Global Plans to Replace the Dollar

1. Global Plans to Replace the Dollar

Top 25 of 2011

Nations have reached their limit in subsidizing the United States’ military adventures. During meetings in June 2009 in Yekaterinburg, Russia, world leaders such as China’s President Hu Jintao, Russia’s President Dmitry Medvedev, and other top officials of the six-nation Shanghai Cooperation Organisation took the first formal step to replace the dollar as the world’s reserve currency. The United States was denied admission to the meetings. If the world leaders succeed, the dollar will dramatically plummet in value; the cost of imports, including oil, will skyrocket; and interest rates will climb.

Student Researchers:

• Nicole Fletcher (Sonoma State University)
• Krystal Alexander (Indian River State College)
• Bridgette Grillo (Sonoma State University)

Faculty Evaluators:

• Ronald Lopez (Sonoma State University)
• Elliot D. Cohen (Indian River State College)
• Mickey Huff (Diablo Valley College)

Foreigners see the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO) as Washington surrogates in a financial system backed by US military bases and aircraft carriers encircling the globe. But this military domination is a vestige of an American empire no longer able to rule by economic strength. US military power is muscle-bound, based more on atomic weaponry and long-distance air strikes than on ground operations, which have become too politically unpopular to mount on any large scale.

As Chris Hedges wrote in June 2009, “The architects of this new global exchange realize that if they break the dollar they also break America’s military domination. US military spending cannot be sustained without this cycle of heavy borrowing. The official US defense budget for fiscal year 2008 was $623 billion. The next closest national military budget was China’s, at $65 billion, according to the Central Intelligence Agency.”

To fund the permanent war economy, the US has been flooding the world with dollars. The foreign recipients turn the dollars over to their central banks for local currency. The central banks then have a problem. If a central bank does not spend the money in the United States, then the exchange rate against the dollar increases, penalizing exporters. This has allowed the US to print money without restraint, to buy imports and foreign companies, to fund military expansion, and to ensure that foreign nations like China continue to buy American treasury bonds.

In July 2009, President Medvedev illustrated his call for a supranational currency to replace the dollar by pulling from his pocket a sample coin of a “united future world currency.” The coin, which bears the words “Unity in Diversity,” was minted in Belgium and presented to the heads of G8 delegations.

In September 2009, the United Nations Conference on Trade and Development proposed creating a new artificial currency that would replace the dollar as reserve currency. The UN wants to redesign the Bretton Woods system of international exchange. Formation of this currency would be the largest monetary overhaul since World War II. China is involved in deals with Brazil and Malaysia to denominate their trade in China’s yuan, while Russia promises to begin trading in the ruble and local currencies.

Additionally, nine Latin American countries have agreed on the creation of a regional currency, the sucre, aimed at scaling back the use of the US dollar. The countries, members of the Bolivarian Alliance for the Americas (ALBA), a leftist bloc conceived by Venezuela’s President Hugo Chávez, met in Bolivia where they vowed to press ahead with a new currency for intraregional trade. The sucre would be rolled out beginning in 2010 in a nonpaper form. ALBA’s member states are Venezuela, Bolivia, Cuba, Ecuador, Nicaragua, Dominica, Saint Vincent and the Grenadines, and Antigua and Barbuda.

The cycle supporting a permanent US war economy appears to be almost over. Once the dollar cannot flood central banks and no one buys US treasury bonds, the American global military empire collapses. The impact on daily living for the US population could be severe.

Our authors predict that in addition to increased costs, states and cities will see their pension funds drained. The government will be forced to sell off infrastructure, including roads and transport, to private corporations. People will be increasingly charged for privatized utilities that were once regulated and subsidized. Commercial and private real estate will be worth less than half its current value. The negative equity that already plagues 25 percent of American homes will expand to include nearly all property owners. It will be difficult to borrow and impossible to sell real estate unless we accept massive losses. There will be block after block of empty stores and boarded-up houses. Foreclosures will be epidemic. There will be long lines at soup kitchens and many, many homeless.

Update by Michael Hudson

Foreign countries are presently seeking to create an international monetary system in which central bank savings do not fund the United States’ military deficit. At present, foreign “dollar holdings” take the form of US treasury bonds, used to finance the (largely military) US domestic budget deficit, a deficit that is largely due to military spending.

Russia, China, India, and Brazil have taken the lead in seeking an alternative system. But almost no information about such a system was available in the US or even the European press, except for a shorter version of my “De-Dollarization” article that I published as an op-ed in the Financial Times of London.

Discussions about creating an alternative monetary system have not been public. I was invited to China to discuss my views with officials there and to lecture at three universities, and was subsequently asked to write up my proposals for Premier Wen Jiabao, pending another visit just prior to this year’s meetings between China, Russia, India, and Brazil, with Iran attending with visitor status. All of this signals that other countries are seeking an alternative. Now that the euro has collapsed, there’s currently little alternative to the dollar as a reserve currency. This implies that there is no national currency that is a stable store of value for international savings.

Meanwhile, US money managers are leading the flight from the dollar to Brazil, China, and other “emerging market” countries. As matters stand, these countries are selling their resources and companies for free—as the dollars being spent to buy them end up in their central banks, to be recycled into US treasury bonds, or to be used to purchase euro debt that is plunging in international value.

The result of this conundrum is the pressure to end the postwar era of “free capital movements” and to introduce capital controls.

There has been almost no press discussion of my story or indeed of the issue itself. US and European media have successfully ignored the proposal of an alternative to the existing state of affairs.

Update by Fred Weir

This story illustrates one aspect of post–Soviet Russia’s search for a place in the US-led global order—a position that would reflect that country’s own distinct geopolitical interests and how it differs from the West in terms of history, culture, and level of economic development. Russia inherited from the former Soviet Union close relations with many countries that the US regards as “rogue states,” including Iran, Cuba, and Venezuela. There continues to be a lot of official, public sympathy for those countries and their opposition to the US global system, even though Moscow no longer has any grand sense of anti-Western ideology or even any practical goal of mobilizing toward an “alliance” that would serve Russia’s ends.

Under the George W. Bush administration, Moscow felt itself under pressure from what it viewed as Western encroachments into the post-Soviet space, what Russians term the “near abroad.” This took the form of “colored revolutions,” or what the Western media referred to as “pro-democracy uprisings” in Georgia, Ukraine, and Kyrgyzstan, which removed corrupt but Moscow-friendly regimes and brought to power much more outspoken and active pro-Western ones. The Kremlin, rightly or wrongly, interpreted these upheavals as US-sponsored and orchestrated attempts to reengineer the political loyalties of neighboring states with which Russia has deep historical ties. Two of those new leaders, Georgia’s Mikheil Saakashvili and Ukraine’s Viktor Yushchenko, sought to put their countries on a fast track to membership in the North Atlantic Treaty Organization (NATO), a prospect that Russia viewed with alarm bordering on panic. Another Bush-era initiative that engendered deep hostility in Moscow was a plan to station strategic antimissile interceptors in neighboring Poland, with associated radars in the Czech Republic. Russian military experts argued these deployments were the beginning of a strategic process that might eventually undermine Russia’s own aging, Soviet-era nuclear deterrent, which is the main priority of Russia’s national defense.

