25 Hedge Fund Managers Are Worth 680,000 Teachers

The Preposterous Reality: 25 Hedge Fund Managers Are Worth 680,000 Teachers (Who Teach 13 Million Students)
By Les Leopold, AlterNet
Posted on April 10, 2010, Printed on April 10, 2010
http://www.alternet.org/story/146402/

What work do we value most?

In 2009, the worst economic year for working people since the Great Depression, the top 25 hedge fund managers walked off with an average of $1 billion each. With the money those 25 people “earned,” we could have hired 658,000 entry level teachers. (They make about $38,000 a year, including benefits.) Those educators could have brought along over 13 million young people, assuming a class size of 20. That’s some value.

Apparently the 25 hedge managers did something that is even more valued in our society. But how valuable was it, really? To assess that, we need to answer a few basic questions:

1. What do hedge managers do?
They run funds into which very rich people put money to make even more money. Hedge fund managers move the money around in very risky ways to get the most enormous yields possible. (Wealthy investors believe they are entitled to double digit and even triple digit returns.)

Because hedge funds are considered playthings for the rich, who presumably are fully aware of all the risks, they are exempt from most financial regulations. (We’ll soon see if the financial reform bill now moving through the Senate changes this in any substantial way.)

The wealthy will have placed an estimated $2 trillion into hedge funds by the end of this year. (That’s about $6,500 for every man, woman and child in the U.S.)

2. Where does all that hedge fund money come from?
It’s mostly excess cash the super-rich have in hand now that their tax rates have dramatically declined. In the 1970s the marginal rate on those with incomes above $3 million (in today’s dollars) was 70 percent. Today, the effective rate on the 400 richest Americans is 16 percent, according to the most recent IRS data.

The wonderful thing about putting your money in a hedge fund (or managing one) is that the income you get from it is not taxed as income (say, officially at the rate of 35 percent). Instead, it is treated as a business investment, something that’s good for the economy and that we need to encourage through a low tax — a “capital gain.” The tax rate on capital gains is 15 percent. This is one reason that Warren Buffett can say that he pays a smaller percentage in taxes than his secretary.

3. How do hedge funds make money?
Some hedge fund managers use computerized modeling to decide where to invest or to make investments automatically. Other managers claim they just make good judgment calls. They also make enormous bets using lots of leverage and deploy an arsenal of derivatives.

It’s a dicey business, but it’s not supposed to put the larger system at risk… until it does. In the late 1990s, the hedge fund known as Long Term Capital Management, run by the brightest bulbs in the financial universe (including a couple of Nobel laureates), found itself with over $100 billion in assets but only $4 billion in capital. When that upside down pyramid began to crumble, the effect was systemic. So systemic that the Federal Reserve, fearing a major meltdown of the financial markets, forced Wall Street banks and investment houses to bail out the fund’s investors. Some economists argue that risky gambling by hedge funds did not cause the current crisis. But no one has conducted an impartial investigation into that question.

The $1 billion each those 25 hedge fund managers netted (for themselves) was impressive — but doing it in the year 2009 was also slap in the face of struggling Americans. That’s because hedge funds would have earned little or no money at all in 2009 had the government not bailed out the financial sector with trillions in loans, asset guarantees and other forms of financial assistance. It was, in effect, a generous gift from we the taxpayers. Much of that money was “earned” by betting that the government would not let the financial sector collapse. Smart bet.

In principle hedge funds would do little harm if they were not implicitly backstopped by the taxpayer in this way. Here’s how one sage financial expert put it to me recently:

Personally, I do not care whether hedge funds and other pools of unregulated funds gamble in opaque derivatives rated by incompetent ratings agencies. But I do want them to fail when their bets go bad. Nor do I want them to be rescued in the event of a run to liquidity. If they are leveraged and cannot come up with cash, they should fail. It will be painful for their creditors. So be it, the more pain, the better. That is the downside to private property. Greed is good, but must be balanced by the fear of failure. Without failure there is no fear.

On the other hand, I want to have a protected and closely regulated portion of the financial sector for those who do not want to take excessive risks. And any institution that bets with “house money”–that is, that has access to the Fed in the case of a liquidity problem and to the Treasury in the case of insolvency–must be constrained. That is the direction that true reform ought to take.

4. Do hedge funds create real value that is essential for our economy and our society?
Here’s a test: Imagine what would happen if they disappeared entirely. People working at the 8,000 or so hedge funds — a relatively small number of people — would lose their jobs. But it’s unlikely that the national or world economy would suffer at all. The wealthy would simply move their money to other investments. They might even decide to make longer term investments that would be used to produce real goods and services.

But wait, aren’t these piles of money a valuable source of funds for investment in the real economy? Don’t hedge funds make our markets work more efficiently? By betting against overvalued currencies and bogus balance sheets of toxic-chocked banks, don’t hedge funds police the bad guys? Aren’t they the essential glue for rebuilding America?

If any of those good things happen, they’re an accidental byproduct. The real job of hedge funds is to allow very rich people to make more money as quickly as possible, preferably without tying up the cash for too long. Use hedge fund money for a leveraged buyout that can be flipped quickly for big profits? Sure. Use it to speculate on the value of currency or to make a quick dash in and out of a credit default swap? You betcha.

If we step back and look at the big game, we can see that hedge funds are hard at work skimming profits from the financial sector, which in turn is living off the largess of the American taxpayer. It’s all part of the great financialization of the U.S. economy that began in earnest when the financial sector was deregulated in the late 1970s. Over the years, financial sector profits have risen to nearly 40 percent of all corporate profits. And sadly, it’s not because financial firms helped our economy grow. It’s because they figured out how to run a very profitable casino for the wealthy. And then hedge funds came along and figured out how to skim the skim from those casinos.

5. So how can 25 hedge fund managers be “worth” $658,000 new teachers?
They aren’t. And I bet the leading hedge managers themselves would admit it.

But our economic system isn’t rewarding real value. While the hedge fund 25 are living large, teachers everywhere are getting the axe. Why the layoffs? Because state and local governments aren’t collecting enough taxes — not since Wall Street investors crashed the economy.

In our New Jersey town, we are laying off 85 teachers. Instead we ought to be hiring 85 more to reduce class size and improve support programs for those students who desperately need them. It’s obscene that we’re shoveling money to the super-rich even as we force teachers to join the ranks of the unemployed. Already 29 million Americans are without work or forced to work only part-time.

