Prisoner Society: more than 2,000 cases of torture in Israeli prison during past year

26.10.09 - 15:31

Ramallah / PNN – President of the Palestinian Prisoner Society, Qaddura Fares, reported today that during the past year there have been more than 2,000 cases of torture in Israeli prison.

The Israeli administration has exerted, and continues to do so, violence, beatings, and physical and psychological torture against Palestinians, said Fares on Monday. He described daily evidence of the “barbarism of the occupation forces against prisoners.”

Among the thousands is Majid Rantis who has been detained since 18 September 2001. He was sentenced by an Israeli military court to 15 years.

According to a document drafted by a lawyer of the Prisoner Society, Rantis was interrogated for 70 days during which time he was beaten, held in solitary confinement and deprived of sleep. The man finally lost his left eye due to one of the beatings and underwent surgery on 6 July 2005. It was acknowledged that his loss of sight was a result of the beatings.

A PPS lawyer also reported on Fares Awad from Aroura Village who was beaten in such a way as to cause problems with the main artery of his heart.

He was arrested on 26 June 2006 and sentenced by a military court to four and a half years in Israeli prison. Awad arrived in good health, having even been granted a checkup by the prison doctor upon arrival. After five months in Ofer Prison he was taken to the Russian Compound for investigation where he was blindfolded, handcuffed, and beaten.

During the some odd 70 days of ongoing interrogation, a blow to the chest led to a loss of consciousness. Awad was taken to Hadassah Hospital, Ein Karem, on 29 June 2006 where he was not given a diagnosis.

He later was transferred to Mount Scopus and then to Ashkelon where he is suffering several problems, including a rise in temperature. He was taken to a clinic there where he was given Akamol, common headache reliever. After his condition worsened Awad was given other drugs, but began to suffer from liver problems. He now can no longer walk.

The case files continue with lists of victims who have spent long stretches of time in tiny spaces or tied to school chairs. The Israeli government is one of the few world wide that openly advocates interrogation methods considered torture by international standards.

Italy: an attempt to outlaw defending freedom of speech

The Zionist and the Neo-Fascist decide who must be silenced in Italy

Pacifici and Alemanno

October 26, 2009 - Palestine Think Tank

Antonio Caracciolo is a scholar of philosophy of law who works at the Faculty of Political Sciences of Rome University.

Politically, he is a liberal in the Italian sense of the word: a believer in the separation of Church and state, constitutional democracy, the rule of law and a free market; however he keeps his opinions strictly out of his work, reserving them for his blog Civium Libertas.

Recently, his blog has dedicated much attention to the politics of Israel and the methods used by Zionist organizations in Italy to silence criticism of Israel in the Italian media and political sphere.

The Zionist discourse, in recent years, has focused increasingly on the extermination of the European Jews during the Second World War, and this has led Antonio Caracciolo to touch another topic. As a liberal and legal scholar, he considers the attempt to introduce prison sentences http://en.wikipedia.org/wiki/Laws_against_Holocaust_denial against "Holocaust deniers" or "revisionists" incompatible with Articles 21 and 33 of the Italian constitution, which protect freedom of expression and of research. In this context, however, Antonio Caracciolo has refused to get involved in historical discussions, or to support any "revisionist" thesis.

His blog – one of hundreds of thousands on the net in Italy – passed unnoticed for over two years, until a few days ago Italy's leading daily, La Repubblica, decided to make its existence front page news, under the more-than-misleading title:

"'The extermination of the Jews is a legend", Holocaust denier professor, Rome University under shock"

Gianni Alemanno, mayor of Rome, immediately demanded that the President of Rome's University, Luigi Frati, take steps against Antonio Caracciolo. It is ironical to remember that Alemanno is not only the first neo-Fascist to become mayor of the Italian capital, he has also been the historic leader of the mystic current in the Alleanza Nazionale (former MSI) party, and is the son-in-law of Pino Rauti, who introduced the esoteric ideas of Julius Evola into the neo-Fascist movement.[1]

In Europe, even in the Middle Ages, mayors had no right to tell universities whom to hire or fire. However, the President of the University Luigi Frati, thanked Gianni Alemmano for his prompt action and promised to "look into taking disciplinary steps against Caracciolo", which could include his being fired from his job.

The right-wing president of the Rome town Council, Marco Pomarici, declared that

"one cannot tolerate certain statements circulating freely around Europe's largest university, especially in a course on Philosophy of Law. Such theories can generate a return of anti-Semitism and it is quite clear that Caracciolo is not suited to teach and must be dismissed."

