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The Federal Reserve chairman has appeared before the Financial Crisis Inquiry Commission in Washington

• Lehman boss Dick Fuld was defiant in the hotseat yesterday

The man at the helm of America’s central bank, Ben Bernanke, will spend the morning under examination over his actions to steady the US economy at the height of the global financial crisis back in September 2008.

Starting at 9am ET (2pm UK), Bernanke will be questioned by a bipartisan panel chaired by Phil Angelides, a former Democratic state treasurer of California, as part of a series of evidentiary sessions entitled “too big to fail: expectations and impact of extraordinary government intervention and the role of systemic risk in the financial crisis”.

Following up from yesterday’s appearance by the former Lehman Brothers boss Dick Fuld, the panel are sure to ask Bernanke about the US government’s controversial path in allowing Lehman to file for bankruptcy – despite putting together rescue packages for other banks including Bears Stearns, Wachovia and Washington Mutual.

A cerebral figure, Bernanke has a habit of speaking in tortuously lengthy sentences. But I’ll be following and interpreting his remarks here live, to see what new insights can be gained about the worst financial crisis since the Great Depression of the 1930s.

2.01pm: Bernanke’s taking his seat, pouring himself a glass of water and the proceedings are about to start. Phil Angelides is gavelling us in. Bang, bang.

2.04pm: The Federal Reserve boss has 10 minutes to make some opening remarks.

He kicks off immediately by talking about big banks: “So called too big to fail financial institutions were both a source, although by no means the only source, of the financial crisis, and an impediment to resolving it.”

The most prominent factor, he recalled, in precipitating the crisis was the prospect of big losses in subprime mortgages – but although mortgage losses were large, they weren’t large enough to account for the entire crisis. The effect was greatly increased by existing weaknesses in the system, plus gaps in the government’s “tool box”.

2.07pm: Financial institutions, says Bernanke, were too reliant on unstable short-term funding – the “shadow banking system” – which made them vulnerable to classic “run on the bank” situations.

Poor risk management, excessive leverage of households and firms, misuse of certain financial instruments all played a part. Plus, in the public sector, gaps in the statutory framework and “flaws in the performance of regulators and supervisors” both in the US and elsewhere.

Bernanke says there weren’t enough oversight powers over the shadow banking system – including big Wall Street broker-dealerships (a clear reference to Lehman Brothers and Bear Stearns). He says bank capital and liquidity standards were insufficiently stringent.

2.09pm: In the longer term, the existence of “too big to fail” firms creates severe moral hazard problems – and an uneven playing field between large firms and their smaller competitors.

In other words, Bernanke is saying you can’t have a situation where big banks take risks in the knowledge that, at the 11th hour, they will always be bailed out by the government in extremis. That’s not fair on smaller financial institutions which can’t rely on such a backstop.

2.10pm: We need a framework providing an appropriate mix of “prudence, risk-taking and innovation” in the financial system, Bernanke concludes in his opening remarks.

2.13pm: The panel’s Democratic chairman, Phil Angelides, kicks off the questioning. Angelides is a clever fellow and he takes his role seriously – his questions tend to probe matters of detail, rather than to elicit grand expressions of emotion from his witnesses.

He’s waffling on for rather a long time. But the essence of his question is – “was this a substantial miss” for regulators? Did the Fed fail to see weaknesses in the system in the run-up to the crisis?

2.15pm: Bernanke says “too big to fail” institutions were popping up not only in the US but globally – as financial supermarkets grew – classic examples being Citigroup or firms in the UK such as RBS. He says there wasn’t sufficient anticipation of the systemic risk of these huge institutions.

“There was a combination of the structure of the system, the underlying trends towards greater and more complex firms, together with some mistakes and shortcomings on the part of regulators.”

2.18pm: A blunt point, now, from Bernanke on the international race towards deregulation – he says Wall Street and the City engaged in a damaging race to offer the lightest touch in financial oversight.

“Before the crisis, one of our main concerns was London and Tokyo – were they taking away financial industry from the US and was excessive regulation doing that?”

2.20pm: Bernanke’s back on the sheer size of banks and on the need for a mechanism to wind down failed institutions in an orderly way: “The most important lesson of this crisis is we have to end ‘too big to fail’.”