In response to these perceived threats, Russia seemed to sometimes go out of its way to cultivate relationships with other countries that were at odds with the US, which is the subject of this story. The Russians also held war games with the Venezuelan navy in the Caribbean, resumed cold war–era nuclear bomber patrols along the North American coast, and talked about revitalizing former Soviet air bases in Cuba.

In the past year, with substantially changed foreign policy priorities brought in by President Barack Obama, Moscow’s attitude has relaxed somewhat. Obama shelved the controversial plan to station antimissile weapons in Poland, and implicitly removed from the agenda any question of inducting Ukraine and Georgia into NATO. The so-called Obama “reset” of relations between Moscow and Washington seems to be improving prospects for cooperation, even on such thorny issues as Iran, though it may be too early to draw any firm conclusions.

Sources:

Chris Hedges, “The American Empire Is Bankrupt,” Truthdig, June 15, 2009, http://www.truthdig.com/report/item/20090614_the_american_empire_is_bankrupt/.

Michael Hudson, “De-Dollarization: Dismantling America’s Financial-Military Empire: The Yekaterinburg Turning Point,” Global Research, June 13, 2009, http://www.globalresearch.ca/PrintArticle.php?articleId=13969.

Fred Weir, “Iran and Russia Nip at US Global Dominance” Christian Science Monitor, June 16, 2009, http://www.csmonitor.com/2009/0616/p06s12-woeu.html.

Lyubov Pronina, “Medvedev Shows Off Sample Coin of New ‘World Currency’ at G-8,” Bloomberg, July 10, 2009, http://www.bloomberg.com/apps/news?pid=20601087 &sid=aeFVNYQpByU4.

Edmund Conway, “UN Wants New Global Currency to Replace Dollar,” Telegraph (UK), September 7, 2009, http://www.telegraph.co.uk/finance/currency/6152204/UN-wants-new-global-currency-to-replace-dollar.html.

Jose Arturo Cardenas, “Latin American Leftists Tackle Dollar with New Currency,” Agence France-Presse, October 16, 2009, http://www.google.com/hostednews/afp/article/ ALeqM5jisHEg79Cz8uRtYfZR6WK4JmWsIg.

See below for further references to articles I have written on this topic.

Stories on Russia’s overtures to Cuba and Venezuela:

• http://www.csmonitor.com/World/Americas/2009/0910/p06s11-woam.html
• http://www.csmonitor.com/World/Global-News/2009/0315/a-new-cuban-missile-crisis-russia-eyes-bomber-bases-in-latin-america
• http://www.csmonitor.com/World/Americas/2008/1125/p01s01-woam.html
• http://www.csmonitor.com/World/Europe/2008/0908/p01s06-woeu.html

Stories on Russia’s relations with Iran:

• http://www.csmonitor.com/World/Europe/2010/0521/Russia-sanctions-unlikely-to-delay-Iran-nuclear-power-plant
• http://www.csmonitor.com/World/Global-News/2009/0921/secret-israeli-deal-to-stop-russian-s-300-missile-sale-to-iran
• http://www.csmonitor.com/World/Europe/2009/0323/p06s01-woeu.html

Stories on US–Russian relations:

• http://www.csmonitor.com/World/Europe/2010/0513/Leaked-Russian-document-Could-Medvedev-era-tilt-more-pro-West
• http://www.csmonitor.com/World/Europe/2010/0504/NPT-Obama-reveals-size-of-US-nuclear-weapons-arsenal.-Will-Russia-respondhttp://www.csmonitor.com/World/
• Europe/2009/1028/p06s14-woeu.html
• http://www.csmonitor.com/World/Europe/2010/0513/Leaked-Russian-document-Could-Medvedev-era-tilt-more-pro-West

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• 22. Obama’s Trilateral Commission Team

Wall Street Journal

• POLITICS
• DECEMBER 14, 2010

'Temporary' Tax Code Puts Nation in a Lasting Bind

By JOHN D. MCKINNON, GARY FIELDS And LAURA SAUNDERS

WASHINGTON—Welcome to the world of the temporary tax code.

The U.S. tax code is slowly being turned into a temporary patchwork of provisions that need to be addressed every year or two, depriving individuals and businesses of the predictability they need for long-range plans. John McKinnon discusses. Also, Brett Arends says not only are the Democrats politically bankrupt and the Republicans morally bankrupt, but that this tax deal will play a big role in America's undoing.

In the late 1990s, there were typically fewer than a dozen tax provisions that had just a limited lease on life and needed to be renewed every year or so.

Today there are 141.

Now Congress, taking up a deal worked out between the Obama administration and Republican leaders, is poised to turn the whole personal income-tax system into something of a temporary structure. The plan embraces a broad range of provisions—an extension of Bush-era rates, a new estate-tax formula—but for only two years. A payroll-tax cut in the bill is for a single year.

This means that if the compromise passes largely intact, the U.S. will have no permanent regime governing levies on salaries, capital gains and dividends, the Social Security tax, as well as a slew of targeted breaks for families, students and other groups. This on top of dozens of corporate-tax provisions that already were subject to annual renewal.

The level of uncertainty, unusual for developed nations, complicates planning and discourages hiring and investment, many economists and corporate executives say.

"I haven't seen anything like it, and it's hard historically to find anything like" the current and pending negotiations, says Mortimer Caplin, an Internal Revenue Service commissioner in the Kennedy administration who at 94 is just three years younger than the income tax itself. "This Congress has left an awful lot up in the air."

A vote to pass the tax deal in the Senate is expected on Tuesday or Wednesday; prospects for swift approval in the House remained cloudy but party leaders seem increasingly resigned to the measure clearing Congress intact.

Democrats are predicting that a tax deal will clear a crucial hurdle comfortably in the Senate today, with a margin they hope will add momentum to the deal in the House. Aaron Zitner and Neal Lipschutz discuss. Also, Nick Timiraos discusses worry among economists that the housing market could be headed toward another downdraft as mortgage lenders tighten credit.

The two-year expiration of the bill's main provisions on individual rates would occur just after the next presidential election, and few in Washington envision a long-term solution being crafted at such a charged time.

At the same time, the possibility of a sweeping tax-system revamp can itself add to the uncertainty, what with politicans increasingly ready to talk about this. President Barack Obama has lately, as has the deficit-reduction panel he appointed, including Republican members such as Rep. Dave Camp, future chairman of the House Ways and Means Committee. The possibility of an overhaul that would put on the table long-established credits and deductions could further uproot predictability.

