Friday, September 30, 2005 K.Y. Leong: The Rat Catchers of India

In our country whose social moorings are in the belief that government is the principal source of its societal upliftment, a simple case of rodent catching in India exemplifies how bureacracy almost always fails in its duty to dispense of its fundamental functions, an article from KY Leong published at

The Rat Catchers of India
by K.Y. Leong

Every major power in the world today has a spy agency. The Americans have the CIA, the Brits their MI6, and the Russians have the FSB (formerly the KGB). In the Indian capital city of New Delhi they have a Rat Surveillance Department (RSD). Unlike the others whose jobs involve tracking down the nasty "rats" who trade state secrets or crash airplanes into tall buildings, the RSD has a mission of a less sinister kind. It deals with a menace closer to the ground.

According to a recent report in the Hindustan Times (September 2005):

New Delhi's government has a rat-catching department that has not caught a single rodent in more than a decade… The Rat Surveillance Department employs 97 rat catchers, who each earns about 3,500 rupees (US$83) a month. But there are no records of any rodents having been caught in the past 10 years.

…Rats are not hard to find in New Delhi — they can be seen scurrying across public parks and streets and even in homes.

Obviously, to the dutiful taxpayer in India, this is highly disturbing news. Why?

First, it shows that rats are smarter than their human pursuers — the rodents have evaded capture for more than 10 years.

Second, the government has demonstrated its total incompetence in this game of Spy vs. Spy by committing the strategic error of telling the world it has 97 "specialists" out there, each being paid a lousy 83 bucks a month and thus, exposing them to the risk of being bought over to "the other side"?

A third and less obvious reason is the one offered by Henry Hazlitt: the Indian government had thought "only of the first half of the transaction." And the Indian taxpayer was left wondering: What happened to the second half of this simple deal, i.e. getting rid of some nasty rats?

But it doesn't take a PhD in rat-catching to figure out that annihilation of the rodent population could also mean the demise of the Rat Surveillance Department. For what would be the point of the taxpayer keeping 97 "specialists" employed if there were no more subversive rats around?

One can also imagine that the employment of the first rat catchers would necessitate the establishment of a chain of related public goods producers, e.g. a Rodent Counter-Intelligence Agency, a Criminal Rat Investigation Bureau, a Rodent Detention Center…, and maybe even a Rat Census Bureau (for how else would the government be able to obtain the necessary rodent demographics required to establish the need for exactly 97 rat catchers?).

Again, one would not need a doctorate in verminous espionage to deduce that systemic failure of this type of state-run structure is inevitable. In the case of the RSD and associates, one purposeful initiative from any one of the rat buster departments would necessitate action on the part of all the other public goods producers along this value chain. And since such an initiative, if carried out diligently, would eventually threaten the existence of all rat buster groups, it would clearly not be in the interest of any member within the value chain to make a first move, indeed any move at all.

Hazlitt again:

"While every group has certain economic interests identical with those of all groups [in this case, the elimination of a public evil], every group has also… interests antagonistic to those of all other groups [preserving the job of the government servant]."

So, for 10 years hence, we have the Indian rat catcher, possibly more competent than his government bosses, his self-serving praxeological thinking committing him to the noble cause of an idyllic existence.

There is another kind of street nuisance in India. Those who have traveled there cannot help but notice that cow droppings are often found on the streets and parks. Cows are considered sacred animals by the Hindus and allowed to roam the streets and let off droppings freely.

If you were a civic minded citizen of India, you might think it a good idea to call the rat busters and inquire if they could actually do the public a service by removing a similar street nuisance (since the government has yet to set up the Dung Elimination Department). But then you would be sadly disappointed by the response you would likely receive from the RSD officer: "That's not my department!"

But cow droppings are not really a public menace in India. These are industriously collected by villagers in the countryside to be dried, stored and burnt as fuel in cooking and heating. It is a freely available source of energy.

And fortunately for the villagers, the cow dung market got there ahead of the State, before it could set up the Rural Health Protection Department and decree all collecting, processing, buying and selling of cow droppings illegal (unless a state-imposed excise duty is paid in every transaction).

Indeed, if the State had gotten ahead of the villagers, it would soon have realized that cow droppings are more than just natural fertilizer. It would next have to declare such a strategic resource critical to national interests, which must therefore be protected and regulated by the Renewable Energies Agency. Furthermore, in the name of a potential Global Health Hazard, any foreign nation with plentiful cow droppings on its streets would be declared "evil" and have to be "liberated" as soon as possible.

Indeed, one public good propagates another and another…

Besides the concern for national security, processed dung could also pose a serious threat of a different kind to the State. Being highly portable (when shaped and dried) it is sometimes used in barter trades for beans, milk, tea and other basic necessities in the remote villages of India. Yes, there exists a parallel economy operating outside the purview of the State. Since everyone has a need for energy, but not every person likes tea or beans in his diet, processed cow droppings have come to function as money — a commonly accepted medium of exchange.

When Mises concluded that "In a socialist country, it is not the seller who has to be grateful, it is the buyer," he couldn't possibly have imagined the Indian taxpayer returning the favor of the idle rat catcher and paying his taxes with dung money — or the Central Bank of India, obsessed with controlling all money supplies in that country, accumulating this alternative Indian currency as a commodity reserve against the rupee!

That might put a stop to stinking inflation; and result in the government (unwittingly) doing everyone a great favor — stable money, at last.

But meanwhile, in the capital city of India, as long as the rat catchers are in government service, rats roam free.

K.Y. Leong is in business in Singapore. Comment on the blog.

Thursday, September 29, 2005

Gudani Expose: Last Straw to break the Camel’s back?

After the series of failed attempts to unseat the highly unpopular incumbent Philippine president through the withdrawal of support by former political allies and select cabinet members, augmented by street protests by militants and malcontents, the botched legislative route via the impeachment process, the unsuccessful stab to get members of the Catholic Church to demand her resignation and now, the persistent clamors for military interventions, Brig. General Francisco Gudani, assistant superintendent of the Philippine Military Academy and Col. Alexander Balutan assistant commander of PMA cadets expose at the Senate aims to highlight the crevice within ranks of the Armed Forces of the Philippines and possibly inspire an EDSA I type of ‘mutiny’ with the latter two as figureheads. Stated differently, Brig Gen Gudani and Balutan are providing themselves as an alternative to the Ramos-Enrile EDSA I tandem to the proposed regime ‘change’.

Their sensational appearance at the Senate has apparently failed to present any direct evidence damning the incumbent, with most of the allegations mostly based on hearsay evidence. In short, nothing more than sound bytes.

However, we will have to see whether this politicization within the ‘isolated’ ranks of the military organization will drawout more reluctant or shadow supporters and snowball into a much ballyhooed ‘last straw’ to successfully unseat PGMA.

So far the financial markets have relatively ignored the impacts based on the movements of the Peso (moved higher) and the slight decline of the heavily foreign supported Phisix as of Wednesday September 28th.

Tuesday, September 27, 2005

CNN Money: Wall Street storm may be brewing

Financial risks brought about by the untested exotic instruments as derivatives, which are now extensively used by hedge funds, have hit mainstream newswires, this report from CNN Money’s Amanda Cantrall, “Wall Street storm may be brewing

Some noteworthy excerpts...

