California Looks Like ‘Ground Zero’

Credit Crisis Meet Power Crisis - New Study Warns US Blackouts Loom in ’09

A new study warns crippling blackouts could hit the U.S. next summer, and the senior policy advisor to the nonprofit group that did the study warns California is most likely to be “ground zero” for a blackout that could take out most of the Western United States.

The study – from NextGen Energy Council, titled “Lights Out in 2009?” – adds up to what could be a knockout punch to an economy that will still be reeling next summer from the combined impacts of the credit crunch, rising unemployment and reduced consumer spending. America’s power markets are in crisis the way its credit markets are, the advisor, Jim Sims, former director of communication for President Bush’s National Energy Policy Task Force, told EnergyTechStocks.com. “We’re flirting with disaster,” he said.

While Sims said that inadequate generation and transmission have combined to leave California most exposed, he quickly added that, for the same reasons, people and businesses in Florida and throughout the Southeast are also at great risk. He further said that, notwithstanding greater industry efforts to stabilize the U.S.’s region-wide high-voltage power grids, once a blackout begins it could easily “cascade” for hundreds, even thousands of miles.

A blackout starting in California, he said, could reach all the way to the Rocky Mountains, while a blackout that started in Georgia might go as far north as Pennsylvania and New Jersey.

Remind You of Anything?

Yesterday in the Guardian, AC Grayling noted a most striking similarity;

At the Anaplasmic Institute at Valles Marineris, an interesting experiment is being conducted into the appetite-passion cycle associated with the feeding habits of Sus scrofa peculata, this being the Latin zoological name of an otherwise familiar large semi-domestic mammal, the naked pin-striped hog. When released into a feeding pound, a square formed by full feeding-troughs, the hogs struggle, fight and squirm to get at the troughs, and eat as fast and as much as they can, typically submerging their whole faces into the swill and both swallowing and inhaling it in large quantities. Because of the speed with which they eat they almost as often regurgitate the swill as quickly as they ingest it, so that the volume of swill plus regurgitate stays almost constant for a time, though insensibly it diminishes in volume (some of it begins to find its way out of the other end of the hogs; but because many of them are in the troughs with all four feet this does not decrease the volume in the trough as much as it might otherwise do).

Because the nature of the contents of the trough are changing as they come to consist more and more of regurgitate and defecate, the capacity of the hogs' digestive system to cope with what they ingest begins to change. There are some warning signs: a few of the hogs begin to look a little green, and only then do their neighbours at the trough start to edge away, subconsciously aware perhaps that the gastric secretions and enzymes mixed into the regurgitations of the greener pigs are adding greater degrees of toxicity to the regurgitate. But at a certain point the level of toxicity in the swill-cum-regurgitate as a whole reaches a level at which the entire herd of hogs flips into a sudden panic mode: now aware that they cannot continue to eat very fast and in large quantities without doing themselves injury, they all immediately stop eating, and begin to run around the feeding pound emitting loud fear-and-warning noises – and at the same time emitting noisome efflations resulting from the degree of toxicity of the swill over-indulged in, which has caused them tremendous bloating. It is a truly pitiable spectacle to see so many frightened flatulent hogs dashing fruitlessly about, begging for the keepers to come and clean out their feeding troughs and to administer medications to solve their digestive crisis.

Researchers at the Valles Marineris institute point out that the noise and efflations of frightened squealing hogs have a serious effect on other animals in the farmyard, peaceably trying to go about their business. Although there is relatively little wrong with the rest of the farmyard, the disruptions caused by the furore in the hogs' feeding pound is seriously disruptive, and without swift firm action the whole farm can be harmed by the hogs' panic-attack.

The researchers further say that their original assumption had been that the hogs were intelligent creatures, able to self-regulate their feeding habits; they somewhat abashedly say that they had thought that the gobbling and elbowing that went on at the troughs in normal times was simply bad manners, not something systemic and dysfunctional, and not in need of keepers with sharp sticks to stop the hogs going too far. Fat hogs, they say, were thought to be good for the farmyard's income because of the revenue they generate, earning more than eggs and pick-your-own strawberry promotions. They now say that their studies of appetite and emotion in hogs has revealed that hogs have only one appetite – greed – and one emotion – fear – and that these govern all their behaviour in the feeding pound. In fact, they have concluded with surprise that the hogs' brains consist almost entirely of an amygdala, the organ responsible for arousal, autonomic responses associated with fear, emotion generally, and hormonal secretions. The hogs appear to be functionally bereft of higher cortical layers of the brain that in other animals are associated with rationality and intelligence; which makes them a much more dangerous farmyard animal than they had hitherto been believed to be.

Asked what solutions the researchers propose, the answer is: more keepers with sharp sticks, and encouragement to the public to eat more roast pork.

Treasury Invokes Patriotism In Pitch to Bank Executives

WashingtonPost| Because the financial system depends heavily on confidence, the government's response is aimed at repairing perceptions as well as problems. For that reason, the government ordered the chief executives of nine prominent banks to attend a meeting yesterday at the imposing offices of the Treasury Department, next-door to the White House.

The participants included: Bank of America, J.P. Morgan Chase and Wells Fargo, retail banking giants that together control 30 percent of the nation's deposits; Wall Street titans Goldman Sachs, Morgan Stanley and Merrill Lynch, which has agreed to be bought by Bank of America; and Citigroup, the most international of the American banks. Also invited were the Bank of New York Mellon and State Street, lesser-known banks that play a crucial role as the back offices for the financial system.

Treasury Secretary Henry M. Paulson Jr. told the executives that for the good of the nation -- patriotism was specifically invoked, according to a person briefed on the discussions -- they would each have to sell the government a stake in their companies.

Representatives of several banks underscored after the meeting that they did not need the government's money but said they cooperated out of obligation and to help heal the financial system.

U.S. Forces Nine Major Banks To Accept Partial Nationalization

Washington Post | The U.S. government is dramatically escalating its response to the financial crisis by planning to invest $250 billion in the country's banks, forcing nine of the largest to accept a Treasury stake in what amounts to a partial nationalization.

News that European governments also planned to take stakes in their banks and anticipation of new U.S. measures unleashed a tremendous surge in U.S. stock prices yesterday, with the Dow Jones industrial average soaring to the biggest percentage gain since the 1930s, up 11.1 percent. It ended 936.42 points higher, the largest point gain ever, just days after the Dow had its steepest weekly decline in history.