This year has been something of a test case for tax uncertainty, with concern about what would happen when provisions adopted in 2001 and 2003 expired at year-end.

More

• Tax-Cut Bill Draws Wide Support in Senate
• Tax-Cut Vote Splits New York Senators
• Tax Deal Set to Pass Senate
• Pelosi Walks Tax-Deal Tightrope
• Wealth Report: Depending on the Rich

Sales of certain kinds of life insurance rose as families wrestled with the possibility that estate taxes would jump in 2011. With no assurance the 15% rate on dividend income would last past 2010, Kraft Foods Inc., Exelon Corp. and Altria Group Inc. asked their shareholders to contact Congress in opposition to an increase. Stocks of utilities, which traditionally pay high dividends, appeared to factor in the possibility of a rise in the dividend tax rate in 2011, analysts said.

At Incobrasa Industries Ltd., a producer of biodiesel in Gilman, Ill., sales manager Douglas Santos has been waiting to see what happens to an expired tax subsidy for his industry. He is running at 25% capacity, vs. 100% in 2008. Mr. Santos wants Congress to make up its mind one way or the other. "Just do something," he says. The bill before Congress would restore the subsidy.

Economic research has shown businesses tend to be more reluctant to invest when they perceive high levels of uncertainty about various things, including over taxes. The pressure on policy makers to narrow the budget deficit, not merely simplify the tax system, further muddies the waters now, says Massachusetts Institute of Technology tax economist James Poterba, who finds "the crystal ball…particularly unclear at the moment."

Some call the worries exaggerated. "I truly do believe the concerns expressed over tax uncertainty are truly overblown," says Martin Sullivan, an economist with Tax Analysts, a nonprofit tax publisher, who sees today's situation as quite manageable compared with the profound business uncertainty companies faced during the financial crisis.

Important 'Extenders' | Provisions That Need to Be Renewed Regularly

• Protection from alternative minimum tax
• Enhanced charitable deductions for business
• Business research credit
• Ethanol subsidies
• Biodiesel incentives
• Faster depreciation for business investments
• Tax deferral of overseas financing income
• Expensing of 'brownfields' remediation
• Charitable donation of IRA assets

Deductibility of state and local sales taxes

View Full Image

Bloomberg News

Catherine McGraw, center, waits to check out at a J.C. Penney store in Mentor, Ohio.

Deductibility for school supplies

View Full Image

Associated Press

Stacey Ressler, a teacher in Wernersville, Pa., organizes classroom supplies she purchased.

"We're used to [uncertainty] in the tax world," he says. "What's changed in the last few years is the size of the temporary extensions."

Obama administration officials note that the tax code has been through gyrations before, for example in the 1980s, when Congress adopted accelerated depreciation in 1981, only to repeal it five years later. That threw real-estate markets into an uproar and added to problems that contributed to the savings-and-loan collapse.

The White House says the current confusion points to the need for a system that is more stable and simpler. "We've got to have a larger debate about...how is this country going to win the economic competition of the 21st century," President Obama said last week. "That's going to mean looking at the tax code and saying, what's fair, what's efficient? And I don't think anybody thinks the tax code right now is fair or efficient."

Small business is often looked to as a source of job growth. But the latest monthly survey by the National Federation of Independent Business, a small-business advocacy group, found that 75% of owners felt it wasn't a good time to expand, and one in five said the main reason was doubt about policy environment, including taxes.

For smaller companies, tax uncertainty could be an incentive to expand overseas rather than in the U.S., according to Tom Duesterberg, president of the Manufacturers Alliance, a group representing medium-size firms. Companies "can't wait until all these [tax] questions are resolved," he says. "They are not going to wait until all that definitively happens. They have to deploy cash, please their shareholders and expand and grow."

Billy Hoffpauir, a developer in Lafayette, La., says he has been trying to sell some real estate because "with the current uncertainty, I am unable to quantify the risk to make long-term investment decisions." If he finds buyers, he says, he would be likely to plow the cash into "other interests, probably overseas," because some foreign countries have more favorable taxes and regulations. The tax situation is the overwhelming driver in his business decisions, Mr. Hoffpauir says.

Lea Bailes, president of Guier Fence in Blue Springs, Mo., says his plans for next year depend on how the tax debate turns out: "We're looking at acquiring a couple of smaller fence companies. The number we acquire, honestly, will depend on what we have to pay in tax."

The company, which employs about 70, would try to hire two to three new workers for each acquisition, possibly 10 in all. "If everybody our size can add 10 employees, we'd be a lot farther down the road in dealing with the unemployment," Mr. Bailes says.

Guier is in the process of acquiring another firm now, and while Mr. Bailes likes to take time to make such decisions, he worries that concern over a possible rise in capital-gains rates might make the seller push to complete the sale this year. The bill in Congress would keep the current 15% top rate for two years.

One reason unsettled rules on individual income taxes affect planning at small businesses is that many don't pay corporate tax, but pass business income through to the owners for taxation on their personal returns.

Bill Wiygul, whose family owns four auto-repair businesses in northern Virginia, estimates he and his wife would pay at least $20,000 more in various taxes in 2011 if Congress doesn't address parts of the code, including the Alternative Minimum Tax. The AMT snags a growing number of filers each year, and while Congress regularly limits the number affected—and likely will do so again this week or next—this has so far been an AMT "patch," never a permanent fix.

Mr. Wiygul says he would trade an increase in tax rates for greater certainty if the pain was shared by all. "We are petrified," he says. "We would be more actively pursuing expansion opportunities if we felt like the climate was more certain."

Large multinationals are only marginally affected directly by income-tax provisions on the table this year. Yet the stakes might be high for these companies. Executives worry about becoming a target for lawmakers seeking revenue to narrow deficits.

If a broad revision "is a true 'step back, let's take a fresh look,' we would not be frightened by that," says Ken Cohen, a vice president at Exxon Mobil Corp. But if it pits industry versus industry or becomes a hunt for revenue, "that's the process we would have much more apprehension about."

The reasons the tax code has acquired an increasingly temporary cast have to do with deficits, a divided Congress and even the constitutional system.

Political division contributes because of the daunting task of mustering a filibuster-proof 60 votes in the Senate. Legislative shepherds of the Bush cuts resorted to passage under what is called "budget reconciliation," requiring only a majority vote. But a measure passed this way can't be for longer than the budget that authorizes it, in this case 10 years. Hence the provisions expire in 2010.

Such an outcome is less likely in countries with parliamentary systems because these leave the government less subject to having its will thwarted by a large minority. "Very few countries have tax provisions that expire unless legislative action is taken," says Jeffrey Owens, head of tax at the Organization for Economic Cooperation and Development in Paris. "Also, in most OECD countries, it's the government that initiates new legislation, and once proposed the legislation generally passes."