``Hedge funds now manage an estimated $1 trillion in assets worldwide, and in some cases, a single fund can account for a big chunk of the volume on some exchanges...

“The credit derivatives market has swelled to an estimated $8.4 trillion -- that's trillion with a 't' -- and regulators are concerned about trading in these largely unregulated investments...

“Two complex derivatives -- credit default swaps and collateralized debt obligations -- have become especially popular with hedge fund investors in recent years.

Soaring Number of Hedge Funds

Exploding Credit Derivatives

Sep2705 Global Liquidity Spillover Lifts Phisix

The US Federal Reserve raised its interbank lending rates for the ELEVENTH time to 3.75% while our local counterpart the Bangko Sentral ng Pilipinas (BSP) likewise increased its repo rate by a quarter point to 7.25%.

All week long business headlines spoke about “pressures” on the BSP to raise the local rates and the Phisix incrementally advanced. On Friday the BSP made good on its “pressure” and raised rates, the Phisix fell and mainstream analysts were facilely attributing these to interest rates. Call these crass analyses. First, local interest rates have low correlation to the Phisix. Second, a quarter point increase is hardly a reason to cause a contraction, as the scale of the increase is marginal. Third, most local analysts are off tangent as to forget that foreign money are the main drivers of the Philippine equity markets, such that raising rates in fact benefits the Peso and the Phisix as to maintain the spread differentials between the rate framework of the US dollar and the Philippine Peso. Think of the US markets, it raised its rates for the Eleventh time, yet its equity markets have so far held its stead. Rising rates have in fact, uplifted the state of the US dollar, if not forfended the US dollar from its two year streak of losses, which is what I suspect as the prime reason for the US Federal Reserves’ decision to maintain its ‘measured pace’ of rate increases, aside from targeting to thaw the lathered US real estate markets.

As the Mr. Jen of Morgan Stanley argues, for as long as the Fed tightens it will be very difficult for the USD/Asia to trade lower. That seems to be the case as key global currencies weaken against the US dollar including those from Asia. The US dollar index firmed by 1.34% to 89.23 at the expense of the Euro (-1.39%), the British Pound (-1.66%), the Australian Dollar (-1.25%), the Swiss Franc (-1.91%), the Japanese Yen (-.81%), the Taiwan Dollar (-.7%), the South Korean won (-.3%), the Thai baht (-.3%), the Singapore dollar (-.3%), the Indian Rupee (-.2%) and the Indonesian rupiah (-.7%). So regional, if not the global currency selloffs, hurt the Philippine Peso too down by .1% to 56.225.

During the previous week I argued that global liquidity conditions are likely to spillover the country’s equity assets and to be further bolstered by the technical picture; it appears that such conditions have reemerged as foreign money have reversed from three consecutive weeks of outflows to inflows. The Phisix jumped by 2.6% on a “late cycle rally” which has been an ongoing regionwide if not worldwide phenomenon, although what really concerns me is the tepid volume accompanying the rise.

The chart above of the Phisix courtesy of shows of a successful breach of the 50-day (blue line) and 200 day (red line) moving averages. The previous resistance levels are now reckoned as the current support levels. Yet, technical indicators such as the relative strength index (RSI) shown on the upper window, as well as, the MACD on the lower window are suggestive of a likely continuation of the present momentum.

In addition I would like to point out of two technical patterns that seem to highlight bullish undertones for the Phisix, again shown in the chart above. The lower blue line depict of an interim uptrend while the resistance is marked by the “flat” horizontal line. Both lines seem to denote of a convergence or a manifestation of a bullish “ascending triangle” formation. Further the lower three blocked arrows appear to indicate of a massive reverse “head and shoulder” formation whose neckline is likewise at the resistance levels of 2,050. A successful breach of the neckline would likely see the Phisix target the 2,300 vicinity.

Again barring any unforeseen events, global liquidity flows will remain as the key drivers of global equity markets. The Institute of International Finance (IIF) projects private capital flows to emerging markets to reach $345 billion in 2005 topping the record inflows of $323 billion in 1996.Posted by Picasa

Sunday, September 18, 2005

Gold At Fresh 17 Year Highs; Currency-wide bullmarket begins!

``Losing trust does not mean that there must be a ready substitute. On the contrary: when distrust will emerge towards the US dollar this would affect the attitude towards all paper currencies. In the final stages of the currency crisis, the dollar will most likely devalue not so much against the euro and the yen, but all of these currencies and most of the rest will devalue drastically against gold.” Anthony Mueller, The End of Dollar Supremacy, Oct 20, 2003.

As mentioned last week, John Maynard Keynes’ barbaric metal ‘Gold’ was drifting along at a striking distance near its 16 year barrier based on the US dollar quoted price charts, but this week not only has it successfully broken out of them, it has done so against virtually almost all major currencies as shown in the charts below courtesy of

Gold breaks out against the Euro (red candlesticks) and the Japanese Yen (green line)!

Gold breaks out even against the key Commodity Currencies, the Australian Dollar (gold line) which incidentally bears a strong correlation to gold relative to other currencies! While treading at the upper side range of the strongest amongst ’em all the Canadian Loonie (blue candlestick)!

In the past, gold prices have largely tracked the Euro as it gained over the US dollar, however since the US dollar have firmed over for most of the year and gold manifested signs of eventual decoupling since June (see June 13 to 17 edition A Looming Genuine Bull Market in GOLD at Work??!!).

Further I also think that the oil gold ratio has something to do with the recent rally seen with the monetary metal.

Historically, gold and oil have moved up in the years where high inflation prevailed. For example here is a list of how assets performed during June 1970 to 1980...



Returns (%)








US coins









Chinese ceramics






US farmlands



Old Masters






Consumer Price Index



Treasury bills



Foreign Exchange








Note: Compound annual rates of return. Source: Salomon Inc/Dr. Marc Faber Tomorrow’s Gold

As you would notice from the above table, tangible assets prevailed over the presently ‘known’ traditional investments themes.

One must be reminded that while history may not repeat itself entirely it may show signs of parallelism as today.

The chart below, courtesy of Adam Hamilton’s shows of the gold oil correlation or how many barrels of oil can buy an ounce of gold or expressed in a ratio the market price of gold divided by the market price of oil.

The remarkable thing is that in about four decades, the gold and oil ratio as shown above has traded in a well defined range, where the historical average ran at around 15.2. In addition, there were 5 instances in the past where oil outperformed gold which eventually resulted to a reversion to the mean, meaning gold prices eventually caught up.

Since WTIC’s crude Oil, traded at the NY Mercantile Exchange, surged above $70 two weeks ago, the ratio went into the extremes at around 6.2, which is the 6th instance of oil outperforming gold in 40 years!

As of Friday’s close of $63 per bbl and $459.5 for gold priced in US dollars, the ratio is now at 7.29 still way below its past lows at 8.1 to 8.2. This could be indicative of four probable scenarios to occur for oil and gold to revert to its historical averages;

oil will move down back to $30 bbl, assuming gold remains constant at $459.5
gold will rise to meet its historical averages at $958 (!!!) while oil remains constant at $63
a combination of both or lastly
oil would rise in much a moderated clip relative to the advances in the price of gold.