The Treasury Department's decision to take equity stakes in banks represents a significant reversal, coming just weeks after Treasury Secretary Henry M. Paulson Jr. had opposed the idea. In a momentous meeting yesterday afternoon in Washington, Paulson, flanked by top financial regulators, told the executives of nine leading banks that they needed to participate in the program for the good of the national economy, two industry sources said on condition of anonymity because they were not authorized to speak publicly.

The government's initiative, which was to be announced this morning before the markets open for New York trading, is part of a wider plan that goes beyond the $700 billion rescue package approved by Congress earlier this month. The Federal Deposit Insurance Corp. is also set to announce today the launch of an insurance fund to guarantee new issues of bank debt. It will provide unlimited deposit insurance for non-interest-bearing accounts, which are widely used by small businesses for payroll and other purposes.

In pressing the bank executives to accept partial government ownership, Paulson's message was clear: Though officially the program was voluntary, the banks had little choice in the matter. In exchange for giving the Treasury minority stakes, the nine firms would jointly receive an investment worth $125 billion. The government would make another $125 billion available for the next 30 days to thousands of other banks and thrifts across the country.

Our Catastrophic Ecological Trajectory

George Monbiot brings it in the morning's Guardian;

Ecology and economy are both derived from the Greek word oikos - a house or dwelling. Our survival depends on the rational management of this home: the space in which life can be sustained. The rules are the same in both cases. If you extract resources at a rate beyond the level of replenishment, your stock will collapse. That's another noun which reminds us of the connection. The Oxford English Dictionary gives 69 definitions of "stock". When it means a fund or store, the word evokes the trunk - or stock - of a tree, "from which the gains are an outgrowth". Collapse occurs when you prune the tree so heavily that it dies. Ecology is the stock from which all wealth grows.

The financial crisis for which we must now pay so heavily prefigures the real collapse, when humanity bumps against its ecological limits.

As we goggle at the fluttering financial figures, a different set of numbers passes us by. On Friday, Pavan Sukhdev, the Deutsche Bank economist leading a European study on ecosystems, reported that we are losing natural capital worth between $2 trillion and $5 trillion every year as a result of deforestation alone. The losses incurred so far by the financial sector amount to between $1 trillion and $1.5 trillion. Sukhdev arrived at his figure by estimating the value of the services - such as locking up carbon and providing fresh water - that forests perform, and calculating the cost of either replacing them or living without them. The credit crunch is petty when compared to the nature crunch.

The two crises have the same cause. In both cases, those who exploit the resource have demanded impossible rates of return and invoked debts that can never be repaid. In both cases we denied the likely consequences. I used to believe that collective denial was peculiar to climate change. Now I know that it's the first response to every impending dislocation.

Why the Bailout Will Fail

Q: Does this crisis represent something deeper, like a general and unavoidable failure of our entire monetary system?

A: This crisis represents a generalized failure of the monetary system, and the sooner we get to that conclusion, the sooner we can begin to talk about solutions that treat the cause, not the symptoms.

Q: Are the failing institutions worth saving?

A: The failed institutions are not worth saving, because they represent a model that is now broken beyond repair.

Q: Will it work?

A: The current bailout plan cannot work, because it is too small and it is directed at the symptoms, not the causes.

Q: Can the government afford it?

A: The government cannot afford the cure. But even worse, the US government is already insolvent (when factoring in entitlement liabilities), and nobody is asking how borrowing an additional 12.5% of GDP does anything but make that problem worse.

much more at chris.martenson.com - Why the dollar rally is going to fail

Now Who Will the Feral Idiots Blame?

WASHINGTON | A campaign that blames the global financial crisis on a government push to make housing more affordable for lower-class Americans has taken off on talk radio and in e-mail.

Commentators say that was what triggered the stock market meltdown and the freeze on credit. They specifically target Fannie Mae and Freddie Mac, the mortgage finance giants that the federal government seized Sept. 6. They say that lending to poor and minority Americans caused Fannie’s and Freddie’s financial problems.

Subprime lending offered high-cost loans to the weakest borrowers in the housing boom from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

•More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

•Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

•Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that the critics lambaste.

The “turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007,” the President’s Working Group on Financial Markets reported Friday.

Federal housing data reveal that the charges aren’t true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Open Letter to the Next Farmer-in-Chief

Dear Mr. President-Elect,

It may surprise you to learn that among the issues that will occupy much of your time in the coming years is one you barely mentioned during the campaign: food. Food policy is not something American presidents have had to give much thought to, at least since the Nixon administration — the last time high food prices presented a serious political peril. Since then, federal policies to promote maximum production of the commodity crops (corn, soybeans, wheat and rice) from which most of our supermarket foods are derived have succeeded impressively in keeping prices low and food more or less off the national political agenda. But with a suddenness that has taken us all by surprise, the era of cheap and abundant food appears to be drawing to a close. What this means is that you, like so many other leaders through history, will find yourself confronting the fact — so easy to overlook these past few years — that the health of a nation’s food system is a critical issue of national security. Food is about to demand your attention.

Complicating matters is the fact that the price and abundance of food are not the only problems we face; if they were, you could simply follow Nixon’s example, appoint a latter-day Earl Butz as your secretary of agriculture and instruct him or her to do whatever it takes to boost production. But there are reasons to think that the old approach won’t work this time around; for one thing, it depends on cheap energy that we can no longer count on. For another, expanding production of industrial agriculture today would require you to sacrifice important values on which you did campaign. Which brings me to the deeper reason you will need not simply to address food prices but to make the reform of the entire food system one of the highest priorities of your administration: unless you do, you will not be able to make significant progress on the health care crisis, energy independence or climate change. Unlike food, these are issues you did campaign on — but as you try to address them you will quickly discover that the way we currently grow, process and eat food in America goes to the heart of all three problems and will have to change if we hope to solve them. Let me explain.

Read more in the NYTimes The Food Issue.

Annals of McCain - Palin, XXIV: Hatemongering

A lot of pundits seem dismayed and surprised at the moral depths to which Dishonest John McCain's campaign has sunk in the last week. I have to disagree. There is nothing surprising about it. This is his MO: do whatever he thinks is necessary. McCain has a long history of lack of principle and probity, whether it is in his personal life (a vile and abusive temper, disloyalty to his first wife) or his public life (corrupt behavior in the Savings and Loan scandal, chicanery on behalf of gaming interests and much more). Where I do agree with his new found critics is the frightening nature of his behavior in a time when the economy is spiraling out of control and a major depression is looming. Historically these conditions have unleashed the worst in the American character, a visceral Nativism and the McCain - Palin campaign events are enabling the kind of racist, xenophobic and vicious responses that tend to accompany hysterical fear turned and turn it to unthinking anger. It isn't just scaring me. It's scaring a lot of people, including Republican moderates (the ones that are left).

