent ten hours on this floor then. In January and February, I came to the floor time and time again to discuss the dangers of granting retroactive immunity. Along with my colleague and friend Russ Feingold, who has shown remarkable leadership on this issue, I offered an amendment that would have stripped retroactive immunity from the Senate bill. Unfortunately, our amendment failed and to my extreme disappointment, the Senate adopted the underlying bill.
Since passage of the Senate bill, there has been extensive negotiations on how to move forward. Today, we are being asked to pass the so-called compromise that was reached by some of our colleagues and approved by the House of Representatives.
I am here today to say that I will not and cannot support this legislation. It goes against everything I have stood for – everything this body ought to stand for.
There is no question some improvements have been made over the previous versions of this bill. Title I, which regulates the ability of the government to conduct electronic surveillance, has indeed been improved. Albeit modestly. In fact, it is my hope that a new Congress and a new President will work together to fix the problems with Title I should the Senate adopt this new legislation.
But in no way is this compromise acceptable, Mr. President. This legislation before us purports to give the courts more of a role in determining the legality of the telecommunications companies actions. But in my view the Title II provisions do little more than ensure without a doubt that the telecommunications companies will be granted retroactive immunity.
Allow me to quote the Senate Intelligence Committee report on the matter. It reads:
Beginning soon after September 11, 2001, the Executive branch provided written requests or directives to U.S. electronic communication service providers to obtain their assistance with communications intelligence activities that had been authorized by the President.
… The letters were provided to electronic communication service providers at regular intervals. All of the letters stated that the activities had been authorized by the President. All of the letters also stated that the activities had been determined to be lawful by the Attorney General, except for one letter that covered a period of less than sixty days. That letter, which like all the others stated that the activities had been authorized by the President, stated that the activities had been determined to be lawful by the Counsel to the President.
Under the legislation before us, the district court would simply decide whether or not the telecommunication companies received documentation stating that the President authorized the program and that there had been some sort of determination that it was legal.
Read more:
http://dodd.senate.gov/index.php?q=node/4476
http://dodd.senate.gov/index.php?q=node/4476
video available at url above
June 24, 2008
Chris Dodd's Speech on Telecom immunity etc.
Remarks as Prepared - Mr. President: I rise—once again—to voice my strong opposition to the misguided FISA legislation before us today. I have strong reservations about the so-called improvements made to Title I. But more than that, this legislation includes provisions which would grant retroactive immunity to telecommunications companies that apparently have violated the privacy and the trust of millions of Americans by participating in the president’s warrantless wiretapping program. If we pass this legislation, the Senate will ratify a domestic spying regime that has already concentrated far too much unaccountable power in the president’s hands and will place the telecommunications companies above the law.
I am here today to implore my colleagues to vote against cloture in the morning.
And let me make clear, at the outset of this debate, that this is not about domestic surveillance itself. We all recognize the importance of domestic surveillance – in an age of unprecedented threats. This is about illegal, unwarranted, unchecked domestic surveillance.
And that difference—the difference between surveillance that is lawful, warranted and that which is not—is everything.
Mr. President, I had hoped I would not have to return to this floor again under these circumstances – hoped that in these negotiations we would have been able to turn aside retroactive immunity on the grounds that it is bad policy and sets a terrible precedent.
As all of my colleagues know, I have long fought against retroactive immunity, because I believe, quite simply, it is an abandonment of the rule of law. I’ve fought this with everything I had in me—and I haven’t waged this fight alone.
In December, I opposed retroactive immunity on the Senate floor. I spent ten hours on this floor then. In January and February, I came to the floor time and time again to discuss the dangers of granting retroactive immunity. Along with my colleague and friend Russ Feingold, who has shown remarkable leadership on this issue, I offered an amendment that would have stripped retroactive immunity from the Senate bill. Unfortunately, our amendment failed and to my extreme disappointment, the Senate adopted the underlying bill.
Since passage of the Senate bill, there has been extensive negotiations on how to move forward. Today, we are being asked to pass the so-called compromise that was reached by some of our colleagues and approved by the House of Representatives.
I am here today to say that I will not and cannot support this legislation. It goes against everything I have stood for – everything this body ought to stand for.
There is no question some improvements have been made over the previous versions of this bill. Title I, which regulates the ability of the government to conduct electronic surveillance, has indeed been improved. Albeit modestly. In fact, it is my hope that a new Congress and a new President will work together to fix the problems with Title I should the Senate adopt this new legislation.