Let me quote, Adam Hamilton here, ``The six-decade old GOR relationship could certainly end at anytime, anything is possible in the markets. But odds are it won’t. Gold and oil are both tangible and finite assets, they can’t just be wished into existence but instead vast amounts of capital must be expended to recover them. Since they are both real, they tend to feel the effects of inflation similarly. As the US Federal Reserve continues its dangerous course of printing perpetually spiraling amounts of paper money, more paper will bid on gold and oil driving up both prices at the same time.

``In an inflationary fiat-paper regime such as the ones that exist in every country on the planet today, money supplies are guaranteed to grow faster than commodities supplies. As relatively more money bids for relatively less commodities, higher commodities prices are the inevitable result. To bet that the GOR is going to suddenly fail is not only to bet against six decades of history, but to somehow assert that fiat-paper inflation will miraculously cease so monetary pressures don’t push up gold and oil simultaneously.”

Gold’s rise in the US was largely blamed on inflationary fears and the financial markets seems to have corroborated this view as US treasury yields rose dramatically (prices fell) across the board.

The chart below shows of the Morgan Stanley US Government benchmark (blue line) in a free fall even as emerging bonds, represented by the JP Morgan Debt Fund appears to surge higher even in the face of sharp declines in copper prices (-.65%) for the second consecutive week!

Yet hardly anyone has recently spoken about gold’s latest rise against all major currencies. Have global investors come to realize that the US biggest exports, its currency, have equally eroded the purchasing power of its major trading partners?

To put in proper perspective, gold prices has not actually risen but rather fiat or paper currencies has receded in value relative to their purchasing power against commodities, particularly against oil, gold and silver (+3.23%)...

Larry Edelson of Safe Money Report sees the landmark rise of gold as portentous of the following environment, he warns...

A. Inflation will rise substantially in the months ahead ...
B. Oil prices could be ready to explode again ...
C. The dollar may fall more sharply than anyone expects, and …
D. Some hidden surprise, such as a blow-up in derivatives, could be lurking just beyond the visible horizon.

While I do not intend to make a big fuzz out of it, the latter’s description of a blow-up in derivatives is certainly getting some officials to be ‘overly concerned’ about recent developments, such as investors asking for actual settlement of treasury futures contract, restatement of financial reports by the Federal Home Loan Bank of Pittsburgh due to derivatives, rumors of a derivatives meltdown, the collapse of a hedge fund called Bayou and the US Federal Reserve’s move to rein in derivatives trades through processing backlogs as global hedge funds access to these untested exotic instruments balloon.

Apparently the specter of a repeat of the Long Term Capital Management (LTCM) hedge fund collapse in 1998, has prompted these bankers and FED officials to contain possible ripples, notes Riva Atlas of the New York Times, ``Credit derivatives are bets on whether a company will pay its debts. In the event of a default, the party on the losing side of a trade must compensate the institution that holds the other end of the bet.

``The problem is Wall Street has been overwhelmed in keeping track of these trades - and if corporate defaults, which are at an 11-year low, suddenly rise, it could have a mess on its hands...

``The Federal Reserve called the meeting yesterday to address both a backlog in processing these trades as well as something called assignments, which refers to who holds the contracts at the time they are due.”

You see the world today is absolutely flushed with liquidity, if we are to reckon using Mckinsey Quarterly estimates global capital markets are now at about $118 trillion (bank deposits, market capitalization, private and public debts) while Global GDP is about $40 trillion. With the financial markets about 195% greater than economic output, this translates to a “financial economy” where activities are directed to more paper trading and credit creation, ergo speculative excess, rather than the “real economy” where goods or widgets are manufactured and services are rendered.

A sudden contraction of liquidity due to any proximate causes such as a derivative induced meltdown could cause a breakdown of confidence towards the prevailing monetary system; yet other circumstance can equally generate the same tumultuous conditions such as global central banks realignment of currency reserves, a shift in oil/commodities trading away from the US dollar (Iran’s proposed oil exchange in 2006 purportedly quoted in Euros), a pop in the real estate bubble in the US, a catastrophic war among major economies or a major terrorist strike or cataclysmic natural disaster could all be triggers. Remember while these are all reckoned as low probability events, with ample warnings issued by diverse institutions (IMF, OECD, World Bank) or renowned individuals (Sir John Templeton, George Soros, Warren Buffett, former US Federal chief Paul Volker, ex-US Treasurer Robert Rubin), like the recently tragedy of New Orleans, ignoring them could be costly to your portfolio.

John Hathaway of Tocqueville Asset Management estimated that above ground or physical gold which includes, among others, central bank holdings as well as private holdings through jewelries and stock market capitalization of the global gold mining sector (less than a $100 billion) are at about $1.5 trillion dollars. Considering that global stock market cap and bond markets at about $75 trillion, an allocation of only 1/10th of 1% would translate to 7500 tonnes, equivalent of three years supply of newly mined gold. In the words of Mr. Hathaway, ``Such an allocation would in time cause gold to trade comfortably in excess of 4 digits in terms of US dollars, Euros and just about any other currency as well.”

I know most of you remain skeptical of my view, whereas for your prudent investor analyst gold’s move against all currencies of late represents a critical milestone. It basically epitomizes a tectonic shift in the global financial market landscape where first, as commodity prices race higher, this would largely represent a squeeze in profit margins on higher input costs and possibly through politically inspired legislated wage hikes, second, higher commodity prices via inflation presages an era of higher interest rates or tight money environment and lastly rising gold prices are indicative of greater risks in the realm of financials, economics or politics or a combination thereof. Ignore the writings on the wall at your own risk!Posted by Picasa

Thursday, September 15, 2005

Sep15 Lepanto’s Anguish

A single seller took it upon the palm of his hands to dictate where the share prices of lepanto are headed for...down! In four consecutive days (since Friday) the seller offloaded or 'dumped' 100 million shares in the market for no apparent logical reason.

Three events transpired during the past month that may or may not have affected the recent selloffs; namely...the labor strike, the rights announcement, and the lawsuit and countersuit filed by both Lepanto and its creditor NM Rotschild.

First the labor strike had been settled.

Second, the rights announcement which was initially disclosed last August 15th appeared to have even generated a good response with Lepanto's share prices recovering until Thursday last week.

Lastly, Lepanto initiated the lawsuit against Rothschild for the latter's intransigence to renegotiate on the hedged portion (forward sales) of Lepanto's gold produce.

I am unaware as to the TRUE rationale behind the sudden 'singlehanded' selloff although the reasons floated "not interested in the rights" or "Rothschild declaration of LC default" are in my opinion, not materially significant to affect Lepanto's mine ownership and operations as to merit such a decline. In short I think the selling has been unwarranted and could be a temporary blip.

Why so?

First Gold prices are nearing 16 year high trading at $445-450+ an ounce. Please see chart

Since prices of underlying commodities mostly determines the bottomline of a mining company (ceteris paribus-all things being equal), rising gold prices should equate to better balance sheets for gold mining companies.

