Dec 31

Jan. 1 (Bloomberg) — U.S. stocks plunged the most in 2008 since the Great Depression as financial shares collapsed, energy and metal producers tumbled and the world’s biggest economy suffered a yearlong recession.

Citigroup Inc., Bank of America Corp. and Goldman Sachs Group Inc. retreated more than 60 percent as 80 out of the 84 financial institutions in the Standard & Poor’s 500 Index declined. Exxon Mobil Corp. and Freeport-McMoRan Copper & Gold Inc. fell as the Reuters/Jefferies CRB Index of 19 raw materials dropped a record 36 percent. Caterpillar Inc. sank 38 percent as the U.S., Europe and Japan experienced the first simultaneous contractions since World War II.

“They will write about this year for a long time,” Duncan Niederauer, chief executive officer of New York Stock Exchange owner NYSE Euronext, said in an interview. “It’s been, in one word, tiring.”

The S&P 500 decreased 38.5 percent, the most since the 38.6 percent plunge in 1937, to 903.25 and sank to an 11-year low of 752.44 on Nov. 20. Volatility increased, with the index rising or falling 5 percent in a single day 18 times. The Dow Jones Industrial Average slumped 34 percent to 8,776.39 for the steepest drop since 1931.

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Dec 31

FTSE 100 has lost 31% of its value in 2008
• Russia down 72% and China off 65%P


A trader reacts to the falling FTSE 100 at CMC Markets in London. Photograph: Alastair Grant/AP

A record $14 trillion (£9.7tn) has been wiped off world share values in 2008 as many stockmarkets around the world suffered their worst 12 months on record.

Turmoil in the financial system and the worst global recession since the 1970s have sent shares reeling. Global stocks, as measured by the MSCI index, have fallen by a record 44% over the year.

In London, the FTSE 100 index lost 31.3% in 2008, its worst annual decline since it was created in 1984, and following a 3.8% gain in 2007. It edged up 0.94% to 4434.17 on the last trading day of the year, a gain of 41.49 points. Banks, at the centre of the financial storm, were among the biggest losers ranging from HBOS, Royal Bank of Scotland and Lloyds TSB to Barclays. Mining companies Kazakhmys, Xstrata and Rio Tinto also fared badly as the economy worsened.

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Dec 31

Investors pulled a net $32bn from hedge funds last month, making 2008 the first year in their recorded history that the funds have had significant outflows and ending the industry’s 18 years of asset growth.

Money has been taken out of funds following every strategy, even those – such as macro funds – which were showing returns, according to data from fund trackers Hedge Fund Research.

The funds enjoyed net inflows for the first part of the year, even as the financial crisis hit and traditional mutual funds began to show outflows.

However, in September a tide of redemptions began, according to TrimTabs, another fund tracker.

Conrad Gann, chief operating officer of TrimTabs, said: “We estimate outflows in November were $32bn, and there is an additional pipeline of redemptions that have not been filled, there could be $80bn [of redemptions] in December.

“There are $57bn of redemptions that we know are in, that are not reflected yet,” he said.

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Dec 31

The U.S. military is now spending more – on a constant dollar basis – than it did in 1968, when the Defense Department had more than 500,000 soldiers stationed in South Vietnam. If you include the cost of the wars in Iraq and Afghanistan, then the U.S. military spent about $580 billion in 2007; that’s about 33 percent more – again, measured in constant (year 2000) dollars – than the United States spent in 1968. Even without the cost of those ongoing wars, America’s military spending is higher now than at any time since 1945.

A recent study by the Center for Strategic and Budgetary Analysis, a Washington-based think tank, provides yet more sobering numbers. The report, written by the CSBA’s Steven M. Kosiak, concludes that “since 2001, some $904 billion has been provided to cover the cost of US military operations. This includes some $687 billion for Iraq, $184 billion for Afghanistan and $33 billion for various homeland security activities.”

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Dec 31

‘Hellhouse’ of personal data will be created, warns former DPP

The private sector will be asked to manage and run a communications database that will keep track of everyone’s calls, emails, texts and internet use under a key option contained in a consultation paper to be published next month by Jacqui Smith, the home secretary.

A cabinet decision to put the management of the multibillion pound database of all UK communications traffic into private hands would be accompanied by tougher legal safeguards to guarantee against leaks and accidental data losses.

But in his strongest criticism yet of the superdatabase, Sir Ken Macdonald, the former director of public prosecutions, who has firsthand experience of working with intelligence and law enforcement agencies, told the Guardian such assurances would prove worthless in the long run and warned it would prove a “hellhouse” of personal private information.