At the Effects Measure scienceblog - distinguished by the avalanche of examples they've compiled of the phenomenon in question.

Islamic finance rides the storm

A thriving financial sector sounds like an oxymoron these days. Even Australia's banks - among the most profitable in the world - kept a fifth of this week's interest rate cut to cushion their margins. But there is one sector that has tongues wagging in the hubs of commerce: Islamic finance.

While the Western world's financial system has been imploding, this small but rapidly growing share of world capital has weathered the storm.

Islamic finance takes its guidance from sharia.

The biggest markets are in the Middle East and Muslim countries, but global banks have opened sharia-compliant branches. Locally, the Muslim Community Co-operative is one of a few lenders offering the service.

Justice, partnership and opposition to excessive risk are the main principles guiding Islamic banks. Outright speculation and dealing with any party that has a balance sheet more than a third of which is debt are forbidden, as are investments deemed unethical by Islamic scholars, such as casinos.

But if these rules sound tough, the biggest difference is a ban on interest.

Charging interest is immoral because it does not take into account how changes in the value of the loan's security can affect the borrower, sharia says. Home owners who bought near the peak are now experiencing this harsh reality: interest gives banks a steady payment from the borrower, regardless of the property market's state.

However, profit is fine, and Islamic banks have devised ways to make money from lending. Instead of demanding interest, they buy the asset outright on behalf of the borrower. The borrower pays off the loan (the principle) and a fee for using the asset (rent, for example) until the amount is repaid and ownership transfers to the borrower. (More in BusinessDay)

Anti-democratic nature of US capitalism exposed

Noam Chomsky in the Irish Times;

Financial liberalisation has effects well beyond the economy. It has long been understood that it is a powerful weapon against democracy. Free capital movement creates what some have called a "virtual parliament" of investors and lenders, who closely monitor government programmes and "vote" against them if they are considered irrational: for the benefit of people, rather than concentrated private power.

Investors and lenders can "vote" by capital flight, attacks on currencies and other devices offered by financial liberalisation. That is one reason why the Bretton Woods system established by the United States and Britain after the second World War instituted capital controls and regulated currencies.*

The Great Depression and the war had aroused powerful radical democratic currents, ranging from the anti-fascist resistance to working class organisation. These pressures made it necessary to permit social democratic policies. The Bretton Woods system was designed in part to create a space for government action responding to public will - for some measure of democracy.

John Maynard Keynes, the British negotiator, considered the most important achievement of Bretton Woods to be the establishment of the right of governments to restrict capital movement.

In dramatic contrast, in the neoliberal phase after the breakdown of the Bretton Woods system in the 1970s, the US treasury now regards free capital mobility as a "fundamental right", unlike such alleged "rights" as those guaranteed by the Universal Declaration of Human Rights: health, education, decent employment, security and other rights that the Reagan and Bush administrations have dismissed as "letters to Santa Claus", "preposterous", mere "myths".

The End of Growth

Growth is gone. Over. Kaput. Finished. Get used to it.

If so, there will be an ocean of consequences. For those in the tiny universe of environmental NGOs, one of the consequences is this: The time for arguing against economic growth may be over. Yes, everyone who understands our human impact on the environment, and the disastrous implications of our economic growth imperative, knows that it is absolutely essential that the world find an alternative to growth; that instead, the human economy must contract to a point that it no longer threatens the viability of ecosystems. This is the essence of sustainability.

But imagine yourself talking to someone who has just lost her job. You tell this person, “You need to voluntarily further reduce your income and standard of living.” How’s that likely to go over?

Effective strategy demands recognition of the opportunities and limits of the unique historical moment. It seems that we have just moved from one historic moment to a very different one. In this situation, it’s more helpful to tell people (including policy makers) how to effectively deal with their immediate problems in a way that is consistent with long-term sustainability. Anything else will be irrelevant at best, extremely unwelcome at worst.

Growth is dead. Let’s make the most of it. A crisis is a terrible thing to waste.

Richard Heinberg at the PostCarbon Institute.

Remember Your Self....,

Paul Levy at RealitySandwich;

Lucid dreaming is a perfect metaphor, expression, and vehicle for realizing the dreamlike nature of both our experience of ourselves and the world around us. Just like we can become lucid in our night dreams, we can wake up in our waking dream and see how we are all collaboratively "dreaming up" our world into materialization, a realization which empowers us to co-operatively change the collective dream we are having.

When we become lucid in a dream, we realize that who we've imagined we are, what is called the "dream ego," is not who we actually are, but is merely a model of who we are. To identify with the dream ego is to become bewitched, fixated on and absorbed into a particularized stance which ultimately is illusory in that it has no substantial existence. Entrancing ourselves into imagining we exist in a way in which we simply do not is simultaneously a cause and result of a self-generating, auto-hypnotic self-constriction in consciousness which, ultimately speaking, we are doing to ourselves. It is what I call ME disease, whose root is a mis-identification of who we imagine we are (please see my book, The Madness of George W. Bush: A Reflection of our Collective Psychosis).

When we become lucid in a dream, we realize that who we were imagining we are - the dream ego - is being dreamed by a deeper part of ourselves...what I call the "deeper, dreaming Self." Jung himself had this realization in a dream he had during the last years of his life. In the dream he entered a church, and much to his surprise saw a meditating yogi sitting in front of the church. Upon closer inspection, Jung saw that the yogi had his face, and Jung then realized that the yogi was not Jung's dream, but that he was the yogi's dream.

In full-blown lucidity, we have an expansion of identity. We discover our inseparability and co-extensiveness with all parts of the dream. This is not a realization that belongs to the egoic, separate self, which is moment by moment contracting against itself, continually trying to strategize and manipulate the dream so as to full-fill its imagined sense of lack. The egoic, separate self is itself the very seeming obscuration to our natural lucidity, so how can it possibly become lucid? Rather, lucidity is an expression that we've seen through our self-created illusion and recognized the true nature of our situation, of who we actually are.