How to tame these runaway paydays? Just institute a financial transaction tax or a windfall profits tax. The fix is technically simple but politically complex. It’s going to take a lot of political will — over a long period of time — to reorder our most basic economic values.

In the meantime, try explaining to your kids why school programs are being cut while 25 shrewd gamblers are living like Pharaohs.

Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It (Chelsea Green, 2009).

Anger over health-care reform spurs rise in threats against Congress members

By Sari Horwitz and Ben Pershing
Washington Post Staff Writers
Friday, April 9, 2010; A03

Anger over the health-care overhaul has led to a nearly threefold increase in recent months in the number of serious threats against members of Congress, federal law enforcement officials said.

The lawmakers reported 42 threats in the first three months of this year, compared with 15 in the last three months of 2009, said Senate Sergeant-at-Arms Terrance W. Gainer, who had information about threats involving both chambers.

"The incidents ranged from very vulgar to serious threats, including death threats," Gainer said. "The ability to carry them out is another question and part of an investigation to determine what, if any, appropriate steps to take."

Nearly all of the recent threats appear to come from opponents of the health-care overhaul, said Gainer, who also served four years as chief of the U.S. Capitol Police. And, he said, there have been "significantly more" threats against House members than against senators.

The threats, which have led to at least three arrests, have not abated since President Obama signed the measure into law March 23. The Capitol Police have contacted the FBI about such threats even more often since the law was signed, said Lindsay Godwin, an FBI spokeswoman.

House Speaker Nancy Pelosi (D-Calif.) became the best-known of the recently targeted lawmakers Wednesday, when authorities accused a man in San Francisco of making dozens of threatening calls to her home and her husband's office.

In response to the threats, Capitol officials have been working to ensure that the 454 Senate offices across the country are secure. Some of the offices, a quarter of which are in federal buildings, are receiving additional equipment to help with the screening of mail. In other instances, law enforcement officials are recommending new locks and surveillance cameras.

A few members have reacted to the threats by lowering their public profiles. Rep. Tim Ryan (D-Ohio) canceled an event at a Youngstown community health center because he received a threatening letter, his spokeswoman told a local television station.

But most lawmakers haven't altered their routines, devoting their two-week spring recess to the typical district meetings, town halls and campaign events.

A day before Gregory L. Giusti was charged with threatening Pelosi, Charles A. Wilson was arrested near Yakima, Wash., and charged with "leaving expletive laden threatening messages" on multiple occasions at the office of Sen. Patty Murray (D-Wash.), including a recorded message that said, "I want to kill you."

On March 29, a Philadelphia man was charged with threatening in a YouTube video to kill Rep. Eric Cantor (R-Va.) and his family. Prosecutors say the suspect, Norman Leboon, has multiple personalities and is not competent to stand trial.

Some lawmakers say the real change in recent weeks has been that members aren't keeping such incidents private anymore. "Normally, we don't give publicity to this," said Rep. Dan Lungren (Calif.), the ranking Republican on the House committee that oversees the Capitol Police.

The threats have come at home and at work, online, on the phone and in person.

This week, Rep. Stephen I. Cohen (D-Tenn.) received hostile e-mails to his Cohen for Congress campaign Web site, an incident that was reported to the Capitol Police and the FBI office in Memphis. One e-mail said, "If our tea parties had hoods, we would burn your [expletive] on a cross on the White House front lawn," according to Cohen's chief of staff.

A propane gas line was cut in March at the Charlottesville home of Rep. Tom Perriello's (D-Va.) brother after a self-identified "tea party" activist posted the address on the Internet and said it was the congressman's house.

A brick was thrown through the window of the Niagara Falls district office of Rep. Louise M. Slaughter (D-N.Y.) , and someone left her a voice mail suggesting that the children of health-reform supporters would be targeted by snipers.

Rep. Bart Stupak (Mich.), the leader of a bloc of antiabortion Democrats who eventually cut a deal with the Obama administration and voted for the bill, received a fax with a drawing of a noose and an anonymous voice mail saying: "You're dead. We know where you live. We'll get you."

Despite the threats, Murray and Slaughter haven't changed their public schedules, according to spokesmen, and Perriello hasn't slowed down since the vandalism at his brother's house.

"It hasn't really changed much about how we do business here in the office," said Perriello spokeswoman Jessica Barba.

She said Perriello was maintaining a "very aggressive public events schedule" with more than a dozen appearances in the past week and no security staff in tow.

Sen. Lamar Alexander (R-Tenn.) said that he had received threats before and during the health-care debate but that he's "handled them quietly."

"There's simply more anger out there about the direction of our country," Alexander said. "I see it and feel it in the public meetings I go to. But I'm going to the same places and doing the same things I always have."

Will Obama recognize Egypt's turning point and get on board?

Editorial
The Washington Post
Friday, April 9, 2010; A20

ON TUESDAY, scores of Egyptians -- most of them young and many of them women -- turned up on the streets of Cairo to press for peaceful political reform. They were members of the 6th of April movement and other groups that have joined a National Front for Change led by Mohamed ElBaradei, the Nobel Prize-winning former director of the International Atomic Energy Agency. Their demands are simple, and reasonable: an end to the emergency laws that prevent political organizing and freedom of assembly; independent monitoring of parliamentary elections this year; and changes in the Egyptian constitution that would allow a genuinely free contest in next year's presidential election.

The response of Egypt's authoritarian regime was also simple: riot police, truncheons and plainclothes thugs. The young protesters were literally beaten into submission. More than 90 were thrown into trucks and hauled away to police stations; criminal charges are being pressed against 33.

This is the standard response of Egypt's strongman, Hosni Mubarak, to anyone in his country who suggests even small steps toward liberal democracy. With the exception of one brief period during the administration of George W. Bush, the repression has been tolerated by U.S. presidents and by Congress, which annually delivers billions in economic and military aid to Mr. Mubarak's regime.

This status quo is no longer sustainable. Hundreds of thousands of Egyptians have rallied behind Mr. ElBaradei, who has been touring the country to make the case for peaceful change. Facebook groups supporting his movement have more active members than does the ruling party. At 81, Mr. Mubarak appears to be in failing health; he recently underwent surgery in Germany. His clumsy project to groom his son Gamal to succeed him is floundering -- the idea is unpopular among supporters of the regime, not to mention the public.