2.24pm: Now we’re beginning to zero in on the failure of Lehman Brothers. Reviving a topic of discussion from yesterday’s hearing with Dick Fuld, panel chairman Phil Angelides wants to know whether it was an active policy decision by the US authorities to allow Lehman to fail – or, presumably, just a cock-up.

Angelides isn’t buying previous claims that the Fed didn’t have the legal authority to backstop Lehman’s liabilities. What were the factors the Fed was weighing up?

2.29pm: The Federal Reserve boss says before he took the job, he was an academic and that he studied the Great Depression. He believed “deeply” that a failure of Lehman would be catastrophic:

“I never, at any time, wavered in my view that we should do absolutely everything possible to prevent the failure of Lehman.”

But on the fateful Sunday in September 2008 when Lehman failed, Bernanke says he was told there was a run on the bank – and that Lehman fundamentally didn’t have enough capital.

“Lehman did not have enough capital to allow the Fed to lend it enough to meet that run. Therefore, if we lent them money, all that would happen would be the run would succeed because it wouldn’t be able to meet those demands, the firm would fail and not only would we be unsuccessful but we would have saddled the taxpayer with tens of billions of dollars of losses.”

In other words, the patient was dead on the operating table and no amount of blood infusion would bring it back to life.

He bluntly adds: “Any attempt to lend to Lehman within the law would be futile and would only result in loss of cash.”

Its going concern value, he adds, was melting away as customers deserted.

2.32pm: Legally speaking, Bernanke says, the Fed was not allowed to lend without a reasonable expectation of repayment. This was before the days of bail-out funds and “Tarp” investments. The Fed chief says Lehman simply didn’t have enough collateral to backstop any injection of

“It wasn’t just a failure of legality it was a question of whether there was anything we could conceivably do to prevent the failure of the firm.”

He describes it as a “myth” that the government could have saved Lehman and adds: “If I could have done anything to have saved it, I would have saved it.”

This is a bluntly opposing view to the agitation of Dick Fuld, who insisted to the panel yesterday that Lehman was “mandated” into bankruptcy by the government, which refused to give it access to cheap liquidity from the Fed’s discount window.

2.34pm: By the way, the text of Bernanke’s written testimony has been posted on the FCIC’s website here.

It’s fairly dense stuff though and I wouldn’t recommend it for bedtime reading.

2.38pm: So what’s changed? Well, nowadays, Bernanke says, firms will have “living wills” giving instructions on how to wind them down.

But a key problem, he says, is the international dimension – one bank supervised by the Fed has offices in 109 countries, each with its own bankruptcy rules and codes. Bernanke wants more global co-operation:

“We’re going to need to develop the moral equivalent of tax treaties” with other countries, frameworks on how to wind down firms. This should be a “top priority”, says Bernanke.

2.41pm: There are 4 or 5 countries which are the most important that the US has to work with on solving the problem of ‘too big to fail’ banks, Bernanke says. Presumably (hopefully) that includes the UK. “There a lot of work to be done and I think we have a way to go” but there’s plenty of co-operation and goodwill from international partners.

2.44pm: Meanwhile, outside the Washington inquiry panel room, there’s an interesting report today on an extension of Bernanke’s powers. Bloomberg Markets magazine says that the Fed is going to oversee two non-bank firms which are considered systemically important to the US economy – General Electric and Warren Buffett’s Berkshire Hathaway.

That’s on top of its oversight of top banks and 440 “thrift holding companies”, the magazine reports.

2.47pm: How was Lehman Brothers’ failure different from AIG, which was bailed out by the government? The question is asked by panel vice-chairman Bill Thomas.

Bernanke says there was a “fundamental difference” – while Lehman lacked collateral, AIG was in trouble because only a relatively small part of its business had gone up the creek (a financial insurance division largely based in London). He insists the Fed will be paid back for its $185bn plus bail-out package of AIG.

A bit of mutual loving as Thomas thanks Bernanke for his “bravery and willingness” in taking such political risks during the financial crisis. Bernanke smiles wanly.