Deficits tempt legislators to give tax provisions a temporary term to disguise their cost. For proponents of a new tax provision, the strategy is to get a foot in the door by passing it for a year or two, at a seemingly affordable cost, intending to renew it regularly.

That is how the number of provisions up for yearly extension has ballooned. Though the provisions are often extended in a bundle, a given provision's inclusion in the bundle is never certain.

Perhaps nowhere has tax uncertainty been felt more intensely this year than in the estate tax, always a controversial matter.

A 2001 law lowered its rate and increased the exemption in steps, with the tax lapsing in 2010 and then, unless Congress acts, returning in 2011 at a 55% top rate on estates of $1 million or more. The unusual hiatus coupled with a far more costly tax as soon as 2010 ended gave "just an unbelievable Alice-in-Wonderland aspect" to planning for certain well-to-do families, says Bruce Stone, a Miami-area estate lawyer.

Sales of a life-insurance policy commonly used for estate planning rose 22% in the first nine months from a year earlier, and their death-benefit coverage was up 30%. Though the policies can also be used for other purposes, part of the jump seemed clearly to be for hedging against the possible estate-tax jump in 2011.

In a few cases, the uncertainty drove people to ponder extreme measures to avoid a tax hit for heirs.

David Drouhard, a Washington-state farmer who is 56, received a diagnosis of advanced kidney cancer 14 months ago and faced a grim set of treatment choices. Most offered little chance of extending his life more than 18 months, although an immunity-boosting drug held out some hope. Mr. Drouhard says he worried that inaction on the estate tax would force his family to sell his wheat and alfalfa farm, now worth about $3 million, to pay taxes if he died in 2011.

After much deliberation, Mr. Drouhard decided to take the immunity-boosting drug, but with a caveat: "I said, 'If we don't see results from the first series [of treatments], I'm going to stop,"' he says. "I try to take care of my family, so why not go ahead and die instead of living another six months." He has responded well to the treatment, but adds: "I think it's wrong that you have to make that kind of decision."

The compromise Congress is weighing this week would set a top estate-tax rate at 35% and the exemption at $5 million.

But this would be for just two years. Just as this year, a failure by Congress to act then would cause the tax to then revert to a top 55% rate and $1 million exemption, in this case in 2013.

—Leslie Scism contributed to this article.

Write to John D. McKinnon at john.mckinnon@wsj.com, Gary Fields at gary.fields@wsj.com and Laura Saunders at laura.saunders@wsj.com

December 14, 2010 at 17:28:46

The plot to destroy Social Security

By Michael Collins (about the author)

opednews.com

Bill Clinton showed up at the White House for an "impromptu" press conference to discuss the president's tax compromise with the Republicans. Clinton disclosed that "I make a lot of money now" and, as a result, he would benefit from the program. Then he endorsed the compromise, calling it the best deal Obama could make.

Clinton was particularly high on the Social Security payroll tax reduction. "According to all economic analysis, [this is] the single most effective tax cut you can do to support economic activity. This will actually create a fair number of jobs. I expect it to lower the unemployment rate and keep us going."

Across town, United States Senator Bernie Sanders was telling the simple truth that Obama and Clinton avoided. Reducing the Social Security payroll tax from 6.2 percent to 4.2 percent as a one year tax holiday presumes that the normal rates will be restored at the end of the one year period. Who would restore those rates? The very same party that passed the Bush 10-year "temporary" income tax reductions. That same party, the Republicans, now claims that ending the Bush temporary tax cuts represents the greatest tax increase ever. Just as they forgot that those tax cuts were temporary, the new Republican majority will forget the payroll cuts were temporary. Senators Bob Corker (R-TN) and Mike Johanns (R-NE) agree that ending the tax holiday will be portrayed as a tax increase.

Social Security has a dagger at its heart. In 2011, we will have a president, who wouldn't even fight for Social Security when he had a majority in Congress, with a House of Representatives with a veto proof majority that won't repeal any tax cut until Hell freezes over.

The citizens of this country have been betrayed by the smoothest con artists around for the benefit of the ultra rich, with the ultimate demise of Social Security assured by a rock solid majority of Republican extremists waiting in the wings to occupy the 112th Congress.

Where's the opposition?

The nation's largest organization for seniors, AARP, endorsed the Obama payroll tax cuts. The organization did this despite the fact that the Obama compromise offers little in the way of benefits for seniors.

The allegedly liberal publication, Mother Jones, just ran a piece by Obama apologist Kevin Drum claiming that there's every reason to believe that the payroll tax holiday will be over in just one year as promised in this deal. It's another example of tortured logic listing Republican avarice and concluding they'll honor their word.

The self-styled advocates for a FDR revival, New Deal 2.0, ran two opinion pieces supporting the Obama deal. One argued it was that the president "probably did the best he could" while the other actually praised the deal, claiming that this was the "best deal" that Obama could get. A third piece noted that Obama didn't know much about FDR's Social Security proposal but left the president untouched on the Trojan Horse payroll tax reduction. What would FDR do? Capitulate and equivocate. Hardly.

The largest organization representing seniors, 40 million strong, just caved. They and the president got some cover by two organizations that advertise as being of the left that also caved.

That leaves Senator Sanders, those who will support him for real filibuster, focused advocates for the program, and citizens of the United States. The House Democratic Caucus rejected Obama's proposal to some fanfare. But their objections were on how the bill was rolled out and specifics like a $5 million threshold for any estate tax.

Addictions 101

Two key features of the bipartisan political establishment are an addiction to stealing money from the people for their patrons, the corporate and ultra rich elite, and total denial that taking the peoples' money to satisfy this relentless craving is both harmful and morally unacceptable.

The Money Party is at the peak of its craving for more money earned their old-fashioned way, through expropriation from the masses. They will not be denied. They are Hell bent on making their once false prophesies that Social Security is bankrupt into a living reality.

We are nothing to them.

http://www.themoneyparty.org/main/

Michael Collins is a writer in the DC area who researches and comments on the corruptions of the new millennium. His articles focus on the financial manipulations of The Money Party, the abuse of power by government, and features on elections and (more...)

The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.

Bad Business from the Richest Businessmen

by Dan Lieberman / December 13th, 2010

Investor Warren Buffett and Microsoft founder Bill Gates announced that they are asking hundreds of billionaire Americans to give away at least 50 percent of their wealth to charity. According to Reuters, “They have named the campaign the Giving Pledge and are asking those who commit to giving away at least half their fortune during their lifetime or after their death to publicly state their intention with a letter explaining their decision.” A worthwhile endeavor, but why wait and why donate to just any charity when they can use the wealth for a more worthwhile purpose, to save the economy?