In short, Egypt's incipient instability and the three elections it has scheduled in the next 18 months present both a major challenge and a precious opportunity for the Obama administration. As a bipartisan "working group on Egypt" said in a letter delivered this week to Secretary of State Hillary Rodham Clinton, "Egypt is at a critical turning point . . . . There is now an opportunity to promote gradual, responsible democratic reform." The group, which includes Robert Kagan, Thomas Carothers and Michele Dunne, all of the Carnegie Endowment for International Peace, as well as experts from six other institutions, said that the administration should be "raising with the Egyptian government -- privately, but at the highest level -- the U.S. hope and expectation that Egypt will hold genuinely competitive elections."

The Obama administration contends that it is doing just this. But President Obama and Secretary of State Hillary Rodham Clinton have also devoted a lot of high-profile time and energy to stroking Mr. Mubarak, out of a conviction that strained relations during the Bush administration needed to be repaired. The ties have been mended and the private messages allegedly delivered -- but Egypt, as the working group's letter notes, is "sliding backward into increased authoritarianism." It's time for the administration to recognize that its approach is not working -- and that it cannot afford to squander this moment of opportunity.

Obama talks less of terror in outreach to Muslims

By MATT APUZZO
Associated Press
2 hrs 35 mins ago

WASHINGTON – Less talk about "Islamic radicalism" and a lot more about doing business. In the year since President Barack Obama pledged a new beginning in the relationship with the Muslim world, the White House has begun to change the U.S. focus.

Terrorism still dominates U.S. security concerns, but the White House believes it doesn't have to dominate the conversation. Since Obama's speech in Cairo last year, the White House has tried to talk more about health care, science and education.

It's a strategy based on the belief that the prior administration viewed the world through the lens of terrorism. And when it talked to Muslim nations, it was all about winning the war of ideas.

"You take a country where the overwhelming majority are not going to become terrorists, and you go in and say, 'We're building you a hospital so you don't become terrorists.' That doesn't make much sense," says National Security Council staff member Pradeep Ramamurthy.

Ramamurthy runs the administration's Global Engagement Directorate, a four-person team that Obama launched last May with little fanfare and a vague mission to use diplomacy and outreach "in pursuit of a host of national security objectives." Since then, the division has not only helped change the vocabulary of fighting terrorism but has shaped the way the country invests in Muslim businesses, studies global warming, supports scientific research and combats polio.

Also, Obama advisers who are rewriting a document spelling out the country's national security strategy plan to leave out references to "Islamic radicalism," counterterrorism officials said. They spoke on condition of anonymity because the document is still being written and is weeks away from release. Currently, the document declares: "The struggle against militant Islamic radicalism is the great ideological conflict of the early years of the 21st century."

Ramamurthy's team is reaching out in a variety of ways. Before diplomats go abroad, they hear from him or his deputy, Jenny Urizar. When officials from the National Oceanic and Atmospheric Administration returned from Indonesia, the NSC got a rundown about research opportunities on global warming.

Ramamurthy maintains a database of interviews conducted by 50 U.S. embassies worldwide. And business leaders from more than 40 countries head to Washington this month for an "entrepreneurship summit" for Muslim businesses.

"Do you want to think about the U.S. as the nation that fights terrorism or the nation you want to do business with?" Ramamurthy said.

Many international Muslim leaders have cheered the new tone, not just for its symbolism but because it makes it politically easier for them to cooperate with the U.S.

"It's also a clear indication of President Obama's substantial understanding of the intricacies of Muslim politics," Jordanian lawmaker Hamada Faraaneh said.

On Wednesday, Iraqi government spokesman Ali al-Dabbagh applauded indications that the Obama administration would keep religious rhetoric out of the U.S. security strategy.

"It is a good message of assurance, and differs from the former American administration's position on this matter which showed no real understanding of Islamic countries," al-Dabbagh said. "This decision by Obama will help to reform the image Muslims have of America."

Public opinion polls have shown consistent improvement in sentiment toward the U.S. within the Muslim world, though the viewpoints are still overwhelmingly negative.

To deliver his message, Obama's speechwriters have at times taken inspiration from former President Ronald Reagan. In China in 1984, Reagan spoke about education, space exploration and scientific research. He discussed freedom and liberty. He never mentioned communism or democracy.

"They didn't look up to the U.S. because we hated communism," said Deputy National Security Adviser Ben Rhodes, Obama's foreign policy speechwriter.

Like Reagan in China, Obama in Cairo made only passing references to terrorism. Instead he focused on cooperation. He announced the U.S. would team up to fight polio with the Organisation of the Islamic Conference, a multinational body based in Saudi Arabia. The U.S. and OIC had worked together before, but never with that focus.

"President Obama saw it as an opportunity to say, 'We work on things far beyond the war on terrorism,'" World Health Organization spokeswoman Sona Bari said.

Polio is endemic in three Muslim countries — Nigeria, Pakistan and Afghanistan — but some Muslim leaders have been suspicious of vaccination efforts, which they suggested were part of a CIA sterilization campaign. Last year, the OIC and religious scholars at the International Islamic Fiqh Academy issued a fatwa, or religious decree, that parents should vaccinate their children.

The Centers for Disease Control and Prevention also began working more closely with local Islamic leaders in northern Nigeria, a network that had been overlooked for years, said John Fitzsimmons, the deputy director of the CDC's immunization division.

Though health officials are reluctant to assign credit to any one action, new polio cases in Nigeria fell from 83 during the first quarter of last year to just one so far this year, Fitzsimmons said.

Obama did not invent Muslim outreach. President George W. Bush gave the White House its first Quran, hosted its first Iftar dinner to celebrate Ramadan and loudly stated support for Muslim democracies like Turkey.

But the Bush administration struggled with its rhetoric. Muslims criticized Bush for describing the war on terrorism as a "crusade" and labeling the invasion of Afghanistan "Operation Infinite Justice" — words that were seen as religious. He regularly identified America's enemy as "Islamic extremists" and "radical jihadists."

Karen Hughes, a Bush confidante who served as his top diplomat to the Muslim world in his second term, urged the White House to stop.