“Authorisations for access might be written into statute. The most senior ministers and officials might be designated as scrutineers. But none of this means anything,” said Macdonald. “All history tells us that reassurances like these are worthless in the long run. In the first security crisis the locks would loosen.”

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Dec 31

Looking back in our archives this Christmas I came across a rather important article which I had half forgotten about. It dates from 2006, when the credit crisis was a mere apple in the financial system’s eye and the City was enjoying one of its biggest booms in history. The article, which can be found here, reveals that the Bank of England knew precisely what risk was posed by the dangerous build-up of debt which was brewing in the economy.

More strikingly, its Financial Stability Report from 2006 was as far as I can tell the first major institutional missive explicitly warning about the dangerous funding gap building up in the British banking system.

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Dec 31

Source: YouTube

Source: California’s Car Crisis (BBC)

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Dec 30

Peter Schiff: “I am a 100% convinced that anybody who has their wealth in US Dollars will be just as broke as the people who had their money with Madoff.”

(All 6 parts are a must-see.)

Part 1 of 6

Source: YouTube

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Dec 30

McKinney also mentions Israel’s Attack on the U.S.S. Liberty.


Added: December 30, 2008
Source: YouTube

Related video: Dead In The Water – The Sinking of the USS Liberty (BBC)

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Dec 30

“We are in the process of creating another Great Depression.” (Peter Schiff)

Part 1

Source: YouTube

Part 2

Source: YouTube

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Dec 30


December 30, 2008

Source: YouTube

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Dec 30

As recession fears cause the nation to embrace greater state control of the economy and unimaginable federal deficits, one searches in vain for debate worthy of the moment. Where there should be an historic clash of ideas, there is only blind resignation and an amorphous queasiness that we are simply sweeping the slouching beast under the rug.

With faith in the free markets now taking a back seat to fear and expediency, nearly the entire political spectrum agrees that the federal government must spend whatever amount is necessary to stabilize the housing market, bail out financial firms, liquefy the credit markets, create jobs and make the recession as shallow and brief as possible. The few who maintain free-market views have been largely marginalized.

Taking the theories of economist John Maynard Keynes as gospel, our most highly respected contemporary economists imagine a complex world in which economics at the personal, corporate and municipal levels are governed by laws far different from those in effect at the national level.

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Dec 30


A for sale sign stands outside a home in Boston, on Sept. 5, 2008. Photographer: Michael Fein/Bloomberg News

Dec. 30 (Bloomberg) — Home prices in 20 major U.S. cities declined at the fastest rate on record, depressed by mounting foreclosures and slumping sales.

The S&P/Case-Shiller index declined 18 percent in the 12 months to October, more than forecast, after dropping 17.4 percent in the year through September. The gauge has fallen every month since January 2007. Year-over-year records began in 2001.

See also: U.S. Economy: Confidence Sinks to Record Low on Jobs (Bloomberg)

The financial market meltdown that’s reverberated around the globe has prompted banks to curb lending, signaling the housing slump will persist for a fourth year in 2009. Falling property values have eroded household wealth, causing consumers to pare spending and deepening what is projected to be the longest recession in the postwar period.

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Dec 30


U.S. one hundred dollar bills are displayed for a photograph in New York on Dec. 30, 2008. Photographer: Daniel Acker/Bloomberg News

Dec. 31 (Bloomberg) — The dollar fell, heading for its worst annual decline against the yen in more than two decades, on speculation a U.S. report this week will show manufacturing shrank at the fastest pace since 1980.

The currency was also poised for a third annual loss versus the Swiss franc on bets the Federal Reserve’s zero target lending rate will weigh on demand for the greenback. The euro was set for the largest annual gain against the British pound since its 1999 debut on speculation the Bank of England will keep its main lending rate lower than the European Central Bank’s rate.

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Dec 30

A column of Israeli armored vehicles is deployed in a farmer's field Tuesday near the Gaza border.
A column of Israeli armored vehicles is deployed in a farmer’s field Tuesday near the Gaza border.

GAZA CITY (CNN) — Israel’s fourth day of attacks in Gaza sent the Palestinian death toll to more than 375 as the Jewish state’s prime minister warned Tuesday that the air offensive marked only the beginning, according to officials.

“We are currently at the first stage of the operation,” Prime Minister Ehud Olmert told President Shimon Peres during a morning briefing, officials said.