Now that we're all going to have to cut back on the levels of our consumption and distraction, perhaps we can get about the infinitely more serious business of observing, studying, and remembering ourselves....,

Why the Establishment Rejects McPalin

OCTOBER 8--Angered by a delay in the receipt of his voter registration card, a Louisiana man today threatened election officials, claiming that he urgently needed to cast a ballot to "keep the nigger out of office," according to police. Wade Williams, 75, was arrested this morning on a felony terrorizing charge after allegedly calling the Registrar of Voters and warning that he would come to the state office and empty his shotgun unless he got his registration card. Using profanity and racial slurs, Williams told a state official "about needing to vote to 'keep the nigger out of office," according to an Ouachita Parish Sheriff's Office affidavit, a copy of which you'll find here. Though the document does not name the candidate to which Williams is so violently opposed, it seems likely he was referring to Democratic presidential candidate Barack Obama. After being arrested at his Monroe home, Williams was booked into the Ouachita Correctional Center, where the below mug shot was snapped. En route to the jail, he "continued his 'tirade' about niggers and also stated that he had a shotgun, but had it hidden at his residence," reported Lt. Michael Judd. This surprising incident was brought to your attention by the ever-vigilant Submariner.

Leaders May Close World's Markets

Oct. 10 (Bloomberg) -- Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they ``rewrite the rules of international finance.''

``The idea of suspending the markets for the time it takes to rewrite the rules is being discussed,'' Berlusconi said today after a Cabinet meeting in Naples, Italy. A solution to the financial crisis ``can't just be for one country, or even just for Europe, but global.''

The Dow Jones Industrial Average fell as much 8.1 percent in early trading and pared most of those losses after Berlusconi's remarks. The Dow was down 0.5 percent to 8540.52 at 10:10 in New York.

Group of Seven finance ministers and central bankers are meeting in Washington today, and will stay in town for the International Monetary Fund and World Bank meetings this weekend. European Union leaders may gather in Paris on Oct. 12, three days before a scheduled summit in Brussels, Berlusconi said today, while Group of Eight leaders may hold a meeting on the crisis ``in coming days,'' he said.

Berlusconi didn't give any details about what kind of rules leaders were looking to change, except to say that leaders are ``talking about a new Bretton Woods.''

The Bretton Woods Agreements were adopted to rebuild the international economic system after World War II in a hotel in Bretton Woods, New Hampshire. The aim of the agreements was to establish a monetary management system, initially by pegging currencies to gold. The IMF was set up later to help manage the international financial system.

The End Of American Capitalism?

Analysis in today's Washington Post; The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism.

Since the 1930s, U.S. banks were the flagships of American economic might, and emulation by other nations of the fiercely free-market financial system in the United States was expected and encouraged. But the market turmoil that is draining the nation's wealth and has upended Wall Street now threatens to put the banks at the heart of the U.S. financial system at least partly in the hands of the government.

The Bush administration is considering a partial nationalization of some banks, buying up a portion of their shares to shore them up and restore confidence as part of the $700 billion government bailout. The notion of government ownership in the financial sector, even as a minority stakeholder, goes against what market purists say they see as the foundation of the American system.

Yet the administration may feel it has no choice. Credit, the lifeblood of capitalism, ceased to flow. An economy based on the free market cannot function that way.

Intractable Paradox

Governance and banks are doing their utmost to restore confidence in the intangible monetary system to drive economic growth. The operation of the economy entails irreversibly drawing down irreplaceable, finite natural material resources. The people in charge are striving to speed up the unsustainable process driven by money. Do you want them to succeed, or not?

The Root of All Evil...,

Comes now Roubini - The world is at severe risk of a global systemic financial meltdown and a severe global depression;

At this point severe damage is done and one cannot rule out a systemic collapse and a global depression. It will take a significant change in leadership of economic policy and very radical, coordinated policy actions among all advanced and emerging market economies to avoid this economic and financial disaster. Urgent and immediate necessary actions that need to be done globally (with some variants across countries depending on the severity of the problem and the overall resources available to the sovereigns) include:

- another rapid round of policy rate cuts of the order of at least 150 basis points on average globally;

- a temporary blanket guarantee of all deposits while a triage between insolvent financial institutions that need to be shut down and distressed but solvent institutions that need to be partially nationalized with injections of public capital is made;

- a rapid reduction of the debt burden of insolvent households preceded by a temporary freeze on all foreclosures;

- massive and unlimited provision of liquidity to solvent financial institutions;

- public provision of credit to the solvent parts of the corporate sector to avoid a short-term debt refinancing crisis for solvent but illiquid corporations and small businesses;

- a massive direct government fiscal stimulus packages that includes public works, infrastructure spending, unemployment benefits, tax rebates to lower income households and provision of grants to strapped and crunched state and local government;

- a rapid resolution of the banking problems via triage, public recapitalization of financial institutions and reduction of the debt burden of distressed households and borrowers;

- an agreement between lender and creditor countries running current account surpluses and borrowing and debtor countries running current account deficits to maintain an orderly financing of deficits and a recycling of the surpluses of creditors to avoid a disorderly adjustment of such imbalances.

At this point anything short of these radical and coordinated actions may lead to a market crash, a global systemic financial meltdown and to a global depression. At this stage central banks that are usually supposed to be the "lenders of last resort" need to become the "lenders of first and only resort" as, under conditions of panic and total loss of confidence, no one in the private sector is lending to anyone else since counterparty risk is extreme. And fiscal authorities that usually are spenders and insurers of last resort need to temporarily become the spenders and insurers of first resort. The fiscal costs of these actions will be large but the economic and fiscal costs of inaction would be of a much larger and severe magnitude. Thus, the time to act is now as all the policy officials of the world are meeting this weekend in Washington at the IMF and World Bank annual meetings.

Thursday midnite update: A few hours after I had written this note the market crash that I warned about is underway in Asia: the Nikkei index in Japan is down 11% and all other Asian markets are sharply down. This reinforces the urgency of credible and rapid policy actions by the G7 financial officials who are meeting in a few hours in Washington and the need to also involve in such global policy coordination the systemically important emergent market economies.

Give Us This Day Our Daily Bread.....,

In the Financial Post - Grain shipments stalled in credit drought;

The meltdown in financial markets has resulted in a dramatic slowdown in maritime trade, with major ports in Canada and the United States preparing for sharply reduced activity after several of the busiest years on record.