But in no way is this compromise acceptable, Mr. President. This legislation before us purports to give the courts more of a role in determining the legality of the telecommunications companies actions. But in my view the Title II provisions do little more than ensure without a doubt that the telecommunications companies will be granted retroactive immunity.
Allow me to quote the Senate Intelligence Committee report on the matter. It reads:
Beginning soon after September 11, 2001, the Executive branch provided written requests or directives to U.S. electronic communication service providers to obtain their assistance with communications intelligence activities that had been authorized by the President.
… The letters were provided to electronic communication service providers at regular intervals. All of the letters stated that the activities had been authorized by the President. All of the letters also stated that the activities had been determined to be lawful by the Attorney General, except for one letter that covered a period of less than sixty days. That letter, which like all the others stated that the activities had been authorized by the President, stated that the activities had been determined to be lawful by the Counsel to the President.
Under the legislation before us, the district court would simply decide whether or not the telecommunication companies received documentation stating that the President authorized the program and that there had been some sort of determination that it was legal.
Read more:
http://dodd.senate.gov/index.php?q=node/4476
Sunday, June 22, 2008
Wall St. Journal: Bernanke's turnaround on interest rates: What about credibility? What about Inflation
Is it kinda sad that the only one with their eye on the ball is the WSJ? --RB
Bernanke's Market Week
June 21, 2008;
The Federal Reserve's Open Market Committee meets again next week, and one of its jobs will be to clean up the mess the Fed made this week.
Earlier this month, Chairman Ben Bernanke signaled a turn in Fed policy to include a focus on maintaining a "stable" dollar. Sure enough, the dollar strengthened, the price of oil fell and stocks crept up. Then earlier this week, someone in the upper reaches of the Fed began leaking to the press in advance of next week's FOMC meeting that Mr. Bernanke saw no reason to raise interest rates this month, or indeed until the autumn.
Sure enough, oil shot up and gold rose back above $900 an ounce, with equities tanking in turn on stagflation fears. Throw in renewed worries over credit problems in the banking system, and the markets had a very ugly week.
What we can't figure out is what in the world Fed officials are thinking, assuming that's even the right word. The most precious commodity a Fed Chairman has is credibility. When he makes a widely advertised public commitment to maintain dollar stability, and then he or his minions leak that he has no plans to back that up with any action, he is squandering his own currency. Central banking isn't an academic seminar where ideas don't have consequences.
With inflation climbing around the globe, most of it inspired by dollar weakness, the Fed has a growing credibility problem. Mr. Bernanke needs to understand that investors are beginning to suspect that the most important financial official in the world doesn't seem to appreciate the Fed's primary role in undermining the greenback. If that conclusion becomes fixed, this week's market meltdown will look pretty by comparison.
Bernanke's Market Week
June 21, 2008;
The Federal Reserve's Open Market Committee meets again next week, and one of its jobs will be to clean up the mess the Fed made this week.
Earlier this month, Chairman Ben Bernanke signaled a turn in Fed policy to include a focus on maintaining a "stable" dollar. Sure enough, the dollar strengthened, the price of oil fell and stocks crept up. Then earlier this week, someone in the upper reaches of the Fed began leaking to the press in advance of next week's FOMC meeting that Mr. Bernanke saw no reason to raise interest rates this month, or indeed until the autumn.
Sure enough, oil shot up and gold rose back above $900 an ounce, with equities tanking in turn on stagflation fears. Throw in renewed worries over credit problems in the banking system, and the markets had a very ugly week.
What we can't figure out is what in the world Fed officials are thinking, assuming that's even the right word. The most precious commodity a Fed Chairman has is credibility. When he makes a widely advertised public commitment to maintain dollar stability, and then he or his minions leak that he has no plans to back that up with any action, he is squandering his own currency. Central banking isn't an academic seminar where ideas don't have consequences.
With inflation climbing around the globe, most of it inspired by dollar weakness, the Fed has a growing credibility problem. Mr. Bernanke needs to understand that investors are beginning to suspect that the most important financial official in the world doesn't seem to appreciate the Fed's primary role in undermining the greenback. If that conclusion becomes fixed, this week's market meltdown will look pretty by comparison.