2.54pm: Suddenly an uncharacteristic dig at Wall Street “rewards for failure” from Bernanke.

“For capitalism to work, you have to have incentives tied to performance,” declares Bernanke. “One of the things people are very upset about is the fact that it seems like a lot of people who drove their companies into the ditch walked off with a lot of money and that’s not good capitalism – it’s not a good ethical outcome, either.”

3.04pm: Republican panelist Douglas Holtz-Eakin, a former economic adviser to President Bush, wants to know Bernanke’s view of the factors behind the housing bubble.

Bernanke is saying something opaque and academic about the “interaction of expectations, optimism on the one hand and innovation of mortgage instruments on the other”. That’s a posh way of saying that homebuyers’ greed was matched by lenders’ greed.

He says there were “increasingly sketchy instruments” such as Option ARM and interest-only mortgages, previously reserved for sophisticated investors, which became available to first-time buyers. When house prices stopped rising, the whole pack of cards came tumbling down.

3.06pm: It would have been “questionable”, says Bernanke, to raise interest rates in 2003 or 2004 to deflate the mortgage bubble, given what was going on in the broader economy. It would have been better, he says, to have addressed it through tighter regulation on homeloans.

3.09pm: The Fed boss is asked why, in the early days of the credit crunch, he kept insisting that the fallout could be “contained”. He says it’s because the cost of delinquent mortgages was only going to reach about $300bn to $400bn – Bernanke admits he didn’t expect reverberations to spread further.

“What I did not recognise was the extent to which the system had flaws and weaknesses in it that were going to amplify the initial shock from subprime and make it into a much bigger crisis.”

3.18pm: Former Lehman trader Lawrence McDonald, author of “a colossal failure of common sense” which chronicles the collapse of Lehman, is tweeting outrage at Bernanke’s testimony.

McDonald is adamant that it was contradictory for the Fed to let Lehman fail, yet bail out the insurer AIG: “Mr. Ben Bernanke, just like Lehman $AIG did NOT have the collateral to justify using tax payer funds to save it, not $180 bln!”

3.25pm: Under questioning from former Florida governor Bob Graham, the Fed chairman says in principle, he’d like to see capital surcharges on firms that are systemically critical – which would “both make them safer and would make it more onerous to be a systemically cricial firm”. Plus greater discipline imposed by the authorities.

This would reduce the incentive for huge mega-banks to become “too big to fail”. And he adds that under its new power, the Fed theoretically has the power to break up firms it believes are threatening the financial system.

3.35pm: Bernanke concedes there were two areas in which the Fed could have done more to ease the crisis – in enforcing standards at the mortgage underwriting level and in the general risk management of firms to help them understand their own potential losses.

“One of the lessons of the crisis is that innovation isn’t always a good thing,” the Fed chief adds.

3.40pm: One of the panellists, John Thompson, asks a blunt question: “In hindsight, would you have preferred to have saved Lehman?”

“It’s really hard to know what would have happened, um, I mean one possible scenario is that…,” begins Bernanke, then he switches tack.

“The only way we could have saved Lehman would have been by breaking the law and I’m not sure I’m willing to accept those consequences for the Federal Reserve and for our system of laws. I just don’t think that would have been appropriate,” he says. “So, I wish we had saved Lehman but it was beyond our ingenuity and capacity to do it.”

He’s re-asserting his earlier view that the Fed isn’t allowed to lend when there isn’t a realistic possibility of getting its money back – and that Lehman didn’t have the collateral to back a loan of public money.

3.52pm: A bit of scepticism here on the Fed’s claim that it couldn’t have bailed out Lehman because it lacked collateral. A Republican panellist, Peter Wallison, wants to know if the Fed did an actual study on Lehman’s capital at the time.

Unusually, Bernanke looks a bit uncomfortable and starts muttering about stress tests. Then he admits that he doesn’t have any actual hard evidence to back up his assessment of Lehman’s capital shortfall: “To my knowledge, I don’t have a study to hand you but it was a judgement made by the leadership of the NY Fed and the people who were charged with reviewing the books of Lehman that they were far short of what was needed to get the cash to meet the run. That was the judgement that was given to me.”

