Profits mask coming storm

Contrary to surface appearances such as the recent stock market rally and "glowing" first quarter profitability statements from certain Wall Street banks, multipronged risks for renewed, considerable turmoil in the US financial sector are mounting.

The recent six-week rally on Wall Street, led mostly by banking and other financial shares, isn't based on any concrete turnaround in the deeply worrying fundamentals of the financial sector.

Instead, it is based largely on the fact that the new administration has trotted out into public view multiple and very large government programs aimed at cleansing the banks' balance sheets of huge sums of toxic assets, unlocking the persistently seized credit
markets, stemming the swiftly mounting foreclosure rate, creating jobs, and otherwise stimulating an early economic revival.

None of these aims and goals has been accomplished yet, not even in part, but investors were heartened by the raft of government programs that has been announced, and they have responded by bidding up banking and other shares on Wall Street, hoping that the bottom of the crisis in the financial sector has already been reached.

However, that bottom hasn't been reached, and is still nowhere in sight, despite the recent quarterly profit reports by a few of the largest US banks. It should come as no surprise that Wall Street financial institutions that have been in receipt of massive sums of bailout money and have been targeted by varied "liquidity" operations from the government are suddenly able to report a "profit".

Additionally, much of the "profit" reported for the first quarter resulted from one-off events that have little or no chance of seeing a repeat. In these most recent quarterly statements, the accounting and reporting methods have been altered so as to put a better face on their operations and fiscal position. Their already notoriously "fuzzy" math, which permitted banks to arbitrarily designate which assets are included in their profit statements and which ones are not, now also conveniently permits them to arbitrarily decide which losses are "temporary" and can be excluded from the statement altogether. Consequently, "fuzzy" has now gotten even fuzzier. Why? And, why now?

Wall Street financial institutions have suffered a gross loss of investor confidence in this crisis and have seen their share values ravaged as a result. Hence, there is a concerted and vigorous effort underway on their part to bolster that collapsed confidence, with the aim of driving the value of their shares back up.

Remember, these big institutions all participated in one way or another in the grossly deceptive schemes and practices that created and artificially inflated fundamentally risky investment assets, grossly overstated their creditworthiness, and sold them on to unsuspecting investors - the massive swindle that brought us into this crisis in the first place, a crisis that emerged right on Wall Street itself.

Hence, it is nothing for such firms and their accounting and credit rating accomplices to engage once again in spin, deceptively cooking the numbers to make their position look much better than it really is, so as to attract investors and drive up share prices. Sovereign wealth funds around the globe, having suffered huge losses on their investments in US banks, can be described by the adage "once bitten, twice shy". Many have decided to largely divest themselves of their holdings in US financial shares. Why? They no longer trust the banks to disclose their true financial position fully, accurately and honestly. The savvy investor will keep such facts very close in mind.

Now, with the May 4 deadline for releasing the government stress test results bearing down on us, Wall Street institutions have much greater reason and motive for spinning their financial position (propagandizing investors) - none of Wall Street's big banks wants to take a renewed hit as a result of being portrayed by the stress tests as being in a less-than-desirable financial condition.

Therefore, the Wall Street spin machines are operating at full speed, striving to portray the 19 banks involved in the stress tests as profitable, stable, healthy and vibrant. They are doing everything they can to maintain, and bolster, the fundamentally frail investor confidence they have regained in the past six weeks, and they are trying to position themselves to massively capitalize on the release of the stress test results if they can, or at least to minimize their potential ill effects.

The entire idea of the stress tests has come under fire as a bone-headed scheme that was aimed at restoring confidence but will almost certainly accomplish the exact opposite. If the results paint a rosy picture for all 19 banks, then investors will pan the stress tests as having no credibility, and their suspicions and fears that the banks and the government are lying about their true condition will probably skyrocket. If any of the 19 banks get less than flying colors in the stress test results, then those banks will likely see their shares take a renewed pounding as investor confidence collapses again.

There may well be depositor runs on such banks, depleting their capital and bringing on a renewed crisis. If the government and/or the banks themselves do not release meaningful data on May 4, then investors will conclude that the results were too grim, and a new crisis of confidence will result. But if too much information is released, then the same thing could likely be the result because a number of respected experts warn that the US banking system is fundamentally insolvent.

The government and the banks do not want investors at large to see hard data that only bolsters that dismal assessment. The Barack Obama administration has thus painted itself into a potentially very grim corner with the stress tests. Almost no matter what is done on May 4, the risks of a new crisis of confidence in the US financial sector are significantly rising.

Why such a bleak assessment here of the current fiscal position of the US financial sector?

First, as noted above, the US financial sector is not providing a clear and true picture of its fiscal position. Instead, it is seeking to paper over its fundamental insolvency with quarterly reports that are long on spin and short on hard, uncooked data. Why? The answer is quite simple. Full disclosure of its true position would not be in the interests of reviving America's fundamentally flawed model of "securitization", which has experienced a massive collapse and to this day has not been revived. Can it be revived? At what cost?