Wednesday, June 11, 2008
Glenn Greenwald: NYT Plays Up Bogus Fears on FISA and Telecom Amnesty
One interesting tidbit is that Glenn Greenwald isn't even publicly aware that the war on terror is totally bogus since the US, Israel and other states like the UK plan and execute virtually all the significant terror, especially the high profile events like 9/11. Has anyone else besides Greenwald exposed the NYT for their complicity? --Ronald
Glenn Greewald
NYT circulates fear-mongering claims on FISA debate
Tuesday June 10, 2008
The New York Times' Eric Lichtblau has a long, prominent article today on the pending debate over FISA and telecom amnesty -- headlined: "Return to Old Spy Rules Is Seen as Deadline Nears" -- that features (and endorses) virtually every blatant falsehood that has distorted these spying issues from the beginning, and which is built on every shoddy journalistic practice that has made clear debate over these issues almost impossible. The article strongly suggests that a so-called "compromise" is imminent, a "compromise" which will deliver to the President virtually everything he seeks in the way of new warrantless eavesdropping powers and telecom amnesty.
One paragraph after the next in Lichtblau's article features shrill warnings, mostly from unnamed "officials," about all the scary things that will happen if Congressional Democrats do not quickly pass a new FISA bill that is similar to the Rockefeller/Cheney Senate bill and that is agreeable to the President. If a "compromise" isn't reached, reports the article, then we'll all have to live under the so-called "old" FISA law -- meaning the law used by the U.S. to defend itself from 1978 until August, 2007 and then again from February, 2008 until the present. Moreover, the one-year surveillance orders obtained last August under the now-expired Protect America Act are set to expire in August, 2008. We learn from Lichtblau's article that this would be so very dangerous because:
* expiration of the one-year PAA orders in August would create "a situation that some officials predict could leave worrisome gaps in intelligence";
* if no deal is reached, then "'We'll start losing intelligence capabilities,' Senator Christopher S. Bond of Missouri said";
* "government and Congressional officials said in interviews that they saw [reversion to FISA] as a dangerous step backward" because "government lawyers, analysts and linguists would once again have to prepare individual warrants, potentially thousands of them, for surveillance of terrorism targets overseas."
* Scarier still: "Telecommunications companies would also have to spend considerable time shutting down existing wiretaps, and then start them up again if ordered under new warrants, officials said."
* Without any explanation as to why, Lichtblau grants anonymity to an administration official to oh-so-bravely-and-valuably spout the administration line: "A senior intelligence official, speaking on condition of anonymity, said the administration was concerned that reverting to the older standards and requiring individual warrants for each wiretap would create a severe gap in overseas intelligence by raising the bar for foreign surveillance collection."
* "Attorney General Michael B. Mukasey has described the idea of reverting to the older standards of foreign surveillance as 'unthinkable.'"
* As always, pitifully frightened Congressional Democrats feed these claims: "'Until August, were O.K.,' said one senior Democratic Congressional aide involved in the negotiations. "After August, we're not O.K."
Read more:
http://www.salon.com/opinion/greenwald/
Glenn Greewald
NYT circulates fear-mongering claims on FISA debate
Tuesday June 10, 2008
The New York Times' Eric Lichtblau has a long, prominent article today on the pending debate over FISA and telecom amnesty -- headlined: "Return to Old Spy Rules Is Seen as Deadline Nears" -- that features (and endorses) virtually every blatant falsehood that has distorted these spying issues from the beginning, and which is built on every shoddy journalistic practice that has made clear debate over these issues almost impossible. The article strongly suggests that a so-called "compromise" is imminent, a "compromise" which will deliver to the President virtually everything he seeks in the way of new warrantless eavesdropping powers and telecom amnesty.
One paragraph after the next in Lichtblau's article features shrill warnings, mostly from unnamed "officials," about all the scary things that will happen if Congressional Democrats do not quickly pass a new FISA bill that is similar to the Rockefeller/Cheney Senate bill and that is agreeable to the President. If a "compromise" isn't reached, reports the article, then we'll all have to live under the so-called "old" FISA law -- meaning the law used by the U.S. to defend itself from 1978 until August, 2007 and then again from February, 2008 until the present. Moreover, the one-year surveillance orders obtained last August under the now-expired Protect America Act are set to expire in August, 2008. We learn from Lichtblau's article that this would be so very dangerous because:
* expiration of the one-year PAA orders in August would create "a situation that some officials predict could leave worrisome gaps in intelligence";
* if no deal is reached, then "'We'll start losing intelligence capabilities,' Senator Christopher S. Bond of Missouri said";
* "government and Congressional officials said in interviews that they saw [reversion to FISA] as a dangerous step backward" because "government lawyers, analysts and linguists would once again have to prepare individual warrants, potentially thousands of them, for surveillance of terrorism targets overseas."