The debate about whether Lehman should have been rescued is coming down to this – was this simply a short-term liquidity crisis caused by a run on the bank? Or did Lehman have a bigger, broader, underlying capital hole that justified the panic by customers?

4.04pm: Here’s a take on Bernanke’s performance from Reuters:

Federal Reserve Chairman Ben Bernanke said on Thursday he could not have legally saved Lehman Brothers from bankruptcy and the firm’s catastrophic failure in 2008 was a source of sadness.

4.06pm: Democrat panellist Brooksley Born wants to know if inter-connected derivatives positions were a key concern in the decision over whether to rescue Lehman.

“It was a significant concern,” says Bernanke, who says the Fed worked hard with over-the-counter markets to try to “put foam on the runway” in preparation for winding down thousands of complex positions on Lehman’s books.

4.13pm: Did Lehman and Bear fail only because of “unjustified liquidity runs” or were their genuine insolvency problems, asks Keith Hennessey, a Republican former Bush White House economist.

Bernanke says there were “clearly losses and liquidity issues” at both Bear Stearns and Lehman Brothers. He says Lehman had struggled to raise additional capital over the spring and summer of 2008.

“It was a combination of general fear, certainly, but also some legitimate concerns about both the asset position of the company, its balance sheet, but also some concerns about the longer term viability of the firm, its business model.

“It’s the nature of financial institutions that they live on confidence. When their counterparties and customers and creditors don’t believe they are sustainable, then the pressure mounts very quickly.”

The phrase “legitimate concerns” is key. It’s Bernanke-speak for a slapdown of Lehman’s boss Dick Fuld, who claimed yesterday that the run on his bank was caused by “uncontrollable market forces”, incorrect perceptions and rumours.

4.20pm: Here’s a slightly off-beat question – what are the best books and speeches to read about the crisis? It’s a chance for Bernanke to endorse a few works!

“Not to sound too professorial, there is some academic work,” says Bernanke, mentioning research on bank runs done by a Yale professor, Gary Gorton.

He’s also a fan of Markus Brunnermeier, a Princeton economics professor, for his scholarship on panic in the Repo market. And for a historical perspective, Bernanke recommends Lords of Finance – a Pulitzer prize-winning history of the Great Depression by Liaquat Ahamed.

4.29pm:
“A lot of the Wall Street guys are like greased pigs – they’re hard to catch,” remarks the panel’s Democratic chairman, Phil Angelides, apropos of nothing in particular. Nice phrase. Angelides wants to know if the Fed has sufficient resources to police Wall Street.

Bernanke doesn’t really answer directly – he’s meandering off on a soliloquy how much experience and expertise there is in the Fed, and his organisation’s multi-disciplinary approach. He adds, though: “It’s never going to be the case that the government can pay what Wall Street can pay.”

4.32pm: Bernanke on toxic mortgages interacting with the US economy: “The e.coli got into the food supply and that caused a much bigger problem.”

4.41pm: Mark-to-market accounting “exacerbated somewhat” the financial crisis, Bernanke says. It’s the nature of the market that asset prices move up and down at times of stress.

“I don’t think we should conclude from that we should abandon mark-to-market accounting.”

4.42pm: That’s it – it’s all finished – Phil Angelides is thanking Bernanke for his appearance before the commission. The Fed chairman is getting up and leaving the room. I’ll wrap up the main points of Bernanke’s testimony in a few minutes but things seem to have gone relatively smoothly for old Ben – there haven’t been too many flashpoints or embarrassing gaffes.

4.57pm: Ben Bernanke’s appearance before America’s financial crisis inquiry commission clocked in at two and three quarter hours. It’s been a typically calm and measured performance by the Federal Reserve chairman who isn’t known for intemperate outbursts – perhaps thankfully, given that he’s in charge of the stability of the world’s largest economy.

Bernanke did produce a few gems, though, largely on the subject of Lehman Brothers’ collapse and the Bush administration’s decision not to step in with a rescue.

• It would have been “illegal” for the Federal Reserve to bail out Lehman Brothers because the bank didn’t have collateral to back a loan from taxpayers’ money: “The only way we could have saved Lehman would have been by breaking the law and I’m not sure I’m willing to accept those consequences for the Federal Reserve and for our system of laws.”