Remember that there are two fundamental camps with respect to the answer to the question of what lies at the root of the present crisis. One camp holds that America's new generation of financial assets that resulted from the recently invented financial process known as "securitization" are fundamentally sound in value, and that an over-reaction on the part of investors to the subprime crisis has resulted in a panic-induced collapse in their valuations.

This camp believes that the securitization model can and should be revived, and that when investor confidence is restored in financial assets now seen as "toxic", then all will be well again, almost magically, as toxic assets become valuable and attractive once again. All that need be done, it is believed, is for the government to work with Wall Street to jump-start securitization, a model this camp vehemently denies has failed, even though many trillions of dollars both spent and committed already have so far failed to get securitization's heartbeat going again.

The other camp believes that the toxicity is inherent in the very nature of the newly developed financial assets themselves, and that once investors recognized this fact, then that is why their values collapsed. This camp sees the securitization model as fundamentally flawed, based as it is upon artificial inflation of assets, the shortsighted growth of serial asset bubbles created by an unholy de facto alliance of government, big Wall Street banks and credit-rating agencies whose credibility and integrity were profoundly compromised, and unsustainable negative real interest rates (the creation of a massive credit excess), without which the securitization model simply won't run.

This camp sees no future for assets that have gone toxic. It sees the collapse that began in late July 2007 with the emergence of the subprime crisis as one that massively discredits the model itself. This camp believes that a revival of securitization will come at the cost of a dollar crisis only a moderate distance down the road, and that even if the model is revived, it won't be able to avoid a second, massive crash.

The US government and Wall Street are laboring feverishly to get securitization's heart beating again. That is fundamentally what is behind all their efforts. Crucial to this task, they believe, is restoring investor confidence in the model itself and in the innovative financial markets and modern financial assets it has created. Much like producers and sellers of tainted wine who've been found out and who've watched their product prices collapse as buyers shun the wine for its toxic risks, they're in cooperation again, minimizing the taint and trying to sell the sparkle as they did before this crisis broke. It is unlikely to succeed in attracting investors on the scale needed to revive securitization. But even if it does, the currency is being set up for a massive collapse when the proverbial bill soon comes due.

Therefore, essentially, on the level of the model itself, the US financial sector is headed for a more massive collapse than we've seen already, even if revival efforts were to somehow succeed in breathing life into the sector temporarily.

The second reason that this assessment here of the current fiscal position of the US financial sector is so bleak is because real events on the ground, occurring as we speak, demand such realism.

Many times I have drawn attention to the simple concept of the self-reinforcing downward spiral that has come to life within this ongoing crisis, a downward spiral that encompasses both the financial and economic sectors. Turmoil in the financial sector creates both a seizure of credit and higher costs for credit of all kinds, which feeds directly and indirectly down the line into the economic sector, translating into losses for business and individuals.

Those losses result in rising business failures, job losses, foreclosures and bankruptcies, and collapsing spending, investment and asset prices. These developments feed back, in turn, into the financial sector as banks and other institutions suffer greater losses and as the list of their toxic assets grows by leaps and bounds.

This, in turn, causes the credit seizure to persist and to tighten, which feeds directly down the line into the economic sector again, and the downward spiral continues and gains momentum. Though simple in nature, this downward spiral has been profoundly resistant to all the trillions of dollars thrown at it so far in an effort to break its grip. Additionally, its dramatic influence over where we're headed is too often minimized or forgotten altogether, until unfolding events bring a painful reminder.

In this respect, the first-quarter results of the Bank of America, announced on Monday, April 20, contain such a reminder - despite showing a "profit", credit losses are swiftly mounting as the quality of credit continues to deteriorate rapidly, without any reprieve. The Dow lost nearly 300 points that day, led by a fall in financial shares.

Just ahead, there exist strong indications of the real possibility of renewed, much deeper turmoil in the financial sector, in addition to what we're already seeing. The upcoming release of the stress test results may well provide a trigger for such renewed turmoil, which will feed once again down the line into the real economy, the economic sector, and only strengthen the downward spiral that exists between those two sectors.

We may see Wall Street rallies like the one that began six weeks ago, but they won't resolve the fundamentally grim picture for the US, which is firmly in the grip of forces that it unleashed upon itself. The US government and its Wall Street accomplices lack the insight, power, ability and integrity to break the downward spiral anytime soon. Thus, it will run its own course, just as it has been doing for many months already.


W Joseph Stroupe is a strategic forecasting expert and editor of Global Events Magazine online at www.globaleventsmagazine.com

World Bank president warns economic crisis poses “human calamity”

The head of the World Bank warned over the weekend that the deepening global economic crisis threatens to unleash “a human and developmental calamity.”