"I did recommend that, in my judgment, it's unfortunate because of the way it's heard. We ought to avoid the language of religion," Hughes said. "Whenever they hear 'Islamic extremism, Islamic jihad, Islamic fundamentalism,' they perceive it as a sort of an attack on their faith. That's the world view Osama bin Laden wants them to have."

Hughes and Juan Zarate, Bush's former deputy national security adviser, said Obama's efforts build on groundwork from Bush's second term, when some of the rhetoric softened. But by then, Zarate said, it was overshadowed by the Guantanamo Bay detention center, the abuses at Abu Ghraib prison and a prolonged Iraq war.

"In some ways, it didn't matter what the president did or said. People weren't going to be listening to him in the way we wanted them to," Zarate said. "The difference is, President Obama had a fresh start."

Obama's foreign policy posture is not without risk. Even as he steps up airstrikes abroad, he has proven vulnerable to criticism at home, such as the failed Christmas Day airline bombing and the announced-then-withdrawn plan to prosecute self-described 9/11 mastermind Khalid Sheikh Mohammed in New York.

Peter Feaver, a Duke University political scientist and former Bush adviser, is skeptical of Obama's engagement effort. It "doesn't appear to have created much in the way of strategic benefit," he said. Obama risks seeming to adopt politically correct rhetoric abroad while appearing tone-deaf on security issues at home, Feaver said.

The White House dismisses such criticism. In June, Obama will travel to Indonesia, the world's most populous Muslim country, and is expected to revisit many of the themes of his Cairo speech.

"This is the long-range direction we need to go in," Ramamurthy said.

Confirmed: Obama authorizes assassination of U.S. citizen

By Glenn Greenwald
Salon.com
Wednesday, Apr 7, 2010 04:08 EDT

Wikipedia

Anwar al-Awlaki

(updated below - Update II - Update III - Update IV)

In late January, I wrote about the Obama administration's "presidential assassination program," whereby American citizens are targeted for killings far away from any battlefield, based exclusively on unchecked accusations by the Executive Branch that they're involved in Terrorism. At the time, The Washington Post's Dana Priest had noted deep in a long article that Obama had continued Bush's policy (which Bush never actually implemented) of having the Joint Chiefs of Staff compile "hit lists" of Americans, and Priest suggested that the American-born Islamic cleric Anwar al-Awlaki was on that list. The following week, Obama's Director of National Intelligence, Adm. Dennis Blair, acknowledged in Congressional testimony that the administration reserves the "right" to carry out such assassinations.

Today, both The New York Times and The Washington Post confirm that the Obama White House has now expressly authorized the CIA to kill al-Alwaki no matter where he is found, no matter his distance from a battlefield. I wrote at length about the extreme dangers and lawlessness of allowing the Executive Branch the power to murder U.S. citizens far away from a battlefield (i.e., while they're sleeping, at home, with their children, etc.) and with no due process of any kind. I won't repeat those arguments -- they're here and here -- but I do want to highlight how unbelievably Orwellian and tyrannical this is in light of these new articles today.

Just consider how the NYT reports on Obama's assassination order and how it is justified:

The Obama administration has taken the extraordinary step of authorizing the targeted killing of an American citizen, the radical Muslim cleric Anwar al-Awlaki, who is believed to have shifted from encouraging attacks on the United States to directly participating in them, intelligence and counterterrorism officials said Tuesday. . . .

American counterterrorism officials say Mr. Awlaki is an operative of Al Qaeda in the Arabian Peninsula, the affiliate of the terror network in Yemen and Saudi Arabia. They say they believe that he has become a recruiter for the terrorist network, feeding prospects into plots aimed at the United States and at Americans abroad, the officials said.

It is extremely rare, if not unprecedented, for an American to be approved for targeted killing, officials said. A former senior legal official in the administration of George W. Bush said he did not know of any American who was approved for targeted killing under the former president. . . .

"The danger Awlaki poses to this country is no longer confined to words," said an American official, who like other current and former officials interviewed for this article spoke of the classified counterterrorism measures on the condition of anonymity. "He’s gotten involved in plots."

No due process is accorded. No charges or trials are necessary. No evidence is offered, nor any opportunity for him to deny these accusations (which he has done vehemently through his family). None of that.

Instead, in Barack Obama's America, the way guilt is determined for American citizens -- and a death penalty imposed -- is that the President, like the King he thinks he is, secretly decrees someone's guilt as a Terrorist. He then dispatches his aides to run to America's newspapers -- cowardly hiding behind the shield of anonymity which they're granted -- to proclaim that the Guilty One shall be killed on sight because the Leader has decreed him to be a Terrorist. It is simply asserted that Awlaki has converted from a cleric who expresses anti-American views and advocates attacks on American military targets (advocacy which happens to be Constitutionally protected) to Actual Terrorist "involved in plots." These newspapers then print this Executive Verdict with no questioning, no opposition, no investigation, no refutation as to its truth. And the punishment is thus decreed: this American citizen will now be murdered by the CIA because Barack Obama has ordered that it be done. What kind of person could possibly justify this or think that this is a legitimate government power?

Just to get a sense for how extreme this behavior is, consider -- as the NYT reported -- that not even George Bush targeted American citizens for this type of extra-judicial killing (though a 2002 drone attack in Yemen did result in the death of an American citizen). Even more strikingly, Antonin Scalia, in the 2004 case of Hamdi v. Rumsfeld, wrote an Opinion (joined by Justice Stevens) arguing that it was unconstitutional for the U.S. Government merely to imprison (let alone kill) American citizens as "enemy combatants"; instead, they argued, the Constitution required that Americans be charged with crimes (such as treason) and be given a trial before being punished. The full Hamdi Court held that at least some due process was required before Americans could be imprisoned as "enemy combatants." Yet now, Barack Obama is claiming the right not merely to imprison, but to assassinate far from any battlefield, American citizens with no due process of any kind. Even GOP Congressman Pete Hoekstra, when questioning Adm. Blair, recognized the severe dangers raised by this asserted power.

And what about all the progressives who screamed for years about the Bush administration's tyrannical treatment of Jose Padilla? Bush merely imprisoned Padilla for years without a trial. If that's a vicious, tyrannical assault on the Constitution -- and it was -- what should they be saying about the Nobel Peace Prize winner's assassination of American citizens without any due process?