• Bernanke doesn’t agree with Lehman’s boss Dick Fuld, who testified yesterday that the run on his bank in September 2008 was unjustified and irrational panic. The Fed chairman says there were “legitimate concerns” among customers and counterparties about Lehman’s asset position, balance sheet and business model.

• The demise of Lehman was a different situation from the crisis that gripped insurer AIG. Bernanke argues that the government was legitimately able to rescue AIG because it had solid insurance assets to put up as collateral for bail-out funds. He says AIG was undermined by problems in a relatively small financial products division.

• In future, banks considered systemically important will have a “living will” making an orderly wind-down easier, and there could be capital surcharges on financial supermarkets that get too big – all measures to stop any firm being “too big to fail”.

• Lehman’s demise was a source of “sadness” for Bernanke and he wishes he could have saved the bank with “cheery words”.

• And an autumn reading list recommended by the Fed chairman – work by Princeton economist Markus Brunnermeier, Yale professor Gary Gorton and Liaquat Ahamed’s book on the great depression, “Lords of Finance”.

Originally published here

Scientists say desertification of the mountain grasslands of the Tibetan plateau is accelerating climate change

Like generations of Tibetan nomads before him, Phuntsok Dorje makes a living raising yaks and other livestock on the vast alpine grasslands that provide a thatch on the roof of the world.

But in recent years the vegetation around his home, the Tibetan plateau, has been destroyed by rising temperatures, excess livestock and plagues of insects and rodents.

The high-altitude meadows are rarely mentioned in discussions of global warming, but the changes to this ground have a profound impact on Tibetan politics and the world’s ecological security.

For Phuntsok Dorje, the issue is more down to earth. He is used to dramatically shifting cloudscapes above his head, but it is the changes below his feet that make him uneasy.

“The grass used to be up to here,” Phuntsok says, indicating a point on his leg a little below the knee. “Twenty years ago, we had to scythe it down. But now, well, you can see for yourself. It’s so short it looks like moss.”

The green prairie that used to surround his tent has become a brown desert. All that is left of the grasslands here are yellowing blotches on a stony surface riddled with rodent holes.

It is the same across much of this plateau, which encompasses an area a third of the size of the US.

Desertification

Scientists say the desertification of the mountain grasslands is accelerating climate change. Without its thatch the roof of the world is less able to absorb moisture and more likely to radiate heat.

Partly because of this the Tibetan mountains have warmed two to three times faster than the global average; the permafrost and glaciers of the “Third Pole” are melting.

To make matters worse, the towering Kunlun, Himalayan and Karakorum ranges that surround the plateau act as a chimney for water vapour – which has a stronger greenhouse gas effect than carbon dioxide – to be convected high into the stratosphere. Mixed with pollution, dust and black carbon (soot) from India and elsewhere, this spreads a brown cloud across swaths of the Eurasian landmass. When permafrost melts it can also release methane, another powerful greenhouse gas. Xiao Ziniu, the director general of the Beijing climate centre, says Tibet’s climate is the most sensitive in Asia and influences the globe.

Grassland degradation is evident along the twisting mountain road from Yushu to Xining, which passes through the Three Rivers national park, the source of the Yangtze, Yellow and Lancang rivers. Along some stretches the landscape is so barren it looks more like the Gobi desert than an alpine meadow.

Phuntsok Dorje is among the last of the nomads scratching a living in one of the worst affected areas. “There used to be five families on this plain. Now we are the only one left and there is not enough grass even for us,” he says. “It’s getting drier and drier and there are more and more rats every year.”

Until about 10 years ago the nearest town, Maduo, used to be the richest in Qinghai province thanks to herding, fishing and mining, but residents say their economy has dried up along with the nearby wetlands.

“This all used to be a lake. There wasn’t a road here then. Even a Jeep couldn’t have made it through,” said a Tibetan guide, Dalang Jiri, as we drove through the area. By one estimate, 70% of the former rangeland is now desert.