Second, the selloff was not broad based, meaning that other mining companies have not suffered equally shattering setbacks. The odd thing here is that mining companies with operations appear to be taking more damages as they attempt to clean their books compared to speculative dormant companies slated to resume operations soon.

Third, one should not forget that mining investments are primarily valued by its assets or by their proven reserves, it is for this reason why foreign companies buy moribund local mining companies even without operations (e.g. London’s Crew Gold acquisition of Apex Mining).

Lastly, on the issue of lawsuits. Lepanto settled its $30 million liabilities to NM Rothschild last year. Maybe because the management of Lepanto shares my view that gold prices are bound to go up, it became a principal issue for them to resolve on dehedging, as declared during its latest annual stockholders meeting.

According to the PSE disclosure, Lepanto initiated the lawsuit principally because NM Rothschild does not agree to renegotiate the contract whereby the former declared the contract NULL and VOID. In response, NM Rothschild declared Lepanto to be in default. Plainly stated, Lepanto sells to NM Rothschild at $295 per oz when gold prices are above $440 per oz, Lepanto decides to renegotiate, was spurned hence brought its creditor to court.

Even at default, which means a call on the outstanding loans of Lepanto, the company can easily borrow to finance for its liabilities to NM Rothschild and still profit. Remember that $440 per ounce versus $ 295 per oz of forward sales translates to a spread of 49.5%...which means that even if Lepanto borrows to pay off NMRothschild it would still earn over 20% net. However, why borrow when you can sue for leverage? That I think that is what Lepanto did.

Under the context of whether the recent selloff is due to the "stock rights" or to the "lawsuit" (NMRothschild allies/factotums could be the one selling to discourage Lepanto from using its shares as collateral-my two cents), I do not see it as having a significant impact on Lepanto's ownership of the mines as well as its operations, ergo a short term dislocation.

If the stock rights was the issue, tomorrow essentially settles the case, being the ex-date of the said rights. Otherwise, the depletion of securities held by the party engaged in the ‘sabotage’ game plan will determine the true worth of Lepanto’s shares.

In fact, the selloff comes in the face of a resurgent global mining stocks...the chart above is a benchmark index of Australia and Asian Gold mining stocks or the FTSE Austrasian Index.

Or even Japan's Topix mining index itself. Remember mining economics is fundamentally aggregate; which means based on worldwide demand and supply.

Tuesday, September 13, 2005

Sep13 Other People’s Blood

Other People’s Blood

After failing to impeach the incumbent PGMA, the tone for belligerency has definitely stepped up. Last week, we noted of politicians and several entities latently advocating for the military to intercede to oust the President. Now we are reading of opinion writers advocating for genuine bloodshed through a revolution.

In one of today’s opinion columns, Edilberto Alegre wrote in his Pinoy na Pinoy Businessworld column that because the former pillars of regime change, particularly the church and the military, has not moved to overthrow the government, but whose institutions has been afflicted by schisms, a bloody revolution is likely to ensue.

Mr. Alegre says, ``There are no credible issues to die for. There are no credible leaders to follow. I am afraid it’s time for a real revolution in which there will be unbelievable bloodshed.”

The absurdity or paradox with Mr. Alegre’s proposition is that when there is ‘nothing’ to fight for, WHY then must it follow that there should be an ‘unbelievable bloodshed’? Filipinos in Mr. Alegre’s view would have to turn bonkers to engage in wholesale slaughter for NO apparent credible reasons to fight for.

Like all of those clamoring for a violent upheaval to effect a regime change, obviously, Mr. Alegre and ilk are calling for Other People’s Blood (OPB), meaning that they are desiring to envisage a revolution at their midst when they would be relegated to the sidelines cheering and not wanting to be physically involved in those brutal skirmishes. He would most probably be screaming, “Yeah...die you dork, you deserve it for supporting this administration.”

This idea of lusting for bloodshed comes to a generation that has not personally encountered the brutalities and horrors of war.

To quote historian Arnold Toynbee who wrote of a war-and-peace cycle as a consequence of a “Generation Cycle in the transmission of a social heritage”.

``The survivors of a generation that has been of military age during a bout of war will be shy, for the rest of their lives, of bringing a repetition of this tragic experience either upon themselves or upon their children, and … therefore the psychological resistance of any move towards the breaking of a peace … is likely to be prohibitively strong until a new generation … has had the time to grow up and to come into power. On the same showing, a bout of war, once precipitated, is likely to persist until the peace-bred generation that has been lightheartedly run into war has been replaced, in its turn, by a warworn generation.”

It is easy to call for bloodshed and chaotic revolutions when somebody else’s blood is at stake or is spilled on the streets other than the caller himself.

Monday, September 12, 2005

Sep12 Too Much Adan About Nothing

The surprise appointment of Lt. Gen. Edilberto Adan, the Armed Forces deputy chief of staff as commander of the Southern Command raised some brouhaha over some quarters from AFP and media.

With the retirement of Lt. Gen. Alberto Braganza from the Southcom, the largest of the Armed Forces’ five commands, Maj. Gen. Samuel Bagasin, commander of the Army’s 4th Infantry Division, was earlier touted as Braganza’s likely successor.

According to news reports, Maj. Gen. Gabriel Habacon of the Army’s 1st Infantry Division, one of the generals whose name was mentioned in the Garcillano tapes, was instrumental in lobbying for Lt. Gen. Adan’s appointment which colored the whole affair as ‘controversial’.

Yet behind all the hoopla is that, according to Manila Times, ``Adan, who is set to retire in January 2006, is a member of the Philippine Military Academy’s Class of 1972.”

January 2006 is ONLY about a quarter or THREE MONTHS from now!!! In other words, Lt. Gen Adan’s post, which is being questioned by some quarters, is relatively for a THREE MONTHS stint, yet media and political personalities are making such big fuzz out of it!!!! A typical ‘mountain out of a molehill’.

Further, PGMA, being the Commander In Chief, like all incumbents before her, as part of the constitutional privilege bestowed upon the Presidency and not of PGMA, have the prerogative to make such an appointment based her own established criterion, principally, on trust and confidence to the appointee. Whether it was for a short term political accommodation or not is definitely NOT inappropriate nor illegitimate.

It is only in the eyes of those who can see no better due to the obsession on personality based politics.