Statistics from the Port of Vancouver have yet to officially register a drop but at Long Beach and Los Angeles, among the biggest U.S ports, imports have already declined 9% this year.

The credit crisis is spilling over into the grain industry as international buyers find themselves unable to come up with payment, forcing sellers to shoulder often substantial losses.

Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said.

"There's all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit," said Bill Gary, president of Commodity Information Systems in Oklahoma City. "The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy."

So far the problem is mostly being felt in U.S. and South American ports, but observers say it is only a matter of time before it hits Canada.

"We've got a nightmare in front of us and a lot of people are concerned it's going to get a lot worse," said Anthony Temple, a grain marketing expert based in Vancouver.

Consequence Management Response Force

How time flies. It's been a few weeks since we related a story in the Army Times about the deployment of the infantry division's 1st Brigade here in the U.S. - comes now Amy Goodman with a more in-depth discussion of that development. Here are a couple of excerpts;

We welcome you both to Democracy Now! Why don’t we begin with Colonel Michael Boatner? Can you explain the significance, the first time, October 1st, deployment of the troops just back from Iraq?

COL. MICHAEL BOATNER: Yes, Amy. I’d be happy to. And again, there has been some concern and some misimpressions that I would like to correct. The primary purpose of this force is to provide help to people in need in the aftermath of a WMD-like event in the homeland. It’s something that figures very prominently in the national planning scenarios under the National Response Framework, and that’s how DoD provides support in the homeland to civil authority. This capability is tailored technical life-saving support and then further logistic support for that very specific scenario. So, we designed it for that purpose. [...]

AMY GOODMAN: Matt Rothschild, you’ve been writing about this in The Progressive magazine. What is your concern?

MATTHEW ROTHSCHILD: Well, I’m very concerned on a number of fronts about this, Amy. One, that NORTHCOM, the Northern Command, that came into being in October of 2002, when that came in, people like me were concerned that the Pentagon was going to use its forces here in the United States, and now it looks like, in fact, it is, even though on its website it says it doesn’t have units of its own. Now it’s getting a unit of its own.

And Colonel Boatner talked about this unit, what it’s trained for. Well, let’s look at what it’s trained for. This is the 3rd Infantry, 1st Brigade Combat unit that has spent three of the last five years in Iraq in counterinsurgency. It’s a war-fighting unit, was one of the first units to Baghdad. It was involved in the battle of Fallujah. And, you know, that’s what they’ve been trained to do. And now they’re bringing that training here?

On top of that, one of the commanders of this unit was boasting in the Army Times about this new package of non-lethal weapons that has been designed, and this unit itself is going be able to use, according to that original article. And in fact, the commander was saying he had even tasered himself and was boasting about tasering himself. So, why is a Pentagon unit that’s going to be possibly patrolling the streets of the United States involved in using tasers?

The End of Privacy.....,

In yesterday's Guardian, further thoughts on the Every Call and Every E-Mail project unfolding in the U.K. Plans for a vast central database of emails, phone calls and texts will see everyone monitored as a potential suspect. First, what the authorities want;

In the name of the fight against crime, and the fight against terror, we are all to be monitored as if we could be suspects. Computers will analyse our behaviour for signs of deviance. The minute we become of interest to anyone in authority - perhaps because we take part in a demonstration, have an argument with a security guard at an airport, spend too long on a website, or are witness to a crime - the police or the security services will be able to dip into our records and construct a near-complete pattern of our lives.

The shocking element to the new plan is that the authorities want their own database only because they find the current limitations frustrating. Under the Regulation of Investigatory Powers Act rules, the 700 or so bodies already licensed to watch us must make a certified request to phone or internet firms for individual records. More than 500,000 such requests were made last year. But the companies are reluctant to hang on to the data, and the security services would find a single, accessible database so much more convenient.

Then, a meditation on the possibilities which inhere to such a capability.

Stop and consider this for a moment. Think about how happy any of us would be to have our lives laid out to official view. All our weaknesses, our private fears and interests, would be exposed. Our web searches are guides to what is going on in our minds. A married man might spend a lot of time on porn websites; a successful manager might be researching depression; a businessman might be looking up bankruptcy law.

We all have a gulf between who we really are and the face we present to the world. Suddenly that barrier will be taken away. Would a protester at the Kingsnorth power station feel quite so confident in facing the police if she knew that the minute she was arrested, the police could find out that she'd just spent a week looking at abortion on the web? Would a rebel politician stand up against the prime minister if he knew security services had access to the 100 text messages a week he exchanged with a woman who wasn't his wife? It isn't just the certainty that such data would be used against people that is a deterrent, it's the fear. As the realisation of this power grew, we would gradually start living in the prison of our minds.

About that Greed, Incompetence and Fraud...,

There is No Plan B?

Comes now my man rembom with troubling questions about the "bailout" just now rushed through Congress by the Bush administration for the exclusive benefit of wealthy, incompetent, and quite possibly criminally fraudulent bankers...,

"Well, it looks like the Fed has discovered a Plan B. It turns out that the Fed can buy commercial paper directly from non-financial corporations needing credit to maintain operations. This will keep the credit markets working even if the zombie banks aren't up to the task. In other words, the threat of a complete meltdown in the absence of a bailout was nonsense and the media once again got taken for a ride by the Bush administration."Of course, relying on the central bank to dish out credit to corporations is not ideal, but neither is it ideal to overpay for $700 billion of junk assets on the books of troubled banks.

Too bad that the media didn't spend more time focusing on the options available, instead of selling President Bush's bailout package."

From Beat The Press blog, Oct. 7, 2008, by Dean Baker

Intellectual Cleansing - Part II

Most ambitious journalists start out on a daily local newspaper (I would soon end up on one), owned by one of a handful of large media groups. There, as I would learn, one quickly feels all sorts of institutional constraints on ones reporting. As a young journalist, if you know no better, you simply come to accept that journalism is done in a certain kind of way, that certain stories are suitable and others unsuitable, that arbitrary rules have to be followed. These seem like laws of nature, unquestionable and self-evident to your more experienced colleagues. Being a better journalist requires that these work practices become second nature.

These rules were constantly reinforced:

Promotion meant moving on from the lowly beat reporter, covering community issues, to other posts: the city or county council correspondent, who depended on council officials and councillors for information; the court reporter, who loyally regurgitated court proceedings; the business staff, who tried to liven up advertisers press releases; and the crime correspondent, who spent all day hanging out with policemen.