Irony again, since Marco Pomarici a short time before had declared publicly that "there were also many positive elements in Fascism".

Riccardo Pacifici, the very Zionist president of the Jewish community elected by a first-time right wing majority (on a ticket explicitly called "For Israel") and well known in Italy for an "aid to Gaza" hoax, calls directly for imprisoning Antonio Caracciolo:

"Such "gentlemen" in some European countries – alas, not in Italy yet – are punished by the law for the ideas they uphold".

The next day, Riccardo Pacifici launched an appeal (directly from Israel) to the academic world, announcing that he would take legal action against Caracciolo's blog, and calling on university professors to take steps to "prevent allowing certain people having contact with students" (La Repubblica, October 23, 2009). Specifically, he calls upon the professors to "help us so that Italy makes laws declaring holocaust denial a crime".

Pacifici claimed the existence of a "true Holocaust denial network" in Internet, hardly surprising if we consider that Internet is a network. Pacifici also told the press that he had presented a black list of websites to the police.

"The problem of the net, emphasizes Pacifici, is that it is uncontrolled. The risk is that one can write anything by simply opening a website in Moscow. We also need to intervene in terms of legislation about this."

Statements of indignation about Caracciolo's blog "are not enough", Pacifici goes on. "Unanimous condemnation is not enough. We need to act in terms of criminal law".

The Caracciolo case opens a new frontier. Not only would unpopular opinions be banned, but also the right to criticize such bans. Pacifici's proposal, if applied in Germany, would put Henryk Broder, candidate-president of the German Jewish Community, in gaol, as he has promised to fight for the repeal of Holocaust denial legislation. http://www.focus.de/politik/deutschland/henryk-m-broder-publizist-will-knobloch-im-zentralrat-abloesen_aid_446835.html

The following day, October 24, Repubblica itself published an article by Christopher Hitchens which called for a military attack on Iran, no less, but this seems not to have sent any shock waves through the media.

Far more than Holocaust revisionism/denial is at stake. Pacifici is calling for legislation able to outlaw a blog like Antonio Caracciolo, which criticizes a government of the Middle East, analyzes the action of public figures and organizations in Italy and defends freedom of speech.

Such legislation would be possible only if laws were passed forbidding opposition to government policies, or declaring certain foreign states to be above criticism, or forbidding even support for the notion of free speech.

This of course is the basic issue behind "Holocaust denial legislation", which is actually only part of the general attempt by governments to control the Internet and to make opposition – outside of very limited channels – a crime: one need only think of the Czech Republic, where legislators slipped a few extra words into the the Holocaust denial legislation. In Prague today, one can go to prison for up to eight years for "supporting class hatred" in "print, film, radio, television". "Hatred" of course is a purely emotional term, and any judge will be free to decide whether the person organizing a strike had such wicked feelings or not.

Note:

[1] The Italian neo-Fascist party, MSI (later Alleanza Nazionale, now dissolved into the governing centre-right party) was a complex coalition, with three main strands: very conservative, largely Catholic anti-Communists; the "left-wing" which saw Mussolini as the "true" Socialist in the progressive and secular nationalist tradition of the 19th century; and a mystic, largely pagan wing with close cultural ties to certain currents of German thought.

Are You Ready for the Next Crisis?

By PAUL CRAIG ROBERTS - October 26, 2009

Evidence that the US is a failed state is piling up faster than I can record it.

One conclusive hallmark of a failed state is that the crooks are inside the government, using government to protect and to advance their private interests.

Another conclusive hallmark is rising income inequality as the insiders manipulate economic policy for their enrichment at the expense of everyone else.

Income inequality in the US is now the most extreme of all countries. The 2008 OECD report, “Income Distribution and Poverty in OECD Countries,” concludes that the US is the country with the highest inequality and poverty rate across the OECD and that since 2000 nowhere has there been such a stark rise in income inequality as in the US. The OECD finds that in the US the distribution of wealth is even more unequal than the distribution of income.

On October 21, 2009, Business Week highlighted a new report from the United Nations Development Program concluded that the US ranked third among states with the worst income inequality. As number one and number two, Hong Kong and Singapore, are both essentially city states, not countries, the US actually has the shame of being the country with the most inequality in the distribution of income.

The stark increase in US income inequality in the 21st century coincides with the offshoring of US jobs, which enriched executives with “performance bonuses” while impoverishing the middle class, and with the rapid rise of unregulated OTC derivatives, which enriched Wall Street and the financial sector at the expense of everyone else.