Related article: World rallies around Palestinians amid Gaza offensive


A girl in Caracas, Venezuela, holds a sign reading, “No more massacre in Gaza” at Israel’s embassy Monday.


Olmert’s summation came a day after Defense Minister Ehud Barak told Israel’s parliament that the campaign launched Saturday marked an “all-out war” against Hamas, the Islamic militant group that rules Gaza. Continue reading »

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Dec 30


For three straight days, Yellowstone National Park has been shaken by a serise of small earthquakes. Scientists are watching to see whether the tremors are signaling something bigger to come. (ABC News Photo Illustration)

CHEYENNE, Wyo. (AP) – Yellowstone National Park was jostled by a host of small earthquakes for a third straight day Monday, and scientists watched closely to see whether the more than 250 tremors were a sign of something bigger to come. Swarms of small earthquakes happen frequently in Yellowstone, but it’s very unusual for so many earthquakes to happen over several days, said Robert Smith, a professor of geophysics at the University of Utah.

“They’re certainly not normal,” Smith said. “We haven’t had earthquakes in this energy or extent in many years.”

Smith directs the Yellowstone Seismic Network, which operates seismic stations around the park. He said the quakes have ranged in strength from barely detectable to one of magnitude 3.8 that happened Saturday. A magnitude 4 quake is capable of producing moderate damage.

“This is an active volcanic and tectonic area, and these are the kinds of things we have to pay attention to,” Smith said. “We might be seeing something precursory.

Related article:
Yellowstone National Park Hit by Hundreds of Small Earthquakes (Bloomberg)

“Could it develop into a bigger fault or something related to hydrothermal activity? We don’t know. That’s what we’re there to do, to monitor it for public safety.”

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Dec 30

Kirk Kerkorian
Billionaire Kirk Kerkorian, whose Beverly Hills-based investment company confirmed Monday that it had dumped its remaining stock holdings in struggling Ford Motor Co., had had a long, if not always profitable, relationship with Detroit.  Associated Press

The investor spent about $1 billion acquiring a 6.5% stake in the struggling automaker this year, then saw the value of its stock plummet.

Kirk Kerkorian wasn’t kidding when he said he was putting the brakes on his latest foray into the auto industry.

A spokeswoman for Tracinda Corp., the billionaire’s Beverly Hills-based investment company, confirmed Monday that it had dumped its remaining stock holdings in struggling Ford Motor Co. She declined to provide details of the stock sales.

Kerkorian owned 107.1 million Ford shares, or 4.9% of the company, in late October, when Tracinda reported in a regulatory filing that it had unloaded 7.3 million shares and planned to sell the rest of its holdings by the end of the year.

Because it owned less than 5% of the company — the regulatory threshold for reporting changes in stock ownership — Tracinda was not required to file information with the Securities and Exchange Commission regarding the more recent sales, such as when the shares were sold or at what price.

But Kerkorian, who began buying Ford shares in April and spent about $1 billion acquiring a 6.5% stake in the automaker, clearly took a bath on the investment. Ford was trading at about $7.75 a share when Kerkorian began acquiring his stake. The average price since his last SEC filing in late October: $2.33 a share.

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Dec 29


Vehicles bound for export wait in a lot in Yokohama City, Japan on Oct. 27, 2008. Photographer: Haruyoshi Yamaguchi/Bloomberg News

Dec. 30 (Bloomberg) — Japan’s economy will probably shrink at an annual 12.1 percent pace this quarter, the sharpest drop since 1974, as exports collapse, Barclays Capital said.

Gross domestic product in the three months ending tomorrow will fall at almost three times the 4.1 percent rate previously predicted, said Kyohei Morita, chief Japan economist at Barclays in Tokyo, after reports last week showed industrial production and exports posted the biggest declines on record in November.

“Given the speed and the length of the contraction, this recession could be the most severe in the postwar era,” Morita said. “We expect negative growth will continue for a fifth straight quarter to the April-June period of 2009.”

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Dec 29

What a difference 20 years makes.

The Japanese stock market on Tuesday morning completed its investment year with its usual half-day, Dec. 30 session. That won it the dubious honor of being the first major global stock market to put its 2008 performance in the books — and its double-digit loss is likely to be followed by most of the rest of the world.


The Nikkei Stock Average’s glory days above 38000 are a distant memory, as the Japanese stock market has completed its dismal 2008 investment year. Pictured, a trader in Tokyo earlier this month. Associated Press

The Nikkei closed up 1.3% to finish at 8859.56, booking its worst year ever with a loss of 42%. This follows an 11.1% decline for 2007. On a positive note, the index marked its first positive month since May.