All of this underscores the principal point made in this excellent new article by Eli Lake, who compellingly and comprehensively documents what readers here well know: that while Obama's "speeches and some of his administration’s policy rollouts have emphasized a break from the Bush era," the reality is that the administration has retained and, in some cases, built upon the core Bush/Cheney approach to civil liberties and Terrorism. As Al Gore asked in his superb 2006 speech protesting Bush's "War on the Constitution":

Can it be true that any president really has such powers under our Constitution?

If the answer is yes, then under the theory by which these acts are committed, are there any acts that can on their face be prohibited?

If the president has the inherent authority to eavesdrop on American citizens without a warrant, imprison American citizens on his own declaration, kidnap and torture, then what can't he do?

Notice the power that was missing from Gore's indictment of Bush radicalism: the power to kill American citizens. Add that to the litany -- as Obama has now done -- and consider how much more compelling Gore's accusatory questions become.

UPDATE: When Obama was seeking the Democratic nomination, the Constitutional Law Scholar answered a questionnaire about executive power distributed by The Boston Globe's Charlie Savage, and this was one of his answers:

5. Does the Constitution permit a president to detain US citizens without charges as unlawful enemy combatants?

[Obama]: No. I reject the Bush Administration's claim that the President has plenary authority under the Constitution to detain U.S. citizens without charges as unlawful enemy combatants.

So back then, Obama said the President lacks the power merely to detain U.S. citizens without charges. Now, as President, he claims the power to assassinate them without charges. Could even his hardest-core loyalists try to reconcile that with a straight face? As Spencer Ackerman documents today, not even John Yoo claimed that the President possessed the power Obama is claiming here.

UPDATE II: If you're going to go into the comment section -- or anywhere else -- and argue that this is all justified because Awlaki is an Evil, Violent, Murdering Terrorist Trying to Kill Americans, you should say how you know that. Generally, guilt is determined by having a trial where the evidence is presented and the accused has an opportunity to defend himself -- not by putting blind authoritarian faith in the unchecked accusations of government leaders, even if it happens to be Barack Obama. That's especially true given how many times accusations of Terrorism by the U.S. Government have proven to be false.

UPDATE III: Congratulations, Barack Obama: you're now to the Right of National Review on issues of executive power and due process, as Kevin Williamson objects: "Surely there has to be some operational constraint on the executive when it comes to the killing of U.S. citizens. . . . Odious as Awlaki is, this seems to me to be setting an awful and reckless precedent. " But Andy McCarthy -- who is about the most crazed Far Right extremist on such matters as it gets, literally -- is as pleased as can be with what Obama is doing (or, as Gawker puts it, "Obama Does Something Bloodthirsty Enough to Please the Psychos").

UPDATE IV: Keith Olbermann's coverage of this story was quite good tonight -- see here.

Muslim cleric Aulaqi is 1st U.S. citizen on list of those CIA is allowed to kill

By Greg Miller
Washington Post Staff Writer
Wednesday, April 7, 2010; A08

A Muslim cleric tied to the attempted bombing of a Detroit-bound airliner has become the first U.S. citizen added to a list of suspected terrorists the CIA is authorized to kill, a U.S. official said Tuesday.

Anwar al-Aulaqi, who resides in Yemen, was previously placed on a target list maintained by the U.S. military's Joint Special Operations Command and has survived at least one strike carried out by Yemeni forces with U.S. assistance against a gathering of suspected al-Qaeda operatives.

Because he is a U.S. citizen, adding Aulaqi to the CIA list required special approval from the White House, officials said. The move means that Aulaqi would be considered a legitimate target not only for a military strike carried out by U.S. and Yemeni forces, but also for lethal CIA operations.

"He's in everybody's sights," said the U.S. official, who spoke on the condition of anonymity because of the topic's sensitivity.

CIA spokesman Paul Gimigliano said: "This agency conducts its counterterrorism operations in strict accord with the law."

The decision to add Aulaqi to the CIA target list reflects the view among agency analysts that a man previously regarded mainly as a militant preacher has taken on an expanded role in al-Qaeda's Yemen-based offshoot.

"He's recently become an operational figure for al-Qaeda in the Arabian Peninsula," said a second U.S. official. "He's working actively to kill Americans, so it's both lawful and sensible to try to stop him." The official stressed that there are "careful procedures our government follows in these kinds of cases, but U.S. citizenship hardly gives you blanket protection overseas to plot the murder of your fellow citizens."

Aulaqi corresponded by e-mail with Maj. Nidal M. Hasan, the Army psychiatrist accused of killing 12 soldiers and one civilian at Fort Hood, Tex., last year. Aulaqi is not believed to have helped plan the attack, although he praised Hasan in an online posting for carrying it out.

Concern grew about the cleric's role after he was linked to the Nigerian accused of attempting to bomb a U.S. airliner on Christmas Day by detonating an explosive device he had smuggled in his underwear. Aulaqi acknowledged teaching and corresponding with the Nigerian but denied ordering the attack.

The CIA is known to have carried out at least one Predator strike in Yemen. A U.S. citizen, Kamal Derwish, was among six alleged al-Qaeda operatives killed in that 2002 operation but was not the target.

Alexander Tikhomirov's life illustrates challenge radical Islam poses in Russia

By Philip P. Pan
The Washington Post
Wednesday, April 7, 2010; A08

MOSCOW -- He had been a bright but lonely child from a sleepy city near the Mongolian border, in a Buddhist region of Russia far from the nation's Muslim centers. But by the time he was killed last month, thousands of miles away in the volatile North Caucasus, Alexander Tikhomirov had become the face of an Islamist insurgency.

After two young women blew themselves up on the Moscow subway last week, killing 40 people in the city's worst terrorist attack in years, investigators said they suspected that Tikhomirov had recruited and trained them, and perhaps dozens of other suicide bombers.

How the schoolboy whom neighbors called Sascha became the tech-savvy militant known as Sayid Buryatsky remains a question wrapped in rumor and speculation. But the outline of Tikhomirov's journey from the Siberian steppes to the mountains of Chechnya provides a sense of the challenge that radical Islam poses in Russia and the speed with which the insurgency in the nation's southwest is changing.

In less than two years with the rebels, Tikhomirov became their most effective propagandist, drawing in young Muslims with his fluent Russian, colloquial interpretations of Islam and mastery of the Internet. When security forces gunned him down last month at age 27, the guerrillas immediately cast him as a martyr.