Accumulation of wealth for expressive purposes detracts entirely from its economic purpose, to grow the economy. Letting investment lay fallow, which these captains of industry have partly done, or detouring gigabucks for disbursement through depleting charities, rather than organizing assets towards further growth through investment in growing industries, will soon turn the entire nation into one big charity. Can the free enterprise system survive without growth? Can it maintain growth when an already falling economy is deprived of almost a trillion dollars of needed investment funds?

Forbes relates that the assets of four hundred U.S. billionaires total 1.2 trillion dollars. If all of them were willing to sell one-half of their assets to investors, the sales will transfer 600 billion dollars of green currency to their bank accounts. By surrendering the 600 billion dollars, without obtaining tax deductions, to the world’s largest charity, which is the United States government, the billions of dollars can be used for one or more of the following:

Pay for most of next year’s public deficit.

Supply massive funds to private industries, especially in new energy technologies, and enable them to grow again.

Reimburse one year of salaries for new employees ($40,000/person average). This will temporarily reduce unemployment by 15 million, erase most of the unemployment compensation, and assist the states to achieve balanced budgets,

Support new export industries and assist in overcoming the trade deficit,

Maintain low taxes

Provide low cost loans for small businesses.

We need to help the deprived and less fortunate around the wide world, but are those of their own United States citizens, many suffering from the shocks of a failing economy, any less in need? Perhaps it seems that those who purchase the assets could have performed the same philanthropy. Not so. Unlike the wealthiest, who remain with hundreds of million or billions after halving their assets, the investors purchasing the assets, say, those who have millions of dollars, will remain with only millions of dollars after purchasing the assets, a worthwhile amount but insufficient for being too zealous in assisting others. Summarizing — the sellers don’t need the assets; the buyers, who are of much lesser wealth, are still accumulating.

The brief analysis also indicates that an excessive accumulation of assets by one person can stifle an economy, and reworking of these assets, so their value circulates, can advance an economy. Thousands of persons, each with hundreds of thousand dollars of assets (such as owning a house), cannot ordinarily sell the assets and, if they could, have no means to group together with others to support the economy. One person with more than one billion dollars of assets can sell assets and direct the funds to advantageous economic use without teaming with anyone.

Apparently not considered by the top 400 is that selling massive amounts of assets and transferring the funds to charities have detrimental effects to the economy.

Many charities exist overseas, which means dollars will leave the nation.

If the contributors obtain massive tax deductions, then the decreased tax revenue will widen the government deficits.

Charities are localized and non-growth industries. They cannot efficiently handle huge investments, and their objective is to disappear. Huge investments to promote growth benefit the entire economy and eventually, either resolve the problems of, or provide the assistance to, the charitable organizations.

Selling assets to obtain funds for reconstituting America and paying full taxes for the transactions will enable the nation to grow again and produce massive benefits for all — government deficit reduced, population escaped from poverty, charities relieved of their own burdens. Eventually the same persons who performed the noble act will find their assets growing once again. What more can the country ask of them, or they of their nurturing country?

Dan Lieberman is Editor of Alternative Insight, a monthly web based newsletter. He is a writer of many published articles on the Middle East. He can be reached at: alternativeinsight@earthlink.net. Read other articles by Dan.

This article was posted on Monday, December 13th, 2010 at 7:00am and is filed under Classism, Economy/Economics, Finance.

December 11, 2010 at 18:49:11

Five WikiLeaks Myths and their Disturbing Truth

By Elaine Shpungin (about the author)

"Your concept looks terrific. I wish you the best of luck" Daniel Ellsberg by inju

On December 6, I received a message from a friend celebrating the fact that Julian Assange, the controversial founder of WikiLeaks, was leading a Times magazine poll for the next "person of the year."

Up to then, I had been somewhat dismissive of the whole WikiLeaks debacle, perceiving this Assange character as someone who practiced "irresponsible" journalism, releasing thousands of private communications that seemed to have little to do with national security and a lot to do with mean-spirited back-channel insults between diplomats. Add to this an accusation of rape (which did seem suspiciously timed to me, but still) and this did not seem like someone I wanted to have coffee with, never mind nominate for person of the year!

However, due to the popularity implied by the Times poll, and to my great respect for my friend's political senses, my interest was piqued. Thus, I began to dig into the WikiLeaks story, reading sources I have personally come to trust over the years to put together a credible version of the facts for myself.

What I discovered troubled me greatly.

Surprisingly, what was disturbing were not Assange's actions, or even the unethical and untruthful actions revealed about our government by some of the leaked cables (although these are very sad to me), but by the actions and words of our political leaders (like Joe Lieberman) and major organizations (like Amazon and Visa/Mastercard) which have summarily decided on Assange's guilt without evidence or a due process. I am also disturbed by the mainstream story told about WikiLeaks, Assange, and the leaked cables, which weave the myths below into a tale of narcissism, drama, irresponsibility, and (yawn) petty diplomatic cat-fights, with "treason" and "terrorist" accusations thrown in for flair.

The counter-story that emerged out of my reading is far more complex and nuanced, and raises many questions about who has really crossed ethical boundaries here -- Assange or those that have tried to discredit and shut him down.

It is to be expected, of course, that no government wants to be embarrassed or have their state secrets (especially ones that showcase lies or human rights abuses) revealed publicly. However, if such a thing occurs, officials (and the media, and corporations) have a decision point a moment in which they can choose the level of dignity, morality, ethics, and legality with which they will approach the disclosures.

It is these actions and words, which have stemmed from the moments of choice presented to our leaders by WikiLeaks, that worry me in terms of what they reveal about their commitment to democracy, civil liberties, human rights and use of power.

But I will let you judge for yourself.

MYTH ONE: ANARCHY FOR THE FUN OF IT

Assange is an anti-establishment, anti-business trouble maker who is trying to create chaos for his own enjoyment.

Evidence and statements made by Assange and those who know him suggest that he is neither anti-establishment nor anti-business but anti-corruption and illegality.

WikiLeaks neither steals documents nor pays others to do so nor investigates actions and crimes. Instead, WikiLeaks acts as a secure online publishing clearinghouse for documents submitted to them voluntarily by "whistleblowers" (people who want to expose corruption, human rights abuses, and illegal activities by organizations, corporations and nations).

Whistleblowers throughout history, although not always popular at that moment, have been willing to take risks to inform us about decisions that have critical implications for our health (e.g., tobacco industry); the welfare and lives of our family members (e.g., Vietnam war Pentagon Papers); our preferences for how our tax dollars are spent and our ability to make a living (e.g., financial corruption by governors, luxury purchases by our representatives); and our ability to decide on the match between the actions of those who lead us and our own moral compass (e.g., sales of arms to certain groups and nations, child molestation and sex scandals, financial support to governments that are officially at war with us or unsupported by us, etc.)

Legal protection for whistleblowers varies widely by topic and geographic locale and whistleblowers are often at risk for serious recriminations ranging from job loss to incarceration and death.