More striking is the Nikkei’s comedown from its heights two decades ago. In 1989, on the last trading day of that year, Tokyo’s blue-chip index had touched an all-time high of 38915.86.

On Monday, the final full trading session of the year, the Nikkei had closed at 8747.17, down 7.65 points or 0.09%.

Insurance stocks in Tokyo on Monday surged in the wake of reports that Mitsui Sumitomo Insurance Group, Aioi Insurance and Nissay Dowa General Insurance were in talks to integrate their operations by next autumn.

In a statement posted on its Web site, Mitsui Sumitomo wrote that “no decision that needs to be disclosed has been made.” Mitsui Sumitomo rose 8.3%, Aioi soared 19% and Nissay Dowa jumped 15%.

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Dec 29

I am sure that things will turn out to be much worse than what this report predicts because the economic crisis has just begun.


• Businesses call for minimum wage freeze
• Report warns of ‘winter surge’ in unemployment

Next year will be the worst for jobs for almost 20 years, with a net reduction of at least 600,000 people in employment, according to a report published today.

The Chartered Institute of Personnel and Development (CIPD) is predicting a “winter surge” of redundancies in the first quarter of the year that could see as many as 300,000 lose their jobs.

The institute warned that unemployment would continue to rise in 2010, taking the total number of jobs projected to be lost over the course of the recession to about 1 million.

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Dec 29

Here are the 30 most recent earthquakes

Related article: UPDATE: Scientists Eye Unusual Swarm of Yellowstone Quakes

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Dec 29

Bailing out zombies with taxpayers’ money. But you can trust the government with your money.

“An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention,” Paulson said 21 months ago.

Treasury Secretary Henry Paulson declared that the current turmoil in markets and financial institutions ultimately will “make things better.” (September 15, 2008)

As you see Henry Paulson is a real ‘expert’ you can believe in.



A GMAC Real Estate sign, attached to a sign advertising 0% down financing, is posted in the front yard of a home in Norcross, Georgia, on Sept. 12, 2007. Photographer: Chris Rank/ Bloomberg News

Dec. 29 (Bloomberg) — The U.S. Treasury committed $6 billion to support GMAC LLC, the financing arm of General Motors Corp., the latest step in the government’s widening effort to keep the largest U.S. automaker out of bankruptcy.

Treasury said it will purchase a $5 billion stake in GMAC, and lend $1 billion to GM so the automaker can participate in a rights offering at GMAC to support the lender’s reorganization as a bank holding company. The loan is in addition to $13.4 billion the Treasury agreed earlier this month to lend to GM and Chrysler LLC.

The fresh capital from the Treasury’s $700 billion Troubled Asset Relief Program will enable GMAC to expand lending to car buyers, which in turn may help save GM. The company’s U.S. sales plunged 22 percent this year through November after GMAC — which financed about 35 percent of GM’s retail customers last year — ran short on cash and limited loans to people with only the best credit. The Treasury stepped in after Congress failed to pass an auto industry bailout earlier this month.

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Dec 29

For sale signs sit on the window of a former Circuit City store in New York, on Dec. 29, 2008. Photographer: Jeremy Bales/Bloomberg News

Dec. 29 (Bloomberg) — U.S. retailers face a wave of store closings, bankruptcies and takeovers starting next month as holiday sales are shaping up to be the worst in 40 years.

Retailers may close 73,000 stores in the first half of 2009, according to the International Council of Shopping Centers. Talbots Inc. and Sears Holdings Corp. are among chains shuttering underperforming locations.

More than a dozen retailers, including Circuit City Stores Inc., Linens ‘n Things Inc., Sharper Image Corp. and Steve & Barry’s LLC, have sought bankruptcy protection this year as the credit squeeze and recession drained sales. Investors will start seeing a wide variety of chains seeking bankruptcy protection in February when they file financial reports, said Burt Flickinger.

“You’ll see department stores, specialty stores, discount stores, grocery stores, drugstores, major chains either multi- regionally or nationally go out,” Flickinger, managing director of Strategic Resource Group, a retail-industry consulting firm in New York, said today in a Bloomberg Radio interview. “There are a number that are real causes for concern.”

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Dec 29

Looking back over my columns of the past 12 months, one of their major themes was neatly encapsulated by two recent items from The Daily Telegraph.