Millions of Americans have lost their homes and half of their retirement savings while being loaded up with government debt to bail out the banksters who created the derivative crisis.

Frontline’s October 21 broadcast, “The Warning,” documents how Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, Deputy Treasury Secretary Larry Summers, and Securities and Exchange Commission Chairman Arthur Levitt blocked Brooksley Born, head of the Commodity Futures Trading Commission, from performing her statutory duties and regulating OTC derivatives.

After the worst crisis in US financial history struck, just as Brooksley Born said it would, a disgraced Alan Greenspan was summoned out of retirement to explain to Congress his unequivocal assurances that no regulation of derivatives was necessary. Greenspan had even told Congress that regulation of derivatives would be harmful. A pathetic Greenspan had to admit that the free market ideology on which he had relied turned out to have a flaw.

Greenspan may have bet our country on his free market ideology, but does anyone believe that Rubin and Summers were doing anything other than protecting the enormous fraud-based profits that derivatives were bringing Wall Street? As Brooksley Born stressed, OTC derivatives are a “dark market.” There is no transparency. Regulators have no information on them and neither do purchasers.

Even after Long Term Capital Management blew up in 1998 and had to be bailed out, Greenspan, Rubin, and Summers stuck to their guns. Greenspan, Rubin and Summers, and a roped-in gullible Arthur Levitt who now regrets that he was the banksters’ dupe, succeeded in manipulating a totally ignorant Congress into blocking the CFTC from doing its mandated job. Brooksley Born, prevented by the public’s elected representatives from protecting the public, resigned. Wall Street money simply shoved facts and honest regulators aside, guaranteeing government inaction and the financial crisis that hit in 2008 and continues to plague our economy today.

The financial insiders running the Treasury, White House, and Federal Reserve shifted to taxpayers the cost of the catastrophe that they had created. When the crisis hit, Henry Paulson, appointed by President Bush as Rubin’s replacement as the Goldman Sachs representative running the US Treasury, hyped fear to obtain from “our” representatives in Congress with no questions asked hundreds of billions of taxpayers’ dollars (TARP money) to bail out Goldman Sachs and the other malefactors of unregulated derivatives.

When Goldman Sachs recently announced that it was paying massive six and seven figure bonuses to every employee, public outrage erupted. In defense of banksters, saved with the public’s money, paying themselves bonuses in excess of most people’s life-time earnings, Lord Griffiths, Vice Chairman of Goldman Sachs International, said that the public must learn to “tolerate the inequality as a way to achieve greater prosperity for all.”

In other words, “Let them eat cake.”

According to the UN report cited above, Great Britain has the 7th most unequal income distribution in the world. After the Goldman Sachs bonuses, the British will move up in distinction, perhaps rivaling Israel for the fourth spot in the hierarchy.

Despite the total insanity of unregulated derivatives, the high level of public anger, and Greenspan’s confession to Congress, still nothing has been done to regulate derivatives. One of Rubin’s Assistant Treasury Secretaries, Gary Gensler, has replaced Brooksley Born as head of the CFTC. Larry Summers is the head of President Obama’s National Economic Council. Former Federal Reserve official Timothy Geithner, a Paulson protege, runs the Obama Treasury. A Goldman Sachs vice president, Adam Storch, has been appointed the chief operating officer of the Securities and Exchange Commission. The Banksters are still in charge.

Is there another country in which in full public view so few so blatantly use government for the enrichment of private interests, with a coterie of “free market” economists available to justify plunder on the grounds that “the market knows best”? A narco-state is bad enough. The US surpasses this horror with its financo-state.

As Brooksley Born says, if nothing is done “it’ll happen again.”

But nothing can be done. The crooks have the government.

Note: The OECD report shows that despite the Reagan tax rate reduction, the rate of increase in US income inequality declined during the Reagan years. During the mid-1990s the Gini coefficient (the measure of income inequality) actually fell. Beginning in 2000 with the New Economy (essentially financial fraud and offshoring of US jobs), the Gini coefficient shot up sharply.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He is coauthor of The Tyranny of Good Intentions. He can be reached at: PaulCraigRoberts@yahoo.com

Thirteen detained after tent erected at settlement

October 26, 2009

Bethlehem - Ma'an - Palestinians, supported by Israeli and international peace activists, on Friday erected a tent on Palestinian-owned land across from Hazon David, an illegal Israeli settlement outpost slated for evacuation, according to a local group.

The Christian Peacemaker Teams reported that 100 people chanted for an end to the occupation and evacuation of Israeli settlements, illegal under international law, and erected the tent structure and flew a Palestinian flag.