World Bank President Robert Zoelick issued the warning in the context of a meeting of the bank and the International Fund in Washington that came on the heels of meetings by G7 and G20 finance ministers in the US capital.

Zoelick said that developing countries will see “especially serious consequences with the crisis driving more than 50 million people into extreme poverty, particularly women and children.”

The IMF and World Bank warned Sunday that global unemployment is set to rise from 5.3 percent to 8.5 percent, leaving some 90 million more people “trapped in extreme poverty.” He added: “The number of chronically hungry people is expected to climb to over 1 billion this year.” These stark warnings stood in stark contrast to the relatively sanguine assessment adopted by the finance ministers from the G7 and G20 groups of leading nations in their meeting last Friday. Despite this more optimistic tone, the ministers neither offered any new policies nor resolved any of the issues that divided the previous G20 summit.

While the G7 communiqué begins by noting that the meeting takes place during the deepest and most widespread economic downturn and financial stress witnessed in decades, the G7 ministers present a markedly rosy assessment of the future trajectory of the world economy.

Their communiqué states, “Economic activity should begin to recover later this year amid a continued weak outlook, and downside risks persist.” The group added, “Recent data suggest that the pace of decline in our economies has slowed, and some signs of stabilization are emerging.”

The relatively optimistic tone of the document flies in the face of reports issued last week by the IMF. The organization's Global Financial Stability Report, published last Tuesday, predicted that total credit write-downs worldwide may reach over $4 trillion, and that the world banking system was close to insolvency.

The following day, the IMF published its World Economic Outlook, sharply reducing the estimates of world growth it had made in January. The bank said that it expects the world economy to shrink by 1.3 percent in 2009, and that the world economy would grow at a rate of only 1.9 percent in 2010. The advanced economies, including those represented in the G7, are expected to see no growth next year

The US financial system, given huge infusions of government cash and ever-more lax regulatory standards, has in fact returned to profitability, prompting White House officials to proclaim that the economy may be nearing recovery. Favorable borrowing rates have led to increased refinancing activity, generating an uptick in profits.

But the crisis in the real economy has only gotten worse. The UK economy contracted in the first quarter faster than anticipated, while German Central Bank President Axel Weber said that the German economy may have contracted by as much as 3 percent in the first quarter, which would be the highest on record.

Following the release of the communiqué, the Financial Times Monday warned against any overly optimistic view of the world economy, noting that at least twice in [Japan's] “lost decade,” fleeting signs of recovery yielded to the reality that the economy had not yet overcome a crisis emanating from its burst bubble at the start of the 1990s.

Conflicts between the US and Europe continued to simmer under the relatively placid tone of the communiqué. There are sharp divisions on all major questions, including the amount of stimulus to be provided by each country, and whether there is to be any international regulation and restrictions on financial speculation.

The IMF had previously recommended that G20 countries allocate 2 percent of their gross domestic products as stimulus spending. While the IMF said on Sunday that, on aggregate, this figure has been reached, there are severe disparities in the amount of stimulus spending various national governments have been willing to undertake

The United States has pressed for countries to adopt a rigorous and intensive stimulus, while Euro Zone members argued that 2 percent of GDP was too much. On Sunday, the IMF released its estimates of the total stimulus levels for the G20 countries. Russia had the highest government stimulus of 4.1 percent, while Japan's stimulus program amounted to 2.4 percent of its GDP. The US package was an even 2 percent of output.

The other G7 member countries pledged significantly lower amounts of stimulus funds. France's stimulus plans amounted to only 0.7 percent of GDP, while Germany allocated 1.6 percent and Britain 1.4 percent.

As in the G20 Summit three weeks ago, sharp divisions surfaced on the question of world financial regulation. Christine Lagarde, the French finance minister, told the Financial Times, “I have this concern that as things pick up...a lot of people will want to go back to the old games. Go back to making money and exploiting [regulatory] systems as much as they can.” These comments referred implicitly to the United States, which has resisted any international restrictions on its financial system.

Guido Mantega, the Brazilian finance minister, said that the overriding issue was cleaning up the global financial system. “If the United States and other countries that have banks with toxic assets do not clean up their financial system, this crisis will last for a long time,” he said.

The Obama Administration has challenged the IMF's bleak picture of bank balance sheets, claiming that the US banking system is fundamentally sound. The IMF said last week that write-offs at US banks could total $2.7 trillion.

The communiqué stressed the need to repair bank balance sheets in order for recovery to proceed. “All the experience we have of past banking crises...is that you never recover before you complete the cleaning up of the balance sheet of the financial sector,” it said. “You can postpone it. At the same time, you postpone the recovery.”

There were difficulties even raising the funds pledged by the G20 summit to the IMF. The G20 pledged an additional $500 million at its meeting 3 weeks ago. Thus far, however, only $375 billion have been raised, and Friday's meeting ended without new pledges.