Polar bears will be fine after all Photo: AP

The first, on May 21, headed “Climate change threat to Alpine ski resorts” , reported that the entire Alpine “winter sports industry” could soon “grind to a halt for lack of snow”. The second, on December 19, headed “The Alps have best snow conditions in a generation” , reported that this winter’s Alpine snowfalls “look set to beat all records by New Year’s Day”.

Easily one of the most important stories of 2008 has been all the evidence suggesting that this may be looked back on as the year when there was a turning point in the great worldwide panic over man-made global warming. Just when politicians in Europe and America have been adopting the most costly and damaging measures politicians have ever proposed, to combat this supposed menace, the tide has turned in three significant respects.

First, all over the world, temperatures have been dropping in a way wholly unpredicted by all those computer models which have been used as the main drivers of the scare. Last winter, as temperatures plummeted, many parts of the world had snowfalls on a scale not seen for decades. This winter, with the whole of Canada and half the US under snow, looks likely to be even worse. After several years flatlining, global temperatures have dropped sharply enough to cancel out much of their net rise in the 20th century.

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Dec 29

Smoke billows from a site in Gaza today following more Israeli air strikes. Picture: AFP/Getty Images

ISRAEL today warned the people of Gaza that its attacks which have so far killed more than 300 were a “war to the bitter end”.

The statement from defence minister Ehud Barak came as jets obliterated symbols of Hamas power on the third day of its overwhelming assault.

They hit a house next to the Hamas premier’s home, devastated a security compound and flattened a five-storey building at a university closely linked to the Islamic group.

Related articles:
Six months of secret planning – then Israel moves against Hamas (The Guardian)
Two Israeli armored divisions stand by outside Gaza (DEBKAfile)
Mideast papers on Gaza (BBC News)
Gaza: where civilians become targets (The Guardian)
Aid reaching Gaza, but U.N. says it’s not enough (CNN)
White House blames Hamas for violence (msnbc)

- Israel Moves Tanks Toward Gaza as Hamas Rockets Hit (Bloomberg)
Protests erupt in the Arab world against airstrikes (The Times)
Israel seals off Gaza periphery to journalists (Reuters)

Meanwhile there were reports that the Israeli navy had begun bombarding the area from the sea.

The death toll rose to 315, including seven children under the age of 15.

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Dec 29

ISRAEL’S bombing of the Gaza Strip is a massive violation of international law because it is punishing an entire population for the actions of a few.

That is the assessment of the United Nations regional envoy, Professor Richard Falk.

Yesterday, Professor Falk accused Israel of targeting civilians and of a disproportionate response to the threat posed by Hamas’ equally illegal rocket attacks on its southern border.

An emeritus professor of international law at Princeton University and a trenchant critic of the Bush Administration’s foreign policy, Professor Falk was again at odds with the White House, which has blamed Hamas for breaking the Gaza ceasefire.

The US used veto rights to block a UN Security Council resolution demanding an end to the Israeli attacks. The council instead issued a statement calling for a halt to violence.

While Israel said it targeted Hamas militants, Professor Falk said its air strikes hit the most densely populated area of the Middle East.

He said Israel’s blockade of Gaza led to food shortages and prevented medical aid from reaching the injured.

“Certainly the rocket attacks against civilian targets in Israel are unlawful,” Professor Falk said.

“But that illegality does not give rise to any Israeli right … to violate international humanitarian law and commit war crimes or crimes against humanity in its response. The entire 1.5 million people who live in the crowded Gaza Strip are being punished for the actions of a few militants.”

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Dec 29

Dec. 29 (Bloomberg) — The ruble fell to a record low against the euro as Russia devalued the currency for the 12th time in seven weeks after the government forecast its first budget deficit in a decade.

The managed currency weakened 2.6 percent to 41.7245 per euro, the lowest since the European currency started trading in 1999. It fell 0.7 percent to 29.1797 versus the dollar, a four- year low. Bank Rossii allowed the ruble to fall 1.7 percent against its basket of 55 percent dollars and 45 percent euros, the most since the measure was introduced in February 2005, according to a central bank official who declined to be identified, citing bank policy.

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Dec 29

    Tim Loughton
    Shadow Children’s Minister Tim Loughton is chairman of Classwatch

    Schools have installed CCTV cameras and microphones in classrooms to watch and listen to pupils as young as four.

    The Big Brother-style surveillance is being marketed as a way to identify pupils disrupting lessons when teachers’ backs are turned.

    Classwatch, the firm behind the system, says its devices can be set up to record everything that goes on in a classroom 24 hours a day and used to compile ‘evidence’ of wrongdoing.