In other words, success at the newspaper was gauged in terms of obedience to figures of authority, and the ability not to alienate powerful groups within the community. Ambitious journalists learnt to whom they must turn for a comment or a quote, and where suitable stories could be found. It was a skill that presumably stayed with them for the rest of their careers.

Those who struggled to cope with these strictures were soon found out. They either failed their probationary periods and were forced to move on, or stayed on in the lowliest positions where they could do little harm.

Entire article archived here;

Fall of the Wall.....,

Naomi Klein on Democracy Now: Wall St. Crisis Should Be for Neoliberalism What Fall of Berlin Wall Was for Communism;

So I think we can see a couple of scenarios for the future. One, McCain wins, and it’s economic shock therapy. You know, the thesis of The Shock Doctrine is that we’ve been sold a fairy tale about how these radical policies have swept the globe, that they haven’t swept the globe on the backs of freedom and democracy, but they have needed shocks, they have needed crises, they have needed states of emergencies. It doesn’t necessarily have to be an outright military coup, which are the conditions in which this ideology had its first laboratories. It can just be a bad-enough economic crisis, a bad-enough hyperinflation crisis, in an electoral democracy that allows politicians to say, “Sorry about everything we said during the campaign. Sorry about the usual ways in which we make decisions, debate discussion. We’re going to have to haul up, form an emergency economic team and impose shock therapy,” usually with the help of the International Monetary Fund and the World Bank.

Milton Friedman understood the utility of crisis. And this is a quote—you know, I use it a lot, but I’ll use it now again, because I think it’s important—which he has at the beginning of the 1982 edition of Capitalism and Freedom: "Only a crisis, actual or perceived, produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.”

Now, because I’ve been studying the utility of crisis for this free market project, which I consider to be very anti-democratic, it’s really attuned me to looking for the ideas that are lying around. And I’ve been paying really close attention to people like Grover Norquist, Newt Gingrich, the Republican Study Committee, these past few weeks. And I have an “ideas lying around” file, which are the ideas that they are floating right now in the midst of this economic crisis. And a lot of them are familiar, but the point is is that they’re being repackaged now as the way out of this economic crisis. So, it’s suspending the capital gains tax, getting rid of the post-Enron regulations, getting rid of mark-to-market accounting. In other words, more deregulation and less money in the public coffers. And it is interesting that the way in which this bill—the way the senators were trying to get the bailout bill through the Senate, after it had failed to go through Congress, was by adding tax cuts, a package of $118 billion worth of tax cuts. Some of them are good, some of them are not. But it’s a deepening of this crisis.

So, we know that the crisis is coming, and the question is, how are we going to respond? I think there needs to be better ideas lying around. I think the Milton Friedman Institute is about keeping the same old ideas that have been recycled so many times, that actually make these public crises worse, making sure that they are the ones that are ready and available whenever the next crisis hits. I think that is what—at its core, that’s what so many of the right-wing think tanks are for, and that’s what the Institute is for. And I think that is a waste of the fine minds at this university. I think it is a waste of your minds, your creativity, because all of these crises—climate change, the casino that is contemporary capitalism—all of these crises do demand answers, do demand actions. They are messages, telling us that the system is broken. And instead of actual solutions, we’re throwing ideology, very profitable ideology, at these problems. So we need better ideas lying around.

Faith. Belief. Trust. An Orthodoxy Built on Superstition

Madeleine Bunting quietly devastates in the Guardian;

We are now learning what countries across the developing world have experienced over three decades: unstable and inequitable neoliberal economics leads to unacceptable levels of social disruption and hardship that can only be contained by brutal repression. Add that to the two other central charges against deregulated capitalism: first, it may create wealth but it does not distribute it effectively; and second, that it takes no account of what it cannot commodify - neither the social relationships of family and community nor the environment, which are vital to human wellbeing, and indeed to the functioning of the market itself. Ultimately, neoliberal capitalism is self-destructive.

We are now witnessing the collapse of this absurd economic orthodoxy that has dominated politics for nearly 30 years. Its triumphalist arrogance, its insistence on orthodoxy, has been comparable to Soviet communism in its scale. For two decades, we've been told "Tina" - "There is no alternative".

Economists talk of trust, belief, faith; we now understand that all along neoliberal capitalism was a form of mythology. That's why the triumphalism was necessary - you could not afford to have anyone challenge the system or we might all realise we were gawping at the emperor's nakedness.

Every Call and E-mail

In the UK Times Online;

Ministers are considering spending up to £12 billion on a database to monitor and store the internet browsing habits, e-mail and telephone records of everyone in Britain.

GCHQ, the government’s eavesdropping centre, has already been given up to £1 billion to finance the first stage of the project.

Hundreds of clandestine probes will be installed to monitor customers live on two of the country’s biggest internet and mobile phone providers - thought to be BT and Vodafone. BT has nearly 5m internet customers.

Ministers are braced for a backlash similar to the one caused by their ID cards programme. Dominic Grieve, the shadow home secretary, said: “Any suggestion of the government using existing powers to intercept communications data without public discussion is going to sound extremely sinister.”

MI5 currently conducts limited e-mail and website intercepts which are approved under specific warrants by the home secretary.

Further details of the new plan will be unveiled next month in the Queen’s speech.

The Home Office stressed no formal decision had been taken but sources said officials had made clear that ministers had agreed “in principle” to the programme.

Officials claim live monitoring is necessary to fight terrorism and crime. However, critics question whether such a vast system can be kept secure. A total of 57 billion text messages were sent in the UK last year - 1,800 every second.

Crisis Effects Russian Economy

From the Washington Post foreign service;

Russia's leading stock markets crashed again Monday, suffering another record one-day loss and hitting three-year lows. The benchmark MICEX and RTS indexes plunged 19 percent as regulators repeatedly suspended trading in an attempt to slow the free fall. The markets are down nearly two-thirds from their highs in May.

Meanwhile, the Russian banking system is enduring a severe liquidity crisis triggered by a flight of capital and foreign loans.

Prime Minister Vladimir Putin has responded by tapping the government's immense cash reserves, built up during the long oil boom, and injecting as much as $100 billion into the financial system.

The crisis has not been felt by much of Russian society. Only a fraction of the public invests in the stock markets, and the Kremlin's moves to support the banks have prevented any run on deposits. But there are hints of trouble. Inflation is rising, industrial production is shrinking and several firms have said they are cutting bonuses or laying off staff.

