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  1. 2005/11/05 Summit Meeting in Argentina
  2. 2005/11/04 Greenspan's testimony 2
  3. 2005/11/04 Alan Greenspan's Testimony before US Congress
  4. 2005/11/01 Bernanke, new Fed chairman
  5. 2005/11/01 US Fed's increase in the Federal Fund Rate
  6. 2005/10/18 NYTimes article on Koizumi's war shrine visit
  7. 2005/10/06 The Damages to US from Invading Iraq
  8. 2005/09/30 Fear in New Orleans
  9. 2005/09/22 To tell the truth
  10. 2005/09/21 Simon Wiesenthal Dies at 96

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Summit Meeting in Argentina

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November 4, 2005
Bush's Troubles Follow Him to Summit in Argentina

MAR DEL PLATA, Argentina, Nov. 4 - President Bush's foreign and domestic troubles trailed him to the opening day of an international summit here as tens of thousands protested in the streets and Mr. Bush deflected questions about his chief political aide, Karl Rove, who remains under investigation in the C.I.A. leak inquiry.

At a brief news conference with American reporters today at the Sheraton Mar Del Plata, Mr. Bush was asked four times about Mr. Rove, and four times refused to answer. The president did not take the opportunity to offer a public endorsement of Mr. Rove, nor did he address speculation in Washington about whether Mr. Rove would stay as his deputy chief of staff.

Asked if there were discussions at the White House about whether or not Mr. Rove would remain in his job, Mr. Bush replied that "the investigation on Karl, as you know, is not complete, and therefore I will not comment about him and/or the investigation."

Mr. Bush calmly added, "I understand the anxiety and angst by the press corps to talk about this." But he called the C.I.A. leak inquiry "a very serious investigation," and said that the White House is "cooperating to the extent that the special prosecutor wants us to cooperate."

At the same time, Venezuela's populist president, Hugo Chávez, rallied some 25,000 protesters in this beach resort's main soccer stadium. He declared a free trade accord backed by Mr. Bush as dead and accused the Pentagon of having a secret plan to invade his oil-rich country.

"If it occurs to U.S. imperialism, in its desperation, to invade Venezuela, a 100-years' war will begin," Mr. Chávez declared to cheers.

A few blocks from the hotel where the summit conference was taking place, some protesters threw stones and set fires this afternoon, and the police fired tear gas canisters to break up the demonstrations. Television images showed riot police arriving in vans and on motorcycles and horseback and massing near the crowds.

Several hundred demonstrators wearing bandanas or masks over their faces brandished clubs or fired slingshots at the police and set fire to a bank, according to reports by news agencies. The rioting broke out after a much larger, peaceful protest march involving several thousand people, the agencies said.

President Bush arrived here on Thursday night after one of the worst weeks of his presidency, only to be greeted by strong anti-American sentiment and taunts from Mr. Chávez.

Today, Mr. Bush said that he and Argentina's president, Néstor Kirchner, had agreed in talks that the United States' role in the region could be constructive and positive. Mr. Bush stressed the need for wise decisions to attract investments.

Standing next to President Kirchner, he also made what appeared to be a reference to the protests.

"It's not easy to host all these countries," he said, addressing Mr. Kirchner. "It's particularly not easy to host, perhaps, me," he said, drawing laughter.

The Summit of the Americas, a two-day, 34-nation gathering, opened to officially focus on creating jobs and promoting democracy.

Mr. Chávez, who has repeatedly accused the Bush administration of trying to assassinate him and invade his oil-producing country, is using the international summit meeting here to protest the administration's free trade message and to attempt a showdown with Mr. Bush, the man the Venezuelan government calls "Mr. Danger."

He said this week that his main goal at the meeting was the "final burial" of the proposed Free Trade Area of the Americas accord, which is already stalled.

"I think we came here to bury F.T.A.A.," Mr. Chávez said today, according to remarks reported by Reuters. "I brought my shovel."

Mr. Bush said today he would be "polite" when he meets Mr. Chávez.

The White House strategy is to ignore Mr. Chávez as much as possible.

"President Chávez has been pretty vocal about how he sees the summit and what he hopes to achieve at the summit," Thomas A. Shannon, the assistant secretary of state for inter-American affairs, told reporters on Air Force One on Thursday as it headed for Argentina. "I mean, he's going to behave the way he wants to behave."

Earlier this week, Mr. Bush did not denounce a longstanding request from Mr. Chávez that the Argentine government build a nuclear reactor in Venezuela for energy production.

"I guess if I were a taxpayer in Venezuela, I would wonder about the energy supply that Venezuela has," Mr. Bush said in an interview at the White House on Tuesday with a group of reporters from Latin American publications. "But maybe it makes sense." Mr. Bush added that "it's the first I've heard of it."

A little more than 24 hours later, Stephen J. Hadley, the national security adviser, appeared to backtrack when he noted that Mr. Chávez had asked a number of countries to build a nuclear reactor in Venezuela, and that he was far from a deal.

"I think that's because people recognize that it would be problematic for Chávez to be in the nuclear business, if you will," Mr. Hadley said, adding that "this trip, this summit, is not about Hugo Chávez."

But behind the scenes on Thursday, the United States and Venezuela were intensely jostling for advantage. As a result, negotiators were still struggling to come to an agreement over the final text of a joint communiqué, meant to be based on a consensus, that the leaders here hope to issue when the meeting ends on Saturday.

In a section on job creation, United States representatives have suggested taking note of "the 96 million people who live in extreme poverty" in Latin America and the Caribbean, subsisting on $1 a day or less. But Venezuela would agree to that statement, Latin American diplomats said, only if the following phrase were also included: "while in the United States there are 37 million poor."

The deepest disagreements had to do with the issue of free trade, which Mr. Bush has offered as the key to economic growth in the hemisphere. Washington is said to be pushing to issue a statement favoring the resumption of negotiations aimed at establishing the free trade accord, abbreviated F.T.A.A., but has met resistance not only from Venezuela but from Brazil and Argentina, too.

"The only language which is a problem is F.T.A.A.," said José Miguel Insulza, the secretary general of the Organization of American States. "We're moving toward a solution, not in the meeting but in the corridors."

At a parallel "People's Summit" in Mar del Plata on Thursday, organized by a coalition of left-wing, indigenous and antiglobalization groups, American proposals on free trade also came in for criticism, as did Mr. Bush himself.

"We Said No and No Means No: No to Bush, No to F.T.A.A. and No to Repaying the Debt," read one large banner at the conference, held in a group of tents and classrooms on the campus of a local university. Several thousand people attended.

"We've had enough of neo-liberalism and the damage it has inflicted on our societies," said Juan Montenegro, who came from Buenos Aires to take part. "Bush is trying to destroy Iraq with bombs and guns and Latin America with an economic program that will rob us of our sovereignty."

The "antisummit" began early in the week and was expected to culminate today in mass protest marches, led by Adolfo Pérez Esquivel, the Nobel Peace Prize winner, and Diego Maradona, the soccer idol.

Christine Hauser contributed reporting for this article from New York

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2005/11/05 09:33 2005/11/05 09:33

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Greenspan's testimony 2

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Testimony of Chairman Alan Greenspan
Economic outlook
Before the Joint Economic Committee, U.S. Congress
November 3, 2005

 

Mr. Chairman, when I last appeared before the Joint Economic Committee in early June, economic activity appeared to be reaccelerating after a slowdown in the spring. The economy had weathered a further run-up in energy prices over the winter, and aggregate demand was again strengthening. Real gross domestic product (GDP) growth averaged 3-1/2 percent at an annual rate over the first half of the year, and subsequent readings on activity over the summer were positive. By early August, the economy appeared to have considerable momentum, despite a further ratcheting up of crude oil prices; pressures on inflation remained elevated.

As you know, the economy suffered significant shocks in late summer and early autumn. Crude oil prices moved sharply higher in August, bid up by growth in world demand that continued to outpace the growth of supply. Then Hurricane Katrina hit the Gulf Coast at the end of August, causing widespread disruptions to oil and natural gas production and driving the price of West Texas Intermediate crude oil above $70 per barrel. Because of a lack of ready access to foreign supplies, natural gas prices rose even more sharply. At the end of September, with the recovery from the first storm barely under way, Hurricane Rita hit, causing additional damage and destruction--especially to the energy production and distribution systems in the Gulf. Most recently, Hurricane Wilma caused widespread power outages and property damage across the state of Florida. These events are likely to exert a drag on employment and production in the near term and to add to the upward pressures on the general price level. But the economic fundamentals remain firm, and the U.S. economy appears to retain important forward momentum.

Of course, the higher energy prices caused by the hurricanes are being felt well beyond the Gulf Coast region. Those higher prices resulted from the substantial damage that occurred to our nation's energy production and distribution systems. Of the more than 3,000 oil and gas production platforms in the paths of Katrina and Rita, more than 100 were destroyed, and an additional 50 suffered extensive damage. Of the 134 manned drilling rigs operating in the Gulf, 8 were lost, and an additional 38 were either set adrift by the storms or were badly damaged. At present, both oil and natural gas production in the Gulf are operating at less than 50 percent of pre-Katrina levels. Since the first evacuations of oil and gas facilities were ordered before Katrina, cumulative shortfalls represented almost 4 percent of the nation's annual production of crude oil and 2 percent of our output of natural gas.

The combination of flooding, wind damage, and a lack of electric power also forced many crude oil refineries and natural gas processing plants to shut down. The restoration of production at the affected natural gas processing facilities has proceeded particularly slowly, in part because of the lack of natural gas feedstocks and infrastructure problems. Most refineries, however, will be back on line within the next month or so, though a few may take longer.

In the interim, a greater output of refined petroleum products in other areas of the country and much higher imports, especially of gasoline, are making up for the production shortfalls in Gulf refining. The temporary lifting of some environmental regulations and the suspension of the Jones Act facilitated those adjustments. In addition, refiners have shifted the mix of production toward more gasoline and less heating oil and jet fuel. That shift has had benefits in the short run, though the longer it continues, the greater the possibility of upward pressure on distillate fuel oil prices during the winter heating season.