The communiqué issued by the G7 pledged to abstain from protectionist measures. The resolution of the G20 conference in London made a similar solemn pledge, but according to Bloomberg.com, the US, UK, Germany, France and Italy have all introduced protectionist measures since then.

Global Research Articles by Andre Damon

Casino Capitalism and Financial Recklessness: Obama Has Missed His Moment

Barack Obama has squandered his presidency. He had a fleeting moment to challenge the casino capitalism and financial recklessness of our economic and political elite. He could have orchestrated a state socialism that would have provided a safety net for tens of millions of Americans faced with dislocation and misery. The sums he has doled out to Wall Street could have been used to force companies to keep workers on the job or create new banks to open up credit. But he lacked the foresight and the courage to challenge entrenched power. And now we are headed down one of two frightening roads—massive deflation or hyperinflation. Neither will be pleasant.

Hyman Minsky—an economist largely ignored during his lifetime and now held up as something of a prophet—argued that speculative bubbles, and the financial collapses that follow them, are an inevitable consequence of unregulated capitalism. Minsky, an economics professor at Washington University in St. Louis who died in 1996, warned: “The normal functioning of our economy leads to financial trauma and crises, inflation, currency depreciations, unemployment and poverty in the middle of what could be virtually universal affluence—in short … financially complex capitalism is inherently flawed.” He called for socialized banking and stimulus packages to protect workers.

Our Minsky moment, however, has passed. Obama did not introduce radical measures to change our financial structures. And the outlook, even from Obama’s chief financial advisers, is very gloomy. The U.S. economy will continue to contract “for some time to come,” said Lawrence Summers, director of the White House National Economic Council. “I expect the economy will continue to decline,” with “sharp declines in employment for quite some time this year,” Summers said Sunday on “Fox News Sunday.”

The International Monetary Fund has forecast that the U.S. economy will shrink 2.8 percent this year and have no growth in 2010, with unemployment rising to 10.1 percent.

Deflation, for the moment, remains our most immediate threat. The Labor Department reported that in March the consumer price index fell 0.4 percent over the last year, the first decline in over 50 years. Home values have fallen in the last year by 18 percent. Our current deflation is not the massive deflation endured during the Great Depression, but if it continues, and it becomes sustained, it will wreck our economy. I suspect that the few trillion dollars thrown at an economy that may have lost as much as $40 trillion in wealth means deflation will win out.

A sustained deflation, such as the one that has afflicted Japan, would make it much harder for borrowers, who would have less cash, to pay off debt. It would fuel more defaults, see more bankruptcies and dry up credit. It would lead to a fall in wages. Those attempting to sell houses, or any other products, would watch helplessly as the value of what they own evaporated.

Classical economic theory states that when you pump huge sums of money into the economy you produce inflation. And Fed Chairman Ben Bernanke would like to trigger inflation to relieve the heavy debts weighing on many banks and investment houses. Inflation, because it reduces the value of the dollar, effectively devalues debts and reduces what many owe. This push toward inflation is why we have low interest rates. This is why we are printing and borrowing hundreds of billions of dollars. And this is why projected deficits are almost beyond comprehension.

The Congressional Budget Office recently released its analysis of the Obama administration’s 10-year budget proposal. The projected deficit for fiscal year 2009 is $1.8 trillion. And the CBO projects deficits over the next 10 years that annually are between about $650 billion and $1 trillion. The CBO also projects that the outstanding federal debt held by the public will increase from 40.8 percent of GDP in 2008 to 82.4 percent in 2019. This is a doubling of the national debt over the next 10 years. These deficits are being produced to jump-start the economy, to prevent deflation and to produce inflation.

Inflation, which may look good if you are a Wall Street firm overloaded with bad debt, is as risky as deflation, however. It can easily morph into hyperinflation and bring, like deflation, political and economic instability. It can lead to runs on banks. It can make your currency worthless. It discourages investment and thrift. And when you borrow at the level we are borrowing at you frequently debauch your currency. This could lead to the dollar being abandoned as a global currency. Why would the Chinese, or anyone else, want to keep buying our debt while we work overtime to devalue our currency? It means, in essence, that they can never make a profit and what they own is being reduced daily in value.

Hyperinflation is never controlled domestically. It is created by outside forces. If China and other buyers of our debt view the endlessly increasing American deficit spending as a threat to the viability of the U.S. dollar they will abandon the dollar and reduce their purchases of treasury bills. Chinese leaders have already questioned the wisdom of keeping foreign reserves predominantly in the form of U.S. dollar-denominated treasury bills and bonds. And if they walk away from the dollar our currency will become junk and hyperinflation will race through the society like a plague.

Deflation or hyperinflation will be our nemesis. These are the only two options left. The speculators on Wall Street and in the White House are again rolling the dice. But be assured that no matter what combination comes up, we are going to be fleeced.