The impact of the crisis is clearest in real estate construction, one of the fastest-growing segments of the economy over the past few years but also one of the most heavily dependent on bank loans. With credit disappearing, other developers have joined Polonsky in announcing plans to halt construction.

Naomi Wolf - Give Me Liberty

The following is excerpted from the introduction to Naomi Wolf's new book, Give Me Liberty: A Handbook for American Revolutionaries

...historians are also now documenting the stories of how in the pre-Revolutionary years, ordinary people -- farmers, free and enslaved Africans, washer-women, butchers, printers, apprentices, carpenters, penniless soldiers, artisans, wheelwrights, teachers, indentured servants -- were rising up against the king's representatives, debating the nature of liberty, fighting the war and following the warriors to support them, insisting on expanding the franchise, demanding the right to vote, compelling the more aristocratic leaders of the community to include them in deliberations about the nature of the state constitutions, and requiring transparency and accountability in the legislative process. Even enslaved Africans, those Americans most silenced by history, were not only debating in their own communities the implications or the ideas of God-given liberty that the white colonists were debating; they were also taking up arms against George III's men in hopes that the new republic would emancipate them. Some were petitioning state legislatures for their freedom; and others were even successfully bringing lawsuits against their owners, arguing in court for their inalienable rights as human beings. This is the revolutionary spirit that we must claim again for ourselves -- fast -- if we are to save the country.

Will the Crisis Bring Down the Global Financial System?

Adrian Salbuchi spins a fascinating yarn at Global Research setting up the timeline and the players involved in getting us to the current state, and then laying out possible what next scenarios;

Plausible Scenarios
The crisis affecting the global financial system based on parasitic speculation and usury is a terminal crisis. It can no longer be solved through purely financial and monetary mechanisms and measures. If US authorities only concentrate on this type of measure, then a truly serious collapse is imminent and unavoidable.

A more pragmatic view of the global and US power structures, however, indicates that the US will not just stand by whilst this occurs, allowing the demise of the US as a global superpower. The US will not just turn-off the lights, and go home as the Soviet Nomenklatura did in the early nineties. No sir. They're gonna put up a hell of fight!! And that is a problem for all the peoples of the world, as well as for the people of the United States themselves. In this sense, we envision several scenarios out of which we have singled out three clearly defined scenarios which must no doubt have their respective alternative action plans to address this growing crises:

Plan A (i.e., addressing a relatively low intensity crisis through basically financial measures) - This envisions continuing on-going negotiations between the FED, Treasury Dept., Congress, major bankers, European and Asian central bankers seeking further measures to stop further black-holes and bank failures, lobbying for further u$s 700 billion bail-out plans to be wrenched out of Congress and elsewhere. This will serve to control the crisis in the days and weeks to come by helping banks in trouble, including medium-sized banks anf foreign banks operating in the US (e.g. your HSBC's, Barclays', Deutsche Bank's and others), and most important, the remaining major Mega-banks like Goldman Sachs, Morgan Stanley, JPMorgan Chase and CitiGroup. The immediate effect of this will be that there will be drastic and far-reaching crisis management through financial and monetary measures. At the same time, new rules of the game will be dealt in Wall Street and Washington. The practical result will be massive transference of wealth away from small investors, pension funds, small stockholders, etc., and into the hands of the usual cabal of bankers, institutional investors, speculators and financial parasites.

Plan B (i.e., addressing a medium intensity crisis through financial and monetary measures) - If Congress does not approve the bail-out plan, or significantly limits it, or even if Congress does approves it, it were to prove insufficient in the days and weeks to come with a further spate of major banking and insurance company failures, then the US Government - i.e., the Fed and Treasury Dept. - might very well declare a "National Economic Emergency" and introduce a totally new currency.

No, not the "Amero" which is a smoke-screen rumour, but rather something far more straight to the point: a "New Dollar" which, contrary to the present devalued dollar, would be Gold-backed, however not by just any gold: it will be 9999 proof gold bullion, with some sort of 100% fool-proof security factor - e.g., either an embedded chip or hologram that will transform it into "Global Reserve Gold", or financially "sacred" gold - that will have a value maybe ten times higher than normal "profane" Gold. At the same time, an extended banking holiday will be declared in order to implement the change of currency (just as happened in Argentina several times in recent history, notably when former president Alfonsín introduced the "Austral" to replace the highly devalued peso).

Transition to the new currency will be at terms highly beneficial for those banks, companies, citizens, allies and other "preferred allies and friends" of the US who will get One New Dollar for each "old" dollar. Then, certain powerful holders of dollar-denominated instruments - cash, US Treasury Bills and Bonds, and the like - will be given some preferential treatment based on specific US geopolitical and geoeconomic interests such as, for example, the governments and interests of the European Union, Japan, maybe China, and specific institutions and global corporations who will be able to change their old dollars for New Dollars at acceptable rates of exchange, say 2, 3 or 4 old dollars for every New Dollar.

For the rest of dollar-holders - i.e., vast numbers of private investors in all parts of the world in countries in Latin America, Central Europe, the Muslim World, Africa, etc. - the US Government will simply say that their respective local markets will need to determine how many old dollars will buy a New Dollar, and that this will be governed by the market forces of supply and demand. We will then see currency traders of all shapes and sizes offering One New Dollar for every 8, 10, or 20 old dollars in the hands of desperate masses of people trying to get rid of those creased green-backed bits of paper of falling value.(5)

The immediate effect of this would be to further spread the socializing of US banking losses into emerging markets and weaker economies outside of the United States (i.e., New Dollar would allow the bankers to selectively export the US currency's inflationary erosion towards specific regions and segments of the world).

Plan C (i.e., addressing a high intensity crisis through geopolitical and miitary measures) - If the US authorities cannot resolve the crisis with financial, monetary and economic measures, and increasing internal social violence and political insecurity were to affect the US and its key allies, then the crisis will go into geopolitical and military mode. If an extended banking holiday is forced upon the Bush administration, freezing banking accounts, deposits, ATM machines (just like the "Corralito" - i.e., the "baby play pen" - that Argentina suffered starting 1st December 2001 generating unimaginable hardship to our country), this may later lead to trying to resolve the problem on a the international geopolitical stage by "kicking the chessboard".