* Scarier still: "Telecommunications companies would also have to spend considerable time shutting down existing wiretaps, and then start them up again if ordered under new warrants, officials said."
* Without any explanation as to why, Lichtblau grants anonymity to an administration official to oh-so-bravely-and-valuably spout the administration line: "A senior intelligence official, speaking on condition of anonymity, said the administration was concerned that reverting to the older standards and requiring individual warrants for each wiretap would create a severe gap in overseas intelligence by raising the bar for foreign surveillance collection."
* "Attorney General Michael B. Mukasey has described the idea of reverting to the older standards of foreign surveillance as 'unthinkable.'"
* As always, pitifully frightened Congressional Democrats feed these claims: "'Until August, were O.K.,' said one senior Democratic Congressional aide involved in the negotiations. "After August, we're not O.K."
Read more:
http://www.salon.com/opinion/greenwald/
Fiction?!: Cassandra, Chanting: An Election Insider's Nightmare by Anonymous
Editorial Reviews from Amazon dot com.
Product Description
At the center of Cassandra, Chanting is a plot to steal the next American presidential election. Written by an election world insider who must remain anonymous, the novel exposes in authentic and chilling detail just how vulnerable our electoral system is today. It also reveals how warnings by experts are going unheeded and leaving Americans dangerously exposed, just as warnings by the mythological Cassandra went unheeded, resulting in the destruction of ancient Troy. As the novel opens, plotters travel to America and seduce and recruit government officials in order to gain access and then manipulate in undetectable ways the computer programs that control voting systems. The subversive group targets weak leaders and government bureaucrats whose thirst for power or other gain makes them susceptible. They find many eager takers. Meanwhile, the National Institute of Standards and Technology in D.C. has assembled a team led by former Navy SEAL Carl Martello to work on federal election oversight. He is joined by Angela Elanthos, brilliant at computers and decoding, and soon they become suspicious of one of the largest voting companies controlling millions of voting machines, certain they have rigged their programs. Despite government inertia and very different backgrounds, Carl and Angela race against the clock to uncover the high-tech complexities of a plot to fix the outcome of the election. As the novel so alarmingly reveals, the means by which the democratic institutions can be sabotaged within the voting process are all too real, as is the public's continuing indifference to what could happen. Cassandra, Chanting is a gripping tale telling us why we must be ever diligent in protecting our institutions against those who exercise no restraint attempting to destroy those institutions and us. "Embedded in this spell-binder of a novel is a startling and convincing message -- the vulnerability of the very voting system the US is now adopting. The author clearly understands the new system and what makes it tick and shows how it could be 'fixed' to produce a winner different from the popular vote. In the process, the very legitimacy of our political system would be subverted. November 2008 is not so far away. We must heed this warning." Marvin Zonis is a Professor in the Graduate School of Business, The University of Chicago. He also heads Marvin Zonis + Associates, Inc., political risk consultants. www.cassandrachanting.com
Product Description
At the center of Cassandra, Chanting is a plot to steal the next American presidential election. Written by an election world insider who must remain anonymous, the novel exposes in authentic and chilling detail just how vulnerable our electoral system is today. It also reveals how warnings by experts are going unheeded and leaving Americans dangerously exposed, just as warnings by the mythological Cassandra went unheeded, resulting in the destruction of ancient Troy. As the novel opens, plotters travel to America and seduce and recruit government officials in order to gain access and then manipulate in undetectable ways the computer programs that control voting systems. The subversive group targets weak leaders and government bureaucrats whose thirst for power or other gain makes them susceptible. They find many eager takers. Meanwhile, the National Institute of Standards and Technology in D.C. has assembled a team led by former Navy SEAL Carl Martello to work on federal election oversight. He is joined by Angela Elanthos, brilliant at computers and decoding, and soon they become suspicious of one of the largest voting companies controlling millions of voting machines, certain they have rigged their programs. Despite government inertia and very different backgrounds, Carl and Angela race against the clock to uncover the high-tech complexities of a plot to fix the outcome of the election. As the novel so alarmingly reveals, the means by which the democratic institutions can be sabotaged within the voting process are all too real, as is the public's continuing indifference to what could happen. Cassandra, Chanting is a gripping tale telling us why we must be ever diligent in protecting our institutions against those who exercise no restraint attempting to destroy those institutions and us. "Embedded in this spell-binder of a novel is a startling and convincing message -- the vulnerability of the very voting system the US is now adopting. The author clearly understands the new system and what makes it tick and shows how it could be 'fixed' to produce a winner different from the popular vote. In the process, the very legitimacy of our political system would be subverted. November 2008 is not so far away. We must heed this warning." Marvin Zonis is a Professor in the Graduate School of Business, The University of Chicago. He also heads Marvin Zonis + Associates, Inc., political risk consultants. www.cassandrachanting.com
Thursday, June 5, 2008
WSJ Editorial: Is the Fed finally waking up to inflation threat
Isn't it sad when the WSJ editorial page has more credibility than Paul Krugman who recently argued that we didn't have to worry about inflation? -- What breakfast has he been eating? --RB
REVIEW & OUTLOOK
The Buck Stops Where?