Israeli military, border police, regular police, and special forces entered the area and called for the group to disperse or face arrest, according to the group.

Several Israelis sat on the ground in front of the Palestinians, the organization said, while Israeli police detained 11 Israelis, taking seven to the nearby Kiryat Arba police station in Hebron. Police reportedly detained two Palestinians, one of whom was released about three hours later.

The Israeli military forcefully moved the participants from the field to the owner's property up the hill, throwing stun grenades to encourage people to move more quickly from the area, the group added.

What does China's ascendance mean for Palestine?

Sarah Irving, The Electronic Intifada, 26 October 2009

It is not likely that China will offer an alternative to US hegemony regarding Palestine anytime soon. (MaanImages)

George Habash, the late leader of the Popular Front for the Liberation of Palestine (PFLP), called China Palestine's "best friend." Indeed, he was on an official PFLP visit to China when the conflict between Palestinian forces and the Hashemite Kingdom erupted in Jordan in 1970, the events later known as "Black September."

Habash had good reason to appreciate China's friendship at the time. According to Dr. Yukiko Miyagi of the UK-based Centre for the Advanced Study of the Arab World (CASAW), one characteristic of the People's Republic's policy toward the Arab states and political movements in the 1960s was high-profile support for the Palestinian liberation movement.

"It was a matter of both ideology and identity," says Dr. Miyagi. The newly-formed Communist People's Republic of China identified with the Palestinian guerrillas and provided them with military aid and training, seeing them as fellow victims of capitalism and imperialism, as well as hoping to steer the Palestinian resistance down a socialist path. China recognized the Palestinian people as a nation in 1964 and was the first state outside the Arab world to give diplomatic recognition to the Palestine Liberation Organization (PLO). It also refused to grant the same recognition to the State of Israel.

However, according to Dr. Miyagi, China's policy was not entirely altruistic. Even in the revolutionary heat of the 1960s and early 1970s, its support for Palestinian independence was also motivated by its desire to please other Arab countries, in the hope that they would recognize the People's Republic, rather than Taiwan, as the legitimate Chinese state. As Arab countries outnumbered Israel, they were considered more valuable as allies on the world stage.

Oil imports and peace processes

In the wake of the "Cultural Revolution" and the rapprochement with the US, China's political and economic strategies shifted in the 1970s. Its support for the Palestinian liberation movement also changed and it began to adopt a more "moderate" approach. Yet, it still refused to grant Israel diplomatic recognition, and in 1978 voted in favor of a United Nations resolution which classed Zionism as a form of racism. The Chinese leadership also criticized the UN's approach to Palestine, claiming that it unfairly equated the Israeli aggressor and the Palestinian victim. However, this didn't stop it from opening up informal and secretive contacts with Israel.

This rather ambivalent position has perhaps characterized China's attitude toward the Palestinian people's rights ever since. While China maintains support for Palestinian claims to self-determination it has also become a major trading partner with Israel. According to Dr. Miyagi, by the mid-1980s, Israel was the main supplier of high technology, including agricultural equipment and military technology, to China. In addition, China's geopolitical discourse also started to include positions like "Israel's right to security." Yet, at the same time, it called the 1982 massacres at Sabra and Shatila camps in Beirut "Hitlerism" and supplied both aid and arms to Palestinian forces in Lebanon. Two years later, China gave the PLO's delegation to the Beijing embassy status and recognized Yasser Arafat as President, rather than the more commonly used title of Chairman of the PLO.

China as a player in Middle East policy?

China's public support for the Palestinian cause hit a new low in the early 1990s. After the Tiananmen Square massacre in 1989 it became an international pariah in political terms, but it remained a major exporter of consumer goods and importer of oil from the Persian Gulf countries. It abstained from vetoing the UN-authorized and US-led first Gulf War. By 1992, Beijing established diplomatic ties with Israel, without Israel having met any of the preconditions which China had originally demanded. Official visits to and by Beijing were balanced between Palestine and Israel, and China abstained from, rather than supported, a UN motion similar to that of 1978 condemning Zionism as racism. Moreover, Israeli settlements in the West Bank and Gaza were criticized as "harmful to the peace process," but the PLO was told that it should "respect Israeli security."

Since the beginning of the second Palestinian intifada in 2000, and with China's growing international status, it has become more proactive on the issue of Palestine. The People's Republic's first Middle East peace envoy toured both Palestine and Israel in 2002, and Beijing has called for Israel to "unconditionally implement" UN resolutions for it to withdraw from occupied areas, describing settlements as "a violation of Israel's obligations under international law." In January 2009, China responded to Israel's winter invasion of Gaza with its "5 Points for an Immediate Ceasefire." It has expressed support for the Hamas government, and hosted Hamas' foreign minister in Beijing in June 2006. However, it also supported the Annapolis conference which excluded Hamas.

