Corporate Profits Doomed, Warns Grantham

December 1, 2011 by · Leave a Comment 

Bearish stock-picker says margins freakishly high; ‘lot of profit disappointment coming our way’

U.S. companies are the most profitable in more than 40 years, and some of the best-known stock pickers are divided over how long that will last.

Bob Doll, chief equity strategist at BlackRock Inc. (BLK), said low labor costs and cost-saving technology will allow companies to keep up their profitability. Jeremy Grantham, chief investment strategist of Boston-based Grantham, Mayo, Van Otterloo & Co., said margins will send stock markets tumbling when they eventually revert to their mean.

“The implication for the stock market is ugly, because it means earnings are unsustainably high,” Grantham’s colleague Ben Inker, GMO’s director of asset allocation, said in a telephone interview. GMO, an investment manager that oversees $93 billion, puts the fair value of the Standard & Poor’s 500 Index at between 950 and 1,000, compared with the 1,158.67 level at which it closed last week.

U.S. companies’ ability to squeeze more profit from each dollar of sales is pushing earnings higher, even as the economy has grown at a below-average clip since the recession ended in June 2009. Grantham, who called corporate profits “freakishly high” in an August commentary, sees wide margins as an aberration. Some of his competitors say changes in the economy and the way firms operate could keep them near peak levels for another year or two.

“We don’t think they have to fall,” Doll, whose New York- based firm is the world’s largest asset manager, said in a phone interview. BlackRock oversees $3.35 trillion.
Labor, Technology

Two forces that have lifted margins, a weak job market and investment in labor-saving technology, show no sign of reversing, Doll said. “We lean towards the optimistic side,” he wrote in a Nov. 21 note on the stock market’s prospects.

The margins of non-financial companies in the U.S., a widely used measure of profitability, reached 15 percent in the third quarter, according to data from Moody’s Analytics Inc. in West Chester, Pennsylvania. That was the highest level since 1969. When the recession ended in the second quarter of 2009, the comparable number was 8.7 percent.

Moody’s measures margins as total profits for non-financial companies divided by the contribution of those businesses to the gross domestic product. The number captures the results of a range of public and private companies and isn’t distorted by the big swings in earnings of financial firms, according Mark Zandi, the chief economist.

Those on both sides of the debate agree on two things: margins are unusually high and the driving force behind their rise is companies’ ability to keep a lid on expenses.

‘Marvelous Job’

“Businesses have done a marvelous job of reducing costs,” Zandi said in a telephone interview.

The globalization of the workforce and a U.S. jobless rate of 9 percent last month have given management the upper hand in dealing with labor, Zandi said. Wages and salaries as a share of national income fell to 49.4 percent in the third quarter, the lowest since the government began collecting the numbers in 1948, Moody’s data show.

Companies, while slow to hire, have been upgrading technology.

Businesses invested in equipment and software at an annual pace of $1.15 trillion in the third quarter, up 26 percent since the fourth quarter of 2009, data from IHS Global Insight in Lexington, Massachusetts, show.

Emerging Markets

Profit margins have been bolstered by sales to faster- growing economies in Asian and Latin American emerging markets, which have helped companies offset weakness in the U.S. and Europe. American multinationals “are much less dependent on developed-market economies than they have been in the past,” William Stromberg, director of global equity research at Baltimore-based T. Rowe Price Group Inc. (TROW), wrote in a November newsletter.

Dennis Bryan is skeptical that the trends that have supported margins can continue. Bryan is co-portfolio manager of the $1.2 billion FPA Capital Fund (FPPTX), the top-performing diversified U.S. stock fund over the past 25 years, according to Chicago-based Morningstar Inc.

(MORN) The fund gained 14 percent annually in the period ended Sept. 30, Morningstar data show.

Firms may be reaching their limit in wringing out costs, after two years of rising margins, Bryan said in a telephone interview from Los Angeles.

“Will companies be able to keep tightening their belts by cutting millions more Americans out of the workforce?” he said.

Long-Term Trend

Profit margins have been trending higher since the mid-1980s, said Chris Christopher, an economist at IHS (IHS) Global Insight, who has written on the subject. Quarterly margins peaked at 11.9 percent in the 1980s, 13.6 percent in the 1990s and 14.5 percent in the most recent decade, Moody’s data show.

The S&P 500 returned an annual 20 percent over five years after margins peaked in the second quarter of 1984. It fell an annual 1.6 percent over five years after margins hit a high in the third quarter of 1997, and declined 1.2 percent a year after the third quarter of 2006, the peak for margins in the most recent decade.

Sales growth may slow as economies around the world lose steam, Bryan said. The International Monetary Fund trimmed its forecast in September for global economic growth through 2012 and said Europe and the U.S. risk re-entering recession if they fail to solve their financial problems.

When margins have peaked in the past, they have typically fallen over the following five years, Bryan told investors in his third-quarter newsletter.

“We expect a lot of profit disappointments coming our way,” he wrote.

Grantham also believes in mean reversion, the notion that most measures drop back to their historical norms over time.

‘The Great Threat’

“Lower margins are the great threat to market performance,” he wrote in the August newsletter. Grantham is known for his bearish investment outlook and for his successful record in identifying stock-market bubbles.

Margins have been propped up by a “great surge” in government spending that fueled consumption, Grantham said. As political pressures force the U.S. to cut its budget deficit, the economy will suffer and margins will drop, Grantham predicted without laying out a timetable.

GMO expects U.S. large-capitalization stocks to return 1.8 percent a year above inflation over the next seven years, according to its website.

With job growth likely to remain “sluggish” and interest rates low, rising costs are no threat to profits, said BlackRock’s Doll. If the U.S. economy continues to “muddle through” at the growth rates the country has achieved the past two years, sales should hold up as well, he said.

