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What does Cheney know that has him so worried?

Did the Bush Crime Family consider these torture techniques to be torture? Of course they did; otherwise they wouldn't need the memos to create the fantasy that they weren't torturing. There is a term for staging an event where a prisoner thinks you are going to kill him whether you fire blanks at him or pretend you are killing him by drowning. It's called a "mock execution" and is a crime under international law and considered one of the worst kinds of torture. How you do it doesn’t matter.

The flowery lawyer talk in the memos about limits and controls are absurd on their face. It's like setting standards for the bullet that you use in Russian roulette. It doesn't change the game. The fact that they created these memos is a confession of guilt on the face of it. No need to argue over the details.

It is possible that there is much more evidence to come out. The best indicator that this could be so is how wound up Cheney is over this. He knows that there is more that we haven’t seen. It's not time to give up hope for prosecutions.

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China Buying Gold

Great Headlines in the news from the economy; durable goods orders weren’t down as much as expected... Are you kidding? The numbers are terrible and they’d be worse except that huge orders for Military aircraft gave a bump to the numbers. Nobody is buying the kind of things that you would need to replace worn out equipment let alone preparing for future growth. Numbers for consumer goods continue the spiral toward the bottom unabated as unemployment continues to climb.

China has revealed that it has been quietly buying gold and now holds over a 1000 tons. That’s about ten percent of it currency reserves at current prices. China has been buying anything that they can from anybody that will take dollars; even handing out free money to its trading partners in South America to lessen the damage to their economies from the collapse of the bloated behemoth to the north. They are also starting to hand out Chinese currency and since they have manufactured goods to sell; their currency is actually worth something; not to mention their gold reserves.

China is rapidly expanding it’s deep water navy and now has ten nuclear submarines. They also have begun construction of their first aircraft carrier. Instead of nuclear power; will they burn surplus dollar bills in its boiler? Our own Masters of the Universe told us how great America was and how patriotic they were. You could tell by the Flag pins on their lapels; pins that are made in China.

All they were really doing was lining their pockets by gutting our manufacturing base. They sold China all our technology no matter how sensitive saying they were bringing democracy to China. China didn’t become democratic and for eight years we weren’t either. Now we have a new arms race that could have been avoided. Of course if we build any new weapons we will need to buy computer chips and parts from China. I guess I should sign up for those Chinese lessons and beat the rush. www.prairie2.com

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Campaign like a Democrat, trade like a Republican

A truly disturbing bit of economic news has come from Obama’s new trade representative Ron Kirk. He has stated that it is the intention of the Obama Adm. to go ahead with the trade deals brokered by the Bush Adm. with Panama, Korea and Columbia. They also intend to revive talks with the WTO that broke down last July over agricultural commodities. Remember not being able to buy rice? That’s what you get with "free trade".

Obama and Kirk are making all the usual vague promises about protecting American workers. Apparently everything Obama said during the campaign about protecting American workers from these destructive "free" trade deals has now been "out sourced".

To recover from their lost decade; Japan quietly rebuilt its domestic industries. Japan’s government does have a huge debt load even compared to the US, but the difference is that their debt is entirely investments from their retirees. Japan doesn’t owe trillions to China and Saudi Arabia. Japan’s standard of living continues to improve as ours declines. Japan protects its economy from "free trade"; China, India and Europe do as well.

We cannot trade our way out of the mess we are in; we cannot live on a service economy (giving each other haircuts); we cannot rebuild by padding the balance sheets of insolvent banks. We need to make the things we use or accept a third world standard of living.

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Lawyers are losing their feathers

The next step in the progression toward full blown deflation is emerging. Psychologists who treat the neurotic upper middle class are reporting widespread fee reductions in an attempt to maintain a client base. Even corporate lawyers whose own mothers are afraid to call them lest they be billed for the hours are shifting to offering clients discounted flat fee plans. Their mothers still get billed.

The consumer price index has shown the first year to year decline since 1955 but prices can move up and down and not actually reflect inflation or deflation. The actual cost of things depends on real world events like the availability of oil. Of course the price of oil has everything to do with market manipulation and the criminality of that is another issue. Cut backs in things like eating out or not buying a new BMW creates job cuts but not deflation. But once people start cutting wages and especially service fees you can see that deflation is setting in.