VIDEO: Humanitarian Intervention Challenged

Exposing the Truth on NATO-US Agression against Yugoslavia

The Wrong Torture Question

When Americans get "ethical" these days they ponder the great moral mysteries, like "Is public health coverage fair to insurance companies?" or "If we increase the military budget but reduce one section of it, can the whole world still be safe?" or "Would you still oppose torture if it worked?"

Let me suggest a few reasons why I think that last question is the wrong one.

First, torture DID work. It forced false agreement with war lies, helping to launch a long-desired illegal war. And it persuaded many Americans that some very scary and very foreign people were out to get them, people so scary that they had to be tortured in order to talk with them, people whose every false utterance, aimed at stopping the pain, instead generated color-coded horror warnings.

Second, torture has boosted recruitment for anti-U.S. organizations tremendously, horribly damaged the United States' image, stripped U.S. diplomats of the power to address human rights abuses abroad, as well as stripping U.S. citizens of a clear moral right to protest being tortured, and set an example that has spread far and wide. Torture has brutalized participants and witnesses, and we are all witnesses, and it has destroyed lives both through torture to the point of death and through torture to the point of unbearable life.

Third, if you're going to violate particular laws and treaties, you can either repeal them and leave all the other ones intact, or you can simply proceed criminally, thereby assaulting the whole structure of law, leaving everyone in doubt whether ANY laws will be enforced against important people. Our government has taken the latter approach and redefined crimes as "policy differences," which is why torture is ongoing and no criminal penalty will deter its future expansion or the commission of other crimes of whatever sort by high officials.

Fourth, if torture had produced life-saving information, we would have long since heard that fact shouted from every television studio. In fact, we did hear such claims made. They just all turned out to be fictional. In the latest claim of this sort, torture supposedly produced information on the planned bombing of a building in Los Angeles, and this information was transported back in time to the moment at which investigators had already discovered that proposal and laughed heartily at the then-debunked claim that a serious plot had ever developed. The fact that Dick Cheney is pushing this nonsense on us is not actually a compelling reason to believe it unquestioningly.

Fifth, if torture ever produced life-saving information it would be through sheer luck and not intention. Nobody tortures with that intention, because expert interrogators believe other methods are more effective than torture. And if that lucky day ever came, there would be no basis on which to surmise that other methods would not have been at least as effective as the torture was. So, even if a real ticking time bomb situation could be created, there would be no reason to believe torture to be the best tool. And if you could magically design a situation in which, by definition, torture was the ethical choice, you still would not have created a situation in which ignoring the crime of torture would do less damage than pardoning the torturers.

So, do ends justify means? Is torture just plain wrong even in those cases when it would save more lives than it cost? These are intensely ignorant questions. Ends must always be made to justify any means, but the ends must be understood in their entirety. If one result of an action is damage to the rule of law or exacerbation of international hatred or promotion of senseless fear, that must be part of the calculation. Of course torture would not be wrong in a situation in which, all things considered, it did more good than harm; but that situation cannot be found. Whether you claim to simply adhere to a blanket rule, or you consider all the consequences of your actions, you arrive at the same conclusion: torture must be abolished.

But so must the debate over whether torture must be abolished. Torture is illegal. Our laws must be enforced. Torture's recent prominent use by the United States came about in an attempt to promote a far worse crime than torture, the crime of aggressive war. We should not be asking ourselves whether torture was an acceptable means toward that end. We should be asking ourselves how we can best rid the world of wars of aggression.

David Swanson is the author of the upcoming book "Daybreak: Undoing the Imperial Presidency and Forming a More Perfect Union" by Seven Stories Press and of the introduction to "The 35 Articles of Impeachment and the Case for Prosecuting George W. Bush" published by Feral House and available at Amazon.com. Swanson holds a master's degree in philosophy from the University of Virginia. He has worked as a newspaper reporter and as a communications director, with jobs including press secretary for Dennis Kucinich's 2004 presidential campaign, media coordinator for the International Labor Communications Association, and three years as communications coordinator for ACORN, the Association of Community Organizations for Reform Now. Swanson is Co-Founder of AfterDowningStreet.org, creator of ProsecuteBushCheney.org and Washington Director of Democrats.com, a board member of Progressive Democrats of America, the Backbone Campaign, and Voters for Peace, a convenor of the legislative working group of United for Peace and Justice, and chair of the accountability and prosecution working group of United for Peace and Justice.

Culture of Unpunished Sexual Assault in U.S. Military

Marfa, Texas — Sexual assault of women serving in the U.S. military, while brought to light in recent reports, has a long tradition in that institution.

Women in America were first allowed into the military during the Revolutionary War in 1775, and their travails are as old.

Maricela Guzman served in the Navy from 1998 to 2002 as a computer technician on the island of Diego Garcia, and later in Naples, Italy. She was raped while in boot camp, but was too scared to talk about the assault for the rest of her time in the military.