“We didn’t need a strong economy to get margins high,” Doll said. “Why do we need a strong one to keep them high?”

Here to Stay

High margins are here to stay, said Allen Sinai, chief economist at Decision Economics Inc. in New York.

Cloud computing, which provides access to software and computing tasks remotely over the Internet, rather than through a company’s own system, is just the latest tool corporations can use to keep costs in check, Sinai said.

“This is the way of the world now,” he said in a telephone interview.

“CEOs are paid to maximize profits.”

Cisco Systems Inc. (CSCO) CEO John Chambers said in a Nov. 10 interview with Betty Liu on Bloomberg Television’s “In The Loop,” “We are all over our gross margins, the whole company is focused on that.”

Gross margin, Cisco’s fraction of revenue left after subtracting the cost of goods sold, fell to 61 percent in the third quarter from 63 percent a year earlier, even after the San Jose, California-based company eliminated jobs and scaled back operating expenses.

2012 Estimates

Analysts have reduced their estimates for 2012 sales growth among S&P 500 Index companies, after the biggest annual sales increase since at least 1993 this year.

Revenue for the firms in the index will climb 3.9 percent in 2012, based on the average estimate of more than 10,000 forecasts compiled by Bloomberg earlier this month. Sales will surge 11 percent in 2011, according to the analysts.

Grantham said of profit margins, “They do not seem to be connected to economic realty.”

–Bloomberg News–

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Community News (V12-I15)

April 8, 2010 by · Leave a Comment 

Old mosque to site once again hear the azan

TOLEDO,OH–A historic building in Toledo which once served as the first mosque in the city and the ninth in the United States will once again hear the call of azan. The former Toledo Islamic Building was first dedicated as a mosque in 1954 but was shut down after the congregation moved to to Perrysburg Township in 1983, reports the Toledo Blade.

The building was vacant for many years and had earlier been used as a youth treatment center and a government office.

The local Muslim community hadn’t forgotten the importance of the building and the Toledo Masjid al-Islam recently bought it for $60,000. The 3800 square foot facility is now being renovated.

End of Oregon’s Ban on Hijab Welcomed

PORTLAND,OR–The Council on American-Islamic Relations (CAIR) has praised the signing into law of legislation that will end Oregon’s ban on teachers wearing Islamic head scarves or the religious attire of other faiths.

The lifting of the 87-year-long ban will go into effect after the 2010-11 school year and follows a February vote of 51-8 in the Oregon House of Representatives. To become law, the bill had to be signed by Governor Ted Kulongoski.

“This change in the law protects the rights of educators of all faiths,” said CAIR national communications director Ibrahim Hooper.

He added that his organization has consistently defended the right of Americans of all faiths to wear religious attire in the workplace, in schools, in courtrooms and as customers in public venues such as banks.

Currently only Nebraska and Pennsylvania prohibit their teachers from wearing religious clothing at work, and CAIR has called on their legislators to “follow Oregon’s example of respect for religious freedom and diversity.”

In addition to the Muslim organization, a number of interfaith groups, civil rights groups and bar association organizations, including The Becket Fund for Religious Liberty, have joined in the appeal.

Usury Free Conference Held in Toronto

TORONTO,CANADA-A two day conference on exploring usury free financial products was held in Toronto last week. Organized by the Usury Free Association of North America it attracted a large number of scholars from across North America and abroad.

Canada’s first Shariah-compliant credit card, the iFreedom Plus MasterCard, was also launched at the conference.

A recent report for Canada’s national housing agency said Islamic mortgages and other Shariah-compliant financial products would pose no problems with civil law.
Representatives from mainstream banks, politicians, and government officials also attended the conference to learn about Islamic finance.

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Conservative Christians Pray for God to Kill President Obama

November 25, 2009 by · 1 Comment 

By The Cleveland Leader (adapted by TMO)

prayforobabma t shirt That’s not very Christian-like, now is it? Nevertheless, a few religious zealots have taken their dislike of U.S. President Barack Obama to a new level – bumper stickers and t-shirts which command viewers to pray for the president’s death. Of course they don’t come right out and print “Pray for our President to die”. Instead, the perpetrators take a far more cowardly approach, utilizing the slogan “Pray for Obama – Psalm 109:8”.

If you take the time to look up Psalm 109:8, you’ll notice right off that it is not a happy and cheerful passage. Psalm 109 is better known as “A Cry for Vengeance”. Psalm 109:8 specifically reads:

“Let his days be few; and let another take his office.”

While that verse does not specifically mention death or harm to the leader in question, read on and you will see that Psalm 109 has a far more sinister message.

6 Appoint [a] an evil man [b] to oppose him; let an accuser [c] stand at his right hand.

7 When he is tried, let him be found guilty, and may his prayers condemn him.

8 May his days be few; may another take his place of leadership.

9 May his children be fatherless and his wife a widow.

10 May his children be wandering beggars; may they be driven [d] from their ruined homes.

11 May a creditor seize all he has; may strangers plunder the fruits of his labor.

12 May no one extend kindness to him or take pity on his fatherless children.

13 May his descendants be cut off, their names blotted out from the next generation.

14 May the iniquity of his fathers be remembered before the LORD; may the sin of his mother never be blotted out.

In other words, referencing this passage when speaking about President Obama is secret Christian code for “Kill the President.” As sad or as crazy as it may be, this veiled death wish is not the first to have arisen since Barack Obama took office in January. Other examples include the classified ad that was placed in a Pennsylvania newspaper hoping that Obama follows in “the footsteps of Lincoln, Garfield, McKinley and Kennedy” – all of whom were assassinated. Then there’s also the gun totating teabagger from New Hampshire who waved a sign saying that it is time to “water the tree of liberty”, making reference to Thomas Jefferson’s reminder that the tree of liberty must from time to time be watered with the “blood of tyrants and patriots.”