True inflation or deflation has to do with the management of money supply. To much debt creation is what causes inflation. When huge, unrealistic debt loads can no longer be maintained the money supply gets out of control and starts to collapse. This is deflation and is what defines a Great Depression. Deflation causes the collapse of the entire debt load since the reduction in cash flow makes paying interest and principle impossible. The cash flow crisis then spreads throughout the system dragging down people and businesses who aren’t in debt as well.

So you see, lawyers are like the canary in the coal mine or the shark in the fish tank (well you get the idea). Money needs to be injected into the system from the bottom, not the top. It has to be used to create an actual economy and not just more paper on a bank balance sheet. If enough lawyers can’t make the payments on their Mercedes we might get some action.

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Lawyers and Unicorns on the Wall

Dick Cheney is violating the National Security Act or at least claims he is. Any government official given access to any level of classified information is required to sign documents informing him what the rules are on handling and revealing state secrets and he is covered by these rules forever. To even acknowledge to a non-authorized individual that some information that is classified even exists is a crime. The kind of crime that can get you locked in a Supermax prison with no human contact forever.

Cheney claims he has seen secret CIA documents detailing the positive results from the wanton torture of prisoners. To say in public that he has seen still classified documents and revealing their purpose even without specifically revealing their content is a crime. Of course "shoot from the hip to the face" Dick Cheney doesn’t actually have to worry about going to prison for this. Saying he has seen something that doesn’t exist isn’t a crime. He might as well say he saw a lawyer riding a unicorn.

Cheney is desperate to create the myth that torture works; that torture is vital to National Security and that he is not party to numerous felonies that will get him locked away for the rest of his miserable life. He can draw pictures of unicorns and lawyers on the wall of his cell.

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Skin Condition

The IMF issued a report on banks today estimating the worldwide bank losses at 4.1 Trillion Dollars. Over 2.7 Trillion- much more than half of the losses are from US banks alone. US banks have yet to write down at least half of these losses. In other words they are pretending to be in much better shape than they know they are.

The banks are dragging their feet because the IMF estimates that if banks wrote off all their losses immediately it would wipe out their common equity altogether. They are bust; all of them. Any that may be skating by will certainly be brought down by the ensuing panic. Non-banking entities will be dragged down by the freeze-up caused by a lack credit and the uncertainty will in turn push other business over the edge and around and around we go.

Then the layoffs that will follow from the collapsing dominos of business will cut consumer spending which will bring on consumer loan failures and so on. Dramatic action is needed to get us out of this death spiral while there is still time. If there still is time.

The big problem underlying this crisis is the lack of industrial capacity in the US since everything has been crated up and sold to China in order to make a few Republicans into billionaires. With nothing of value to exchange for all the Dollars that have been printed; the banking system cannot sustain itself. At some point this will all have to be restructured or the so-called "free market" will correct itself and the dollar will simply cease to exist.

Nobody should assume that this transition is something simple like changing underwear. It’s more like changing skin. The potential for side effects cannot be predicted. Perhaps some moisturizer would help.

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I think I will hide under the bed early tonight

The stock markets took another big dive today on word that the banks are much worse off than you would think given their latest claims of profitability. The profit numbers did not bear much scrutiny to begin with. They shifted their quarter forward a month to ditch a month of heavy losses. Then there is the accounting change that allows them to stop counting their toxic assets as a current liability and on and on.

The latest news is even more troubling as it portends a coming crisis. The Treasury Dept. is proposing to convert the preferred stock that the Bush Adm. bought in all the big banks under TARP into common stock. This means the banks can use this money to directly offset losses; apparently the Treasury is anticipating the banks taking really big losses. Not a hopeful indicator of where the economy is going since really big losses would mean a lot more home foreclosures and business failures.

Converting to common stock also means that the taxpayers go to the back of the line in case of bankruptcy. Some have pointed out in a conspiratorial tone that all this common stock makes Uncle Sam the majority share holder of most of these banks; free to start dictating how the banks are run. Of course any bank that fails to meet liquidity standards these banks can be seized lock, stock and barrel by the government without notice and these bailout banks have already failed that test. Twenty-five small to medium banks have been taken over so far this year and some industry watchers are predicting that hundreds more will fail later in the year.

So ends another day in the tug of war between the Obama Adm. who is desperately trying to save capitalism from itself and the capitalists who want to maintain the illusion that they are the Masters of the Universe for one more day. I think I will go to bed early (maybe under it). www.prairie2.com

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