In her own words she, “survived by becoming a workaholic. Fortunately or unfortunately the military took advantage of this, and I was much awarded as a soldier for my work ethic.”

Guzman decided to dissociate from the military on witnessing the way it treated the native population in Diego Garcia. Post discharge, her life became unmanageable. The effects of post-traumatic stress disorder (PTSD) from her rape had taken a heavy toll.

After undergoing a divorce, a failed suicide attempt and homelessness, she moved in with her parents. A chance encounter with a female veteran at a political event in Los Angeles prompted her to contact the veteran’s administration (VA) for help. She began seeing a therapist there who diagnosed her with PTSD from her rape.

She told IPS that the VA denied her claim nevertheless, “Because they said I couldn’t prove it … since I had not brought it up when it happened and also because I had not shown any deviant behaviour while in the service. I was outraged and felt compelled to talk about what happened.”

Like countless others, Guzman learned early that the culture of the military promoted silence about sexual assault. Her experience over the years has convinced her that sexual violence is a systemic problem in the military.

“It has been happening since women were allowed into the service and will continue to happen after Iraq and Afghanistan,” Guzman told IPS, “Through the gossip mill we would hear of women who had reported being raped. No confidentiality was maintained nor any protection given to them making them susceptible to fresh attacks.”

“The boys’ club culture is strong and the competition exclusive,” Guzman added, “To get ahead women have to be better than men. That forces many not to report rape, because it is a blemish and can ruin your career.”

She is not hopeful of any radical change in policy anytime soon, but, “One good thing that has come out of this war is that people want to talk about this now.”

More than 190,000 female soldiers have served thus far in Iraq and Afghanistan on the front lines, often having to confront sexual assault and harassment from their own comrades in arms.

The VA’s PTSD centre claims that the incidence of rape, assault, and harassment were higher in wartime during the 1991 U.S. attack on Iraq than during peacetime. Thus far, the numbers from Iraq show a continuance, and increase, of this disturbing trend.

The military is notorious for its sexist and misogynistic culture. Drill instructors indoctrinate new recruits by routinely calling them “girl,” “pussy,” “bitch,” and “dyke.” Pornography is prevalent, and misogynistic rhymes have existed for decades.

Understandably, Department of Defense (DoD) numbers for sexual assaults in the military are far lower than numbers provided by other sources, primarily because the Pentagon only counts rapes that soldiers have officially reported. Even according to the Pentagon, 80 percent of assaults go unreported.

Pentagon spokesperson Cynthia Smith told IPS, “We understand this is very important for everyone to get involved in preventing sexual assault, and are calling on everyone to get involved, step in, and watch each others’ backs.”

According to the DoD Report on Sexual Assault in the Military for Fiscal Year 2007, “There were 2,688 total reports of sexual assault involving Military Service Members,” of which “The Military Services completed a total of 1,955 criminal investigations on reports made during or prior to FY07.”

The criminal investigations yielded the shockingly low number of only 181 courts martial. “We understand that one sex assault is too many in the DoD,” Smith told IPS, “We have an office working on prevention and response.”

A 1995 study published in the Archives of Family Medicine found that 90 percent of female veterans from the 1991 U.S. attack on Iraq and earlier wars had been sexually harassed. A 2003 survey of women veterans from the period encompassing Vietnam and the 1991 Iraq attack, published in the American Journal of Industrial Medicine, found that 30 percent of the women soldiers said they were raped.

In 2004, a study of veterans from Vietnam and all wars since, published in the journal of Military Medicine, found that 71 percent of the women were sexually assaulted or raped while serving.

At the 2006 National Convention of Veterans for Peace in Seattle, April Fitzsimmons, who early in her career was raped by a soldier, met with 45 other female vets, and began compiling information.

“I asked for a show of hands of women veterans who had been assaulted while on duty, and half the women raised their hands,” Fitzsimmons told IPS, “So I knew we had to do something.”

She, along with other women veterans like Guzman, founded the Service Women’s Action Network (SWAN) to help military women who have been victims of sexual violence.

It is an uphill battle for women in the U.S. military to take on the system that clearly represses attempts to change it.

“When victims come forward, they are ostracised, doubted, and isolated from their communities,” Fitzsimmons told IPS, “Many of the perpetrators are officers who use their ranks to coerce women to sleep with them. It’s a closely interwoven community, so the perpetrators are safe within the system and can fearlessly move free amongst their victims.”

Fitzsimmons shared with IPS a view that underscores the gravity of the problem.

“The crisis is so severe that I’m telling women to simply not join the military because it’s completely unsafe and puts them at risk. Until something changes at the top, no woman should join the military.”

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Sidebar: Two Testimonies

April Fitzsimmons served in the Air Force from 1985 to 1989, as an intelligence analyst and intelligence briefer for a two-star general. Early in her military career, another solider sexually assaulted her.