Releases from the nation's Strategic Petroleum Reserve relieved much of the upward pressure on crude oil prices, and imports of refined products responded rapidly to ease the price pressures stemming from the loss of refinery production in the Gulf. As a consequence, the nationwide retail price of gasoline for all grades has declined 60 cents per gallon from its peak of $3.12 per gallon in the week of September 5. Motorists appear to have economized on their driving, and gasoline demand appears to be off a bit. However, it will take time and an appreciable increase in the fuel economy of our stock of motor vehicles to fundamentally change the amount of motor fuel used on our nation's highways.

The far more severe reaction of natural gas prices to the production setbacks that have occurred in the Gulf highlights again the need to expand our nation's ability to import natural gas. In contrast to the fall in crude oil prices and the sharp narrowing of refinery margins during the past two months, natural gas prices have remained high. Moreover, judging from elevated distant futures prices, traders expect natural gas prices to edge lower but to stay high for the foreseeable future. This expectation largely reflects a natural gas industry in North America that is already operating at close to capacity and our inability to import large quantities of far cheaper, liquefied natural gas (LNG) from other parts of the world. At present, natural gas supplies appear to be sufficient to meet the near-term demands--even with some ongoing shortfall in Gulf production. However, a colder-than-average winter would stress this market, and prices will likely remain vulnerable to spikes until the spring.

U.S. imports of LNG have been constrained by inadequate global capacity for liquefaction, as well as by environmental and safety concerns that have restricted the construction of new LNG import terminals in the United States. In 2002, such imports accounted for only 1 percent of U.S. gas consumption. Despite the major effort to expand imports, the Department of Energy forecasts LNG imports this year at only 3 percent of gas consumption. Canada, which has recently supplied one-sixth of our consumption, cannot expand its pipeline exports significantly in the near term, in part because of the role that Canadian natural gas plays in supporting increasing oil production from tar sands.

The disruptions to energy production have noticeably affected economic activity. We estimate that the storms held down the increase in industrial production 0.4 percentage point in August and an additional 1.7 percentage point in September.

Except for the hurricane effects, readings on the economy indicate a continued solid expansion of aggregate demand and production. If allowance is taken for the effects of Katrina and Rita and for the now-settled machinist strike at Boeing, industrial production rose at an annual rate of 5-1/4 percent in the third quarter. That's up from an annual pace of 1-1/4 percent in the second quarter, when a marked slowing of inventory accumulation was a restraining influence on growth.

The September employment report showed a loss of 35,000 jobs. However, an upward revision to payroll gains over the summer indicated a stronger underlying pace of hiring before the storms than had been previously estimated. The Bureau of Labor Statistics estimates that employment growth in areas not affected by the storms was in line with the average pace over the twelve months ending in August.

Retail spending eased off in September, likely reflecting the effects of the hurricanes and higher gasoline prices. Major chain stores report a gradual recovery over October in the pace of spending, though light motor vehicle sales declined sharply last month, when some major incentives to purchase expired.

The longer-term prospects for the U.S. economy remain favorable. Structural productivity continues to grow at a firm pace, and rebuilding activity following the hurricanes should boost real GDP growth for a while. More uncertainty, however, surrounds the outlook for inflation.

The past decade of low inflation and solid economic growth in the United States and in many other countries around the world has been without precedent in recent decades. Much of that favorable performance is attributable to the remarkable confluence of innovations that spawned new computer, telecommunication, and networking technologies, which, especially in the United States, have elevated the growth of productivity, suppressed unit labor costs, and helped to contain inflationary pressures. The result has been a virtuous cycle of low prices and solid growth.

Contributing to the disinflationary pressures that have been evident in the global economy over the past decade or more has been the integration of in excess of 100 million educated workers from the former Soviet bloc into the world's open trading system. More recently, and of even greater significance, has been the freeing from central planning of large segments of China's 750 million workforce. The gradual addition of these workers plus workers from India--a country which is also currently undergoing a notable increase in its participation in the world trading system--would approximately double the overall supply of labor once all these workers become fully engaged in competitive world markets. Of course, at current rates of productivity, the half of the world's labor force that has been newly added to the world competitive marketplace is producing no more than one quarter of world output. With increased education and increased absorption of significant cutting-edge technologies, that share will surely rise.

Over the past decade or more, the gradual assimilation of these new entrants into the world's free-market trading system has restrained the rise of unit labor costs in much of the world and hence has helped to contain inflation.

As this process has unfolded, inflation expectations have decreased, and accordingly, the inflation premiums embodied in long-term interest rates around the world have come down. The effective augmentation of world supply and the accompanying disinflationary pressures have made it easier for the Federal Reserve and other central banks to achieve price stability in an environment of generally solid economic growth.

But this seminal shift in the world's workforce is producing, in effect, a level adjustment in unit labor costs. To be sure, economic systems evolve from centrally planned to market-based only gradually and, at times, in fits and starts. Thus, this level adjustment is being spread over an extended period. Nevertheless, the suppression of cost growth and world inflation, at some point, will begin to abate and, with the completion of this level adjustment, gradually end.

These global forces pressing inflation and interest rates lower may well persist for some time. Nonetheless, it is the rate at which countries are integrated into the global economic system, not the extent of their integration, that governs the degree to which the rise in world unit labor costs will continue to be subdued. Where the global economy is currently in this dynamic process remains open to question. But going forward, these trends will need to be monitored carefully by the world's central banks.

* * *

I want to conclude with a few remarks about the federal budget situation, which--at least until Hurricanes Katrina and Rita struck the Gulf Coast--was showing signs of modest improvement. Indeed, tax receipts have exhibited considerable strength of late, posting an increase of nearly 15 percent in fiscal 2005 as a result of sizable gains in individual and, even more, corporate income taxes. Thus, although spending continued to rise rapidly last year, the deficit in the unified budget dropped to $319 billion, nearly $100 billion less than the figure for fiscal year 2004 and a much smaller figure than many had anticipated earlier in the year. Lowering the deficit further in the near term, however, will be difficult in light of the need to pay for post-hurricane reconstruction and relief.

But even apart from the hurricanes, our budget position is unlikely to improve substantially further until we restore constraints similar to the Budget Enforcement Act of 1990, which were allowed to lapse in 2002. Even so, the restoration of paygo and discretionary caps will not address the far more difficult choices that confront the Congress as the baby-boom generation edges toward retirement. As I have testified on numerous occasions, current entitlement law may have already promised to this next generation of retirees more in real resources than our economy, with its predictably slowing rate of labor force growth, will be able to supply.

So long as health-care costs continue to grow faster than the economy as a whole, as seems likely, federal spending on health and retirement programs would rise at a rate that risks placing the budget on an unsustainable trajectory. Specifically, large deficits will result in rising interest rates and an ever-growing ratio of debt service to GDP. Unless the situation is reversed, at some point these budget trends will cause serious economic disruptions.

We owe it to those who will retire over the next couple of decades to promise only what the government can deliver. The present policy path makes current promises, at least in real terms, highly conjectural. If fewer resources will be available per retiree than promised under current law, those in their later working years need sufficient time to adjust their work and retirement decisions.

Crafting a budget strategy that meets the nation's longer-run needs will become ever more difficult and costly the more we delay. The one certainty is that the resolution of the nation's demographic challenge will require hard choices and that the future performance of the economy will depend on those choices. No changes will be easy, as they all will involve setting priorities and making tradeoffs among valued alternatives. The Congress must determine how best to address the competing claims on our limited resources. In doing so, you will need to consider not only the distributional effects of policy changes but also the broader economic effects on labor supply, retirement behavior, and private saving. The benefits of taking sound, timely action could extend many decades into the future.

 

http://www.federalreserve.gov/BoardDocs/Testimony/2005/20051103/default.htm

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2005/11/04 03:15 2005/11/04 03:15

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Alan Greenspan's Testimony before US Congress

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November 3, 2005
Greenspan Testifies Before Congress on U.S. Economy

Filed at 12:59 p.m. ET

 

WASHINGTON (AP) -- Federal Reserve Chairman Alan Greenspan told Congress Thursday that economic fallout from the recent spate of devastating hurricanes should prove fleeting and that the economy remains sturdy.

The trio of hurricanes -- Katrina, Rita and Wilma -- is likely to ''exert a drag'' on employment and production in the short term and may aggravate inflation pressures, Greenspan said in testimony to Congress' Joint Economic Committee.

''But the economic fundamentals remain firm, and the U.S. economy appears to retain important forward momentum,'' the retiring Fed chairman said in his most extensive remarks to date on the impact of the storms.

While the Fed chief sounded optimistic about the economy's prospects, Greenspan, who leaves early next year after 18 years, made clear that the Fed is keeping a close eye on high energy prices to make sure they don't spark broader inflation.

Although Greenspan didn't specifically mention the future course of interest rates, many analysts predict that borrowing costs will climb in the months ahead as the Fed seeks to combat inflation.

''We are very firm in the notion that this country should not visit the 1970s again in the way of inflation,'' Greenspan said, referring to a period where the economy was rocked by skyrocketing prices.

Greenspan used strong language to warn Congress to get the nation's fiscal house in order. Bloated budget deficits, if not curbed, could pose a danger to the economy's long-term health, he warned.

''Unless the situation is reversed, at some point these budget trends will cause serious economic disruptions,'' Greenspan said.

The government ran up a budget deficit of $319 billion in the 2005 fiscal year that ended Sept. 30. That followed a record amount of red ink last year.

''Lowering the deficit further in the near term, however, will be difficult in light of the need to pay for post-hurricane reconstruction and relief,'' Greenspan said.

If the swollen deficits are left unchecked, they eventually will put upward pressure on long-term interest rates, Greenspan warned.

Greenspan was questioned about the support he gave in 2001 to President Bush's successful drive to get Congress to pass sweeping tax cuts that totaled $1.3 billion over 10 years. Those tax cuts are blamed by Democrats for bringing back record deficits.

Given the facts known at the time, Greenspan said he would still support the tax cuts because of projections, which later proved wrong, that the federal government was facing huge surpluses.

Committee members, noting that Greenspan had appeared before Congress many times during his nearly two decades at the Fed, praised him for the job he had done keeping the U.S. economy on track.

''Mr. Greenspan, we are going to miss you. You have done a heck of a job,'' said Rep. Maurice Hinchey, D-N.Y.

The Fed chief underscored his belief that benefits currently promised to the baby boom generation through Social Security and Medicare likely cannot be met and probably will have to be trimmed.