If you too would like to be added to the Secret Service’s watchlist, have your phone calls tapped and emails read, by all means, buy one of the Psalm t-shirts or bumper stickers. It’s still a free country afterall. But don’t say we didn’t warn you.

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TMO Editor’s note:  This psalm is not directed at cruel leaders, but rather at cruel men who oppress pious men, and against people who curse others more than they bless them.  Therefore perhaps this psalm is more a friend to Obama than it is a friend to the extremists who attack him despite his overtures towards them.  Following are some later verses to illustrate this:

17 He loved to pronounce a curse—
       may it [e] come on him;
       he found no pleasure in blessing—
       may it be [f] far from him.

18 He wore cursing as his garment;
       it entered into his body like water,
       into his bones like oil.

19 May it be like a cloak wrapped about him,
       like a belt tied forever around him.

20 May this be the LORD’s payment to my accusers,
       to those who speak evil of me.

Wood Burning Stoves

October 22, 2009 by · Leave a Comment 

tufail

As early as Roman times stoves made of clay, tile, or earthenware were in use in central and N Europe. Early Swiss stoves of clay or brick, without chimneys, were built against the outer house wall, with an opening to the outside through which they were fueled and through which the smoke could escape. Scarcity of fuel made an economical heat-retaining device necessary, and these primitive stoves, built of clay, brick, tile, or plastered masonry, became common in the Scandinavian countries, Holland, Germany, and N France. Some exquisitely colored and glazed tile stoves, dating from the 16th and 17th cent., show traces of Moorish influence. In Russia large brick stoves formed a partition between two rooms. Because of the very long flue, which wound back and forth inside the structure, these could be heated for some hours with a small amount of light fuel.

The Franklin stove, invented in 1743 and used for heating, was the lineal descendant of the fireplace, being at first only a portable down-draft iron fireplace that could be set into, or before, the chimney.

It was soon elaborated into what was known as the Pennsylvania fireplace, with a grate and sliding doors. In common use for a period after the Revolution, it was followed by a variety of heaters burning wood and coal. The base burner, or magazine coal heater, was widely used before the general adoption of central heating.

Heating devices that we would call stoves had long been in existence, going back to Roman times. However, the stove as the chief cooking device, taking the place of the fireplace, dates only to around the mid-19th century with the widespread use of wood-burning or coal-burning cooking stoves stove, device used for heating or for cooking food. The stove was long regarded as a cooking device supplementary to the fireplace, near which it stood; its stovepipe led into the fireplace chimney. It was not until about the middle of the 19th cent., when the coal-burning range with removable lids came into general use, that the fireplace was finally supplanted as the chief cooking agency.

A cast-iron stove made in China before A.D. 200 has been found, but it was not until late in the 15th cent. that cast-iron stoves were first made in Europe. These consisted of plates that were grooved to fit together in the shape of a box. Probably the earliest of this type were earthenware stoves enclosed in iron castings decorated with biblical scenes and armorial and arabesque designs. They often bore inscriptions in Norse, German, Dutch, French, or sometimes Latin, and some were dated. Many were highly artistic specimens of handicraft. A typical early iron stove is the wall-jamb, or five-plate, stove, which was fueled from an adjoining room.

Dutch, Swedish, and German settlers of the American colonies, especially those of Delaware, Pennsylvania, and New Jersey, brought with them five-plate stoves or molds for casting them. Iron founding began c.1724 in America, and old forges or foundries have left records of five-plate stoves sold in 1728 as Dutch stoves or, less commonly, carved stoves. These continued to be made until Revolutionary times, when they were superseded by the English, or 10-plate, stove, which stood free of the wall and had a draft or fuel door. These 10-plate devices could cook and warm at the same time and replaced, in part, the large masonry baking oven, usually built outside the house.

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Ali-Zaidi Re-appointed to Clarion University

July 2, 2009 by · Leave a Comment 

zaidi Syed R. Ali-Zaidi has been reappointed to the Council of Trustees of Clarion University. The announcement was made by Pennsylvania Governor Edward G. Rendell last week.

He has been appointed to council in 1980, 1985, 1991, 1992, and 2003 as well.

Dr. Ali-Zaidi was a founding member of the Pennsylvania State System of Higher Education Board of Governors, serving from 1984 to 1988 and from 1997 to 2002.  In 1998, Dr. Ali-Zaidi chaired the board’s Task Force on Science and Advanced Technology Education, Workforce Development, and Implementation Research.  In 2001, he established the Syed R. Ali-Zaidi Award for Academic Excellence, which annually recognizes an outstanding State System graduate. Dr. Ali-Zaidi is the recipient of the System’s 2002 Eberly Award for Volunteerism.  He is retired from a 25-year career in research and development with the glass industry.  He has a B.S. in Glass Technology from Sheffield University in England, and a M.Sc. and Ph.D. in Ceramic Engineering, both from The Ohio State University.

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The Truth Is Out There

June 26, 2008 by · Leave a Comment 

By Peter Barber

When Cynthia McKinney speaks the words of Martin Luther King Jr, they resound through the church with some of King’s cadence. “A time comes,” declares the former US congresswoman from Georgia, “when silence is betrayal.” The congregation answers with whoops and calls of “That’s right!” King was talking about America’s war in Vietnam. More than 40 years later, before the packed pews of the Immanuel Presbyterian Church in Los Angeles, McKinney is speaking of the American government’s war on its own people. The shock and awe phase of this conflict, we had been told earlier, began on September 11 2001, when the Bush administration launched attacks on New York and Washington, or at least waved them through.