To address this, WikiLeaks has created a way to encrypt documents and transmissions so that the identity of those who share them remains anonymous. In many places around the world, this prevents whistleblowers from being detained, tortured, imprisoned and assassinated for exposing practices they believe to be endangering and hurting others.

Assange has stated in interviews that what he envisions is a world where corruption is minimized and corporations and governments that operate in ethical and legal ways are rewarded, while those that break laws and ethics codes are exposed and prevented from thriving.

MYTH TWO: IRRESPONSIBLE DOCUMENT DUMPING

Although Assange's work may expose some corrupt or unsavory practices, his irresponsible "dumping" of documents and "transparency trumps all" shotgun approach puts many innocent lives at risk.

Contrary to this popular assertion, the evidence suggests that (a) WikiLeaks currently approaches the release of documents with deliberation and care; and (b) no individuals have yet been shown to have experienced harm as a result of released WikiLeaks documents, while thousands of individuals seem to have been harmed (and killed) as a result of some of the secret decisions described in released WikiLeaks documents (e.g., Kenya, 2009).

Having said that, Assange is not a traditional investigative journalist who goes after a specific story (e.g., plastic melanine in milk products sickening thousands of babies in China). Instead, WikiLeaks acts as a publishing clearinghouse for documents submitted to them voluntarily by "whistleblowers" (people who want to expose corruption, human rights abuses, and illegal activities by organizations, corporations and nations). WikiLeaks then releases large numbers of these documents (after they are verified by volunteer experts) to the public and specific media outlets (e.g., the NY Times, Guardian UK) with the idea that citizens and journalists will comb through the details, report them in ways that make sense to them and their readers, and, in some cases, piece together stories that would parallel the work done by investigative journalists.

Despite this rather "open" approach to releasing leaked information, statements from Assange and his staff (even those who have now left the organization) strongly suggest that he chooses which documents to release (and when) based on specific criteria, contradicting the accusation of document "dumping."

In terms of concern for the "innocent", it seems that, while at times in the past Assange may have been less careful about protecting the names of referenced individuals (e.g., in the Afghanistan war reports), he has recently made efforts to work with human rights groups, media outlets, and insiders to redact current reports (edit before publication) with an eye towards information that endangers individuals, as well as hold back thousands of more damning documents. Other accusations (for instance, around the release of a list of critical infrastructure sites), while more controversial, are commonly believed to reveal nothing that cannot be easily found using Google or even a printed atlas.

Daniel Ellsberg (leaker of Vietnam War Pentagon papers and winner of Ghandhi Peace Award) and others who are closely familiar with Assange's work (e.g., the attorney Glenn Greenwald) have also stated that accusations of "military safety" are a default that is leveled against whistleblowers regardless of relation to actual risk, and have challenged accusers to come up with a single specific example in which individuals have been hurt or have indicated that protection was needed as a result of leaked WikiLeaks documents.

MYTH THREE: CRIMINAL, TREASONOUS, TERRORIST BEHAVIOR

Assange has committed treason or terrorism and needs to be treated as a criminal.

Julian Assange is an Australian citizen who has published edited documents voluntarily sent to him by others (see Myth #1). He did not steal the documents, pay someone to steal them, or break any binding agreements (e.g., between him and his employer) by releasing the documents to the public. While the U.S. (or other nations) are currently investigating possible laws under which Assange may be prosecuted (e.g., the Espionage Act), at this time, Assange has not been charged with any crime related to the leaked cables or any of the other documents released by his organization since 2006.

Despite this, and without even a nod to due process, high ranking U.S. officials and leaders, including Joe Lieberman, have made conclusive statements about Assange's criminality and guilt, with some comparing him to Osama bin Laden (an individual who has been responsible for the violent death of thousands of innocent civilians and whose vision of a just world includes a small number of conservative religious leaders ruling without meaningful input from the populace - the exact opposite, ironically, of Assange's vision of a just world in which a small number of corporate and government leaders do NOT get to rule without meaningful input from the populace).

Meanwhile, major corporations in the U.S. and other countries, including Visa, Mastercard, and PayPal have blocked WikiLeaks from receiving donations, while others (Amazon, EveryDNS, Vimeo) have refused to continue hosting them on their web servers. All have cited investigations into illegality or actions that may have broken their contracts, while PayPal and Amazon have admitted to pressure from the State Department and the Department of Homeland Security, respectively (although PayPal later denied it).

As a frequently cited contrast, supporters of the Ku Klux Klan can continue to use Visa and Mastercard to make donations to their site, which asks them to consent to a statement that "I am white and not of racially mixed descent. I am not married to a non-white. I do not date non-whites nor do I have non-white dependents. I believe in the ideals of western Christian civilisation and profess my belief in Jesus Christ as the son of God."

Reporters without Borders have stated that the actions to block WikiLeaks from operating are unprecedented:

This is the first time we have seen an attempt at the international community level to censor a website dedicated to the principle of transparency. We are shocked to find countries such as France and the United States suddenly bringing their policies on freedom of expression into line with those of China. We point out that in France and the United States, it is up to the courts, not politicians, to decide whether or not a website should be closed.

Daniel Ellsberg, who, in 1971 leaked the Pentagon Papers (an 8,000 page, 47 volume report which showed numerous ways in which the American public had been misled by the government about our involvement in Vietnam), has repeatedly defended Assange. Among other things, Ellsburg has stated that the accusations of treason and vitriol aimed at Assange in relation to the leaked diplomatic cables closely parallel his experiences following the leaking of the Pentagon Papers (including being put under illegal surveillance with the goal of discrediting him through any means possible).

Amnesty International has also released a strong and clear statement about freedom of speech and human rights as it relates to WikiLeaks, saying (among other things):

"" criminal proceedings aimed at punishing a private person for communicating evidence about human rights violations can never be justified. The same is true with respect to information on a wide range of other matters of public interest.

At the very least, a significant number of the documents released by WikiLeaks appear to fall into these categories, so any prosecution based in whole or in part on those particular documents, would be incompatible with freedom of expression. (Amnesty Intenational Q & A)."

MYTH FOUR: GUILTY OF SEXUAL ASSAULT UNTIL PROVEN INNOCENT

Assange is being held on rape charges, which, although he denies them, we know little to nothing about and should therefore take seriously.

Although sexual assault charges are certainly serious, a sober and credible Reuters report shows that Assange had consensual sex with two women (at different times) without the use of a condom (in one case, it broke), which resulted in unsuccessful attempts by the women to track Assange down for STD testing. These unsuccessful attempts (reportedly because he was already staying low due to the leaked cables scandal), escalated into a decision by a prosecutor to press charges. You can read the Reuters Special report (below) for yourself and decide if it's fair to say at this point that we "know nothing".

MYTH FIVE: MUCH ADO ABOUT LEAKED GOSSIP

For all the drama, WikiLeaks cables mostly show a bunch of gossipy, mean-spirited revelations about diplomats and leaders saying unflattering things about each other.