“Maduo is now very poor. There is no way to make a living,” said a Tibetan teacher who gave only one name, Angang. “The mines have closed and grasslands are destroyed. People just depend on the money they get from the government. They just sit on the kang [a raised, heated, floor] and wait for the next payment.”

Many of the local people are former herders moved off the land under a controversial “ecological migration” scheme launched in 2003. The government in Beijing is in the advanced stages of relocating between 50% and 80% of the 2.25 million nomads on the Tibetan plateau. According to state media, this programme aims to restore the grasslands, prevent overgrazing and improve living standards.

The Tibetan government-in-exile says the scheme does little for the environment and is aimed at clearing the land for mineral extraction and moving potential supporters of the Dalai Lama into urban areas where they can be more easily controlled.

Qinghai is dotted with resettlement centres, many on the way to becoming ghettos. Nomads are paid an annual allowance – of 3,000 yuan (about £300) to 8,000 yuan per household – to give up herding for 10 years and be provided with housing. As in some native American reservations in the US and Canada, they have trouble finding jobs. Many end up either unemployed or recycling rubbish or collecting dung.

Some feel cheated. “If I could go back to herding, I would. But the land has been taken by the state and the livestock has been sold off so we are stuck here. It’s hopeless,” said Shang Lashi, a resident at a resettlement centre in Yushu. “We were promised jobs. But there is no work. We live on the 3,000 yuan a year allowance, but the officials deduct money from that for the housing, which was supposed to be free.”

Their situation was made worse by the earthquake that struck Yushu earlier this year, killing hundreds. People were crushed when their new concrete homes collapsed, a risk they would not have faced in their itinerant life on the grasslands. Many are once again living under canvas – in disaster relief tents and without land or cattle.

In a sign of the sensitivity of the subject, the authorities declined to officially answer the Guardian’s questions. Privately, officials said resettlement and other efforts to restore the grassland, including fencing off the worst areas, were worthwhile.

“The situation has improved slightly in the past five years. We are working on seven areas, planting trees and trying to restore the ecosystem around closed gold mines,” said one environmental officer. The problem would not be solved in the short term. “This area is particularly fragile. Once the grasslands are destroyed, they rarely come back. It is very difficult to grow grass at high altitude.”

The programme’s effectiveness is questioned by others, including Wang Yongchen, founder of the Green Earth Volunteers NGO and a regular visitor to the plateau for 10 years. “Overgrazing was considered a possible cause of the grassland degradation, but things haven’t improved since the herds were enclosed and the nomads moved. I think climate change and mining have had a bigger impact.”

Assessing the programme is complicated by political tensions. In the past year, three prominent Tibetan environmental campaigners have been arrested after exposing corruption and flaws in wildlife conservation on the plateau.

Infestation

Another activist, who declined to give his name, said it was difficult to comment. “The situation is complicated. Some areas of grassland are getting better. Others are worse. There are so many factors involved.”

A growing population of pika, gerbils, mice and other rodents is also blamed for degradation of the land because they burrow into the soil and eat grass roots.

Zoologists say this highlights how ecosystems can quickly move out of balance. Rodent numbers have increased dramatically in 10 years because their natural predators – hawks, eagles and leopards – have been hunted close to extinction. Belatedly, the authorities are trying to protect wildlife and attract birds of prey by erecting steel vantage points to replace felled trees.

There is widespread agreement that this climatically important region needs more study.

“People have not paid enough attention to the Tibetan plateau. They call it the Third Pole but actually it is more important than the Arctic or Antarctic because it is closer to human communities. This area needs a great deal more research,” said Yang Yong, a Chinese explorer and environmental activist. “The changes to glaciers and grasslands are very fast. The desertification of the grassland is a very evident phenomenon on the plateau. It’s a reaction by a sensitive ecosystem that will precede similar reactions elsewhere.”

Phuntsok Dorje is unlikely to take part in any study. But he’s seen enough to be pessimistic about the future. “The weather is changing. It used to rain a lot in the summer and snow in the winter. There was a strong contrast between the seasons, but not now. It’s getting drier year after year. If it carries on like this I have no idea what I will do.”