''We owe it to those who will retire over the next couple of decades to promise only what the government can deliver,'' Greenspan said.

On the budget front, he repeated his call for lawmakers to restore caps on spending. And, Greenspan called on Congress to pay for any future tax cuts with either increases in other taxes or reductions in spending.

Greenspan's appearance on Capitol Hill comes two days after he and his Fed colleagues decided to boost the federal funds rate by one-quarter of percentage point, to 4 percent, to thwart inflation.

Oil prices briefly shot up past $70 a barrel in late August, and gasoline prices topped $3 a gallon before moderating. But home heating costs are expected to be much higher this winter than a year ago.

''I think people are going to be quite surprised at their heating bills this winter,'' Greenspan said.

Still, the Fed chief appeared hopeful businesses would be restrained in passing along elevated energy costs in the prices charged to consumers. ''As long as the Fed is perceived to be holding inflation expectations in check ... the passthrough of energy costs will be subdued,'' he said.

Many economists are predicting the Fed will bump up rates at its next session, on Dec. 13, as well as on Jan. 31, which will be Greenspan's last meeting. Some analysts also are calling for a rate increase on March 28, which would be the first presided over by Ben Bernanke, President Bush's choice to replace Greenspan.

Bernanke has said that his first priority will be to maintain continuity with Greenspan's policies. Fed watchers say that means inflation-fighting will keep playing a prominent role.

 

http://www.nytimes.com/aponline/business/AP-Greenspan.html?pagewanted=print

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2005/11/04 03:11 2005/11/04 03:11

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Bernanke, new Fed chairman

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NY times
October 30, 2005
Economic View

Bernanke's Models, and Their Limits

IN terms of intellect, Ben S. Bernanke may be to the Federal Reserve what John G. Roberts Jr. is to the Supreme Court. And like Chief Justice Roberts, Mr. Bernanke, the nominee to replace Alan Greenspan at the Fed, has left a paper trail worth studying. What can it tell us about the sort of Fed chairman he would be?

In general, Mr. Bernanke's work has been solidly in the mainstream - a mainstream he has helped define since he began publishing papers in major economic journals since 1981. He has written repeatedly about ways of using mathematical models of a dauntingly complex economy to set monetary policy. When he has strayed from that subject, his conclusions have sometimes raised eyebrows.

For example, in 2001 he joined Refet S. Gurkaynak of Bilkent University in Ankara, Turkey, in urging colleagues to adopt the sort of savings-driven models of the economy that the White House used to justify its tax cuts. David H. Romer, a professor of economics at the University of California, Berkeley, whose earlier work was discussed in the paper, said the statistical support for their argument was unconvincing.

In 1999, Mr. Bernanke and Mark Gertler, chairman of the economics department at New York University, wrote that financially fragile countries should not adopt fixed exchange rates, because they had been associated with crises in the past - a logic that other economists have disputed.

"Most of my American colleagues seem to go in this direction, but it's not a widely shared view around the world, and especially not in developing countries," said Charles Wyplosz, a professor of economics at the University of Geneva's Graduate Institute of International Studies. "The experience with floating interest rates is that they tend to float too much, so some sort of harnessing of the exchange-rate movements is useful for small, open economies."

These topics, however, are not at the core of what Mr. Bernanke would be concerned with at the Fed. There, his opinions about domestic monetary policy would be more important. One tenet of Mr. Bernanke's philosophy could not be clearer: that the central bank should use a model, not just hunches, to decide about interest rates and the money supply.

This is how he put it in 1997 in a paper with Michael Woodford, now a professor of political economy at Columbia: "We conclude that, although private-sector forecasts may contain information useful to the central bank, ultimately the monetary authorities must rely on an explicit structural model of the economy to guide their policy decisions."

Mr. Bernanke has examined exactly what data a central bank should use to calibrate its models. In 2003, he and Jean Boivin, an associate professor at the Columbia Business School, wrote that there was little advantage in waiting for "final" figures for government statistics, and that preliminary figures worked just as well for economic forecasts. The types of data used by the Fed could also change, said Anil K. Kashyap, a professor of economics and finance at the University of Chicago's business school.

"Greenspan was famous for looking at all these strange things like boxcar shipments," Professor Kashyap said, adding that Mr. Bernanke might prefer "indicators motivated by theoretical considerations," like banks' loan commitments.

Yet even in the "data-rich environment" that Mr. Bernanke and Professor Boivin described, models don't always encompass every possible outcome. Though models can explain various facets of the economy's behavior, even several at a time, no one has come up with a single formula that explains virtually everything.

To wit: a recent theme of Mr. Bernanke's work, one that he expounded as a Fed governor, is that the central bank should not try to prick bubbles in asset prices - mostly because it's too hard to tell when a bubble is really present. In that 1999 paper, he and Professor Gertler supplied a model to show how monetary policy should react to changes in asset prices.

Rudiger Dornbusch, the late professor of economics at the Massachusetts Institute of Technology, said the model lacked one important feature. "When it comes to monetary policy and asset price volatility," he wrote, "the interesting issue is not the gentle part of the trip but rather when it crashes." At that point, credit and liquidity can dry up.

"Neither of these considerations has a place in the Bernanke-Gertler model, which is just price-based and lacks rationing and liquidity," Professor Dornbusch concluded. The absence of liquidity and the onset of credit rationing, he argued, can be extremely important factors in forming policy at times of crisis.

Interestingly, Mr. Bernanke and Professor Gertler wrote a few years earlier that monetary policy might be most powerful during periods of tight credit, because of its effects on banks' balance sheets. But the periods of tightest credit - usually just before, during and after a crash in the markets - are the ones that are most difficult to model.

That is not to say that Mr. Bernanke would shy away from radical action in a crash. In an early version of a paper with Professor Gertler that was eventually published in 1990, they wrote that "under some circumstance, government 'bailouts' of insolvent debtors may be a reasonable alternative in periods of extreme financial fragility."

PROFESSOR ROMER at Berkeley said he believed that Mr. Bernanke would know when to discard his models. "He of course understands that even in normal times, the best model is just a guide," Professor Romer said. "If something extraordinary happens, like either Russia goes under or the stock market goes down by 20 percent, anyone with a modicum of common sense knows that the model's not going to be a reliable guide."

Despite their differences, Professor Romer gave Mr. Bernanke high marks as a potential Fed chairman. The professor's view carries some weight; in 2004, he and his wife, Christina D. Romer, also a professor of economics at Berkeley, published a paper entitled "Choosing the Federal Reserve Chair: Lessons From History."

"It's not your political abilities or who you know," David Romer said. "What does matter is your understanding of the economy and the effects of monetary policy. By that standard, Ben is the best person you could choose, basically."

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2005/11/01 02:19 2005/11/01 02:19

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US Fed's increase in the Federal Fund Rate

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NYtimes October 30, 2005

Fed expected to raise interest rate to 4%

The Federal Reserve is expected to raise interest rates on Tuesday and signal further increases, after recent speeches by Fed policymakers highlighting concerns about inflation risks.

 

While there has been no indication that the Federal Open Market Committee will change its judgment that monetary policy remains "accommodative" and that it will continue to raise rates at a "measured" pace, there is a widespread feeling that part of the statement will need to change soon.

 

A decision on Tuesday to raise rates to 4 per cent which would be the 12th consecutive quarter-point rate increase is unlikely to provoke controversy. Mark Olson, the Fed governor who voted against September's increase, is likely to fall back into line, given good recent data.

One concern is that the federal funds rate is no longer obviously well below the so-called "neutral" level, at which monetary policy neither restricts nor stimulates activity. But there does not yet appear to be a consensus on what should happen next, and the current language in the Fed's statement is seen as acceptable for now, with the FOMC likely to raise rates again in December.

 

Estimates of the neutral rate tend to put it in a range centred on 4.25 per cent. Fed policymakers rarely discuss such numbers but Janet Yellen, president of the San Francisco Fed, recently estimated the neutral rate from 3.5 to 5.5 per cent. "The current federal funds rate is toward the lower end of this band," she said in a speech.

 

The economy continued to grow at a healthy 3.8 per cent rate in the third quarter, according to the Commerce Department's advance estimate, providing further evidence to support the Fed's view that there is good momentum in spite of high energy prices. The economy's long-term potential rate is often put at 3.25 to 3.5 per cent. There has been no sign that the economy was knocked off course by the hurricanes, though high natural gas prices remain a concern.

The Fed's focus on inflation reflects in part the fact that the rise in energy prices is expected to feed into higher core inflation.

 

The Fed's favoured measure of core inflation is already at the top of the 1-2 per cent "comfort" range popularised by Ben Bernanke, the former Fed governor nominated last week to replace Alan Greenspan at the helm.

 

The FOMC will react to the incoming inflation and growth data. Key questions include inflation expectations and the extent of cost pressures from the labour market. High energy prices are a risk for both inflation and growth. With housing prices expected to level off at some point, a major uncertainty is whether business investment will pick up to take the strain if consumer spending slows.

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2005/11/01 02:15 2005/11/01 02:15

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NYTimes article on Koizumi's war shrine visit

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NYTimes October 17, 2005

Japan Leader's Visit to War Shrine Draws Criticism in Asia

TOKYO, Oct. 17 - Prime Minister Junichiro Koizumi's visit to a nationalist war memorial here drew immediate and fierce criticism from Asian countries today, threatening to isolate Japan in the region and deepen its already strained relations with China.

 

Beijing condemned the visit to the memorial, the Yasukuni shrine, as "a serious provocation to the Chinese people," and canceled bilateral talks on the North Korean nuclear crisis scheduled for today. South Korea also announced that it would cancel or postpone a trip to Japan scheduled for December by President Roh Moo Hyun, citing the shrine visit.

 

After months of speculation about the timing of this year's visit, Mr. Koizumi this morning fulfilled his promise of praying annually at the memorial. The Shinto shrine, which deifies Japan's 2.5 million war dead, including Class A war criminals responsible for atrocities throughout Asia, is regarded by most Asians as the symbol of unrepentant Japanese militarism.

 

"Prime Minister Koizumi has to bear the historic responsibility for damaging China-Japan relations," China's ambassador to Japan, Wang Yi, said in a statement.

 

In Seoul, a presidential spokesman, Kim Man-Soo, said that the South Korean government was no longer planning for a summit meeting in December or one-to-one talks between the two leaders at next month's Asia-Pacific Economic Cooperation meeting in Pusan, South Korea.