Nineteen years old at the time of her rape, Fitzsimmons reported the assault, and named her perpetrator, who was removed from the base. However, she declined the offer of counselling “because there was a stigma attached to it,” she told IPS.

“Those who seek counselling are perceived to be at risk, as being too weak and vulnerable and it would have meant forfeiting my top-secret clearance to keep military intelligence classified,” she explained.

Another reason for maintaining silence on the matter was that Fitzsimmons was declared “airman (sic) of the year,” in the European command.

“I didn’t want to lose that,” she says, “I wanted the whole thing to go away.”

Fitzsimmons created a one-woman play, Need to Know, which has been running for six years. In the play, she addresses her own sexual assault in the military. When news of rapes and sexual assaults by U.S. soldiers in Iraq, against both other soldiers and Iraqis began to surface, Fitzsimmons became more active.

“After reading about the 14-year-old Iraqi girl, Abeer Qasim Hamza, who was raped by several soldiers, and about Suzanne Swift, a soldier who after being raped by another U.S. soldier went AWOL (absent without leave) rather than redeploy with the command that was responsible for allowing the rape to occur, I was convinced that there was a cycle of sexual violence in the military that was neither being seen nor addressed,” she says.

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It is not difficult to ascertain the reason for so few sexual assaults being reported in the military. Jen Hogg of the New York Army National Guard told IPS, “I helped a woman report a sexual assault while she was in basic training. She was grabbed between the legs from behind while going up stairs. She was not able to pinpoint the person who did it.”

Hogg explained that her friend was afraid to report the incident to her drill sergeant, and went on to explain why, which also sheds light on why so many women opt not to report being sexually assaulted.

“During training, the position of authority the drill sergeant holds makes any and all reporting a daunting task, and most people are scared to even approach him or her,” Hogg told IPS, “In this case, the drill sergeant’s response was swift but caused resentment towards the female that made the report, because her identity was not hidden from males who were punished as a whole for the one.”

The incident displays another tactic used in the military to suppress women’s reportage of being sexually assaulted - that of not respecting their anonymity, which opens them up to further assaults.

“After this incident many of the males said harassing things to her as they passed her during training, so much so that she regretted having addressed the issue,” Hogg continued, “You can be ostracised as the woman who had dared to speak up. Women willing to speak up are trained to shut up, which results in an atmosphere of silence. After my experiences in basic and advanced individual training I never reported an incident again.”

Hogg herself faced verbal sexual harassment.

“When I removed my protective top in the heat I would often hear comments such as ‘where you been hiding them puppies’ in reference to my breasts.”

Based on her friends’ experience, Hogg did not even consider reporting.

To make matters worse, according to Department of Defense statistics, 84-85 percent of soldiers convicted of rape or sexual assault leave the military with honourable discharges. Not only are they not penalised, they are honoured.

Dahr Jamail is a frequent contributor to Global Research. Global Research Articles by Dahr Jamail

Top Senate Democrat: bankers "own" the U.S. Congress

Sen. Dick Durbin, on a local Chicago radio station this week, blurted out an obvious truth about Congress that, despite being blindingly obvious, is rarely spoken: "And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place." The blunt acknowledgment that the same banks that caused the financial crisis "own" the U.S. Congress -- according to one of that institution's most powerful members -- demonstrates just how extreme this institutional corruption is.

The ownership of the federal government by banks and other large corporations is effectuated in literally countless ways, none more effective than the endless and increasingly sleazy overlap between government and corporate officials. Here is just one random item this week announcing a couple of standard personnel moves:

Former Barney Frank staffer now top Goldman Sachs lobbyist

Goldman Sachs' new top lobbyist was recently the top staffer to Rep. Barney Frank, D-Mass., on the House Financial Services Committee chaired by Frank. Michael Paese, a registered lobbyist for the Securities Industries and Financial Markets Association since he left Frank's committee in September, will join Goldman as director of government affairs, a role held last year by former Tom Daschle intimate, Mark Patterson, now the chief of staff at the Treasury Department. This is not Paese's first swing through the Wall Street-Congress revolving door: he previously worked at JP Morgan and Mercantile Bankshares, and in between served as senior minority counsel at the Financial Services Committee.

So: Paese went from Chairman Frank's office to be the top lobbyist at Goldman, and shortly before that, Goldman dispatched Paese's predecessor, close Tom Daschle associate Mark Patterson, to be Chief of Staff to Treasury Secretary Tim Geithner, himself a protege of former Goldman CEO Robert Rubin and a virtually wholly owned subsidiary of the banking industry. That's all part of what Desmond Lachman -- American Enterprise Institute fellow, former chief emerging market strategist at Salomon Smith Barney and top IMF official (no socialist he) -- recently described as "Goldman Sachs's seeming lock on high-level U.S. Treasury jobs."