June 5, 2008; Page A20
When Paul Volcker declared several weeks ago that the world was in a "dollar crisis," his successors at the Federal Reserve made their private disapproval very clear. This week current Fed Chairman Ben Bernanke waved the white flag over Mr. Volcker's point by declaring his own public concern "that the dollar remains a strong and stable currency." Apologies accepted, provisionally.
The tragedy is that this is big news. The Fed has monopoly power over dollar creation, and concern for its value ought to go without saying. Yet so great has been the Fed's dollar abdication in recent years, and especially since last summer, that Mr. Bernanke's words have come as a great global relief. As the dollar has strengthened in welcome response, the price of gold and oil has fallen in each of the last two days.
The question now is whether the Fed will follow up its new words with action. "We are attentive to the implications of changes in the value of the dollar for inflation and inflation expectations," Mr. Bernanke said on Tuesday, a sign that the Fed may be waking up to the inflation threat. But the Fed chief also signaled that he isn't about to tighten monetary policy any time soon because current "policy seems well positioned to promote moderate growth and price stability over time."
Price stability where? Not in the U.S., where every economic report shows rising price pressure. Yesterday the feds reported that labor compensation rose at a healthy 4.9% for the first quarter, but only 0.6% after inflation. The Fed-inspired commodity boom has sent food and energy prices soaring, while wage gains invariably lag. If Republicans want to know why voters are so upset about an economy with a jobless rate of 5% – below the 5.2% rate when Bill Clinton won re-election in 1996 – this erosion of real incomes is the reason.
The Bernanke Fed has also been oblivious to the fact that it runs a global dollar bloc. Central banks in dozens of countries peg or otherwise link their own currencies to the world's reserve currency, which is the dollar. They do so for the sake of exchange-rate stability, which helps with trade and investment flows. They essentially subcontract their monetary policy to the U.S. central bank.
The Fed's dollar indifference has sent an inflation shock through those dollar-linked economies. This week alone, we've read about price riots in Vietnam; inflation hitting 10.1% in Kuwait; Abu Dhabi contemplating price or wage controls; South Korean and Indonesian central bankers considering rate hikes; and the Chinese letting the yuan rise ever higher to curb inflationary pressures imported from the U.S.
Many of these countries are now delinking from the greenback. Meanwhile, the dollar plunge has translated into a net transfer of trillions in wealth from the U.S. to the rest of the world. The result has been the largest decline in America's global economic influence since the 1970s.
It will take more than a single speech from Mr. Bernanke to undo this damage. A statement of support for the strong dollar from both the Treasury and President Bush would certainly help. The last time Mr. Bush dared to speak his mind this way, in March, Treasury quickly hushed him up. Now would be a good time for the President to say he agrees with what Mr. Bernanke said this week.
The business press has been chattering about Treasury "intervention" in the foreign exchange markets, but this would mostly be symbolic action to scare currency traders. Such interventions are invariably "sterilized," meaning that central banks are careful not to increase or decrease the net supply of dollars. Changing the value of the dollar means reducing the supply of, or increasing the demand for, dollars. At the current moment, the world isn't likely to demand more dollars until it concludes that the Fed is serious about stopping the greenback's further decline.
In this context, last week's announcement of the August departure of Fed Governor Frederic Mishkin is good news. Mr. Mishkin is one of the intellectual architects of the Fed's dollar debacle. His departure means the Fed will soon have three of seven seats unfilled, with one more Governor unconfirmed. The Senate seems disinclined to confirm any more Bush nominees, and that may be just as well. The next President deserves a chance to remake the Fed with sound-money appointees. This Administration has named too many academics who know a lot about monetary theory but too little about currency markets and price signals in the real world.
* * *
The best news would be if this week marks a turning point at the Fed and at the Treasury. The leaders of those institutions have justified the Fed's sprint down the interest-rate curve as a way to boost exports, rescue the financial system and prevent a recession. They were wrong.