 

At a tense summit meeting in Seoul last June, President Roh told Mr. Koizumi that the visits to Yasukuni lay at the "core" of problems between the two nations. Until early this year, relations between Japan and South Korea had improved to such an extent that two summit meetings had been planned annually, one in each country.

 

The visit also drew protests from Taiwan and Singapore, two other nations that suffered under Japanese militarism. The leaders of the Yasukuni shrine and its museum have long stood at the center of a movement to justify Japan's prewar conduct. Their argument is that Japan tried to liberate Asia from Western powers and was pushed into World War II by the United States, and that war criminals enshrined there were innocent.

 

As Mr. Koizumi has led Japan to adopt a more assertive foreign policy, more and more politicians and public figures have also been openly trying to justify Japan's past. Their message has resonated in a country where anxieties over a shrinking population, uncertain economic prospects and China's rise in power have led to an increase in nationalist sentiments.

 

Mr. Koizumi rejected criticism of his visit, saying that he was merely paying homage to Japan's war dead.

 

"From a long-term perspective, I believe China will understand," Mr. Koizumi said. "No foreign government should criticize the way we mourn our war dead."

 

Mr. Koizumi, who arrived at the shrine in his official car, was flanked by a phalanx of bodyguards, and was seen praying in live broadcasts across the nation. He said he visited the shrine as a private citizen.

To downplay his visit's significance, Mr. Koizumi wore a gray suit, in contrast to the formal wear of his previous visits. He also refrained from entering the inner shrine and did not follow the precise Shinto ritual of bowing and clapping.

 

"It is extremely regrettable that the prime minister offered prayers at Yasukuni shrine where Class A war criminals are enshrined," said the leader of the main opposition Democratic Party, Seiji Maehara. "I think he should surely be aware that the prime minister, as a public official, cannot distinguish the official from the private."

 

Mr. Koizumi's muted visit, though, appeared to be a concession to growing criticism at home, with most polls showing the public opposed to his continued visits.

 

Takenori Kanzaki, the leader of the New Komeito Party, the governing party's junior coalition partner, told reporters that Mr. Koizumi probably took into consideration a ruling last month by the Osaka High Court that his visits violated Japan's constitutional separation of religion and the state.

 

It was perhaps also a slight concession to Japanese business leaders, who have openly criticized his visits and had dreaded any future ones. While Japan's political leadership has tended to regard an increasingly powerful China as a threat, its business leaders see it as an opportunity. Indeed, the Japanese economy has revived recently thanks in great part to China.

 

Hiroshi Okuda, the chairman of Toyota and of Nippon Keidanren, Japan's powerful business association, said in a statement that the prime minister had given consideration to domestic and international affairs by visiting the shrine as a private person. Both organizations strongly supported Mr. Koizumi in last month's general election.

 

But Kakutaro Kitashiro, the chairman of the Japan Association of Corporate Executives, another powerful association which supported Mr. Koizumi last month, was more critical.

 

"His visit has drawn criticism from our neighboring countries," Mr. Kitashiro said in a statement. "So we hope that he will fully recognize that it might damage our national interest, that careful explanations must be given to our neighboring countries and that diplomatic efforts must be made to gain their understanding."

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2005/10/18 02:11 2005/10/18 02:11

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The Damages to US from Invading Iraq

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The following article was written in early 2003 when the US first-term Bush administration initiated the invasion in Iraq in the name of "War against Terrorism." Even though the period when the article was written was already two years ago, the brilliant insights and the astute analysis still remain valuable . The essay deals with the behind reasons for the Bush administration's invasion in Iraq and its effects on the US and world economy. 


 

The Damages to us from Invading Iraq
Edward Nell and Willi Semmler, Economics Professors, New School for Social Research, New York.

 

The Administration says that only a ‘regime change’ in Iraq will suffice to protect us from the threat of weapons of mass destruction. Moreover such a change will bring democracy to Iraq and will contribute to peace throughout the region.

 

A skeptical note
Yet the evidence is ambiguous at best. To be sure Saddam poses a threat - but how great a threat? The inspectors dismantled many of his facilities and British and American bombs have destroyed many more. There is virtually no clear-cut evidence of any weapons of mass destruction, or of any adequate facilities to build them. The recent British paper analysis of
Iraq’s weaponry contains nothing new, and the arsenal it describes is both feeble and out-of-date. Iraq
has no nuclear capability at all, at present.
And even though it has been trying, it has not succeeded in acquiring the technology for
nuclear weapons. The few medium range missiles it has are old and inaccurate. If there were real evidence of something substantial and dangerous, it would have been trotted out long ago. There may be some hidden stockpiles – yet chemical or biological weapons could be too old to be effective by now. Of course, there may be some hidden up-to-date weapons, too. Yet it is not clear that a good team of inspectors could not find them.

 

Saddam is presented as a dangerous madman, unstable, angry and out of touch with reality, therefore not someone who can be reliably constrained by threats. Deterrence won’t work because he isn’t rational. Perhaps – but containment seems to have worked during the past decade. And he is rational enough to have maintained himself in power for decades. Of course Saddam resisted the inspectors and repeatedly threatened to make trouble. But he actually succeeded in repairing his oil facilities, and re-organized trade within or around the embargo, so as to rebuild Iraq’s economy. According to some
reports
Iraq’s recent economic growth has been spectacular, in the double digits. It doesn’t seem that he’s completely crazy.

What is clear, however, is that, far from being more menacing, Saddam is much less of a threat now than he has been in the past. His army is less than half the size it was; his conventional weaponry is out of date; his best missiles were used up and have not been replaced; most of whatever arsenal of mass destruction that he had has been destroyed by inspectors or bombing. And the regime is not popular; in the north, the Kurds are in more or less open revolt, while in the south of the country, the Shiite majority has long resented its exclusion from government. In short, Saddam appears to be weaker and less dangerous now than ever.

Nor does the administration seem to have developed a plan for what happens after a preemptive strike topples Saddam.

 

§ To begin with, the moral and juridical grounds claimed for the U.S. to undertake pre-emptive strikes against another country are dangerously ambiguous. What will be the international fall out from this? Will Russia pre-emptively strike Georgia, will India strike Pakistan? The new doctrine threatens to undermine decades of advance in international law and collective security.

 

§ And what would replace Saddam? Would there be a new constitution? Who would draw it up and how? Would the invading forced continue to occupy Iraq? For how long, and when and on what terms would they leave?

 

§ Would Iraq hold together? What would happen to the Kurds? Would the Turks consent to the emergence of a Kurdish state? (They recently threatened to go to war to prevent it!) And what will be done with those Shiites who might wish to join Iran? Not to mention that the Shiites of northern Saudi Arabia have shown an interest in joining forces with the Shiites of southern Iraq…

 

§ What guarantees would be offered to foreign investment? The French and Russians currently have large investments in Iraq and are understandably concerned that they be protected. Will they be invited to join in future policymaking?


Of course, the administration might not want to show its hand in advance. But currently there is no evidence that it even has a hand. These questions don’t even seem to be on the table. The administration seems to have something else entirely in mind. If the administration is not thinking about the future of
Iraq, and if Saddam is weaker and less
dangerous, why has the urge to topple him come up now?

Oil

Texas oilmen figure prominently in the current US administration, and citizens of Saudi Arabia figured prominently in 9/11. It was not just the home of 16 out of the 19 hijackers; it was also apparent that internal pressures kept the regime from cooperating in the investigation. Moreover, it emerged that Saudi money had financed both the Taliban, and Al Qaeda. And, of course, Bin Laden himself – and his money - came from within the Saudi establishment, close to the royal family. Saudi Arabia, the world’s largest oil producer, sitting on the world’s largest and most easily tapped pool of reserves, could no longer be trusted to remain loyal and cooperative. The US depends on Saudi Arabia for the bulk of imported oil. Conservation and improved energy efficiency could reduce this dependence, but oilmen are unlikely to opt for that – conservation reduces revenues. What to do? Well, Saddam’s weakness, together with his belligerence and general unpopularity, offers an opportunity.

 

Consider. There are about 35 to 40 years of oil reserves left in the US. Roughly 67% of the world’s oil reserves are in the Middle East and a large fraction, 21% of world reserves ( and roughly 40% of Middle East reserves), is in Saudi Arabia. If these fall into the wrong hands … well, it would be bad, but they could be replaced – by oil from Iraq!
Notably,
Iraq
’s share in world oil reserves is about 11%. (Compare this to the combined
reserves of the
US, Canada and Mexico, which amount only to 5.4 % of the world supply!) Now consider the nearby neighbors of Iraq: the United Arab Emirates have 9.5% and Kuwait has 9.4% of world reserves. Together, Iraq, Kuwait and the United Arab Emirates would account for almost 30% of known reserves. (Figures from Energy Information Administration, Jan. 2001) Suppose an invasion brought about a compliant government in Iraq, along with a large U.S. military presence… ?

 

Possible gains
The main benefit from such an invasion would be gaining control over Iraqi oil, allowing the consolidation of its production with that of
Kuwait, and the other Gulf States. The long-term presence of a large body of U.S. troops, newly based in Iraq, with new ports for the U.S. fleet in the Gulf, could encourage the integration of oil production, refining and shipping throughout the Gulf region, bringing the small, Westernized Gulf states together, along with Kuwait and southern Iraq, into a regional union, protected by the U.S. (Northern Iraq, at least the Kurdish regions, would presumably break free and go its own way.) The new confederation of Gulf oil producers would be solidly allied with the U.S. and the West, and would provide an important buffer should the Saudi regime be deposed and its oil fall under the control of anti-Western activists. To put it in perspective, if the Saudi regime maintains its control, a successful takeover of Iraq will ensure that the US and the West have 50% of the world’s oil reserve well protected by newly established or upgraded US air, land and naval bases. And in the event of a Saudi collapse, the West would still have 30% of the world’s oil, and would not have to turn to Russia for energy.

But these benefits would only be realized if the Iraqi oil fields were seized intact. Oil
facilities are easily destroyed, and fields can be set afire, as the Iraqis did when leaving
Kuwait
. It can take years to get production back online – and sabotage by terrorists can
continually disrupt operation. It’s unlikely that any benefits from the invasion could be
realized in the short run.