China's official press has also highlighted its aid to Palestine, with official press agencies calling its economic and humanitarian aid "an important expression of China's support for the Middle East peace process." Such statements, however, have often been disingenuous about the scale of China's donations. According to Dr. Miyagi, it gave just $11 million of the $7.4 billion pledged by the international community at the 2007 International Donors' Conference for Palestine.

To expect larger aid contributions -- or more action -- likely misinterprets China's intentions as a global power. Although China's increasing international stature has been the subject of considerable speculation, specialists on its foreign policy insist that it has few ambitions towards the kind of global interventionist role that the US has played as a superpower. While China has massive economic clout as a state, the everyday wealth of its people is still just a fraction of that of most Americans or Europeans. Rather, according to Dr. Miyagi, China's priority has become the maintenance of a stable world order which will supply it with uninterrupted raw materials and energy, and continue to buy its products.

If there are actors hoping that China might offer an alternative to US hegemony and pushing the international community into a more just position on Palestine, it is not likely to happen soon -- if ever. As Dr. Miyagi points out, Palestine occupies a symbolic position for both China as a former revolutionary state and for China's Arab economic partners. However, Palestine itself has no oil and only a tiny consumer market to offer. While China may provide balance to the US's constant pro-Israel positions at the UN and other international arenas, the days of its unequivocal support for Palestinian rights are, it seems, long gone.

Sarah Irving is a freelance writer from Manchester, UK. She worked with the International Solidarity Movement in the West Bank in 2001-02 and with Olive Co-op, promoting fair trade Palestinian products and solidarity visits, in 2004-06. She now writes full-time on a range of issues, including Palestine and the wider Middle East.

An exclusively Jewish Investment Boom

October 26, 2009

Israel has been the best performing residential real estate property market in 2009. Exclusively Jewish developments have been fueled by Israeli government tax breaks and ultra-low interest rates set by the Bank of Israel.

The Jerusalem Post reports (emphasis mine):

New legislation passed by the Knesset may cause the pace of construction to accelerate, pushing down property prices, Construction and Housing Minister Ariel Attias said October 8. The Knesset on August 3 approved a law proposed by Prime Minister Binyamin Netanyahu to free up publicly owned land for private development and make it easier and cheaper to buy and build homes.

Mortgage rates are about 2%, according to Mortgage Israel, the country's largest home-loan brokerage. The average rate for the past five years was about 5 percent. [...]

"A bubble began to emerge this year, fueled by the Bank of Israel," said Shlomo Maoz, chief economist at Excellence Investments. "The bank is now beginning to raise rates again to fight inflation."

Ayelet Nir, chief economist at IBI said "though mortgages became cheap, credit was never widely available in Israel." [...]

Some neighborhoods in Jerusalem, Tel Aviv and Netanya are also shielded from a collapse by constant demand from Jews from the US, France and the UK, said Bernard Raskin, regional director of Re/Max Israel, the country's largest property broker.

Groups of private investors in Tel Aviv have replaced contractors and real-estate companies as the biggest purchasers of land in Israel this year, according to the Israel Lands Administration. The companies are given tax breaks by the government that allow them to pay more, inflating property prices, Maoz said.

A closer examination of the Israeli mortgage industry reveals Western financial industry connections. Shunpiking Magazine describes the process:

Political economy of recent Zionist colonisation and war

* The alternative compromise was to replace direct economic foreign aid with loan guarantees, enabling Israel to lower its borrowing costs by using the US guarantee to obtain a favourable rate of interest in the finance capital markets. For example, the Trans-Israel Highway [2] is a multinational consortium of consortia: in Canada - Derech Eretz Highways (1997) Ltd. comprises Canadian Highways International Corporation (CHIC), builder of the toll turnpikes in Ontario and Nova Scotia, control of which was acquired by the U.S. financial conglomerate CIT Group in 1999; in Israel - Africa Israel Investment Ltd. of Tel Aviv and 36 other firms; in France - Société Générale d'Entreprises of Paris; and in the United States - Hughes Transportation Management Systems and Raytheon Corp., the weapons manufacturer which supplied the billion-dollar, dysfunctional Patriot missile system to Israel. The para-military highway project itself was constructed from a US$3-billion contract, with 80 per cent of any potential losses guaranteed ...by the Israeli government. In a word: the mutual fleecing of each lesser predator by a bigger predator-partner goes 'round and around and it comes out here... in these long-term loan guarantees floated on international financial markets. For their part, business interests based in Israel acquire access to capital by means of free-trade agreements and most-favoured-nation status annexing their market to the financial houses of Wall Street [United States], London and Frankfurt [the European Union] and Bay Street [Canada].