Even in death, he remains influential. The rebel leader Doku Umarov has vowed fresh attacks in the Russian heartland by the brigade of suicide bombers that Tikhomirov helped revive. And he remains a digital legend, with his writings and videos preserved on the Web and his DVDs sold outside mosques across the former Soviet Union.

Neighbors in Ulan Ude, capital of the Siberian province of Buryatia, remember Tikhomirov as an awkward boy from a troubled family. His father was Buryat, an ethnic minority related to Mongols, and died soon after he was born. His mother, said to be an ethnic Russian, struggled to make ends meet at a local market.

One resident, who spoke on the condition of anonymity for fear of police scrutiny, said Tikhomirov's interest in Islam came after he was forced to drop out of high school and attend vocational school. Others traced it to a stepfather from the Caucasus.

But in a letter posted on a rebel Web site, Tikhomirov's mother said he was simply drawn in by a library copy of the Koran when he was 17. "That same year, he started to search for people who could tell him anything about Islam," she wrote.

Tikhomirov may have had an early brush with Islamic extremism and Russia's heavy-handed efforts to stamp it out. An Uzbek preacher named Bakhtiyar Umarov moved to his city about the time he converted, and Tikhomirov studied with him, acquaintances said. After Umarov caused a stir by trying to build a mosque, Russia deported the preacher to Uzbekistan, where he was jailed on charges of "terrorist propaganda." But his defenders insist that he is a moderate and could not have radicalized Tikhomirov.

In his late teens, Tikhomirov moved to Moscow, where he attended an Islamic college that the authorities later closed in a crackdown on suspected extremism. He then traveled to Cairo, where he studied Arabic and attended lectures by Muslim scholars, one of whom he cited years later to justify violence in the name of Islam.

In 2003, he returned to Moscow, telling friends that the Egyptian authorities had kicked him out for his religious activities. He took the Muslim name Sayid, calling himself Sayid Buryatsky.

But he seemed far from ready to join the rebels in the North Caucasus. Investigators say he took a job as a low-level assistant to the Russian Council of Muftis, which unites the nation's Muslim spiritual boards.

Suppressed by the czars and the Communists, Islam has enjoyed a fitful rebirth in Russia since the fall of the Soviet Union. Most of the nation's estimated 20 million Muslims are ethnic minorities who adhere to a moderate branch of the faith. But radical views have made inroads, fueled by foreign proselytizers and frustration with state-backed spiritual leaders.

Acquaintances say Tikhomirov embraced a movement known as Salafism, which argues that Islam has been corrupted over the centuries and urges a return to the stricter practices of the earliest Muslims. The movement is popular among young Muslims in Russia, but the security forces often target its adherents as extremists.

Russia's traditional Islamic leaders have tried to steer young people toward moderate views, but a severe shortage of mosques, due in part to state limits, has made that difficult. In Moscow, six mosques serve as many as 3 million believers, the largest Muslim population of any city in Europe.

Aslam Ezhaev, director of an Islamic publishing house, said Tikhomirov voiced frustration with Muslim officialdom and eventually returned to Buryatia, where he took a job as a warehouse guard and offered to translate Arabic books for him.

Ezhaev suggested that Tikhomirov start a podcast for his Web site, Radio Islam. Tikhomirov proved be a talented preacher; his lectures were an immediate hit.

Ezhaev said he opposed violence and forbade Tikhomirov to discuss jihad. "It was easy for him to stay within the limits," he said. "I didn't see any signs of fanaticism."

On the Web, radicals criticized Tikhomirov for refusing to talk about Russia's brutal efforts to crush the insurgency in the Caucasus, where rebels in 2007 declared jihad to establish an Islamist emirate.

In the spring of 2008, Tikhomirov received a recruitment video from a senior rebel commander. "I considered it probably three or five seconds," he recalled in a video of his own, then concluded that God was challenging him to back up his sermons with action.

Because of his mixed ethnicity, he quickly became a powerful symbol for an insurgency trying to expand beyond Chechnya to the rest of the Caucasus. His sermons, which he filmed in combat gear, weaved scripture with sarcasm, striking a chord in an impoverished Muslim region brimming with resentment against the security forces.

Tikhomirov called the screams of injured enemies "music for the ears" and detailed his central role in the campaign of suicide bombings that began last summer with the revival of Riyad-us Saliheen, a brigade that once staged attacks across Russia.

"While I am alive," he wrote in December, "I will do everything possible so that the ranks of Riyad-us Saliheen are broadened and new waves of mujaheddin go on to martyrdom operations."

On March 2, when security forces surrounded him and other fighters in a village in Ingushetia, Tikhomirov recorded a final sermon on his mobile phone, officials said. The authorities recovered the phone, along with a 50-liter barrel of explosives.

The Lobby v. America

Netanyahu's Lies and the Politicians Who Swallow Them
By RAMZY BAROUD
CounterPunch
April 2, 2010

As I listened to Israeli Prime Minister Benjamin Netanyahu address an animated crowed of supporters on March 22, I felt physically sick. The man has already displayed time and again a complete lack of moral sense or ethical framework in his words and actions. In his recent arguments, he once again twisted history, manipulated facts and fabricated his own selective, self-interested and highly questionable narrative. Netanyahu, a colonialist from a faraway land, also had the audacity to convince himself and a few others that he had legal, moral and historic rights over my land. While I am the son of a Palestinian family rooted in Palestine since time immemorial, Netanyahu is the son of an immigrant from Lithuania. While he giddily robs more Palestinian land in Jerusalem, I live in exile.

Netanyahu was addressing the annual conference of the American Israel Public Affairs Committee (AIPAC). The ‘powerful’ lobby group encompasses a large conglomerate of rightwing Zionist politicians and lobbyists and is seen by many as the most instrumental platform that influences – and, to a large degree, controls - US foreign policy regarding Palestine, Israel and the entire Middle East.

AIPAC is dangerous for many reasons. For one, it’s not a lobby group in the conventional sense - meaning a group of well-paid lobbyists harassing US Congressmen with telephone calls with the hope of advancing the agenda of their benefactors (in this case, the state of Israel). The pro-Israel lobby has actually grown and morphed into a political body that is embedded within all branches of the US government, as well as the media, academia and elsewhere. It is no secret that the neo-conservative cliques of politicians who engineered, steered and to an extent continue to influence US war policy are in fact a mere component of the same ‘lobby’.