According to a show of hands that February afternoon, several hundred people in the immaculate church believe this to be true. Some came in T-shirts bearing the words “9/11 was an inside job”. One wore a badge demanding that you “Examine your assumptions”. Quite a few bought the DVDs on sale in the foyer, most of which bore photographs of the Twin Towers spewing smoke. They had all come to hear the message of Architects, Engineers & Scientists for 9/11 Truth, one of the dozens of groups across the US which campaign to persuade us that everything we think we know about 9/11 is wrong.

Last winter, “Investigate 9/11” banners seemed to be popping up all over the place. Bill Clinton was heckled by “truthers” in Denver while campaigning for his wife. Truthers picketed the Academy Awards in LA – despite this year’s winner of the best actress Oscar, Marion Cotillard, reportedly being one of them. But then, she’s French. Literature lovers in that country pushed Thierry Meyssan’s L’Effroyable imposture (The Appalling Fraud) – which asserts that 9/11 was a government plot to justify invading Iraq and Afghanistan and increase military spending – to the top of the bestseller list in 2002.

Country music star Willie Nelson is assuredly not French, but a week or so before the Oscars he described as naive the notion that the “implosion” of the Twin Towers was caused by crashing jets. Meanwhile the European Parliament screened the Italian documentary Zero, in which Gore Vidal, Italian playwright Dario Fo, and Italian MEP Giulietto Chiesa blame the US government, not al-Qaeda, for 9/11. The following month, Japanese MP Yukihisa Fujita raised his own doubts about the official story at a seminar in Sydney. A busy season for the “9/11 Truth” movement.

The events of 9/11 were recorded in many thousands of images, from crisp agency photographs to amateur camcorder footage. Every recorded trail of smoke, every spray of sparks is pored over by an army of sceptics, collectively described as the 9/11 Truth movement. They believe that the key to the mystery is hidden somewhere within the pictures, just as some people think that clues are contained in the Zapruder film which captured the moment of John F. Kennedy’s assassination. Allied against them is a smaller group of rival bloggers who have taken it upon themselves to debunk what they claim are dangerous conspiracy theories.

Gore Vidal, writer
“If there ever was great cause for impeachment, it would be over 9/11”

There is some evidence that the truthers are swaying the rest of us. A New York Times/CBS News poll in 2006 revealed that only 16 per cent of Americans polled believed the Bush administration was telling the truth about 9/11. More than half thought it was “hiding something”. This is not the same as believing the government actually launched the attacks, but a Scripps Howard/Ohio University poll the same year found that more than a third of those questioned suspected that federal officials assisted in the attacks or took no action to stop them so that the US could go to war.

The truthers certainly believe that they are on a roll. The crowd in the Immanuel Presbyterian Church seemed electrified. As the donated sound system pumped out angry rap, a giant video screen showed images of protesters demanding a new investigation into 9/11. The symbols and the language were borrowed from the civil rights struggle, but the truthers are an eclectic group, including anti-Bush, anti-war liberals and anti-government libertarians. A young man in a “Vote Ron Paul” T-shirt scuttled through the hall, filming us as we took our seats on wooden pews.

First up was Richard Gage, a San Francisco architect who founded Architects, Engineers & Scientists for 9/11 Truth, which now claims to have 379 professional members. Gage told us that the collapse of the Twin Towers could not have been due merely to gravity, the impact of the airliners and the resulting jet fuel fires – which would not have been hot enough to weaken the steel sufficiently. Behind him on the video screen was the south tower of the World Trade Center. Smoke poured from its upper floors. A respectful silence fell over the audience, followed by gasps as the building appeared to dissolve before our eyes.
What happened to building 7?

To the truthers, the third building in the World Trade Center complex to collapse on September 11 is evidence that the mainstream media is in on the plot
While I have seen this footage countless times, it seems that I had clearly never understood what I was seeing. The destruction of the Twin Towers, along with the collapse of the nearby 47-storey World Trade Center 7 building, had all the hallmarks of controlled demolition, according to Gage. They all came straight down, almost at the speed of a free-falling object, right into their own footprints. Steel-framed buildings had never collapsed because of fires before. On this day three did, one of which, “Building 7”, was not even hit by an aircraft.

Gage, who had worked himself into a fever, exhorted the audience to stand up and be counted: “A country is at stake.” Then he welcomed on to the stage the star of the evening, Steven Jones. A softly spoken physicist, Jones is the movement’s designated martyr and seems to promise what the truthers so desperately need: scientific credibility.

Jones entered into truther lore in 2006 when he was put into early retirement by BYU in Utah after giving public lectures on his paper “Why indeed did the WTC buildings collapse?”, which he published on the website of the university’s physics department. Jones contended that the towers were demolished by cutter charges which had been placed throughout the buildings, probably involving an incendiary called thermite. BYU’s College of Physical and Mathematical Sciences and the structural engineering faculty, followed by the university administration, disowned him.

Still, Jones is no fool. He has published more than 50 scholarly papers, including pieces on cold nuclear fusion in journals such as Scientific American and Nature. He invented a cooker which uses solar power and has donated models to poor families in the developing world. Jones tells us he believes laboratory testing of dust from Ground Zero will reveal residue from a thermite reaction.

As soon as the seminar is over, Jones is mobbed by people asking him to pose for photos and offering their own views on the 9/11 plot, as well as others, some extremely outlandish. This is the world Jones now inhabits–it seems a long way from a Utah physics department. I ask him later by phone if he has any regrets about publishing that fateful paper: “No regrets. I’ve thought of Galileo a few times. He got a little worse than I did, I suppose.”