* The first cries of pain in the business press of Israel after Hamas' election to office in the Palestine Legislative Council elections of 25 January 2006 were over the need to get the US to extend the loan guarantees ... even though only about half the facility had been used up [the data in the Ynet article below discloses that US$4.9 of US$9.0 billion has been used]. The electoral verdict created great anxiety in Tel Aviv among those sections of Israeli business and industry living off the avails of the loan guarantees. Hamas, the Islamic Resistance Movement, which won the majority and the democratic right to form the government, was not (and still is not) committed to recognising the Zionist colonies of the West Bank as Israeli territory. This non-recognition gravely jeopardises the entire house-of-cards just elaborated.

Summary:

a. Israel borrows in the money market at a highly preferred rate.

b. The Zionist magnates of the construction and real estate industry - a sector through which the Sharon family enriched itself, and intimately linked with the Jewish National Fund which holds virtually 100 per cent of the land "in trust" (and its parent, the World Zionist Council, composed of Anglo-American finance capitalists) - then borrow from the Israeli government at a slightly higher rate, but still below the mortgage market rate within Israel.

c. Finally, the numerous settlers borrow from the tiny handful of banks and-or fat-cat settlement developers at the prevailing mortgage market rate.

China Should Raise Euro, Yen Holdings, News Reports

Oct. 26 (Bloomberg) -- China should increase the representation of the yen and the euro in its foreign-exchange reserves, the Financial News, a newspaper affiliated with China’s central bank, reported today.

The U.S. dollar should retain the largest weighting in the reserves, albeit a smaller proportion than at present, according to an article by Zhou Hai carried by the Beijing-based paper. The holdings of euro and yen should be increased to reflect China’s growing trade with the European Union and Japan, the report said, without providing Zhou Hai’s job description.

The government is working to maintain an “appropriate” size of currency reserves to reduce pressure on inflation and the yuan’s appreciation, the author wrote in the article. China should improve the yuan’s exchange-rate mechanism and use monetary policy tools “reasonably” to lessen the need for “passive” purchases of foreign currencies, Zhou wrote.

China doesn’t need to include the Hong Kong dollar in its reserves owing to the latter’s peg to the U.S. currency, according to the report.

To contact Bloomberg News staff for this story: Belinda Cao in Beijing at +86-10-6535-2316 or lcao4@bloomberg.net

S&P 500 Overvalued by 40%, Set to Fall, Smithers Says

By Patrick Rial

Oct. 26 (Bloomberg) -- The U.S. Standard & Poor’s 500 Index is about 40 percent overvalued and headed for a drop as central banks pull back on securities purchases that pushed up asset prices, according to economist Andrew Smithers.

Declines are also likely because banks will need to sell more shares to raise capital and restore their financial health, the economist and president of research firm Smithers & Co. said in an Oct. 23 interview at Bloomberg’s Tokyo office. A 40 percent tumble from the S&P 500’s price at the end of last week of 1,079.60 would take the gauge to 647.76, below its March low.

“Markets are very vulnerable to an end of quantitative easing,” said Smithers, 72, who recommended avoiding stocks in 2000 just as the U.S. benchmark entered a two-year bear market. “Central banks, they’ve got to stop some time and if that happens everything will come down.”

Central banks from the Federal Reserve to the Bank of England last year embarked on unprecedented measures to flood credit markets with cash in order to rescue the global financial system from the worst crisis since the Great Depression.

Those purchases may be nearing an end. The Fed’s emergency liquidity programs including the Term Auction Facility and commercial paper purchases have shrunk as the central bank completes the scheduled purchases of housing debt and Treasuries. Bank of England policy makers voted unanimously at their latest meeting to leave the asset purchase program unchanged, rather than move to increase it, minutes showed.

Asset Prices

Asset purchases have doubled the size of the Fed’s balance sheet to $2.1 trillion since the start of the current financial crisis. The Bank of England has spent 175 billion pounds ($286 billion) over the last seven months to rescue the economy.

The boost to asset prices globally helped send the S&P 500 up by 60 percent from its 12-year low on March 9. Crude-oil prices have more than doubled from last year’s bottom in December, reaching as high as $82 a barrel. This month, a Hong Kong apartment sold for a record price-per-square foot.