While Jewish communities in the US may not be united in their support of the largely rightwing and hawkish Zionist lobby groups, both major political parties in the US and all branches of the government stand in complete support of Israel. The AIPAC annual conference is almost mandatory for them. Sadly, Netanyahu’s speech before AIPAC is of equal, if not of greater import to some of them than the State of the Union address. Following Obama’s address in 2010, many US politicians openly voiced criticism of his take on many issues. But few dare challenge Netanyahu on much of the malice he spewed on March 22.

Americans need to realize that this is no longer about Palestine and Israel. It is now about their own country, their own sovereignty and the future of their own democracy. They must ask hard questions and refuse to settle for sentimental answers. How could America be so divided on so many issues, yet so united on the ‘cause of Israel’? Where does a feeble politician like Netanyahu find the courage to defy the president of the very country that supplied his own with many billions of taxpayer dollars? Of course, we know that much of the fund was used to occupy, torment and wage war on Palestinians for many years. This is the atrocious fact that Americans need to understand fully: Israeli war crimes were made possible because of American funds, weapons and political cover. America is not an outside party to the conflict. It has done more than its fair share in the ongoing Palestinian tragedy.

Even if one is somehow convinced by the most recent and unusually strong stance taken by the Obama administration regarding Israel’s settlement policy in East Jerusalem, there still remains the question of what comes next. When the President of the United States articulates a seemingly unmovable US position that rejects the building of more illegal settlements that would preclude any possible peace talks, and yet he fails to weaken Israel’s resolve even by an iota, some questions must be asked. Will the US use its leverage to twist Israel’s arm to respect international law? Will it at least hold on to some of the billions of dollars of funds that it continues to pour into Israel - especially as the US undergoes an unprecedented financial crisis, resulting in growing poverty and homelessness?

The answer might be in the UPI report on March 26, citing Israeli daily newspaper Haaretz:

“Despite the sharpest rift in decades between Israel and the United States, the Pentagon is reported to have given the green light to the $250 million sale of C-130J transport aircraft to Israel…The deal…involves three ‘Super Hercules’ aircraft manufactured especially to the Israeli air force's requirements. (The report) indicates that despite the belief among the United States' top military commanders that Israel's failure to reach a peaceful settlement with the Palestinians is undermining U.S. influence and standing in the Muslim world and thus endangering its forces, the Pentagon is prepared to maintain Israel's military superiority in the Middle East.”

The timing and the nature of the ‘sale’ signify the following: first, if the US government was ready to actively back up its supposed disagreement with Israel, it would have stopped this unwarranted sale. Second, considering that the deal was made through the Pentagon, the very platform used to express concern and call for at least a reconsideration of US policy in the region, the sale is both a slap on the face of the US military, and a veiled apology to Israel. Third, if the failure to reexamine this absence relationship continues, then there is absolutely no doubt left that US foreign policy in the Middle East is indeed held hostage to Israeli, not American priorities, misguided at times as they maybe.

Those individuals in the US government, military and media that have the courage and the platform to confront Israel must take the opportunity. They should not succumb to intimidation or fear, nor should they be swayed by Netanyahu’s lies. The fact is, Netanyahu will continue to lie; it’s what he does best. The onus is on those US politicians who readily and barefacedly continue to give the professional liar a standing ovation following every statement he utters. And it is only really they who give any power to the ‘powerful’ lobby.

Ramzy Baroud is editor of PalestineChronicle.com. His work has been published in many newspapers and journals worldwide. His latest book is The Second Palestinian Intifada: A Chronicle of a People's Struggle (Pluto Press, London). His newbook is, “My Father Was a Freedom Fighter: Gaza’s Untold Story” (Pluto Press, London).

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Confessions From The Horse's Mouth

(can be reviewed in less than 30 minutes).
Please Goggle or use the included links:

- “28 USC 3002” (definition of the United States as a Federal corporation never taught in civics class; go to paragraph 15) (http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00003002----000-.html)

- “27 CFR 72.11” (U.S. Inc. defines all crime as commercial as a result of the fall of the republic when the South walked out of congress in 1861 and the de jure congress, unable to raise a quorum, was replaced by Lincoln with the de facto corporate Congress; and the de jure district court of the United States was replaced by the de facto corporate UNITED STATES DISTRICT COURT (http://www.access.gpo.gov/nara/cfr/waisidx_98/27cfr72_98.html)

- “Executive Order 6102” (government’s confiscation of your family’s gold and wealth under threat of 10 years in prison for failure to comply. As the Order specifies U.S. “persons” (eg. JOHN SMITH and JANE DOE), law enforcement was duped into enforcing against the general public a command that only applied to Federal employees and members of the armed forces.) (http://www.presidency.ucsb.edu/ws/index.php?pid=14611 or http://www.the-privateer.com/1933-gold-confiscation.html)

- “HJR 192” (outlawing of the simple act of “paying with money” as a felony by substituting the lawyer’s parlor trick of “discharging” debts) (http://www.truthsetsusfree.com/HJR192.htm or http://www.nomoredebt.cc/hjr192.html)

- “Congressman Louis McFadden speech” (indictment of the Secretary of the Treasury and the Federal Reserve Board of Governor’s for treason by the chairman of the House Banking and Currency committee in 1934. In scathing speeches to Congress, McFadden said: “(The Fed) has impoverished and ruined the people of these United States, has bankrupted itself, and has practically bankrupted our Government.” This most knowledgeable man on banking also explained in vivid detail the method for recruiting the Federal Reserve to pay our debts as holder of the gold, and which is at the heart of today’s “tax remedies.”) (http://www.geocities.com/Heartland/7006/mcfadden-frb.html or http://www.geocities.com/CapitolHill/Senate/3616/flaherty10.html and http://en.wikipedia.org/wiki/Louis_T._McFadden)

- “Lewis v. United States 680” (Federal Reserve Bank is privately owned: “…we conclude that the Reserve Banks are not federal instrumentalities for purposes of the FTCA (Federal Tort Claims Act), but are independent, privately owned and locally controlled corporations.” Lewis v United States, 680 F.2d 1239 (9th Cir. 1982). In other words, the Fed enjoys no United States immunity from law suit because it is a Federal institution in name only. (http://nesara.org/court_summaries/lewis_v_united_states.htm and http://www.geocities.com/chrisforliberty/lewis.html)