Jones is typical of many 9/11 researchers in that the subject has taken over his professional life. Down the coast in Santa Barbara is another of the movement’s luminaries. On the beach at Isla Vista, one of the most expensive real-estate spots in the US, lives David Ray Griffin, a former theology professor. As his dogs scratch excitedly on the sliding door, Griffin explains that America’s primary faith is not Christianity, but nationalism. “Other countries do really terrible things. Our leaders never would. And that [belief] has been the biggest impediment to getting people to look at the evidence, because they just know a priori that that is ridiculous.”

Michael Meacher, UK politician
“It is clear the US authorities did little or nothing to pre-empt the events of 9/11”

Griffin now thinks the evidence to the contrary is incontrovertible. Until 2002, he had busied himself far from the rancour of public controversy writing rather obscure philosophical books and teaching philosophy of religion at the Claremont School of Theology. But the course of his research changed abruptly when he heard a visiting British theologian question the official account of 9/11. Two years later, Griffin’s The New Pearl Harbor, with a foreword by British MP Michael Meacher, became a touchstone in the 9/11 Truth movement. He has since written others, including one detailing the “omissions and distortions” of the 9/11 Commission, the report of which fits the definition of “conspiracy theory” neatly, he says. “They started with the conclusion that al-Qaeda did it and didn’t even consider the alternative that it was an inside job.”

Griffin was a script consultant on Loose Change Final Cut, part of the internet phenomenon that set off the current explosion of low-budget 9/11 DVDs. The previous version was viewed more than 10 million times on Google Video, according to Vanity Fair. In 2002, armed only with a laptop and off-the-shelf video production software, Dylan Avery, an 18-year-old resident of Oneonta, New York, set about making a fictional film about discovering, with his friends, that 9/11 was orchestrated by the US government. At some point in his research, Avery had a “Dude, this shit is real!” moment and Loose Change entered the realm of agit-prop documentary. Final Cut makes a bold new allegation: the Twin Towers were packed with deadly asbestos, which would have cost billions to clean up. “If you bring down the buildings,” says Griffin, “not only do you not have to pay … to clean them up, somebody is going to make billions of dollars on the insurance.”

September 11 as insurance job? This seems to expand the circle of conspirators somewhat. Griffin ventures another possible explanation: the psychological impact. “You had these massive explosions, which rather looked like a nuclear blast,” he says. “That’s always been the deep fear of America. In the run-up to the Iraq war, that’s what they were talking about – we cannot wait until we have a nuclear cloud.”

Griffin offers one further speculation, this time on a question which is controversial even among 9/11 sceptics: what hit the Pentagon? Thierry Meyssan was the first to claim that it was not Flight 77 – an American Airlines 757 carrying 64 passengers – but a cruise missile that hit the west wall of the Pentagon at 9.37am on September 11. Websites have followed suit, pointing to the apparent lack of plane debris on the Pentagon lawn and the fact that the hole left in the outer ring of the building looks too small to accommodate the wingspan of a 757. Retired US Air Force captain Russ Wittenberg from Pilots for 9/11 Truth asserted that no inexperienced pilot could have performed the manoeuvre the 9/11 Commission concluded that al-Qaeda conspirator Hani Hanjour pulled off that morning: a 330° turn, 2,200ft descent, a full-throttle dive and then a 530 miles per hour plunge at ground level into the Pentagon. Call it “the magic plane theory”: doubters believe that, just as the bullet that killed Kennedy appeared to defy the laws of physics, so the plane that struck the Pentagon was like no other in existence.

And just as Nasa was forced to counter claims the moon landings were faked, these and other claims have forced the US State Department into the debunking business. Its Identifying Misinformation website states that debris from Flight 77 was indeed recovered, as were the remains of passengers and crew. Many witnesses saw the plane come in, and a number of passengers made phone calls to their loved ones telling them their flight had been hijacked.
There is also another obvious problem: if a missile hit the Pentagon, what happened to Flight 77? “There was a rumour that an airliner had gone down on the Ohio/Kentucky border and that was taken very seriously early on by the Federal Aviation Authority,” says Griffin. It later rejected the story. But Griffin claims the only evidence that Flight 77 was aloft after that was an alleged phone call from Barbara Olsen to Ted Olsen, the solicitor-general of the United States.
So how does he explain that phone call? Ted Olsen is a Bush administration insider, he says. Another possible answer, though, is “voice-morphing technology”.

This would also explain the flurry of phone calls from United Airlines Flight 93, which, as the official story has it, crashed in a Pennsylvania field after passengers revolted against their hijackers.

Glossary of doubt:

No-planers
People who claim that it wasn’t an aircraft, but a missile, that hit the Pentagon on September 11 2001. Some have taken it a step further and argued that no aircraft hit the twin towers, either. What the world saw that day, these sceptics argue, was either video trickery or cruise missiles disguised through image technology as aircraft.

Mihops
Truthers who believe the US government “Made it happen on purpose”, “it” being the destruction of September 11.

Lihops
A more moderate strain of truther who believe the government “Let it happen on purpose”.

Scholars for 9/11 Truth
Started by James Fetzer, the group advocates looking at all possible explanations of what happened on September 11, no matter how improbable.

Scholars for 9/11 Truth and Justice

The more moderate splinter group of Scholars for 9/11 Truth, led by Steven Jones. Endorses an “evidence-based approach” to questioning the 9/11 story.

It’s not just supporters of the official story who roll their eyes at these claims. They put Griffin in the camp of the “no-planers”, at least as far as the attack on the Pentagon is concerned. The no-planers enrage the rest of the truthers, who accuse them of sabotaging the credibility of the movement. The claim that no plane hit the Pentagon is a Trojan horse, they say – disinformation that serves the conspirators. Some – such as former MI5 whistleblower David Shayler – have even asserted that no planes, but missiles disguised by “cloaking technology”, hit the Twin Towers. Shayler, incidentally, proclaimed himself the Messiah last year.