“Quantitative easing has set off another sharp, and so far containable asset bubble,” Smithers said. “But if it gets too high and starts to come down then we’ll go straight back” into recession.

The economist said that he stopped buying equities in the 1990s because of expensive valuations and began purchasing them again only for a brief period during the lows of the current crisis.

Tobin’s Q Ratio

Smithers, along with fellow economist Stephen Wright, argued that U.S. equities were grossly overvalued in a March 2000 book the two co-authored entitled “Valuing Wall Street.” The S&P 500 Index plunged 49 percent over 2 1/2 years from a record high reached that month.

He based his prediction in the book on Tobin’s Q, an indicator of whether the market is overvaluing or undervaluing company assets compared with their replacement cost. He uses both the Q ratio, as well as a cyclically adjusted price-to- earnings ratio compiled by Yale University’s Robert Shiller, for his estimate that U.S. shares are 40 percent overvalued.

In his latest book published in July, “Wall Street Revalued,” Smithers argues central banks need to police asset prices such as equities, real estate and debt in order to prevent the bubble and crash cycle seen in recent years.

Imperfectly Efficient

In the book he proposes a successor to the efficient markets hypothesis, naming it the imperfectly efficient market hypothesis. Smithers, who worked for 27 years at S.G. Warburg & Co. where he ran the investment management business, contends that asset prices rotate around a fair value level that can be objectively measured, whereas efficient market theorists postulate assets are always valued at the correct price and therefore need no regulation by authorities.

Central bankers may be catching on. Federal Reserve Chairman Ben S. Bernanke said on Oct. 19 asset bubbles present a challenge that Asian governments will have to deal with in the future. That contrasts with his 2002 statement that monetary policy can’t be “directed finely enough to guide asset prices.”

Not all equity markets are as overpriced as the U.S., Smithers said. Japan may be the world’s cheapest major market though he doesn’t forecast short-term gains from betting on the nation’s stocks.

Cheap Japan?

Profit margins at Japanese companies are likely to improve as companies invest less, lowering depreciation costs, he said. Depreciation eats up about two-thirds of earnings in Japan, compared with less than half for U.S. corporations, according to Smithers. Firms plan to cut capital spending 10.8 percent this year, the Bank of Japan’s quarterly Tankan survey released this month showed.

“It’s quite likely that Japan is the only significant market in the world that is not seriously overvalued,” he said. “When investment comes down, depreciation comes down.”

The economist also said banks such as Goldman Sachs Group Inc. will likely break up when they become subject to sliding- scale capital requirements that penalize them for being too large. Rising profits at financial institutions has largely been the result of shrinking competition in market-making, which has in turn provided banks with inside information on trading patterns, Smithers said.

“Market-making has become a doomsday machine,” Smithers said. “People are arrogant and think they can do wonders and they’ll be all too happy to split off. And you should raise the capital requirements until they do split off.”

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.

Leader: Foreigners behind regional terror attacks

Press TV - October 26, 2009 11:16:25 GMT

Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei

Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei says terrorist attacks in Muslim countries like Iran, Iraq and Pakistan are carried out by foreign agents.

"Bloody measures in some Muslim countries such as Iraq and Pakistan and certain parts of Iran are aimed at creating discord and difference among Shia and Sunni Muslims," said Ayatollah Khamenei in a meeting with Iranian officials in charge of organizing Hajj ceremonies on Monday.

"This is why Muslims should pay great attention to the issue of their unity," added the Leader.

"Perpetrators of terrorist and bloody moves are directly or indirectly linked to foreign agents," the Leader said.

Ayatollah Khamenei said that the Hajj pilgrims cannot remain indifferent to events happening in the Muslim world particularly in Iraq, Afghanistan, Palestine and parts of Pakistan.

"During Hajj ceremonies, [the pilgrims] should be sensitive about moves against the Islamic unity or efforts which aim to offense the flag of the Muslim world which has been hoisted in Iran," added the Leader.

The Leader's remarks came after at least 41 people, including seven senior commanders of the Islamic Revolution Guards Corps (IRGC), were killed in a bombing on October 18 during a unity gathering of Shia and Sunni tribal leaders in the town of Pishin on the Iran-Pakistan border.

The Pakistan-based Jundallah, closely affiliated with the notorious al-Qaeda [CIA] organization, accepted responsibility for the deadly attack.

The Jundallah terrorist group, led by Abdolmalek Rigi, has staged a torrent of terrorist attacks in Iran.