Sunday, September 11, 2005

Martin Spring: Best Ways to Profit in Shares

Martin Spring, who runs an independent financial market outlook, is one of my favorite analysts. This week, Mr. Spring gives us some tips on how to outperform the market, quoting Mr. Spring (emphasis mine):

``If the history of the past century is precedent for the future, the best investment strategies are these:

  • Invest in shares with high dividend yields. According to a study of Britain’s 100 largest companies by ABN-Amro’s Global Investment Returns Yearbook (GIRY), over the 1900-2004 period high-yielders outperformed low-yielders by an average of 3.3 per cent a year. That may not sound much, but because of the wonder of compound interest, it would have meant £1 invested in high-yielders would have grown to £69,208 over the period – compared to just £2,963 for the low-yielders.
  • Reinvest dividends, using other sources if you need income. According to the same study, such reinvestment would have boosted total return in US equities over the same period from 5.1 to 9.8 per cent a year, turning $1 into $17,545, compared to a mere $194 if dividends were not reinvested.
  • Avoid the “blue chips” and invest in the smallest listed companies. In the UK, over the period 1955-2004, investment in small-caps (those in the lowest tenth by market capitalization), with dividends reinvested, would have outperformed the whole-market average by three times; investment in micro-caps (those in the lowest 1 per cent by market cap.) would have grown to a figure more than five times larger than for the small-caps.
  • Invest in equities rather than bonds – but only if you have the endurance to stay invested through the bear markets. Over the past century, according to the ABN-Amro study, the global real return from equities averaged 5.7 per cent a year, compared to only 1.7 per cent for bonds. But “even in a lower volatility market such as the UK, losses (in equities) can be huge,” it warns. In the 1973-74 bear market, shares lost 71 per cent of their value in real terms.
  • Focus your investment on resource-rich countries, while avoiding those that could be involved in armed conflict on their territory. Over the 1900-2004 period, the countries that delivered the best real returns from equities were Australia and Sweden (both averaging 7.6 per cent a year in real terms), South Africa (7 per cent), the US (6.6 per cent) and Canada (6.1 per cent).

Commodity Price Cycles, Katrina’s Inflationary Risks and Rising Gold Prices

The chart above courtesy of the BHP Billiton shows that in 200 years, the ebbs and flows of commodity price cycle comes in at least a decade with the shortest upswing cycle (inflation adjusted) coming off from the late 60’s to the early 1980’s.

Also noteworthy in the above chart is that today’s newfound uptrend is coming off from a very low base, even as commodity prices may seem to be higher than during the last 5 years.

Economist Julian Simon in his thought provoking book, The Ultimate Resource, showed that commodity prices decreases over the long run mainly due to increased supplies propagated by technological advancement. He made a controversial bet with environmentalist Paul Ehrlich in 1980, predicting that commodity prices (5 of Mr. Ehrlich’s choice) would decline in a decade and won. The chart above affirms Mr. Simon’s argument where commodity prices over the last century were apparently headed lower.

However, Mr. Simon’s theory does not preclude the cyclicality of the commodity price cycle where today’s demand-driven markets have been due to more people gaining access to markets, whereby increasing their standards of living which adds to the collective demand for commodities. While on the supply side, the years of underinvestment has restricted production supplies which has been unable to keep up with surging demand.

Further, to quote analyst Doug Casey of the International Speculator, ``While inflationary policies and wasteful government programs dissipate wealth, they also tend to increase returns on commodities. While the U.S. government is busily manipulating the money supply, my guess is that inflation is not as far below the levels seen in the ‘70s—the highest inflation figures of the last half-century and a trigger for the commodities spikes of 1980—as the Bureau of Labors statistics would have us believe.”

Relative to oil, according to Pierre Lemieux economist at Université du Québec in Outaouais, ``The relative price of oil (in terms of other goods) has fallen by perhaps as much as two-thirds between the 1860s and today. During the same period, the price of oil in terms of salaries has decreased by more than 90%.” Yet if one were to subscribe to Mr. Simon’s and Mr. Lemieux’s arguments of technological advances which leads to abundant supply, why is it the that world appears to be hostaged to or heavily dependent on fossil fuel as to be suffering from the stagflationary effects of exploding oil and energy prices today all over again?

Distortion of market forces by collective governments could be the key answer, namely, inflationary policies, nationalization of oil supplies, the non-transparency of actual reserves and excessive regulations and exploratory restrictions that has obscured investment allocation programs by investors’ public and private alike.

Referring to inflationary policies, Hurricane Katrina’s aftermath has resulted to extraneous and internal pressures on the US Federal Reserve to pause from its tightening policies. The OECD and several US lawmakers have requested the US Federal Reserve to forgo raising rates until a clearer view of the impacts of Katrina could be assessed. Chairman Greenspan could be pressured to accommodate on these politically prompted requests.

However, by doing so the specter of inflationary risks emerges, according to Northern Trust Chief Economist Paul Kasriel, ``But if the Fed does pause in its short-term interest rate increases, then a large part of this increased demand for credit will be accommodated through the commercial banking system with the Fed providing the “seed money.” Again, this would increase aggregate demand, not aggregate supply. Therefore, a Fed rate-hike pause in the face of increased hurricane-related credit demand would impart an upward bias on inflation.” This means government “counterfeiters” would be cranking up the printing press machines anew, according to CNN Money, ``Congress passed a $10.5 billion relief bill last week. The $51.8 billion first sought by the Bush administration Thursday covers five weeks and amounts to roughly $1.4 billion a day.” $62.3 billion of money ‘created from thin air’ and additional budgetary woes for both the state and federal government for the US!

As inflation concerns heat up amidst the interest rate debate, we see the gold prices creep higher nearing their 16 year record highs at $449!

As can be seen from the above chart courtesy of gold prices in US Dollars (red candlestick) and the Euro (gold line) have moved at the higher end of the price channel threatening to breakout from its recent set 16-year record highs. Gold prices in Yen have also shadowed the moves of its major currency counterparts. Yet, this comes in the face of declining oil and copper prices!

Incidentally worldwide demand for gold has been strong up by 14% year on year according to World Gold Council as reported by Reuters while global Jewelry offtake zoomed by 15%. If the momentum persists we could see a new high for gold in the coming weeks or so!Posted by Picasa

Tucson Weekly: Censored Stories

This article from tucksonweekly delves on the several issues ignored or deliberately downplayed by the mainstream press for one reason or another, mostly political. Quoting the entire article...

Censored Stories

Project Censored presents the 10 stories the mainstream media ignored over the past year


Just four days before the 2004 presidential election, a prestigious British medical journal published the results of a rigorous study by Dr. Les Roberts, a widely respected researcher. Roberts concluded that close to 100,000 people had died in the invasion and occupation of Iraq.

Most were noncombatant civilians. Many were children.

But that news didn't make the front pages of the major newspapers. It wasn't on the network news. So most voters knew little or nothing about the brutal civilian impact of President George W. Bush's war when they went to the polls.

That's just one of the big stories the mainstream news media ignored, blacked out or underreported during the past year, according to Project Censored, a media watchdog group based at California's Sonoma State University.

Every year, project researchers scour the media looking for news that never really made the news, publishing the results in a book, this year titled Censored 2006. Of course, as Project Censored staffers painstakingly explain every year, their "censored" stories aren't literally censored, per se. Most can be found on the Internet if you know where to look. And some have even received some ink in the mainstream press. "Censorship," explains project director Peter Phillips, "is any interference with the free flow of information in society." The stories highlighted by Project Censored simply haven't received the kind of attention they warrant, and therefore haven't made it into the greater public consciousness.

"If there were a real democratic press, these are the kind of stories they would do," says Sut Jhally, professor of communications at the University of Massachusetts and executive director of the Media Education Foundation.

The stories the researchers identify involve corporate misdeeds and governmental abuses that have been underreported if not altogether ignored, says Jhally, who helped judge Project Censored's top picks. For the most part, he adds, "stories that affect the powerful don't get reported by the corporate media."