And in the long run our allies might not be so happy. In particular the Europeans and
Japanese might come to feel that the world’s oil resources have been gathered into one
pair of hands, those of Uncle.Sam. - who will graciously dole out the oil as and when he
sees fit. According to recent press reports, “the mere prospect of a new Iraqi government has fanned concerns by non-American oil companies that they will be excluded by the
United States, which almost certainly would be the dominant foreign power in Iraq in the aftermath of Hussein’s fall.” (Washington Post, Sunday Sept 15, p. A01).

 

Potential losses
In any case an invasion might not succeed so easily. Set-piece battles are surely not in
the cards; it will be guerilla warfare and house-to-house fighting, with heavy casualties
likely. Saddam is unpopular, but not in the way the Taliban was.
Iraq is secular, Westernized and its population has a high level of education, thanks in large part to Saddam’s long rule. Moreover, Saddam has held down the forces threatening to break the country apart. For many Iraqis this is a credit to the regime. America, on the other hand has bombed Iraq
and enforced an embargo for more than a decade –causing losses
estimated at over a million lives! Whether or not these claims are exaggerated, the bombing and the embargo have imposed terror, destruction and economic shortage on a massive scale. Americans can never expect to be welcomed; they will be bitterly resisted, a resistance that is likely to continue long after the fall of Saddam.

 

An invasion would also create new tensions and intensify existing antagonisms throughout the Arab and Islamic world – and, indeed, in many other areas. An attack would be seen, reasonably enough, we suggest, as an oil grab, somewhat akin to oldfashioned imperialism. This would be deeply resented all over the world, and would be considered by many as undermining the principles of multilateralism, consultation and joint action through the United Nations. In the absence of any real evidence that Saddam poses a serious danger, the doctrine of pre-emptive strikes would appear to be a cover for seizing Iraqi oil. And this could seriously destabilize pro-Western states, including those in the Gulf. Many oil-producing nations would be likely to join in an embargo, directed against the U.S. and perhaps the UK. An outbreak of anti-American and anti-Western sentiment, including terrorist actions, could be expected. Pro-Western governments might very well fall.

Of course, the U.S. would use its influence and diplomacy to try to prevent any interruption of the flow of oil. Moreover, it could sell from its strategic oil reserves, which have been built up in the last couple of years, to keep prices from rising too fast. However, diplomacy may not get very far in the face of the intense passions the invasion is likely to trigger. Even if friendly governments wanted to help, they could be forced by riots and revolts to cut back. Or they might be overthrown. And production and pipelines could be sabotaged. As for the strategic reserves, they are very limited. They are too small to counteract a serious shortage of supply. It will not be at all easy to keep prices down in the face of a major cutback.

 

Economic effects
The basic expectation everywhere, then, has to be that oil prices will rise, perhaps sharply, from today’s already high level of roughly $30 per barrel. Oil is now nearing its
historical peak, which occurred during the oil price shock of the nineteen seventies – a price of $36 per barrel. Oil also went up sharply in the Gulf War.

Given the present state of the U.S. economy a serious rise in energy prices will erode consumer confidence. Consumer confidence dropped sharply in the previous Gulf War and triggered a strong recession (which helped to lose the presidential election for Bush
senior). Anticipating this, and worried by the general uncertainties created by the invasion, short term overseas capital will be tempted to pull out of Wall St. (Stocks of defense contractors might be safer, but even there uncertainty may lead to caution, so they are unlikely to rise.) Funds will begin to return to the Euro and the yen. Wall St will start to fall – this is already happening - and the dollar will fall with it. The further loss of wealth will add to the pressures weakening consumers, and the fall of the dollar will add to the inflationary pressures generated by the rise in energy prices. Both will tend to deepen the recession, and as the recession deepens, the flight of short term capital will gather speed. The downward spiral will prove to be self-justifying.

Moreover, these recessionary pressures will feed into a downswing already well under way. It seems that the hopes for an early recovery were always overly optimistic. Had recovery come and stayed during the summer of 2002, the recession would have been the shortest on record. The U.S economy has never recovered that quickly from a slump.
The hopes for a short recession were based on continued heavy spending by consumers.
But they were already burdened with unprecedented debt - and, in the upper income brackets, had already suffered huge capital losses!

So, to repeat, as oil rises and Wall St. falls, pulling down the dollar, the deflating bubble can be expected to trigger a further decline in consumption spending. There will be no help from investment, which has been low for a year now. The troubles are already serious; the US unemployment rate, now at more than 5.7% and rising, is an underestimate, since discouraged workers have dropped out of the labor force.
In the recession triggered and exacerbated by the previous Gulf war the Fed was still able to come to the rescue by drastically cutting interest rate from 7-8 to 3.5 %. Today, however, with a current interest rate in the US of 1.75 % and in the Euro Area of 3.25 --
and almost deflationary conditions – the central banks do not have much space to stimulate the economies. Nominal interest rates can go only to zero and then a liquidity
trap is reached— with dangerous consequences as the Japanese economy has shown in the last ten years.

So the immediate impact of an invasion will be a tendency to exacerbate the recession,
while at the same time triggering a cost-push inflation. What happens next would depend on the success of the invasion. In the happy event of a quick collapse of Iraqi resistance, so that the oil fields were seized intact, with little loss of life, and no wild rocket attacks on Israel or U.S bases, short term capital might begin to flow back to the dollar and Wall St – especially if reconstruction seemed to promise a new and more stable Western-allied oil patch in the Gulf. And Western-allied states in the Islamic world prevent terrorist incidents. But this is very optimistic.

Far more likely, the oil fields will be badly damaged, and some kind embargo or cutback will develop that is at least partly effective. So oil prices will be driven up and will be expected to stay up. Terrorism is likely to stage a few more spectacular shows, driving the tourist and travel industry into the depths, worldwide. The collapse of tourism will damage some economies seriously, and feed the decline in world trade and investment.
The
U.S. recession will deepen, while inflationary pressures accelerate – ‘stagflation’ will be the end result.

This scenario may then lead to what we would consider a disastrous move by the Fed – disastrous, but not at all unlikely. Namely, to curb inflation and strengthen the dollar, the Fed may feel impelled to raise interest rates. Such action will be unlikely to achieve either objective, but it will damage the real estate and housing markets. Prices in these markets are already widely thought to be over the top. Once they begin to come down, the correction is likely to accelerate, and could easily overshoot. In other words, real estate and housing could crash. If they did the effect on consumer spending would probably be dramatic – made all the worse by the recent, ill-advised toughening of the laws on bankruptcy, which will slow down recovery.

In the longer term, however, there will be an offsetting factor, which is, paradoxically, the war itself. If it turns out to be prolonged, calling for large increases in military spending, corporate America – the military-industrial complex – will benefit substantially. This will increase both employment and profits in manufacturing and hightech.
However, it seems unlikely that this will be enough by itself, either to restore consumer
confidence, or to bring about a favorable general climate encouraging investment. (Consumer confidence and spending fell during the Gulf War; investment did not pick up at all until the middle of the 1990s) Nor will increased military do anything to curb inflation – quite the opposite is more likely. With expected growth in the
US running below 1 %, and in the Euro area below .5%, the advanced economies are too fragile at this time to withstand intensive shocks. Yet that is what an invasion would almost certainly bring. Not to mention a growing awareness that the central banks may be helpless in the face of such shocks. The economies of today are quite different than at the time of the Gulf war in 1990/91.

The bottom line? Even if the invasion is quick and easy, toppling Saddam and seizing the oil fields intact, the immediate and short run effects are still likely to be negative: rising oil prices, short term capital flight, a plunge on Wall St and a falling dollar – plus a world-wide collapse of tourism and travel. All this adds up to recession plus cost-push inflation – ‘stagflation’. But in present circumstances monetary policy finds itself running into a liquidity trap – interest rates have already nearly hit bottom. Also, given the constraints on government spending, for example in the Euro-area, fiscal policy cannot come to the rescue.

But if it all really is short and quick, short term capital might be induced to return, the fall in the dollar could moderate, and the rise in oil prices could be kept down as the U.S
consolidates its new Gulf position. Even so, the recession will get worse, and inflation, once set in motion, may prove hard to control.

But suppose the invasion does not go smoothly; suppose it faces stubborn and intractable resistance, that terrible weapons are launched against our troops and our allies, the oil facilities are destroyed and the fields set ablaze, and that terrorists assail Americans and Westerners all across the globe, while an oil embargo eats into our standard of living…
It is not hard to see what the current administration’s real strategy is – war for oil. But a
close look also tells us what the real damages are likely to be – oil-based stagflation, a
Wall St.
crash and world-wide recession. Maybe conservation and renewable sources of
energy deserve a hearing after all.

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2005/10/06 04:36 2005/10/06 04:36

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Fear in New Orleans

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The New York Times September 29, 2005
Fear Exceeded Crime's Reality in New Orleans

NEW ORLEANS, Sept. 25 - After the storm came the siege. In the days after Hurricane Katrina, terror from crimes seen and unseen, real and rumored, gripped New Orleans. The fears changed troop deployments, delayed medical evacuations, drove police officers to quit, grounded helicopters. Edwin P. Compass III, the police superintendent, said that tourists - the core of the city's economy - were being robbed and raped on streets that had slid into anarchy.

The mass misery in the city's two unlit and uncooled primary shelters, the convention center and the Superdome, was compounded, officials said, by gangs that were raping women and children.

A month later, a review of the available evidence now shows that some, though not all, of the most alarming stories that coursed through the city appear to be little more than figments of frightened imaginations, the product of chaotic circumstances that included no reliable communications, and perhaps the residue of the longstanding raw relations between some police officers and members of the public.

Beyond doubt, the sense of menace had been ignited by genuine disorder and violence that week. Looting began at the moment the storm passed over New Orleans, and it ranged from base thievery to foraging for the necessities of life.

Police officers said shots were fired for at least two nights at a police station on the edge of the French Quarter. The manager of a hotel on Bourbon Street said he saw people running through the streets with guns. At least one person was killed by a gunshot at the convention center, and a second at the Superdome. A police officer was shot in Algiers during a confrontation with a looter.

It is still impossible to say if the city experienced a wave of murder because autopsies have been performed on slightly more than 10 percent of the 885 dead.