If the 9/11 truth movement is fighting a kind of asymmetric war against official sources of knowledge, it is also battling itself. As the movement morphs into an international activist group, it recognises that if it is to convince middle Americans, it must distance itself from its exotic fringe. Once, it was the Mihops versus the Lihops. These factions, who sound like warring species from an H.G. Wells story, are those who believe the government Made It Happen On Purpose and those who think it Let It Happen On Purpose. The Mihops are in the ascendancy.

The genesis of all this can be traced back to a schism that followed the first real attempt to bring scholarly credibility to the 9/11 sceptics. In 2005, Steven Jones was invited to form a group called Scholars for 9/11 Truth by James Fetzer, a professor in the philosophy department at the University of Minnesota and the author of some 20 books on the philosophy of science and artificial intelligence. Fetzer teaches critical thinking, and is nothing if not critical. He has been campaigning for more than a decade to prove that the Zapruder film is a hoax perpetuated by the same government intelligence agencies that orchestrated JFK’s assassination.

But within a year, Jones had written to all members of Scholars announcing that he and others no longer wanted to be associated with Fetzer, who was, in the rebels’ opinion, holding them up to ridicule. Fetzer had backed a theory by Judy Wood, a former assistant professor in mechanical engineering at Clemson University, proposing that the Twin Towers were brought down by a “directed energy” weapon developed as part of the US government’s Star Wars programme. It prompted a stampede to a new group, Scholars for 9/11 Truth & Justice, headed by Jones. Confusing the two groups would be like mistaking Monty Python’s Judean People’s Front for the People’s Front of Judea: this was a major doctrinal split.

Fetzer’s view is that any serious inquiry into what happened on 9/11 should look at all possibilities. Supporters of the directed energy hypothesis keep popping up at 9/11 Truth lectures to heckle what Python fans might call the “splittist” thermite theorists. Among the advocates of the Star Wars theory is Morgan Reynolds, perhaps the first prominent US government official to claim that 9/11 was an inside job. At the time of the attacks, Reynolds was chief economist at the US Department of Labor.

Some Star Wars supporters, in turn, accuse proponents of the thermite hypothesis of being government shills. One, on CheckTheEvidence.com, alleges that Jones’s public denunciation of Star Wars theories is actually a Trojan horse; he notes that Jones once worked at Los Alamos, where directed energy weapons are researched. This line of conjecture also entangles Norman Mineta, US transportation secretary on September 11 2001. Mineta was the man who grounded all civilian aircraft on that morning. But he was also once vice-president of Lockheed Martin, a founding member of the Directed Energy Professional Society … In this outer reach of the blogosphere, no one is ever more than six degrees of separation from the heart of the conspiracy.

Jones did, in fact, do post-doctoral research at the Los Alamos Meson Physics Facility for the University of Wyoming, but he says it was peaceful and non-weapons-related. He says the more out-there theories, including those of the no-planers, are harming the movement. “First, they discourage others who are trying to do serious work, and they tend to be quite vocal about their heckling,” he says. “More serious is that when we’re really trying to look at an evidence-based approach, we get lumped in with these people and then dismissed as a whole.”

Two days before Jones’s lecture in LA, his erstwhile colleague was taking his own campaign on the road on the other side of the country. After addressing Student Scholars for 9/11 Truth in New Hampshire, Fetzer was off to that seat of academic respectability, Yale University. To prepare for our meeting, I watched a DVD of a 9/11 symposium he held in his new hometown of Madison, Wisconsin last year. The star of this show was Alfred Lambremont Webre, a judge on former Malaysian prime minister Mahathir Mohamad’s alternative international War Crimes Tribunal in Kuala Lumpur and co-author of the Space Preservation Treaty. He delivers what might be the most momentous opening line in the history of town hall seminars. “Fellow Citizens… 9/11 was a false flag operation by an international war crimes racketeering organisation to provide a pretext to engage in a genocidal and ecocidal depleted uranium bombing of central Asia, Afghanistan and Iraq in order to secure vast oil and uranium reserves; to roll out a terror-based national security state system worldwide and … to implement the final stages of a world depopulation policy.” There are two more “false flag” operations in the pipeline, he says. The first is the war against asteroids, the second the “war against the evil aliens”.

Hearing this, you either experience the thrill of revelation or the sinking feeling that the person you are listening to is having some kind of breakdown. Within 30 minutes, Webre has folded into the 9/11 plot the Skull & Bones society at Yale University – or the “Brotherhood of Death”, as he calls it – neocon think-thank the Council on Foreign Relations, the Rothschilds, the Queen and the City of London. I wondered how all these conspiracies could be maintained without the whole conceit unravelling.

The answer, of course, is that there is only one conspiracy. Pearl Harbour, the moon landing, JFK, 9/11, the Illuminati, the Black Helicopters, Skull & Bones, chemtrails: all faces of the same demon. The plot goes all the way to the top, and all the way back in time. You could come to believe that it involves everyone except yourself – at which point it’s all over for you. And as I listened, I just waited for him to say the Word. And, inevitably, Webre brought it all back to the “international neo-Zionist organisation”.

I asked Fetzer about this as we sat in a cafe across from Yale, home of the Brotherhood of Death: how did he keep his scholars on message? “It’s obvious to me that you have to consider all the possible alternatives,” he says. “You can’t exclude any, lest, as you proceed in your investigation and eliminate hypotheses, you eliminate the true hypothesis because you’ve never allowed it to be considered.”

Fetzer’s talk later that night does not go well. A Yale student had promoted the lecture on Facebook Events, but fellow students had apparently been unwilling to add their names, which anyone can see, perhaps for fear of ridicule. Only six show up. When it becomes clear that Fetzer is implicating some kind of Star Wars weapon, the two next to me begin scrolling distractedly through their mobile phone messages. Within 10 minutes, they have left.