This means escalating the overall conflict to political, diplomatic and military planes, fueling a generalized global war which New World Order planners seem to believe will allow them to use vast resources for war, placing the focus away from the on-going financial crisis. This will lead to imposing strict limitations on all civil liberties in the US and elsewhere, and even suspending the Constitution (We Argentines certainly know a lot about that too!).

"National Security" will be the blanket excuse at a time of grave internal emergency, and will be used to justify unilateral invasions of countries and regions in different parts of the world. In short, mobilizing the country and its allies in its material resources, whilst the collective psyche is coaxed on the need to "defend" the country against some elusive "enemy" (new or old terrorist organization suitably demonized). One of the results that would be sought would be to re-stabilize the economiy and financial system gearing it on a re-intensified military-industrial complex where the US has an unmatched position - foreign wars are always good to steer attention away from domestic troubles.

American Identity Under Siege...,

Car dealers are like canaries in a coalmine;

Hundreds of thousands of new cars and trucks that would have quickly made their way to people's driveways a year ago are now stacking up on dealer lots across the country, with potential buyers worried about whether they'll keep their jobs, be able to pay for gas, or qualify for a car loan.

For auto dealers already suffering under the worst U.S. sales downturn in 15 years, the increasing cost of the credit they use to keep inventory in their showrooms means every Ford Focus and Jeep Grand Cherokee with a sale sticker in the window is chipping away at dealers' razor-thin profit margins every day and threatening to send more of them out of business.

Like the banks that have been collapsing under the weight of the credit crunch, auto dealers are highly leveraged, making them some of its first victims, said Sheldon Sandler, founder of Bel Air Partners, a New Jersey-based firm that helps car dealers find options when they want out of the business.

But then we already knew that this hazard was around the signpost up ahead - though perhaps we expected to see its manifestations a few years down the line.

the story of the classless society is exemplified by the concept of a middle class — something Americans have proudly espoused — which he points out is held together by the common denominator of everyone owning a car. That's right, not education, not equal opportunity, or equal rights but the one-ton behemoth that we must have to get around the wasteful geography created by suburbia.

We know about this waste from the film The End of Suburbia and James Kunstler's Geography of Nowhere and all the other peak oil fellows, but Orlov points out that because we are so identified with owning a car as part of this American middle class identity we will be hard put to let it go. And when we are forced to (due to diminishing and increasingly expensive gasoline supplies) so will go the myth of the middle class.

Like every other aspect of this slow-motion collapse, except for those who it directly and immediately impacts, folks will watch this specific one without a clue about what it means and what it portends...,

Bad Boys Bad Boys, What You Gonna Do?

In the Guardian, Pankaj Mishra asks whether a new president will change the crazy logic of American militarism?

[excerpts]
The Arab Mind, originally published in 1973, was the bible of neocon commentators in Washington and New York cheerleading the Bush administration's audacious venture: what Condoleezza Rice in the new book by Bob Woodward, The War Within: A Secret White House History 2006-2008 (Simon & Schuster), describes as shifting the "epicentre of American power" from Europe, where it had rested since the second world war, to the Middle East. Widely read in the US military, The Arab Mind later inspired the modus operandi of the jailers of Abu Ghraib.

Richard Armitage, assistant secretary of state and a relative moderate among the Bush administration's hawks, told Pakistani diplomats that the US would bomb their country "back to the stone age" if it did not withdraw its support for the Taliban.

The idea that the natives would recognise superior firepower when they saw it seemed to be validated by Pakistani acquiescence, followed by the Taliban's swift capitulation.

The habitual deceivers are often, in the end, the most deceived. According to Rashid, Pervez Musharraf's regime in Pakistan may have pulled off one of the biggest swindles in recent history by persuading the Bush administration to part with $10bn in exchange for mostly empty promises of support for its "war on terror". Most Pakistanis feel a mix of contempt and distrust for the US, which abandoned their country after enlisting it in a proxy war against the Soviet Union in Afghanistan. Confronted with a choice between regressing to the stone age and meeting crazy Uncle Sam's demands, Musharraf's regime adopted a policy of dissembling that the then foreign minister outlined as "First say yes, and later say but". Since 9/11, the Inter-Services Intelligence (ISI), Pakistan's rogue spy agency, which has long considered Afghanistan as its backyard, has continued to provide sanctuary and military support for the Taliban while occasionally arresting some al-Qaida militants to appease Washington. Mullah Omar and the original Afghan Taliban Shura, Rashid claims, are serenely resident in Pakistan's borderlands, along with "a plethora of Asian and Arab terrorist groups who are now expanding their reach into Europe and the United States".

Obscured by the American economy's slow-motion train wreck, the war on terror has already stumbled into its most treacherous phase with the invasion of fiercely nationalistic and nuclear-armed Pakistan.

Could smashing up Iran or invading Pakistan become the face-saving formula for the exponents of "shock and awe"? Certainly, they see US force impressing the Persian and the Pakistani mind as it apparently has the Arab mind. And such is the crazy logic of a wounded militarism that, notwithstanding its battered economy, the US may soon be embattled on many more fronts in what is already its most damaging war.

The Arab Mind

From Wikipedia;

The Arab Mind is a non-fiction cultural psychology book by Raphael Patai, who also wrote The Jewish Mind. It was first published in 1973, and later revised in 1983. An update (Patai has since died) is planned for 2007.

The book advocates a tribal group survival explanation for the driving factors behind Arab culture.

Criticism
According to Emram Qureshi, the book's methodology is "based on a fatally flawed set of assumptions -- most importantly, that there is one entirely homogenous Arab culture, derived from nomadic Bedouin culture. This ignores both the diversity and history of a people and civilization that extends across dozens of countries, from the Indian Ocean to the Atlantic, and the deeply rooted Arab culture of cities and agricultural communities."[1]

In his view the book is "emblematic of a bygone era of scholarship focused on the notion of a 'national character,' or personality archetype". According to Qureshi, Sondra Hale, a professor of anthropology and chair of the women's studies program at UCLA, sent him an e-mail in which she stated it can "no longer be taken seriously".

Patai is criticized in passing at several points in Edward Said's book Orientalism. Philip S. Golub calls it “a compendium of racist stereotypes and Eurocentric generalizations” which “has become the bible of the Bush administration’s leading neoconservative lights and ‘the most popular and widely read book on the Arabs in the U.S. military.’” The book is described as simplistic, reductionist, stereotyping, generic, essentialist, outdated, superseded, flawed, unscientific and even intellectually dishonest by other scholars.