First, when thinking about the relative impact of Wikileak's revelations, it may be helpful to note that in Wikileak's short history, the 4 yr old agency has already won the Economist New Media Award (UK's Index on Censorship's 2008) and Amnesty International 's Media Award for exposing "extra judicial killings and disappearances" in Kenya (2009).

Then, as recently as July and October 2010, both the Afghanistan and Iraq war logs exposed by WikiLeaks have led to a new understanding of events, decisions, and misinformation that has affected the lives (and deaths) of American men and women deployed in these countries, as well as the astounding number of civilians killed by violent means (66,000 in the Afghani conflict, for instance).

Finally, in regards to the leaked cables themselves, although it is true that the documents show an unexpected lack of "diplomacy" among diplomats (pun intended), leaders, and staff when communicating (privately) with each other, the cables also reveal important information that speaks to military, climate, peacekeeping, and ethical issues that affect us and our relationships with our leaders (and only a tiny fraction has been revealed so far).

For instance, we now know that diplomats have been asked, at times, to double as spies, with tasks such as collecting DNA samples, credit card information, and other personal data on UN leaders. We also know that the U.S. tried to use a carrot and stick combo involving financial incentives and political alliances to influence other nations' decisions during the failed Copenhagen climate talks. We also know that we have been purposefully misinformed about U.S. involvement in Yemen (official story: none; reality: escalation of troops and attacks), about U.S. killings of innocent civilians (directly, not as crossfire victims), about the level of corruption in Afghanistan (e.g., the amount of money we spend on bribes to the "other" side), and the diplomatic deals which involve leaders from other countries covering up for our government as it misinforms the American people.

Amnesty International has also confirmed that a number of WikiLeaks releases have clear relevance to human rights violations around the world, including previously released information about the wars in Afghanistan and Iraq and recently released information about the U.S. involvement in Yemen and complicity between U.S. and Germany around the investigation of CIA agents in relation to the illegal detention and disappearance of Khaled el-Masri. Several media sources have compiled their own "top lists" of critical information, which will continue to evolve as more cables are revealed (see references).

CONCLUSION

As citizens who are interested in our own safety and in the safety of our children (at home and fighting abroad), in what our leaders say and do in our name, in the sustainability of our future, and in how our neighbors across the globe are treated by us - the truths about Assange and WikiLeaks bring up a lot of questions about where our leaders stand when it comes to issues of ethics and civil liberties.

Whether you'd want to have coffee with Assange or not, you have the right to know the whole story and not just the part that is shrouded in myth, threats, and accusations, some of them grounded in an absence of the due process which is supposed to help make this beautiful place the home of the free.

REFERENCES:

Is WikiLeaks' Julian Assange a Hero? Glenn Greenwald Debates Steven Aftergood of Secrecy News

WikiLeaks release: Timeline of the key WikiLeaks revelations

Operation Payback Cripples Mastercard Site in Revenge for WikiLeaks ban

Ex-Inteligence Officers, Others See Plusses in WikiLeaks Disclosures

Amnesty International Q & A Freedom of Expression

An Interview with WikiLeaks' Julian Assange

Reuters Special Report: STD fears sparked case against WikiLeaks

The Arrest of Julian Assange as it Happened

Intermediary Censorship of WikiLeaks on the Rise

WikiLeaks FAQ by Future of the Internet

WikiLeaks' Julian Assange Wants to Spill Your Corporate Secrets

Exclusive: WikiLeaks Will Unveil Major Bank Scandal

The 10 Most Important WikiLeaks revelations (Salon)

WikiLeaks cables: Seven key things we've learned so far

WikiLeaks list of 'critical' sites: Is it a 'menu' for terrorists?

WikiLeaks: Wikipedia

Pentagon Papers: Wikipedia

Daniel Ellsberg: Wikipedia

Whistleblower: Wikipedia

http://www.psychologytoday.com/blog/peacemeal

Elaine Shpungin, Ph.D. is the director of a training center for doctoral students in Psychology and a student and practitioner of Non Violent Communication (NVC) and Restorative Circles (RC). She is currently interested in exploring restorative (more...)

The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.

Published on Sunday, December 12, 2010 by Agence France Presse

Obama Lashes Out Amid Calls to Free Assange

WASHINGTON - Barack Obama has made his strongest condemnation yet of WikiLeaks, as supporters of Julian Assange demonstrated for his release.

WikiLeaks supporters wear masks of the "Anonymous" internet activists and an Assange mask, left, at a rally in Malaga, Spain. (REUTERS/John Nazca)

In a call to the Turkish Prime Minister, Recep Tayyip Erdogan, the US President ''expressed his regrets for the deplorable action by WikiLeaks'', the White House said.

The comments, and similar statements in a call to his Mexican counterpart, Felipe Calderon, were Mr Obama's most forceful yet against the website, whose disclosure of a trove of secret US diplomatic cables has won it international condemnation and praise.

Mr Obama's call to Mr Erdogan could be seen as an effort to smooth ruffled feathers in Turkey - a key regional US ally - where officials including the Prime Minister have railed against some of the information divulged by the documents.

Demonstrations took place across Spain on Saturday - including one by hundreds of people outside the British embassy in Madrid - calling for the release from a London jail of Mr Assange, the website's Australian founder, who is awaiting possible extradition to Sweden to face sexual assault allegations.

There were also demonstrations in London and Amsterdam.

The Spanish website Free WikiLeaks called for demonstrations in Buenos Aires, Mexico City, Sao Paulo, Bogota and Lima. In a manifesto entitled ''For freedom, say no to state terrorism'', it demanded Mr Assange's release and ''restoration of the WikiLeaks domain''.

''Given that no one has proved that Assange is guilty of the offences he is accused of and that WikiLeaks is not implicated in any of those'', the website also urged that the credit card giants Visa and MasterCard rescind their decisions to cut off payments from the website's supporters.

Mr Assange is due to appear in a London court for a second time tomorrow after being arrested on a warrant issued by Sweden. Prosecutors there want to question him about two women's allegations of rape and sexual molestation.

WikiLeaks insists the allegations are a politically motivated attempt to smear Mr Assange.

Mr Assange, 39, has been transferred from the main section of Wandsworth prison to an isolation unit, said Jennifer Robinson, one of his legal team.

His lawyers have complained that he is getting no recreation time in prison, is having difficulties making phone calls out, and has not been allowed to have a laptop in his cell.

''He is on his own,'' Ms Robinson said.

Mr Assange was described as in ''very good'' spirits but ''frustrated'' that he could not answer the allegations that WikiLeaks was behind cyber attacks against the credit card firms that have refused to do business with the website.

''He told me he is absolutely not involved and this is a deliberate attempt to conflate WikiLeaks, which is a publishing organisation, with hacking organisations, which are not,'' Ms Robinson said.