[On Wednesday, however, Dr. Louis Cataldie, the state's medical incident commander for Hurricane Katrina victims, said that only six or seven deaths appear to have been the result of homicides. He also said that people returning to homes in the damaged region have begun finding the bodies of relatives.

[Superintendent Compass, one of the few seemingly authoritative sources during the days after the storm, resigned Tuesday for reasons that remain unclear. His departure came just as he was coming under criticism from The New Orleans Times-Picayune, which had questioned many of his public accounts of extreme violence.]

In an interview last week with The New York Times, Superintendent Compass said that some of his most shocking statements turned out to be untrue. Asked about reports of rapes and murders, he said: "We have no official reports to document any murder. Not one official report of rape or sexual assault."

On Sept. 4, however, he was quoted in The Times about conditions at the convention center, saying: "The tourists are walking around there, and as soon as these individuals see them, they're being preyed upon. They are beating, they are raping them in the streets."

Those comments, Superintendent Compass now says, were based on secondhand reports. The tourists "were walking with their suitcases, and they would have their clothes and things taken," he said last week. "No rapes that we can quantify."

 

Rumors Affected Response

A full chronicle of the week's crimes, actual and reported, may never be possible because so many basic functions of government ceased early in the week, including most public safety record-keeping. The city's 911 operators left their phones when water began to rise around their building.

To assemble a picture of crime, both real and perceived, The New York Times interviewed dozens of evacuees in four cities, police officers, medical workers and city officials. Though many provided concrete, firsthand accounts, others passed along secondhand information or rumor that after multiple tellings had ossified into what became accepted as fact.

What became clear is that the rumor of crime, as much as the reality of the public disorder, often played a powerful role in the emergency response. A team of paramedics was barred from entering Slidell, across Lake Pontchartrain from New Orleans, for nearly 10 hours based on a state trooper's report that a mob of armed, marauding people had commandeered boats. It turned out to be two men escaping from their flooded streets, said Farol Champlin, a paramedic with the Acadian Ambulance Company.

On another occasion, the company's ambulances were locked down after word came that a firehouse in Covington had been looted by armed robbers of all its water - a report that proved totally untrue, said Aaron Labatt, another paramedic.

A contingent of National Guard troops was sent to rescue a St. Bernard Parish deputy sheriff who radioed for help, saying he was pinned down by a sniper. Accompanied by a SWAT team, the troops surrounded the area. The shots turned out to be the relief valve on a gas tank that popped open every few minutes, said Maj. Gen. Ron Mason of the 35th Infantry Division of the Kansas National Guard.

"It's part of human nature," General Mason said. "When you get one or two reports, it echoes around the community."

Faced with reports that 400 to 500 armed looters were advancing on the town of Westwego, two police officers quit on the spot. The looters never appeared, said the Westwego police chief, Dwayne Munch.

"Rumors could tear down an entire army," Chief Munch said.

During six days when the Superdome was used as a shelter, the head of the New Orleans Police Department's sex crimes unit, Lt. David Benelli, said he and his officers lived inside the dome and ran down every rumor of rape or atrocity. In the end, they made two arrests for attempted sexual assault, and concluded that the other attacks had not happened.

"I think it was urban myth," said Lieutenant Benelli, who also heads the police union. "Any time you put 25,000 people under one roof, with no running water, no electricity and no information, stories get told."

 

Crimes of Opportunity

The actual, serious crime began, in the recollection of many, before the catastrophic failure of the levees flooded the city, and much of it consisted of crimes of opportunity rather than assault. On the morning of Monday, Aug. 29, in the half hour or so that the eye of Hurricane Katrina fell on the city - an illusory moment of drawn breath, sunshine and fair breezes - the looters struck, said Capt. Anthony W. Canatella, the police commander in the Sixth District.

Using a chain hitched to a car, they tore open the steel doors at the back of a pawn shop called Cash America on Claiborne Avenue. "Payday Advances to 350," read a sign where the marquee would have been.

"There was nothing in there you could sustain your life with," Captain Canatella said. "There's nothing in there but guns and power tools."

The Sixth District - like most of New Orleans, a checkerboard of wealth and poverty - was the scene of heavy looting, with much of the stealing confined to the lower-income neighborhoods. A particular target was a Wal-Mart store on Tchoupitoulas Street, bordering the city's elegant Garden District and built on the site of a housing project that had been torn down.

The looters told a reporter from The Times that they followed police officers into the store after they broke it open, and police commanders said their officers had been given permission to take what they needed from the store to survive. A reporter from The Times-Picayune said he saw police officers grabbing DVD's.

A frenzy of stealing began, and the fruits of it could be seen last week in three containers parked outside the Sixth District police station. Inside were goods recovered from stashes placed by looters in homes throughout the neighborhood, said Captain Canatella, most but not all still bearing Wal-Mart stickers.

"Not one piece of educational material was taken - the best-selling books are all sitting right where they were left," Captain Canatella said. "But every $9 watch in the store is gone."

One of the officers who went to the Wal-Mart said the police did not try to stop people from taking food and water. "People sitting outside the Wal-Mart with groceries waiting for a ride, I just let them sit there," said Sgt. Dan Anderson of the Sixth District. "If they had electronics, I just threw it back in there."

Three auto parts stores were also looted. In a house on Clara Street, Sergeant Anderson picked his way through a soggy living room, where car parts, still in their boxes, were strewn about. On the wall above a couch, someone had written "Looters" with spray paint.

"The nation's realizing what kind of criminals we have here," Sergeant Anderson said.

Among the evacuees, there was gratitude for efforts by the police and others to help them get out of town, but it was clear that some members of the public did not have a high opinion of the New Orleans Police Department, with numerous people citing cases of corruption and violence a decade ago.

"Don't get me wrong, there was bad stuff going on in the streets, but the police is dirty," said Michael Young, who had worked as a waiter in the Riverwalk development.

 

French Quarter Is Spared

As the storm winds died down that Monday, small groups that had evacuated from poor neighborhoods as far away as the Lower Ninth Ward passed through the historic French Quarter, heading for shelter at the convention center.

"Some were pushing little carts with their belongings and holding onto their kids," said Capt. Kevin B. Anderson, the French Quarter's police commander. He said his officers gave food, water and rides. "That also served another purpose," he said. "That when they came through, they didn't cause any problems."

The jewelry and antique shops in the French Quarter were basically left untouched, though squatters moved into a few of the hotels. Only a small grocery store and drugstores at the edge of the quarter were hit by looters, he said. From behind the locked doors of the Royal Sonesta hotel on Bourbon Street, Hans Wandfluh, the general manager, said he had watched passers-by who seemed to be up to no good. "We heard gunshots fired," Mr. Wandfluh said. "We saw people running with guns."

At dusk on Aug. 29, looters broke windows along Canal Street and swarmed into drugstores, shoe stores and electronics shops, Captain Anderson said. Some tried, without success, to break into banks, and others sought to take money from A.T.M.'s.

The convention center, without water, air-conditioning, light or any authority figures, was recalled by many as a place of great suffering. Many heard rumors of crime, and saw sinister behavior, but few had firsthand knowledge of violence, which they often said they believed had taken place in another part of the half-mile-long center.

"I saw Coke machines being torn up - each and every one of them was busted on the second floor," said Percy McCormick, a security guard who spent four nights in the convention center and was interviewed in Austin, Tex.

Capt. Jeffrey Winn, the commander of the SWAT team, said its members rushed into the convention center to chase muzzle flashes from weapons to root out groups of men who had taken over some of the halls. No guns were recovered.

State officials have said that 10 people died at the Superdome and 24 died around the convention center - 4 inside and 20 nearby. While autopsies have not been completed, so far only one person appears to have died from gunshot wounds at each facility.

In another incident, Captain Winn and Lt. Dwayne Scheuermann, the assistant SWAT commander, said they both shot and wounded a man brandishing a gun near people who had taken refuge on an Interstate highway. Captain Winn said the SWAT team also exchanged gunfire with looters on Tchoupitoulas Street.

The violence that seemed hardest to explain were the reports of shots being fired at rescue and repair workers, including police officers and firefighters, construction and utility workers.

Cellphone repair workers had to abandon work after shots from the Fischer housing project in Algiers, Captain Winn said. His team swept the area three times. On one sweep, federal agents found an AK-47 semiautomatic rifle, Captain Winn said.

For military officials, who flew rescue missions around the city, the reports that people were shooting at helicopters turned out to be mistaken. "We investigated one incident and it turned out to have been shooting on the ground, not at the helicopter," said Maj. Mike Young of the Air Force.- Nathan Levy contributed reporting from Austin, Tex., for this article.

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2005/09/30 02:08 2005/09/30 02:08

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To tell the truth

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The following is an article published in The Guardian revealing the truth of G8 summit. The subtitle of the article is "The truth about Gleneagles puts a cloud over the New York summit "

How G8 lied the World on Aid

Mark Curtis Tuesday August 23, 2005
The Guardian


World leaders are now preparing for the millennium summit to be held in New York next month, described by the UN as a "once-in-a-generation opportunity to take bold decisions". Yet the current draft outcome simply repeats what was agreed on aid and debt last month in Gleneagles. The reality of that G8 deal has recently emerged - and is likely to condemn the New York summit to be an expensive failure.

 
The G8 agreed to increase aid from rich countries by $48bn a year by 2010. When Tony Blair announced this to parliament, he said that "in addition ... we agreed to cancel 100% of the multilateral debts" of the most indebted countries. He also stated that aid would come with no conditions attached. These were big claims, all of which can now be shown to be false.
 

First, in recent evidence to the Treasury committee, Gordon Brown made the astonishing admission that the aid increase includes money put aside for debt relief. So the funds rich countries devote to writing off poor countries' debts will be counted as aid. Russia's increase in "aid" will consist entirely of write-offs. A third of France's aid budget consists of money for debt relief; much of this will be simply a book-keeping exercise worth nothing on the ground since many debts are not being serviced. The debt deal is not "in addition" to the aid increase, as Blair claimed, but part of it.

Far from representing a "100%" debt write-off, the deal applies initially to only 18 countries, which will save just $1bn a year in debt-service payments. The 62 countries that need full debt cancellation to reach UN poverty targets are paying 10 times more in debt service. And recently leaked World Bank documents show that the G8 agreed only three years' worth of debt relief for these 18 countries. They state that "countries will have no benefit from the initiative" unless there is "full donor financing".