Can a story really be "censored" in the Internet age, when information from millions of sources whips around the world in a matter of seconds? When a single obscure journal article can be distributed and discussed on hundreds of blogs and Web sites? When partisans from all sides dissect the mainstream media on the Web every day? Absolutely, says Jhally.

"The Internet is a great place to go if you already know that the mainstream media is heavily biased" and you actively search out sites on the outer limits of the Web, he notes. "Otherwise, it's just another place where they try to sell you stuff. The challenge for a democratic society is how to get vital information not only at the margins but at the center of our culture."

This list should not be taken as gospel; not every article or source Project Censored has cited over the years is completely credible; at least one this year is pretty shaky (see sidebar).

But most of the stories that made the project's Top 10 were published by more reliable sources and included only verifiable information. And Project Censored's overall findings provide valuable insights into the kinds of issues the mainstream media should be paying closer attention to.

1. Bush Administration Moves to Eliminate Open Government

While the Bush administration has expanded its ability to keep tabs on civilians, it's been working to make sure the public--and even Congress--can't find out what the government is doing.

One year ago, Rep. Henry A. Waxman, D-Calif., released an 81-page analysis of how the administration has administered the country's major open government laws. His report found that the feds consistently "narrowed the scope and application" of the Freedom of Information Act, the Presidential Records Act and other key public-information legislation, while expanding laws blocking access to certain records--even creating new categories of "protected" information and exempting entire departments from public scrutiny.

When those methods haven't been enough, the Bush administration has simply refused to release records--even when the requester was a congressional subcommittee or the Government Accountability Office, the study found. A few of the potentially incriminating documents Bush and co. have refused to hand over to their colleagues on Capitol Hill include records of contacts between large energy companies and Vice President Dick Cheney's energy task force; White House memos pertaining to Saddam Hussein's, shall we say, "elusive" weapons of mass destruction; and reports describing torture at Abu Ghraib

The report's findings were so dramatic as to indicate "an unprecedented assault on the laws that make our government open and accountable," Waxman said at a Sept. 14, 2004, press conference announcing the report's release.

Given the news media's intrinsic interest in safeguarding open-government laws, one would think it would be plenty motivated to publicize such findings far and wide. However, most Americans remain oblivious to just how much more secretive--and autocratic--our leaders in the White House have become.

Source: "New Report Details Bush Administration Secrecy" press release, Karen Lightfoot, Government Reform Minority Office, posted on, Sept. 14, 2004.

2. Media Coverage Fails on Iraq: Fallujah and the Civilian Death Toll

Decades from now, the civilized world may well look back on the assaults on Fallujah in April and November 2004 and point to them as examples of the United States' and Britain's utter disregard for the most basic wartime rules of engagement.

Not long after the "coalition" had embarked on its second offensive, U.N. High Commissioner for Human Rights Louise Arbour called for an investigation into whether the Americans and their allies had engaged in "the deliberate targeting of civilians, indiscriminate and disproportionate attacks, the killing of injured persons, and the use of human shields," among other possible "grave breaches of the Geneva Conventions ... considered war crimes" under federal law.

More than 83 percent of Fallujah's 300,000 residents fled the city, Mary Trotochaud and Rick McDowell, staffers with the American Friends Service Committee, reported in AFSC's Peacework magazine. Men between the ages of 15 and 45 were refused safe passage, and all who remained--about 50,000--were treated as enemy combatants, according to the article.

Numerous sources reported that coalition forces cut off water and electricity, seized the main hospital, shot at anyone who ventured out into the open, executed families waving white flags while trying to swim across the Euphrates or otherwise flee the city, shot at ambulances, raided homes and killed people who didn't understand English, rolled over injured people with tanks, and allowed corpses to rot in the streets and be eaten by dogs.

Medical staff and others reported seeing people, dead and alive, with melted faces and limbs, injuries consistent with the use of phosphorous bombs.

But you wouldn't know any of this unless you'd come across a rare report by one of an even rarer number of independent journalists--or known which obscure Web site to log onto for real information.

Of course, the media blackout extends far beyond Fallujah.

The U.S. military's refusal to keep an Iraqi death count has been mirrored by the mainstream media, which systematically dodges the question of how many Iraqi civilians have been killed.

Les Roberts, an investigator with the John Hopkins Bloomberg School of Public Health, conducted a rigorous inquiry into pre- and post-invasion mortality in Iraq, sneaking into Iraq by lying flat on the bed of an SUV and training observers on the scene. The results were published in the Lancet, a prestigious peer-reviewed British medical journal, on Oct. 29, 2004--just four days prior to the U.S. presidential elections. Roberts and his team (including researchers from Columbia University and from Al-Mustansiriya University in Baghdad) concluded that "the death toll associated with the invasion and occupation of Iraq is probably about 100,000 people, and may be much higher."

The vast majority of those deaths resulted from violence--particularly aerial bombardments--and more than half of the fatalities were women or children, they found.

The State Department had relied heavily on studies by Roberts in the past. And when Roberts, using similar techniques, calculated in 2000 that about 1.7 million had died in the Congo as the result of almost two years of armed conflict, the news media picked up the story; the United Nations more than doubled its request for aid for the Congo, and the United States pledged an additional $10 million.

This time, silence--interrupted only by the occasional critique dismissing Roberts's report. The major television news shows, Project Censored found, never mentioned it.

Sources: "The Invasion of Fallujah: A Study in the Subversion of Truth," Mary Trotochaud and Rick McDowell, Peacework, Dec. 2004-Jan. 2005; "US Media Applauds Destruction of Fallujah," David Walsh, (World Socialist Web site), Nov. 17, 2004; "Fallujah Refugees Tell of Life and Death in the Kill Zone," Dahr Jamail, New Standard, Dec. 3, 2004; "Mortality before and after the 2003 Invasion of Iraq," Les Roberts, Riyadh Lafta, Richard Garfield, Jamal Khudhairi and Gilbert Burnham, Lancet, Oct. 29, 2004; "The War in Iraq: Civilian Casualties, Political Responsibilities," Richard Horton, Lancet, Oct. 29, 2004; "Lost Count," Lila Guterman, Chronicle of Higher Education, Feb. 4, 2005; "CNN to Al Jazeera: Why Report Civilian Deaths?," Fairness and Accuracy in Reporting, April 15, 2004, and Asheville Global Report, April 22-28, 2004.

3. Another Year of Distorted Election Coverage

Last year, Project Censored foretold the potential for electoral wrongdoing in the 2004 presidential campaign: The "sale of electoral politics" made No. 6 in the list of 2003-04's most underreported stories. The mainstream media had largely ignored the evidence that electronic voting machines were susceptible to tampering, as well as political alliances between the machines' manufacturers and the Republican Party.

Then came Nov. 2, 2004.

Bush prevailed by 3 million votes--despite exit polls that clearly projected John Kerry winning by a margin of 5 million.

"Exit polls are highly accurate," Steve Freeman, professor at the University of Pennsylvania's Center for Organizational Dynamics, and Temple University statistician Josh Mitteldorf wrote in In These Times. "They remove most of the sources of potential polling error by identifying actual voters and asking them immediately afterward who they had voted for."