Mr Assange's mother, Christine, was quoted as saying she was worried for her son because ''massive forces'' were ranged against him.

© 2010 AFP

AlterNet.org

PERSONAL HEALTH

AlterNet / By Jill Richardson

Pet Food Politics: Why Our Pets Still Aren't Safe

The author of Pet Food Politics exposes how the pet food crisis happened and why it is a sign of a larger problem with our own food system.

September 10, 2008 |

In 2007, American pet owners found out about a large-scale experiment the food industry carried out on our pets. What happens if you streamline, centralize and outsource food production with no goals other than profit? In the case of pet food, the system worked until it didn't. And when it didn't, thousands of dogs and cats died due to eating more than 100 brands of pet food contaminated with melamine and cyanuric acid. Like a dead canary used to alert miners of methane and carbon monoxide, our dead pets are a warning about our own food safety.

Marion Nestle, professor of nutrition, food studies and public health at New York University, recognized the significance of the 2007 pet food crisis immediately. She did what our government should have done: She researched how melamine and cyanuric acid could have entered the pet (and human) food supply under the guise of wheat gluten and chronicled the story from start to finish in her newest book, Pet Food Politics: The Chihuahua in the Coal Mine.

Nestle points out in previous books that it can be hard to prove the effects of any one food because humans eat diets of many foods, making it almost impossible to identify the effects of any specific one. Pets serve as our canaries because they do eat diets consisting almost entirely of one food. Also, the pet food business is even more centralized than the highly consolidated human food supply. With difficult nutrition and taste specifications and expensive manufacturing equipment required to make pet food, companies find it most economical to outsource production to specialized operations like Menu Foods, the company responsible for importing the tainted wheat gluten. When the Chinese supplier substituted wheat flour dressed up with melamine and cyanuric acid for wheat gluten, pets died on a mass scale.

Pet Food Politics reads like a gripping murder mystery, exposing how the pet food crisis happened, what it means for the human food supply, and why the current system of government oversight is insufficient for pets, farm animals and humans. I've enjoyed each of Nestle's books more than the last, and I found Pet Food Politics the most entertaining of all. I also appreciate Nestle's compassion for animals, as she understands that we parents of furry children love our cats and dogs as more than "just pets." I asked Nestle a few questions about Pet Food Politics; you'll find her answers below.

Jill Richardson: At what point did you know you needed to write about the pet food crisis of 2007? What in particular about the story made it a compelling topic for you?

Marion Nestle: This is a long story. My book What to Eat came out in 2006. It's not really a book about what to eat; it's about how to think about what to eat using supermarkets as an organizing device. I went through supermarkets, aisle by aisle, trying to answer every question anyone might have about the issues related to food choices, from nutrition to environmental impact. I kept seeing this huge aisle devoted to dog and cat foods and would look at the products but couldn't understand their labels. If I didn't understand them, I suspected other people might not either. My partner, Mal Nesheim, is a retired animal scientist. He had no trouble understanding them. Aha! Let's do a book together! We signed a contract with Harcourt in February 2007 to write What Pets Eat. And then, one month later, came the recalls. I knew we would have to talk about the recalls in our book. I started working on what I envisioned as a 10-page appendix to What Pets Eat about the recalls, but I totally got into trying to figure out what had happened. The piece got ridiculously out of hand. Fortunately, University of California Press picked it up as a separate book.

JR: What was the top reason that allowed the pet food problems to reach the magnitude they did? Was it preventable?

MN: The number one reason is that nobody was paying any attention to food ingredients imported from China. After that, the reasons multiply. Pet food companies had no idea where their ingredients came from. The manufacture of pet foods is complicated, so it is centralized in a few manufacturing facilities that make many different brands. The food supply for pets is so tightly linked to the food supplies for people and farm animals that the food supplies cannot be separated; what affects one, affects all. The FDA has lost so much funding over the last 10 years or so that it can't do its job. And China is an important trading partner as well as an exporter of cheap goods. This is a hugely complicated, interconnected story that I thought was well worth telling.

JR: What do you think readers will find most shocking about what our pets eat?

MN: What shocked me the most was the lack of oversight. Readers may feel differently. I expected to be appalled by what is in pet foods, but I think they are really OK. Dogs and cats don't mind eating parts of animals that we wouldn't dream of eating. Pet foods perform an important public service in making good use of the nutritious byproducts of human food production. Otherwise, those byproducts would go to waste and have to be thrown in landfills or burned.

JR: This summer the FDA was unable to uncover the source of a salmonella outbreak for several months, and even Whole Foods was subject to a recent beef recall due to E. coli. Do your discoveries about pet food translate into dangers for humans too?

MN: Absolutely. Hence Chihuahua in the Coal Mine. Within months, exactly the same thing happened with the drug heparin. Chinese suppliers were using chondroitin sulfate instead of heparin because the test for heparin just looks at sulfate. This is just like using melamine in wheat flour as a substitute for wheat gluten in pet foods (where the test just looks at nitrogen). Both turned out to be lethal. The lesson is that companies must be vigilant about tracking and testing ingredients. It is also clear that we need a better food safety system, one that requires everyone in the food supply, from farm to table, to do the right thing.

JR: Recently, the government began allowing irradiation of lettuce and spinach. Would you have made the same decision if you were in charge? Do you think irradiation will help?

MN: Yeah, right. Irradiation is a late-stage techno-fix to a problem that should never have happened in the first place. I love quoting Carole Tucker Foreman, a former undersecretary of agriculture, on this point: "Sterilized poop is still poop."

JR: Do you think an Obama or a McCain presidency will be better for food safety?

MN: I'm an Obama supporter -- and let's hope he wins by a landslide, because that's what it will take to give him a mandate to make some positive changes. Otherwise we will be stuck with another four years of business as usual.

JR: Do you think that the efforts to relocalize food (farmers markets, community-supported agriculture, etc.) will help Americans' ability to access safe food?

MN: Definitely. It's not that local food is 100 percent safe. That would be unreasonable to expect. But local food doesn't sit around as long or travel as far, and if it does cause problems, those problems will be confined locally. They won't affect people in 38 states.

JR: Do you have a suggestion for "locavores" who wish to feed their pets ethically produced, healthy food, or is that still uncharted territory?

MN: I've come to believe that just as people can eat many different kinds of diets that promote excellent health, so can dogs and cats. Commercial pet foods work, raw foods work, home-cooked foods work. Pet owners need to find a nutritionally complete method that meets their pets' needs and conforms to the level of convenience they need and to their personal value systems. There are plenty of options for doing all that, and none of them is difficult. And that's the point of What Pets Eat, which should come out in late 2009.

Jill Richardson is the founder of the blog La Vida Locavore and a member of the Organic Consumers Association policy advisory board. Her first book, about food politics, is due out in June 2009.