The deal also involves debts only to the International Monetary Fund, the World Bank and the African Development Bank, whereas many countries have debts to other organisations. It is a kick in the teeth for the African Union, whose recent summit called for "full debt cancellation for all African nations".

The government's claim that debt relief will free up resources for health and education is also a deception. The deal explicitly says that those countries receiving debt relief will have their aid cut by the same amount. If, say, Senegal is forgiven $100m a year in debt service, World Bank lending will be slashed by the same amount. That sum will be retained in the World Bank pot for lending across all poor countries, but only when they sign up to World Bank/IMF economic policy conditions. And this leads to the third false claim.

Blair's assertion that aid will come with no conditions is contradicted by Hilary Benn, his development secretary, who told a parliamentary committee on July 19 that "around half" of World Bank aid programmes have privatisation conditions. Recent research by the NGO network Eurodad shows that conditions attached to World Bank aid are rising. Benin, for example, now has to meet 130 conditions to qualify for aid, compared with 58 in the previous agreement. Eleven of 13 countries analysed have to promote privatisation to receive World Bank loans, the two exceptions having already undergone extensive privatisation programmes. Yet in the G8 press conference Blair refuted the suggestion that privatisation would be a condition for aid.

According to recently leaked documents, four rich-country representatives to the IMF board want to add yet more conditions to debt relief. This will be a key topic for discussion at the IMF's annual meeting the week after the millennium summit. The British government opposes new conditions but continues to support overall conditionality.

This makes a mockery of Brown and Blair's claim that poor countries are now free to decide their own policies. It is true that the G8 communique stated that "developing countries ... need to decide, plan and sequence their economic policies to fit with their own development strategies". Yet it also stated that "African countries need to build a much stronger investment climate" and increase "integration into the global economy" - code for promoting free trade - and that aid resources would be focused on countries meeting these objectives.

Poor countries are free to do what rich countries tell them. The cost is huge. Christian Aid estimates that Africa has lost $272bn in the past 20 years from being forced to promote trade liberalisation as the price for receiving World Bank loans and debt relief. The draft outcome of the millennium summit says nothing about abolishing these conditions and contains little to address Africa's poverty. With only a few weeks to go, massive pressure needs to be brought to bear.

· Mark Curtis is the author of Unpeople: Britain's Secret Human Rights Abuses

www.markcurtis.info


* Other related website

 

Make Poverty History
Official site

Gleneagles: key documents
The chairman's summary
Climate, energy and sustainable development
Africa: a historic opportunity
An action plan on climate change

Special reports
G8
Live 8
Climate change
Debt relief
Hear Africa 05

Get involved
G8: What you can do

Q&A
14.06.2005: The Gleneagles summit

African women in their own words
Eight women, one voice

G8 links
Official G8 Gleneagles site
Wikipedia: G8
G8 Information Centre - University of Toronto
More G8 links

NGOs
Action Aid
Catholic Agency for Overseas Development (Cafod)
Official Live 8 site

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2005/09/22 01:38 2005/09/22 01:38

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Simon Wiesenthal Dies at 96

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New York Times September 20, 2005
Simon Wiesenthal, Who Helped Hunt Nazis After War, Dies at 96

Simon Wiesenthal, the death camp survivor who dedicated the rest of his life to tracking down fugitive Nazi war criminals, died today at his home in Vienna. He was 96. His death was announced by Rabbi Marvin Hier, dean and founder of the Simon Wiesenthal Center in Los Angeles.

After hairbreadth escapes from death, two suicide attempts and his liberation by American forces in Austria in 1945, Mr. Wiesenthal abandoned his profession as an architectural engineer and took on a new calling: memorializing the six million of his fellow Jews and perhaps five million other noncombatants who were systematically murdered by the Nazis, and bringing their killers to justice.

His results were checkered: claims that he flushed out nearly 1,100 war criminals were sometimes wrong or disputed. But his role as a stubborn sleuth on the trail of history's archfiends helped keep the spotlight on a hideous past that he said too much of the world was disposed to forget.

"To young people here, I am the last," he told an interviewer in Vienna in 1993. "I'm the one who can still speak. After me, it's history."

From the cramped three-room office of his Jewish Documentation Center in Vienna, Mr. Wiesenthal spent years collecting and disbursing tips on war criminals through a network of informers, government agents, journalists and even former Nazis. He recounted these efforts in a memoir published in 1967, "The Murderers Among Us," and a second volume, "Justice, Not Vengeance," in 1989.

With a grave and tenacious manner, undercurrents of humor and a flair for gaining attention, he was lionized in 1989 in an HBO movie "Murderers Among Us: The Simon Wiesenthal Story," based on his memoirs and starring Ben Kingsley. A character modeled on him was played by Sir Laurence Olivier in the 1978 film "The Boys from Brazil" (though Mr. Wiesenthal was mortified by his depiction as a bumbler). And he served as a consultant for yet another thriller, "The Odessa File."

Dozens of nations and institutions honored him: the list of his awards, typed single-space, takes up nearly an entire dense page. But one prize that eluded him, to his great disappointment, was the Nobel Peace Prize.

Mr. Wiesenthal, a bulky figure with a clipped mustache who sometimes laughed that people mistakenly saw him as harmless, pressed his searches despite vilification and threats of death and kidnapping made against him, his wife, Cyla, and their daughter, Pauline. In 1982 his house in Vienna was damaged by a firebomb, but he escaped unharmed. (German and Austrian neo-Nazis were charged, and one went to jail.) Yet he rejected entreaties to move, insisting that there was a symbolic purpose in doing his work from a longtime redoubt of Nazism and anti-Semitism where, he once said, his efforts were "unhappily tolerated."

Calling himself "the bad conscience of the Nazis," he vowed to continue his efforts "until the day I die." His goal, he said, was not vengeance but ensuring that Nazi crimes "are brought to light so the new generation knows about them, so it should not happen again."

It was a matter of pride and satisfaction, he said in 1995, as he approached his 87th birthday, that old Nazis who get into quarrels threaten one another with a vow to go to Simon Wiesenthal.

He wrote grippingly of the German killing industry, cataloging a list of property sent to Berlin from the Treblinka death camp between October 1942 and August 1943: "Twenty-five freight cars of women's hair, 248 freight cars of clothing, 100 freight cars of shoes," along with 400,000 gold watches, 145,000 kilograms of gold wedding rings and 4,000 karats of diamonds "over 2 karats."

Of the 700,000 people known to have been taken to Treblinka, he wrote in the 1960's, "about 40 are now alive." He suggested that train stations in Europe should get plaques reading: "Between 1942 and 1945 trains passed through here every day with the sole purpose of taking human beings to their annihilation."

In recent years he also spoke out in favor of war crimes trials for genocide in the former Yugoslavia, and lent his name to a Holocaust study center and Museum of Tolerance in Los Angeles.

"Survivors should be like seismographs," Mr. Wiesenthal wrote. "They should sense danger before others do, identify its outlines and reveal them. They are not entitled to be wrong a second time or regard as harmless something that might lead to catastrophe."

Sometimes he taught his lessons with an acerbic wit. Failing to sway a Jewish lawyer who persisted in defending the right of neo-Nazis to march even through a Jewish neighborhood, Mr. Wiesenthal offered a final rebuke: "A Jew may be stupid, but it's not obligatory."

Once, in West Germany, he related, he defused a harangue by a speaker who accused him of dining on Nazis for breakfast, lunch and dinner. "You are mistaken," he replied. "I don't eat pork."

He became embroiled in Austrian politics, feuding bitterly with the Socialist chancellor, Bruno Kreisky. He was also assailed for siding with Kurt Waldheim, the former United Nations secretary general and Austrian president who concealed his wartime service with a German intelligence unit implicated in atrocities in the Balkans.

Critics challenged Mr. Wiesenthal's claims to have played a role in the seizure of Adolf Eichmann, who directed the transport of European Jews to Hitler's death camps and was kidnapped by the Israelis from Argentina in 1960, then tried, convicted and hanged. He also promulgated many false sightings in the bungled hunt for Josef Mengele, the Auschwitz death camp doctor who fled to South America and drowned in Brazil in 1979.

Serge Klarsfeld, a Paris lawyer who with his German-born wife, Beate, was instrumental in tracking down the Nazi Gestapo leader Klaus Barbie in Bolivia, called Mr. Wiesenthal an egomaniac and faulted him for not supporting their anti-Nazi demonstrations in South America and Europe. But Mr. Klarsfeld credited him with blazing the trail by his early and often lonely quest for justice after the war.

Mr. Wiesenthal was credited with a crucial role in many other cases. His investigations in S縊 Paulo led to the arrests of Franz Stangl, former commandant of the Treblinka and Sobibor death camps in Poland, who was extradited to West Germany in 1967 and died three years later while serving a life sentence, and Gustav Franz Wagner, a former deputy commandant at Sobibor, who died during extradition proceedings in 1980. He was instrumental in the arrest and extradition from Argentina of Josef Schwammberger, an SS officer convicted in the killings of prisoners and slave laborers at camps in Poland and sentenced to life in prison in Germany in 1992.

Mr. Wiesenthal tracked down Karl Silberbauer, at the time a Vienna police officer, who had been the Gestapo aide responsible for arresting Anne Frank and her family in their secret annex in Amsterdam, a feat of sleuthing that buttressed the credibility of Anne's diary in the face of neo-Nazi claims that it was fabricated.

He unmasked Hermine Braunsteiner-Ryan, a whip-wielding guard at the Maidanek death camp who was living in Queens and who was sentenced to life in West Germany. And he put a reporter for The New York Times on the trail of Valerian D. Trifa, a leader of the fascist Iron Guard in Bucharest who fomented a massacre of the Jews, later found refuge in Michigan as archbishop of the Romanian Orthodox Episcopate in the United States and was deported in 1984, to Portugal, where he died three years later.

Mr. Wiesenthal penetrated veils of secrecy shrouding the Nazi euthanasia program and doctors who conspired in killing "useless eaters." He also traced the escape routes of SS criminals and other Nazis, documenting the underground network known from its German initials as Odessa. And as much as tracking down fugitive Nazis himself, he took it as his mission to goad governments around the world not to drop their pursuit and prosecution of war criminals.