What has spared Wall Street more pain is the Fed's decision to open the discount window wider and to more borrowers. The easy-money experiment has merely hit consumers and the already struggling economy with a commodity price wallop, while inspiring a global flight from dollar assets. It's time to start acting to repair the damage.
REVIEW & OUTLOOK
The Buck Stops Where?
June 5, 2008; Page A20
When Paul Volcker declared several weeks ago that the world was in a "dollar crisis," his successors at the Federal Reserve made their private disapproval very clear. This week current Fed Chairman Ben Bernanke waved the white flag over Mr. Volcker's point by declaring his own public concern "that the dollar remains a strong and stable currency." Apologies accepted, provisionally.
The tragedy is that this is big news. The Fed has monopoly power over dollar creation, and concern for its value ought to go without saying. Yet so great has been the Fed's dollar abdication in recent years, and especially since last summer, that Mr. Bernanke's words have come as a great global relief. As the dollar has strengthened in welcome response, the price of gold and oil has fallen in each of the last two days.
The question now is whether the Fed will follow up its new words with action. "We are attentive to the implications of changes in the value of the dollar for inflation and inflation expectations," Mr. Bernanke said on Tuesday, a sign that the Fed may be waking up to the inflation threat. But the Fed chief also signaled that he isn't about to tighten monetary policy any time soon because current "policy seems well positioned to promote moderate growth and price stability over time."
Price stability where? Not in the U.S., where every economic report shows rising price pressure. Yesterday the feds reported that labor compensation rose at a healthy 4.9% for the first quarter, but only 0.6% after inflation. The Fed-inspired commodity boom has sent food and energy prices soaring, while wage gains invariably lag. If Republicans want to know why voters are so upset about an economy with a jobless rate of 5% – below the 5.2% rate when Bill Clinton won re-election in 1996 – this erosion of real incomes is the reason.
The Bernanke Fed has also been oblivious to the fact that it runs a global dollar bloc. Central banks in dozens of countries peg or otherwise link their own currencies to the world's reserve currency, which is the dollar. They do so for the sake of exchange-rate stability, which helps with trade and investment flows. They essentially subcontract their monetary policy to the U.S. central bank.
The Fed's dollar indifference has sent an inflation shock through those dollar-linked economies. This week alone, we've read about price riots in Vietnam; inflation hitting 10.1% in Kuwait; Abu Dhabi contemplating price or wage controls; South Korean and Indonesian central bankers considering rate hikes; and the Chinese letting the yuan rise ever higher to curb inflationary pressures imported from the U.S.
Many of these countries are now delinking from the greenback. Meanwhile, the dollar plunge has translated into a net transfer of trillions in wealth from the U.S. to the rest of the world. The result has been the largest decline in America's global economic influence since the 1970s.
It will take more than a single speech from Mr. Bernanke to undo this damage. A statement of support for the strong dollar from both the Treasury and President Bush would certainly help. The last time Mr. Bush dared to speak his mind this way, in March, Treasury quickly hushed him up. Now would be a good time for the President to say he agrees with what Mr. Bernanke said this week.
The business press has been chattering about Treasury "intervention" in the foreign exchange markets, but this would mostly be symbolic action to scare currency traders. Such interventions are invariably "sterilized," meaning that central banks are careful not to increase or decrease the net supply of dollars. Changing the value of the dollar means reducing the supply of, or increasing the demand for, dollars. At the current moment, the world isn't likely to demand more dollars until it concludes that the Fed is serious about stopping the greenback's further decline.
In this context, last week's announcement of the August departure of Fed Governor Frederic Mishkin is good news. Mr. Mishkin is one of the intellectual architects of the Fed's dollar debacle. His departure means the Fed will soon have three of seven seats unfilled, with one more Governor unconfirmed. The Senate seems disinclined to confirm any more Bush nominees, and that may be just as well. The next President deserves a chance to remake the Fed with sound-money appointees. This Administration has named too many academics who know a lot about monetary theory but too little about currency markets and price signals in the real world.
* * *
The best news would be if this week marks a turning point at the Fed and at the Treasury. The leaders of those institutions have justified the Fed's sprint down the interest-rate curve as a way to boost exports, rescue the financial system and prevent a recession. They were wrong.
What has spared Wall Street more pain is the Fed's decision to open the discount window wider and to more borrowers. The easy-money experiment has merely hit consumers and the already struggling economy with a commodity price wallop, while inspiring a global flight from dollar assets. It's time to start acting to repair the damage.
Subscribe to:
Posts (Atom)