    The equipment is sold with Crown Prosecution Service-approved evidence bags to store material to be used in court cases.

    The microphones and cameras can be used during lessons and when a classroom is unattended, such as during lunch breaks.

    But data protection watchdog the Information Commissioner has warned the surveillance may be illegal and demanded to know why primary and secondary schools are using this kind of sophisticated equipment to watch children.

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    Dec 28

    ST. PAUL, Minn. – Minnesota is deep in the hole financially, but the state still owns a premier golf resort, a sprawling amateur sports complex, a big airport, a major zoo and land holdings the size of the Central American country of Belize.

    Valuables like these are in for a closer look as 44 states cope with deficits.

    Like families pawning the silver to get through a tight spot, states such as Minnesota, New York, Massachusetts and Illinois are thinking of selling or leasing toll roads, parks, lotteries and other assets to raise desperately needed cash.


    The patient (U.S.) is dying because of poisonous and deadly medication administered by the Federal Reserve and the U.S. Government:
    Lindsey Williams: The Dollar And The US Will Collapse; Saudi Arabia And Dubai Will Fall; US Will Be Third World Country; The Greatest Depression Is Coming
    Gerald Celente: The Greatest Depression
    Analyst: One Third Of Banks Could Collapse In 2009
    Peter Schiff: “There is going to be an inflationary depression in the US”
    Marc Faber: “2009 is going to be a catastrophe”
    Ron Paul – TRUTH on Government Fraud funds (12/22/08)
    - Economic Collapse of 2009 – Greater than Great Depression of 1929
    U.S. Economy: Housing Prices Collapse at Near-Depression Pace
    Official says California could be broke in 2 months
    World faces “total” financial meltdown: Bank of Spain chief

    - The Neo-Alchemy of the Federal Reserve by Ron Paul
    - Jim Rogers: If Obamanomics happens it’s all over
    Jim Rogers: “America is out of control”
    Jim Rogers: The Larger US Banks Are Bankrupt, Totally Bankrupt
    Interview with Peter Schiff (12/13/08)
    Interview: Peter Schiff still grim on future
    Peter Schiff Was Right 2006 – 2007 (2nd Edition)
    Peter Schiff: Low Rates, Big Problems
    Peter Schiff: The Economic Crisis Is Only Just Beginning (Nov. 24, 2008)
    Federal Reserve Refuses to Disclose Recipients of $2 Trillion


    Minnesota Gov. Tim Pawlenty has hinted that his January budget proposal will include proposals to privatize some of what the state owns or does. The Republican is looking for cash to help close a $5.27 billion deficit without raising taxes.

    GOP lawmakers are pushing to privatize the Minneapolis-St. Paul International Airport and the state lottery. Both steps require a higher authority – federal legislation in the case of the airport, a voter-approved constitutional amendment for the lottery. But one lawmaker estimated an airport deal could bring in at least $2.5 billion, and the lottery $500 million.

    Continue reading »

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    Dec 28

    One way to quell a violent and deteriorating situation, according to the U.S. military, is to flood the place with guns.

    That’s exactly what is planned for Afghanistan, where a rising tide of chaos is slowly pushing the country past Iraq as the most dangerous battlefield Americans tread upon.

    “The U.S. military plans to help the Afghanistan government recruit, train and arm local Afghans to fight a resurgent Taliban,” reported CNN’s Barbara Starr.

    For the United States, the most sensitive part of the proposal will be the use of American military funds to purchase small arms, most likely AK-47 rifles, that will be given to local Afghans, according to a U.S. military official.”

    “There are worries,” Starr continued, “putting even more weapons in the hands of local communities could lead to tribes fighting each other instead of the Taliban. U.S. troops could get caught in the middle.” The plan would also hinge upon the weak Afghan government to maintain the loyalties of the newly armed populace.

    The last time the U.S. poured weapons into Afghanistan was during the administration of Ronald Reagen, who opted to back the Mujahadeen against occupying Soviet Union forces. The CIA spent billions arming the Afghans through the Pakistani and Saudi intelligence services, finally resulting in driving the Soviets out.

    Ultimately, the wealth of destructive force and financial heft given to the Afghans concentrated around two groups: Osama bin Laden’s al-Qaeda, and the Taliban.

    This ‘new’ strategy will be presented for President-elect Obama’s consideration, Starr said.

    This video is from CNN’s American Morning, broadcast Dec. 26, 2008.

    Download video via RawReplay.com

    David Edwards and Stephen C. Webster
    Published: Saturday December 27, 2008

    Source: The Raw Story

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