- “Modern Money Mechanics” (The Fed’s concise operational manual showing how money AND INTENTIONAL INFLATION are created from thin air by the Fed and it’s member banks. The manual is very clear as to the power of created inflation to speed the process of confiscating your wealth. The section: “Who Creates Money?” and the final paragraph in “Bank Deposits – How They Expand or Contract” are worth extra attention.) (www.rayservers.com/images/ModernMoneyMechanics.pdf or http://en.wikisource.org/wiki/Modern_Money_Mechanics/Introduction )

- “Grace Commission” (Confirmed that virtually ALL taxes actually go to the Federal Reserve Bank to pay interest on the U.S. debt to the banking families that own the International Monetary Fund (IMF): “With two-thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the Federal debt and by Federal Government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government.” J. Peter Grace, Cover letter, President’s Private Sector Report on Cost Control, January 12, 1984. Peter Grace was considered the Warren Buffett of his time, and the Grace Commission Report received widespread media attention as the gospel of Reagan’s so-called tax system overhaul.) (http://www.freecanadian.net/articles/grace.html or http://www.uhuh.com/taxstuff/gracecom.htm)

- “31 CFR 103.11” (Promissory note is defined as a “monetary instrument:” “(u) Monetary instruments…Monetary instruments include…All negotiable instruments (including personal checks, business checks, official bank checks, cashier's checks, third-party checks, promissory notes (as that term is defined in the Uniform Commercial Code), and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee (for the purposes of Sec. 103.23), or otherwise in such form that title thereto passes upon delivery.”) (http://edocket.access.gpo.gov/cfr_2008/julqtr/31cfr103.11.htm or http://www.ffiec.gov/bsa_aml_infobase/pages_manual/regulations/31CFR103.htm)

- “NYUCC 3-104” (Promissory note is defined as a “negotiable instrument:” “(1) Any writing to be a negotiable instrument within this Article must (a) be signed by the maker or drawer; and (b) contain an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation or power given by the maker or drawer except as authorized by this Article; and (c) be payable on demand or at a definite time; and (d) be payable to order or to bearer. (2) A writing which complies with the requirements of this section is (a) a "draft" ("bill of exchange") if it is an order; (b) a "check" if it is a draft drawn on a bank and payable on demand; (c) a "certificate of deposit" if it is an acknowledgment by a bank of receipt of money with an engagement to repay it; (d) a "note" if it is a promise other than a certificate of deposit.) (www.law.cornell.edu/ucc/3/3-104.html)

- “Senate Report 93-549” (The United States has been under dictatorial control since March 9, 1933. Report of the Special Committee on the Termination of the National Emergency, Senate Report 93-549, War and Emergency Powers Acts, November 19, 1973. “Foreward: Since March 9, 1933, the United States has been in a state of declared national emergency…These proclamations give force to 470 provisions of Federal law. These hundreds of statutes delegate to the President extraordinary powers, ordinarily exercised by the Congress, which affect the lives of American citizens in a host of all-encompassing manners. This vast range of powers, taken together, confer enough authority to rule the country without reference to normal Constitutional processes. Under the powers delegated by these statutes, the President may: seize property; organize and control the means of production; seize commodities; assign military forces abroad; institute martial law; seize and control all transportation and communication; regulate the operation of private enterprise; restrict travel; and, in a plethora of particular ways, control the lives of all American citizens.”) (http://www.scratchinpost.net/barefootbob/war_ep1.html)

- “Foley Brothers, Inc. v. Filardo, 336 U.S. 281 (1949).” (U.S. regulations apply only within the U.S. territories and the District of Columbia. “It is a well established principle of law that all federal regulation applies only within the territorial jurisdiction of the United States unless a contrary intent appears.”)

- “Caha v. US, 152 U.S. 211 (1894)” (U.S. regulations apply only within the U.S. territories and the District of Columbia. “The laws of Congress in respect to those matters [outside of Constitutionally delegated powers] do not extend into the territorial limits of the states, but have force only in the District of Columbia, and other places that are within the exclusive jurisdiction of the national government.”)

- “U.S. v. Spelar, 338 U.S. 217 at 222.” (U.S. regulations apply only within the U.S. territories and the District of Columbia. “There is a canon of legislative construction which teaches Congress that, unless a contrary intent appears [legislation] is meant to apply only within the territorial jurisdiction of the United States.”)

- “Downes v. Bidwell, 182 U.S. 244 (1901).” (Purportedly decided if the constitution applies to U.S. territories. In actuality, unleashed the great fraud of unlimited statutory power misapplied throughout the continental united States of America. Dissenting opinion of Justice Marshall Harlan. “…two national governments, one to be maintained under the Constitution, with all its restrictions, the other to be maintained by Congress outside and independently of that instrument, by exercising such powers as other nations of the earth are accustomed to…a radical and mischievous change in our system of government will result…We will, in that event, pass from the era of constitutional liberty guarded and protected by a written constitution into an era of legislative absolutism…It will be an evil day for American liberty if the theory of a government outside the supreme law of the land finds lodgment in our constitutional jurisprudence.” In other words, a genuine de jure united States of America congress is always bound to enact laws within the jurisdiction of the constitution. He held tyo the obvious truth that congress does not exist, let alone have powers, outside the constitution. Harlan said, "This nation is under the control of a written constitution, the supreme law of the land and the only source of the powers which our government, or any branch or officer of it, may exert at any time or at any place.")

- Section 802, Patriot Act. (Defining the People as terrorists. Defining terrorism as a maritime event. Excluding private meetings on the land from terrorism: “(5) the term `domestic terrorism' means activities that--(A) involve acts dangerous to human life that are a violation of the criminal laws of the United States or of any State; (B) appear to be intended-- (i) to intimidate or coerce a civilian population; (ii) to influence the policy of a government by intimidation or coercion; or (iii) to affect the conduct of a government by mass destruction, assassination, or kidnapping; and (C) occur primarily within the territorial jurisdiction of the United States.”) (http://www.ratical.org/ratville/CAH/Section802.html)

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