In a recent interview with Press TV, Rigi's brother, Abdulhamid, confirmed that the Jundallah leader had established links with US agents.

Abdulhamid said that at just one of his meetings with the US operatives, Rigi had received $100,000 to foment sectarian strife in Iran.

Meanwhile, synchronized car bombings in Baghdad on Sunday killed more than 160 people and injured over 700 others.

The bombings, detonated within a minute of each other, also damaged the Justice Ministry and Provincial Council complexes.

Police in £9m scheme to log 'domestic extremists'

Thousands of activists monitored on network of overlapping databases

By Paul Lewis, Rob Evans and Matthew Taylor
The Guardian
October 25, 2009

Detailed information about the political activities of campaigners is being stored on IT systems.

Photograph: Fiona Hanson/PA

Police are gathering the personal details of thousands of activists who attend political meetings and protests, and storing their data on a network of nationwide intelligence databases.

The hidden apparatus has been constructed to monitor "domestic extremists", the Guardian can reveal in the first of a three-day series into the policing of protests. Detailed information about the political activities of campaigners is being stored on a number of overlapping IT systems, even if they have not committed a crime.

Senior officers say domestic extremism, a term coined by police that has no legal basis, can include activists suspected of minor public order offences such as peaceful direct action and civil disobedience.

Three national police units responsible for combating domestic extremism are run by the "terrorism and allied matters" committee of the Association of Chief Police Officers (Acpo). In total, it receives £9m in public funding, from police forces and the Home Office, and employs a staff of 100.

An investigation by the Guardian can reveal:

• The main unit, the National Public Order Intelligence Unit (NPOIU), runs a central database which lists thousands of so-called domestic extremists. It filters intelligence supplied by police forces across England and Wales, which routinely deploy surveillance teams at protests, rallies and public meetings. The NPOIU contains detailed files on individual protesters who are searchable by name.

• Vehicles associated with protesters are being tracked via a nationwide system of automatic number plate recognition (ANPR) cameras. One man, who has no criminal record, was stopped more than 25 times in less than three years after a "protest" marker was placed against his car after he attended a small protest against duck and pheasant shooting. ANPR "interceptor teams" are being deployed on roads leading to protests to monitor attendance.

• Police surveillance units, known as Forward Intelligence Teams (FIT) and Evidence Gatherers, record footage and take photographs of campaigners as they enter and leave openly advertised public meetings. These images are entered on force-wide databases so that police can chronicle the campaigners' political activities. The information is added to the central NPOIU.

• Surveillance officers are provided with "spotter cards" used to identify the faces of target individuals who police believe are at risk of becoming involved in domestic extremism. Targets include high-profile activists regularly seen taking part in protests. One spotter card, produced by the Met to monitor campaigners against an arms fair, includes a mugshot of the comedian Mark Thomas.

• NPOIU works in tandem with two other little-known Acpo branches, the National Extremism Tactical Coordination Unit (Netcu), which advises thousands of companies on how to manage political campaigns, and the National Domestic Extremism Team, which pools intelligence gathered by investigations into protesters across the country.

Denis O'Connor, the chief inspector of constabulary, will next month release the findings of his national review of policing of protests. He has already signalled he anticipates wide scale change. His inspectors, who were asked to review tactics in the wake of the Metropolitan police's controversial handling of the G20 protests, are considering a complete overhaul of the three Acpo units, which they have been told lack statutory accountability.

Acpo's national infrastructure for dealing with domestic extremism was set up with the backing of the Home Office in an attempt to combat animal rights activists who were committing serious crimes. Senior officers concede the criminal activity associated with these groups has receded, but the units dealing with domestic extremism have expanded their remit to incorporate campaign groups across the political spectrum, including anti-war and environmental groups that have only ever engaged in peaceful direct action.

All three units divide their work into four categories of domestic extremism: animal rights campaigns; far-right groups such as the English Defence League; "extreme leftwing" protest groups, including anti-war campaigners; and "environmental extremism" such as Climate Camp and Plane Stupid campaigns.

Anton Setchell, who is in overall command of Acpo's domestic extremism remit, said people who find themselves on the databases "should not worry at all". But he refused to disclose how many names were on the NPOIU's national database, claiming it was "not easy" to count. He estimated they had files on thousands of people. As well as photographs, he said FIT surveillance officers noted down what he claimed was harmless information about people's attendance at demonstrations and this information was fed into the national database.

He said he could understand that peaceful activists objected to being monitored at open meetings when they had done nothing wrong. "What I would say where the police are doing that there would need to be the proper justifications," he said.