Lewis Lapham, journalist
“Americans are very good at dreaming up these scenarios”

The conclusion of the 9/11 Commission – the official story – is that the 2001 attacks got through because those charged with protecting America had not truly conceived of the threat: in its author’s evocative phrase, they had suffered a “failure of imagination”. After trawling the internet in search of 9/11 Truth, it seems to me the American imagination is strong. “Americans are very good at dreaming up these scenarios,” says Lewis Lapham, the former Harper’s magazine editor and a prominent critic of the Bush administration post-September 11. “We are open to all kinds of magical theories,” he says, citing the continuing fascination with the assassination of JFK. “We are also good at creating religions.” Lapham thinks the theory that 9/11 was an inside job follows in this long tradition, but also reflects cynicism among Americans towards their government. He does not accept that the Bush administration planned 9/11 or even allowed it to happen. Nonetheless, he thinks a new investigation is warranted. In 2004, Harper’s ran a trenchant piece describing the 9/11 Commission as a “whitewash” and a “cheat and a fraud” for downplaying evidence that warnings of the al-Qaeda threat were ignored. Such flaws allowed space for alternative theories to develop, Lapham says.

 

In this, there are shades of the Warren Commission into the assassination of President Kennedy, which served merely to deepen popular distrust. But if we have seen the likes of the 9/11 Truth movement before, it also represents something new. “With the Kennedy assassination, pretty soon after the events themselves there were fairly significant questions being raised by people of all types and stripes about what actually happened,” says Mark Fenster, a University of Florida law professor and author of Conspiracy Theories: Secrecy and Power in American Culture. “But whereas then it was a generalised, amorphous kind of response, the amount of organisation – politically and through alternative media – is far more striking now than it was back then.”

Fenster thinks that the 9/11 Truth movement is in some ways a typical American response to a surprising and traumatic event. But it also represents a step change in its use of telecommunications technology. “One of the interesting things, particularly in the beginning of this movement, was the extent to which there were a lot of local groups in different cities organising protests … and they could co-ordinate and create a national and international movement,” he says. “Whether that translates into more people actually believing in the conspiracy theory is a completely different question.”

Fenster believes the few published polls on the subject, rather than showing any real depth of suspicion about 9/11, demonstrate declining trust in the Bush administration generally. The author of one of the most rigorous of the websites that aim to debunk the conspiracy theories, Debunking911.com, notes that the most recent Zogby poll on attitudes towards 9/11 found only 4.6 per cent of Americans believe the Bush administration blew up the Twin Towers. “If you follow the website hits, you’ll find that since Debunking911 came into existence, conspiracy sites have been losing readership,” he says via e-mail. “I think all they needed was someone to fill in the parts conspiracy theorists left out of the conspiracy story and their numbers begin to shrink.”

Perhaps the 9/11 Truth movement is what one would expect in the dying days of an unpopular administration, and with no end in sight to a costly war. Whether it can maintain momentum when that government leaves office next year is anyone’s guess. In the meantime, some on the left accuse it of letting the leaders they so vehemently distrust off the hook. “They make a mockery of [civil rights] causes by associating their nonsense with genuinely important issues, and by diverting a large number of people who should know better into a unicorn hunt,” says British writer and activist George Monbiot. Monbiot is regularly heckled by 9/11 truthers at public events after accusing them in The Guardian of undermining genuine political opposition. His first column on the truthers prompted a near-record number of postings on the paper’s Comment Is Free website – 777 – many accusing him of being part of the conspiracy.

“It’s very interesting to see,” he says, “particularly in the United States, how the anti-war movement has been largely co-opted in many places by the 9/11 Truth movement. And we desperately need an active anti-war movement, because there is a lot of reckoning to be done.”

Peter Barber is the FT’s deputy comment editor

The Dubious ‘Popular Vote’

May 4, 2008 by · Leave a Comment 

Larry J Sabato, professor of politics at the University of Virginia, takes a close look at Hillary Clinton’s arguments that she deserves the Democratic Party’s presidential nomination.

Courtesy Prof. Larry Sabato, UVA

Give Hillary Clinton credit. She has shown toughness, stamina, and persistence in one of the longest presidential campaigns in American history.

If super-delegates back Hillary Clinton, will they alienate loyal black voters?

She has fought hard and come back time and again in the 2008 primary season, defying the pundits who insisted on writing her political obituary prematurely. She has held the charismatic phenomenon named Barack Obama almost to a draw in the fight for votes and delegates in the Democratic party’s nominating battle.

As some of Obama’s weaknesses become more apparent, her arguments are drawing new attention, and at least a few Democratic leaders are considering them.

No-one is likely to agree on exactly what the popular vote is, or how it should be counted – the notion ought to be shelved

All that being true, it’s still very unlikely she will overcome Obama’s lead. With just seven states (plus Puerto Rico and Guam) remaining on the primary schedule, Obama is ahead by close to 160 elected (or pledged) delegates and, overall, by about 130 delegates, once the super-delegates are included.

This may not sound like many in a convention that will host more than 4,000 delegates, but party rules make it difficult to gain a sizeable number of delegates quickly. (Incredibly, you can win a big state and net a mere handful of delegates. The Democrats have developed a system so fair it is unfair.)

Changing the math

Here’s the basic dilemma for Hillary Clinton: How can she convince senior Democrats to turn their backs on the most loyal party constituency, African-Americans, who regularly give 90% of their votes to party candidates?

For the first time, one of their own has a real chance to become the presidential nominee and the occupant of the White House. The anger in the black community would be palpable and long-lasting if Obama is sent packing.