But his efforts in the hunt for Eichmann and Mengele, two of Nazi Germany's most heinous criminals, were disputed.

He often claimed to have placed Eichmann in Buenos Aires as early as 1953, and later to have turned over crucial photos of Eichmann to Israeli agents. But Isser Harel, the Israeli Mossad chief who masterminded Eichmann's abduction, vehemently contradicted Mr. Wiesenthal, denying that any such meeting with agents took place and crediting the success to information supplied by a West German prosecutor, Fritz Bauer. Subsequent accounts lent credence to Mr. Harel's version.

In the case of Mengele, wanted for grisly pseudomedical experiments on twins and other helpless subjects at Auschwitz, Mr. Wiesenthal had a shrewd insight in 1964. He urged West German authorities to monitor a close associate of the Mengele family, Hans Sedlmeier, in G・zburg, a Bavarian town where the Mengele family had its farm-machinery business.

Mr. Sedlmeier had indeed been in regular contact with the fugitive in Paraguay and Brazil. But he also had friends on the local police force and, tipped off to a search, concealed letters and other evidence that would have led to Mengele. The crucial lead evaporated, not to be re-examined for more than 20 years, by which time Mengele was already dead.

Over the years, Mr. Wiesenthal publicized a host of detailed and spurious "sightings" of Mengele in Paraguay, Egypt, Spain and a tiny Greek island, Kythnos. Benjamin Varon, former Israeli ambassador to Paraguay, publicly suggested that Mr. Wiesenthal might have been embellishing to coax money from contributors. His comments, in a Jewish magazine, Midstream, in 1983, provoked a rebuke from Mr. Wiesenthal's supporters, who accused him of "profaning" Mr. Wiesenthal's "sacred mission."

Although he continued to voice suspicions of fakery for years after a body was authoritatively identified as Mengele's in 1985, Mr. Wiesenthal eventually acknowledged the truth of the scientific findings that Mengele had indeed drowned and was dead.

But clearly Simon Wiesenthal haunted his quarry. One of Mengele's fanatical Nazi protectors in Brazil, Wolfgang Gerhard, told of dreams in which he hitched the Nazi-hunter to an automobile and dragged him to his death.

One of the most rancorous episodes in Mr. Wiesenthal's postwar career pitted him against Chancellor Kreisky, who was also Jewish and whom Mr. Wiesenthal accused in the 1970's of pursuing a politically expedient alliance with former Nazis to strengthen his Socialist Party. Mr. Kreisky fired back with intimations that Mr. Wiesenthal had collaborated with the Gestapo, a charge that Mr. Wiesenthal labeled ludicrous, and that was never backed up.

That fracas was followed a decade later by Mr. Wiesenthal's dispute with the World Jewish Congress over the Waldheim affair.

In early 1986, when the former secretary general ran as the conservative party candidate for president, the Jewish Congress investigated his wartime record, uncovering evidence that he had not sat out most of the war, as he had always claimed. Instead he had apparently served as a lieutenant with a German Army intelligence and propaganda unit that had carried out deportations and atrocities in the Balkans, and had initialed reports of "severe" measures to be taken against captives.

From the outset Mr. Wiesenthal took issue with the accusations, but not for reasons of politics, he asserted.

"The truth was simpler," he wrote in his book, "Justice, Not Vengeance." "I was not prepared to attack Kurt Waldheim as a Nazi or a war criminal because from all I knew about him and from all that emerged from the documents, he had been neither a Nazi nor a war criminal."

In 1993 Eli M. Rosenbaum, former general counsel of the World Jewish Congress and later director of the Justice Department Office of Special Investigations, a Nazi-hunting task force, linked Mr. Wiesenthal to a Waldheim cover-up.

In a book, "Betrayal" (St. Martin's), Mr. Rosenbaum and a co-author, William Hoffer, wrote that Mr. Wiesenthal, acting on an Israeli request, had discovered Mr. Waldheim's secret in French-held war archives as far back as 1979 but for political or other reasons misled the Israelis. When evidence of Mr. Waldheim's true record began to emerge, according to the book, Mr. Wiesenthal allied himself with Mr. Waldheim to save his own reputation.

For his part, Mr. Wiesenthal contended that he had correctly informed the Israelis that Mr. Waldheim had not been a member of the Nazi Party or the SS and that the World Jewish Congress was unfairly trying for its own purposes to brand Mr. Waldheim a war criminal. While he faulted Mr. Waldheim's credibility, Mr. Wiesenthal defended his own conduct. In a world where people believe in Jewish conspiracies, he told an interviewer, "accusations from Jewish sources must be able to stand up to all tests of credibility."

Although a reviewer for The New York Times took issue with "Betrayal" for appearing to equate Mr. Wiesenthal and Mr. Waldheim in villainy, its documentation was widely praised, winning a jacket endorsement from Elie Wiesel, the Holocaust survivor and writer.

But Mr. Wiesenthal was never one for backing down. Castigated once as a meddler by an Austrian justice minister, he freely acknowledged that no one had appointed him "the lawyer for six million dead people."

"No such appointment exists," he went on. "But I've worked for over 20 years for the memory of these people, and I believe I've earned the right to speak for them."

Simon Wiesenthal was born on Dec. 31, 1908, in Buczacz, Galicia, which was then in the Austro-Hungarian Empire and later became part of Ukraine. His father, Hans, was a commodities wholesaler and Austrian Army officer who died in combat in 1915. In Buczacz, Jews endured murderous pogroms by the Cossacks, and in one such assault young Simon was slashed by a marauder's saber. In high school the boy fell in love with a classmate, Cyla M・ler, a distant relation of Sigmund Freud; though teenagers, they were considered betrothed.

Mr. Wiesenthal wanted to study at the Polytechnic Institute in Lvov but was denied admission because of a quota on Jewish students. Instead he attended the Technical University of Prague, where in 1932 he received a degree in architectural engineering.

In 1936 he and Cyla married, and he took a job in an architectural office in Lvov. Three years later, when Germany and Russia partitioned Poland, the Red Army overran Lvov, purging Jews. Mr. Wiesenthal's stepfather was arrested and died in prison and his stepbrother was shot. Mr. Wiesenthal was reduced to working as a mechanic in a bedspring factory. Only by bribing a Soviet secret police commissar, he wrote, was he able to save himself, his wife and mother from deportation to Siberia.

In July 1941, Mr. Wiesenthal recounted, after the invading Germans replaced the Russians, he and other Jews were lined up in a courtyard to be shot. After about half the group had been executed, the soldiers withdrew for a church service and he was spared. He was then held in the Janowska concentration camp outside Lvov before he and his wife were sent to a forced labor camp serving the repair shop for Lvov's Eastern Railroad.

In 1942, as the Germans began to implement their "final solution" by exterminating Jews, Mr. Wiesenthal's mother was transported to the Belzec death camp, where she was killed. In all, Mr. Wiesenthal and his wife lost 89 family members to the German liquidation.

With false papers provided by the Polish underground in return for railroad charts that partisans needed for sabotage, Cyla Wiesenthal was spirited out of the labor camp in 1942 as a Pole. She hid in Warsaw, narrowly escaping incineration in a German flamethrower assault, and was sent to the Rhineland as a forced laborer making machine guns for the Germans.

With the connivance of an official, Mr. Wiesenthal himself escaped the labor camp in October 1943. But the following June he was recaptured and sent back to the Janowska camp where, he related, he slit his wrists with a contraband razor blade. Revived by the Gestapo for interrogation, he tried to hang himself but was too weak.

With the Red Army advancing on the retreating Germans, the SS guards moved their last remaining 34 prisoners westward, picking up new prisoners on the march. Few survived the trek, with stops at the camps in Plasgow, Gross-Rosen and Buchenwald and ending at Mauthausen in Austria. There Mr. Wiesenthal, weighing 97 pounds, was liberated by Americans on May 5, 1945.

Almost as soon as he could stand, he began collecting evidence on the atrocities for the War Crimes Section of the United States Army. He also served the Office of Strategic Services and the Army's Counterintelligence Corps, and headed the Jewish Central Committee of the United States occupation zone in partitioned Austria. By the end of 1945 he and his wife had found each other, and the following year their daughter, Pauline, was born. The Wiesenthals were married for 67 years before Mrs. Wiesenthal died on Nov. 10, 2003.

Also in 1946, after supplying evidence for war crimes trials in the American zone, Mr. Wiesenthal and 30 volunteers founded the Jewish Historical Documentation center in Linz, Austria, to collect evidence for future trials. But the developing cold war dulled interest in Nazi-hunting - both the Americans and the Russians were secretly recruiting Nazi scientists and spymasters. In 1954 the Linz office was closed and its files conveyed to the Holocaust archives of Yad Vashem in Jerusalem.

But after the successful seizure of Adolf Eichmann, for which Mr. Wiesenthal was quick to claim credit , he reopened his Jewish documentation center, this time in Vienna, and focused on an array of notorious Nazi fugitives.

In November 1977, Mr. Wiesenthal lent his name to the Simon Wiesenthal Center, a Los Angeles-based institute for Holocaust remembrance. With an attached Museum of Tolerance and offices around the world, the center investigates and reports on anti-Semitism and bigotry worldwide. In 1981 the center produced a documentary, "Genocide," narrated by Elizabeth Taylor and Orson Welles. The next year the film won the Academy Award for best documentary.

According to a biography distributed by the center, Mr. Wiesenthal and his wife lived in a modest house in Vienna where he spent his time "answering letters, studying books and files and working on his stamp collection."

His books include "Concentration Camp Mauthausen" (1946), "I Hunted Eichmann" (1961), "The Sunflower" (1970) and "Sails of Hope: The Secret Mission of Christopher Columbus" (1973), in which he concluded that the voyage in 1492 was in part an effort to find a homeland for Europe's persecuted Jews.

He was often asked why he had become a searcher of Nazi criminals instead of resuming a profitable career in architecture. He gave one questioner this response: "You're a religious man. You believe in God and life after death. I also believe. When we come to the other world and meet the millions of Jews who died in the camps and they ask us, 'What have you done?' there will be many answers. You will say, 'I became a jeweler.' Another will say, 'I smuggled coffee and American cigarettes.' Still another will say, 'I built houses,' but I will say, 'I didn't forget you.' "

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2005/09/21 01:32 2005/09/21 01:32

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