The 8-million-vote discrepancy was well beyond the poll's recognized, less-than-1-percent margin of error. And when Freeman and Mitteldorf analyzed the data collected by the two companies that conducted the polls, they found concrete evidence of potential fraud in the official count.

"Only in precincts that used old-fashioned, hand-counted paper ballots did the official count and the exit polls fall within the normal sampling margin of error," they wrote. And "the discrepancy between the exit polls and the official count was considerably greater in the critical swing states."

Inconsistencies were so much more marked in African-American communities as to renew calls for racial equity in our voting system. "It is now time to make counting that vote a right, not just casting it, before Jim Crow rides again in the next election," wrote Rev. Jesse Jackson and Greg Palast in the Seattle Post-Intelligencer.

Sources: "A Corrupt Election," Steve Freeman and Josh Mitteldorf, In These Times, Feb. 15, 2005; "Jim Crow Returns to the Voting Booth, Greg Palast and Rev. Jesse Jackson, Seattle Post-Intelligencer, Jan. 26, 2005; "How a Republican Election Supervisor Manipulated the 2004 Central Ohio Vote," Bob Fitrakis and Harvey Wasserman,, Nov. 23, 2004.

4. Surveillance Society Quietly Moves In

It's a well-known dirty trick in the halls of government: If you want to pass unpopular legislation that you know won't stand up to scrutiny, just wait until the public isn't looking. That's precisely what the Bush administration did Dec. 13, 2003, the day American troops captured Saddam Hussein.

Bush celebrated the occasion by privately signing into law the Intelligence Authorization Act--a controversial expansion of the PATRIOT Act that included items culled from the "Domestic Security Enhancement Act of 2003," a draft proposal that had been shelved due to a public outcry after being leaked.

Specifically, the IAA allows the government to obtain an individual's financial records without a court order. The law also makes it illegal for institutions to inform anyone that the government has requested those records, or that information has been shared with the authorities.

"The law also broadens the definition of 'financial institution' to include insurance companies, travel and real estate agencies, stockbrokers, the U.S. Postal Service, jewelry stores, casinos, airlines, car dealerships, and any other business 'whose cash transactions have a high degree of usefulness in criminal, tax or regulatory matters'" warned Nikki Swartz in the Information Management Journal. According to Swartz, the definition is now so broad that it could plausibly be used to access even school transcripts or medical records.

"In one fell swoop, this act has decimated our rights to privacy, due process, and freedom of speech," wrote Anna Samson Miranda in an article for LiP magazine titled "Grave New World" that documented the ways in which the government already employs high tech, private industry, and everyday citizens as part of a vast web of surveillance.

Miranda warned, "If we are too busy, distracted, or apathetic to fight government and corporate surveillance and data collection, we will find ourselves unable to go anywhere--whether down the street for a cup of coffee or across the country for a protest--without being watched."

Sources: "PATRIOT Act's Reach Expanded Despite Part Being Struck Down," Nikki Swartz, Information Management Journal, March/April 2004; "Grave New World," Anna Samson Miranda, LiP, Winter 2004; "Where Big Brother Snoops on Americans 24/7," Teresa Hampton and Doug Thompson,, June 7, 2004.

5. U.S. Uses Tsunami to Military Advantage in Southeast Asia

The American people reacted to the tsunami that hit the Indian Ocean last December with an outpouring of compassion and private donations. Across the nation, neighbors got together to collect food, clothing, medicine and financial contributions. Schoolchildren completed class projects to help the cause.

Unfortunately, the U.S. government didn't reflect the same level of altruism.

President Bush initially offered an embarrassingly low $15 million in aid. More important, Project Censored found that the U.S. government exploited the catastrophe to its own strategic advantage.

Establishing a stronger military presence in the area could help the United States keep closer tabs on China--which, thanks to its burgeoning economic and military muscle, has emerged as one of this country's greatest potential rivals.

It could also fortify an important military launching ground and help consolidate control over potentially lucrative trade routes. The United States currently operates a base out of Diego Garcia--a former British mandate in the Chagos Archipelago (about halfway between Africa and Indonesia), but the lease runs out in 2016. The isle is also "remote and Washington is desperate for an alternative," wrote veteran Indian journalist Rahul Bedi.

"Consequently, in the name of relief, the U.S. revived the Utapao military base in Thailand it had used during the Vietnam War (and) reactivated its military cooperation agreements with Thailand and the Visiting Forces Agreement with the Philippines," Bedi reported.

Last February, the State Department mended broken ties with the notoriously vicious and corrupt Indonesian military--although human rights observers charged the military with withholding "food and other relief from civilians suspected of supporting the secessionist insurgency, the Free Aceh Movement," Jim Lobe reported for the Inter Press Service.

Sources: "US Turns Tsunami into Military Strategy," Jane's Foreign Report, Feb. 15, 2005; "US Has Used Tsunami to Boost Aims in Stricken Area," Rahul Bedi, Irish Times, Feb. 8, 2005; "Bush Uses Tsunami Aid to Regain Foothold in Indonesia," Jim Lobe, Inter Press Service, Jan. 18, 2005.

6. The Real Oil-for-Food Scam

Last year, right-wingers in Congress began kicking up a fuss about how the United Nations had allegedly allowed Saddam Hussein to rake in $10 billion in illegal cash through the Oil for Food program. Headlines screamed scandal. New York Times' columnist William Safire referred to the alleged U.N. con game as "the richest rip-off in world history."

But those who knew how the program had been set up and run--and under whose watch--were not swayed.

The initial accusations were based on a General Accounting Office report released in April 2004 and were later bolstered by a more detailed report commissioned by the CIA.

According to the GAO, Hussein smuggled $6 billion worth of oil out of Iraq--most of it through the Persian Gulf. Yet the U.N. fleet charged with intercepting any such smugglers was under direct command of American officers, and consisted overwhelmingly of U.S. Navy ships. In 2001, for example, 90 of its vessels belonged to the United States, while Britain contributed only four, Joy Gordon wrote in a December article for Harper's magazine.

Most of the oil that left Iraq by land did so through Jordan and Turkey--with the approval of the United States. The first Bush administration informally exempted Jordan from the ban on purchasing Iraqi oil--an arrangement that provided Hussein with $4.4 billion over 10 years, according to the CIA's own findings. The United States later allowed Iraq to leak another $710 million worth of oil through Turkey--"all while U.S. planes enforcing no-fly zones flew overhead," Gordon wrote.

Scott Ritter, a U.N. weapons inspector in Iraq during the first six years of economic sanctions against the country, unearthed yet another scam: The United States allegedly allowed an oil company run by Russian foreign minister Yevgeny Primakov's sister to purchase cheap oil from Iraq and resell it to U.S. companies at market value--purportedly earning Hussein "hundreds of millions" more.

"It has been estimated that 80 percent of the oil illegally smuggled out of Iraq under 'oil for food' ended up in the United States," Ritter wrote in the U.K. Independent.