Democratic women appear unlikely to respond in the same fashion if the first serious woman candidate is turned aside.

Worry among super-delegates about Obama’s viability in the fall is not enough. The only conceivable scenarios that might change the present nominating math are:

a.. a campaign-ending scandal or gaffe by Obama
b.. a highly improbable series of victories by Hillary Clinton in primaries she is expected to lose (such as North Carolina and Oregon)
c.. a raft of polls showing Clinton defeating McCain handily while Obama is losing to McCain decisively (most current polls show relatively little difference in the Obama-McCain and Clinton-McCain national match-ups, though the prospective contests in individual states vary considerably)

How can it be that Clinton is so unlikely to prevail, especially close on the heels of her solid, impressive 9.2% victory in Pennsylvania on 22 April?

Why wouldn’t that victory generate significant momentum for Clinton, just at the moment when the remaining super-delegates prepare to make their decisive choice? Didn’t her 214,000-vote plurality in the Keystone State vault her into the popular-vote lead nationally, as she claimed?

The size and breadth of Clinton’s triumph in Pennsylvania certainly demonstrated the emerging limitations of Obama’s appeal, not least the disaffection of many whites, blue-collar workers, and low-income Democrats.

But it almost certainly will be Obama, not Clinton, who is on the November ballot under the Democratic label.

Michigan and Florida

Take Clinton’s claim about the popular vote. On the morning after Pennsylvania, she insisted that she had taken a narrow popular-vote lead, about 15.12 million to nearly 15 million for Obama. But this is classic “new math”, where the numerical answer obtained is often less important than the agile mental gymnastics used to get there.

Clinton’s total relies on two very dubious assumptions. First, one must incorporate the primary results from Florida and Michigan, two January contests excluded by the Democratic National Committee for violating the scheduling rules set by the party. This is no minor sum of votes – 2,344,318, to be exact.

Barack Obama has regularly done better than Hillary Clinton in caucuses

But no even-handed person would contend that Michigan, whose primary occurred on 15 January, should be part of the equation. Barack Obama’s name was not even on the ballot.

The vote total cited by Clinton conveniently excludes three caucus states won by Obama, in Iowa, Maine, and Washington. (Nevada, won by Clinton, is also left out of the tally.) No-one knows the exact number of votes cast for each candidate in these four states since the state parties, by tradition, refuse to release the data.

Eliminating Michigan, the Obama-Clinton match-up shows an Obama edge of a couple hundred thousand votes. Striking Florida brings it to about a half-million-vote Obama plurality. And the unknown caucus results would add at least 100,000 to his lead.

Comparing like with unlike

This discussion of caucus states raises another interesting subject. How can one compare primary and caucus states at all? By their very nature, primaries attract a large electorate in most states. A caucus is a very different political animal, requiring hours of commitment from each participating individual.

The concept of the national popular vote is borrowed from the general election, when it makes more sense

The caucus also is inflexible, beginning at a set, mandatory time. There are no absentee ballots and no excuses for troops abroad, medical personnel who must attend to the sick, or elderly individuals who cannot brave a lengthy, stressful outing. Caucus participation is usually just a fraction of the turnout that would have occurred had the state held a primary.

Therefore, the national vote total is heavily skewed to the states holding primaries, and this total mixes primary apples and caucus oranges in an unenlightening way.

The concept of the national popular vote is borrowed from the general election, when it makes more sense. However, in the nominating season the idea is dubious, and it is not a particularly useful measure for the undecided super-delegates. Nevertheless, it has been bandied about so much by the campaigns and news media that it has now become an inescapable yardstick of electoral validity for Clinton and Obama.

Key states

Other questions about the vote mathematics are also compelling. Should the voting results in November’s likely competitive states-the ones we often call purple – a mixture of Republican red and Democratic blue – be given special weight in the popular-vote formula? After all, the purpose of the nominating contest is to pick a candidate who can win the general election.

Both Clinton and Obama have won states critically important to a Democratic majority in November

Hillary Clinton has pushed this interpretation, but only up to a point. She wants her wins in competitive, significant states such as Ohio and Pennsylvania to be determinants for the super-delegates, yet she ignores Barack Obama’s victories in medium-sized toss-up states such as Colorado and Virginia.

With apologies to George Orwell, all states are equal, but some are more equal than others.

Overall, though, this game is pointless since both Clinton and Obama have won states critically important to a Democratic electoral college majority in November.

Different voters

The flaw in the state-based argument is also fundamental. Party primary electorates do not resemble the November electorates in the vast majority of states, so primary results tell us surprisingly little in most states about how a party presidential nominee will fare in the general election.
Think of it this way – perhaps 35 million Americans will have voted in all the Democratic primaries and caucuses by June, but the November voter turnout could reach 135 million people-and those extra 100 million voters are different, both in ideological and partisan terms, than the 35 million early-birds.

US territories

An ancillary issue is whether the U.S. territories, none of which has electoral college votes in November, should even be included in the party nominating system.

In an extremely close race, their delegates could decide the outcome of a presidential nomination, and potentially the Presidency itself. Should Puerto Rico, voting on 1 June, have more delegates than half the American states, as the Democrats have assigned?

Neither Clinton nor Obama will raise this concern, of course, but unbiased observers ought to do so. In most conventions, the territorial votes are a harmless matter, but every now and then, the unintended consequences of their inclusion could become enormous.

The long and short of the debate over the popular vote is this – no-one is likely to agree on exactly what it is, or how it should be counted.

There are considerable flaws inherent in the concept. The popular-vote notion ought to be shelved – but naturally, in this endlessly contentious campaign season, it will not be.

Professor Larry J. Sabato is director of the University of Virginia’s Center for Politics and author of A More Perfect Constitution.

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