Meanwhile, the above-linked Huffington Post article which reported on Durbin's comments also notes Sen. Evan Bayh's previously-reported central role on behalf of the bankers in blocking legislation, hated by the banking industry, to allow bankruptcy judges to alter the terms of mortgages so that families can stay in their homes. Bayh is up for re-election in 2010, and here -- according to the indispensable Open Secrets site -- is Bayh's top donor: Goldman Sachs.

Goldman is also the top donor to Bayh over the course of his Congressional career, during which Bayh has received more than $4 million from the finance, insurance and real estate sectors.

In a totally unrelated coincidence -- after the Government, as Matt Taibbi put it, enacted "a bailout program that has now figured three ways to funnel money to Goldman, Sachs"-- this is what happened earlier this month:

Goldman reports $1.8 billion profit

Goldman Sachs reported a much stronger-than-expected first-quarter profit Monday, bouncing back from its worst quarter as a public company. . . .

In reporting its results a day earlier than expected, New York-based Goldman said it earned $1.81 billion, or $3.39 a share, for the quarter ended March 31. Analysts surveyed by Thomson Financial were looking for a profit of $1.64 a share.

Goldman shares, which have surged more than 70% during the past month, continued rising late Monday, gaining about 4.7% for the day.

Nobody even tries to hide this any longer. The only way they could make it more blatant is if they hung a huge Goldman Sachs logo on the Capitol dome and then branded it onto the foreheads of leading members of Congress and executive branch officials.

Of course, ownership of the government is not confined to Goldman or even to bankers generally; legislation in virtually every area is written by the lobbyists dispatched by the corporations that demand it, and its passage then ensured by "representatives" whose pockets are stuffed with money from those same corporations. Just as one example, as Jane Hamsher reported about Bayh:

Bayh's little "lobbyist problem" is considered by many to be what tanked his Vice Presidential aspirations. His wife Susan earns about $837,000 a year serving on seven corporate boards, among them Wellpoint, a health insurance company for which Bayh helped secure a $24.7 million dollar grant. She's on the board of ETrade, even as Bayh is on the Senate Finance Committee.

Bayh wants people to believe he's a "moderate" who sits in the "center."

Center of K Street, maybe.

Meanwhile, the only citizen protests relating to this mass robbery are driven by anger at the government for treating bankers too harshly and unfairly -- one of the most classic manifestations of what Taibbi, in a separate piece, so aptly calls the "peasant mentality":

After all, the reason the winger crowd can’t find a way to be coherently angry right now is because this country has no healthy avenues for genuine populist outrage. It never has. The setup always goes the other way: when the excesses of business interests and their political proteges in Washington leave the regular guy broke and screwed, the response is always for the lower and middle classes to split down the middle and find reasons to get pissed off not at their greedy bosses but at each other. That’s why even people like [Glenn] Beck’s audience, who I’d wager are mostly lower-income people, can’t imagine themselves protesting against the Wall Street barons who in actuality are the ones who fucked them over. . . .

Actual rich people can’t ever be the target. It’s a classic peasant mentality: going into fits of groveling and bowing whenever the master’s carriage rides by, then fuming against the Turks in Crimea or the Jews in the Pale or whoever after spending fifteen hard hours in the fields. You know you’re a peasant when you worship the very people who are right now, this minute, conning you and taking your shit. Whatever the master does, you’re on board. When you get frisky, he sticks a big cross in the middle of your village, and you spend the rest of your life praying to it with big googly eyes. Or he puts out newspapers full of innuendo about this or that faraway group and you immediately salute and rush off to join the hate squad. A good peasant is loyal, simpleminded, and full of misdirected anger. And that’s what we’ve got now, a lot of misdirected anger searching around for a non-target to mis-punish . . . can’t be mad at AIG, can’t be mad at Citi or Goldman Sachs. The real villains have to be the anti-AIG protesters! After all, those people earned those bonuses! If ever there was a textbook case of peasant thinking, it’s struggling middle-class Americans burned up in defense of taxpayer-funded bonuses to millionaires. It’s really weird stuff.

One might think it would be a big news story for the second most-powerful member of the U.S. Senate to baldly state that the Congress is "owned" by the bankers who spawned the financial crisis and continue to dictate the government's actions. But it won't be. The leading members of the media work for the very corporations that benefit most from this process. Establishment journalists are integral and well-rewarded members of the same system and thus cannot and will not see it as inherently corrupt (instead, as Newsweek's Evan Thomas said, their role, as "members of the ruling class," is to "prop up the existing order," "protect traditional institutions" and "safeguard the status quo").

That Congress is fully owned and controlled by a tiny sliver of narrow, oligarchical, deeply corrupted interests is simultaneously so obvious yet so demonized (only Unserious Shrill Fringe radicals, such as the IMF's former chief economist, use that sort of language) that even Durbin's explicit admission will be largely ignored. Even that extreme of a confession (Durbin elaborated on it with Ed Schultz last night) hardly causes a ripple.

Global Research Articles by Glenn Greenwald