Sources: "The UN Is Us: Exposing Saddam Hussein's Silent Partner," Joy Gordon, Harper's, December 2004; "The Oil for Food 'Scandal' Is a Cynical Smokescreen," Scott Ritter, UK Independent, Dec. 12, 2004.

7. Journalists Face Unprecedented Dangers to Life and Livelihood

Last year was the deadliest year for reporters since the International Federation of Journalists began keeping tabs in 1984. A total of 129 media workers lost their lives, and 49 of them--more than a third--were killed in Iraq.

In short, nonembedded journalists have now become familiar victims of U.S. military actions abroad.

"As far as anyone has yet proved, no commanding officer ever ordered a subordinate to fire on journalists as such," wrote Steve Weissman in an update for Censored 2006. But what can be shown is a pattern of tacit complicity, side by side with a heavy-handed campaign to curb journalists' right to roam freely.

The Pentagon has refused to implement basic safeguards to protect journalists who aren't embedded with coalition forces, despite repeated requests by Reuters and media-advocacy organizations.

The U.S. military exonerated the Army of any wrongdoing in its now-infamous attack on the Palestine Hotel--which, as the Pentagon knew, functioned as headquarters for about 100 media workers--when coalition forces rolled into Baghdad on April 8, 2003.

To date, U.S. authorities have not disciplined a single officer or soldier involved in the killing of a journalist, according to Project Censored.

Meanwhile, the interim government the United States installed in Iraq raided and closed down Al-Jazeera's Baghdad offices almost as soon as it took power and banned the network from doing any reporting in the country. In November, the interim government ordered news organizations to "stick to the government line on the U.S.-led offensive in Fallujah or face legal action," in an official command sent out on interim prime minister Eyad Allawi's letterhead and quoted in a November report by independent reporter Dahr Jamail.

And both American and interim government forces detained numerous journalists in and around Fallujah that month, holding them for days.

Sources: "Dead Messengers: How the US Military Threatens Journalists," Steve Weissman,, Feb. 28, 2005; "Media Repression in 'Liberated' Land," Dahr Jamail, Inter Press Service, Nov. 18, 2004.

8. Iraqi Farmers Threatened by Bremer's Mandates

Historians believe it was in the "fertile crescent" of Mesopotamia, where Iraq now lies, that humans first learned to farm. "It is here, in around 8500 or 8000 B.C., that mankind first domesticated wheat, here that agriculture was born," wrote Jeremy Smith in the Ecologist. This entire time, "Iraqi farmers have been naturally selecting wheat varieties that work best with their climate ... and cross-pollinated them with others with different strengths.

"The U.S., however, has decided that, despite 10,000 years practice, Iraqis don't know what wheat works best in their own conditions."

Smith was referring to Order 81, one of 100 directives penned by L. Paul Bremer III, the U.S. administrator in Iraq, and left as a legacy by the American government when it transferred operations to interim Iraqi authorities. The regulation sets criteria for the patenting of seeds that can only be met by multinational companies like Monsanto or Syngenta, and it grants the patent holder exclusive rights over every aspect of all plant products yielded by those seeds. Because of naturally occurring cross-pollination, the new scheme effectively launches a process whereby Iraqi farmers will soon have to purchase their seeds rather than using seeds saved from their own crops or bought at the local market.

Native varieties will be replaced by foreign--and genetically engineered--seeds, and Iraqi agriculture will become more vulnerable to disease as biological diversity is lost.

Texas A&M University, which brags that its agriculture program is a "world leader" in the use of biotechnology, has already embarked on a $107 million project to "re-educate" Iraqi farmers to grow industrial-sized harvests, for export, using American seeds. And anyone who's ever paid attention to how this has worked elsewhere in the global South knows what comes next: Farmers will lose their lands, and the country will lose its ability to feed itself, engendering poverty and dependency.

On, Greg Palast identified Order 81 as one of several authored by Bremer that fit nicely into the outlines of a U.S. "Economy Plan," a 101-page blueprint for the economic makeover of Iraq, formulated with ample help from corporate lobbyists. Palast reported that someone inside the State Department leaked the plan to him a month prior to the invasion.

Smith put it simply: "The people whose forefathers first mastered the domestication of wheat will now have to pay for the privilege of growing it for someone else. And with that, the world's oldest farming heritage will become just another subsidiary link in the vast American supply chain."

Sources: "Iraq's New Patent Law: A Declaration of War Against Farmers," Focus on the Global South and Grain, Grain, October 2004; "Adventure Capitalism," Greg Palast,, Oct. 26, 2004; "US Seeking to Totally Re-Engineer Iraqi Traditional Farming System into a US Style Corporate Agribusiness," Jeremy Smith, Ecologist, Feb. 4, 2005.

9. Iran's New Oil Trade System Challenges U.S. Currency

The Bush administration has been paying a lot more attention to Iran recently. Part of that interest is clearly in Iran's nuclear program--but there may be more to the story. One bit of news that hasn't received the public vetting it merits is Iran's declared intent to open an international oil exchange market, or "bourse."

Not only would the new entity compete against the New York Mercantile Exchange and London's International Petroleum Exchange (both owned by American corporations), but it would also ignite international oil trading in euros.

"A shift away from U.S. dollars to euros in the oil market would cause the demand for petrodollars to drop, perhaps causing the value of the dollar to plummet," Brian Miller and Celeste Vogler of Project Censored wrote in Censored 2006.

"Russia, Venezuela and some members of OPEC have expressed interest in moving towards a petroeuro system," he said. And it isn't entirely implausible that China, which is "the world's second largest holder of U.S. currency reserves," might eventually follow suit.

Although China, as a major exporter of goods to the United States, has a vested interest in helping shore up the American economy and has even linked its own currency, the yuan, to the dollar, it has also become increasingly dependent on Iranian oil and gas.

"Barring a U.S. attack, it appears imminent that Iran's euro-dominated oil bourse will open in March 2006," Miller and Vogler continued. "Logically, the most appropriate U.S. strategy is compromise with the EU and OPEC towards a dual-currency system for international oil trades."

But you won't hear any discussion of that alternative on the 6 o'clock news.

Source: "Iran Next US Target," William Clark,, Oct. 27, 2004.

10. Mountaintop Removal Threatens Ecosystem and Economy

On Aug. 15, environmental activists created a human blockade by locking themselves to drilling equipment, obstructing the National Coal Corp.'s access to a strip mine in the Appalachian Mountains 40 miles north of Knoxville, Tenn. It was just the latest in a protracted campaign that environmentalists say has national implications, but that's been ignored by the media outside the immediate area.

Under contention is a technique wherein entire mountaintops are removed using explosives to access the coal underneath--a practice that is nothing short of devastating for the local ecosystem, but which could become much more widespread.

As it stands, 93 new coal plants are in the works nationwide, according to Project Censored's findings. "Areas incredibly rich in biodiversity are being turned into the biological equivalent of parking lots," wrote John Conner of the Katúah branch of Earth First!--which has been throwing all its energies into direct action campaigns to block the project--in Censored 2006. "It is the final solution for 200-million-year-old mountains."

Source: "See You in the Mountains: Katúah Earth First! Confronts Mountaintop Removal," John Conner, Earth First!, November-December 2004.