Additional reporting by Cui Zheng

Originally published here

Hurricane expected to reach North Carolina later today as states from Virginia to Massachussetts prepare to batten down hatches

Barack Obama yesterday declared an emergency as states along the eastern seaboard of the US prepared evacuation plans to be put in to operation if hurricane Earl moves inland instead of glancing the shoreline.

The US president authorised the US Department of Homeland Security and the Federal Emergencies Management Agency (FEMA) to co-ordinate disaster relief – a move that should allow rapid movement of equipment and other resources if the hurricane threatens the most densely-populated area of the country.

Storms are expected to reach North Carolina later today before moving north-east as states from Virginia to Massachussetts also prepare to batten down the hatches.

The governors of North Carolina, Virginia and Maryland have already declared emergencies. The Virginia, governor Bob McDonnell, activated the National Guard, sending troops to the Hampton Roads area on Chesapeake Bay. “I’d rather be safe and get our troops and state police in place by Thursday night,” he said.

Winds of up to 140mph were reported as Earl gathered strength yesterday.

A mandatory evacuation ordered 30,000 residents and visitors to leave Hatteras Island, in North Carolina. About 5,000 tourists were ordered to leave Ocracoke Island, to the south.

Earl is at present a category four hurricane – one short of the most powerful category, category five – the classification for storms hitting 155mph and higher.

Authorities are hoping the storm will stay offshore, but forecasters have warned that it could come closer and pass over New York Island, Boston and Cape Cod.

“Everyone is poised and ready to pull the trigger if Earl turns west – but our hope is that this thing goes out to sea and we’re all golfing this weekend,” Peter Judge, a spokesman for the Massachusetts Emergency Management Agency, said.

Red Cross officials in New York are ready to open up to 50 shelters, housing up to 60,000 people, in an emergency.

Obama’s declaration of an emergency comes days after the fifth anniversary of hurricane Katrina, which wrecked New Orleans and prompted criticism of federal agencies’ slow response during George Bush’s presidency.

Federal agencies were also accused by residents of Louisiana of being slow in reacting to the Deepwater Horizon oil spill in April.

Originally published here

New Labour dogma pervades Tony Blair’s biography. Bringing it into the leadership race is a depressing mistake

Nearly over now, then – so let us count the cliches used to decry the Labour leadership contest. “Interminable,” claims the Daily Telegraph. “The least inspiring contest ever,” says a columnist in the Independent. “A bunch of clueless clodhoppers,” reckons the characteristically emollient Mail. Now, the hysterically received Blair memoirs add another commonplace to the noise: that beneath the alleged tedium lurks grave danger – and if it isn’t careful, Labour will stray from the New Labour path, and lurch into irrelevance.

I dutifully bought my copy of A Journey today, and eventually reached the postscript, in which Blair sets out his vision of the future. What awaited was a mess of suggestions, most of which seemed to favour a model of debate that would effectively be meaningless. For Labour, the ideal path entails “remaining flexible enough to attack the government from left and right”. Even as the welfare state is hacked down and our few remaining social democratic institutions put under threat, “defining where you stand by reference to the opposite of where the other person stands is not just childish, but completely out of touch with where politics is today”. The “statist, so-called Keynesian response to the economic crisis” is a busted flush; even starting to rein in pay at the top would do “more harm than good”. Labour, as he sees it, “should criticise the composition but not the thrust of the Tory deficit reductions”.

Behind all this there is a mindset that is closer to a pathology than thought-through politics. Even after the crash, all that is contemporary, sensible and electorally advantageous is reduced to what Blair calls “liberal economic policies, market reforms in welfare and public services, and” – note the graceful use of language here – “engagement and intervention abroad”.

Anyone who questions this is is in danger of slipping back into the disgraced past. Under every bed, there lurks an “old Labour” red; even in the highest circles (witness an early reference in the book to Alastair Campbell: “much more old Labour” than some people, apparently) there is a constant danger of a return to a nightmare world of picket lines, nationalised everything, and serial Labour losses. In Blair’s rather paranoid account, even Lib Dems have “old Labour” instincts: and the coalition will prosper only if it squashes them.

Some salient facts. Between 1997 and 2010, Labour lost 5 million votes, of which 4 million went under his watch. In the eight years up to 2005 the party also mislaid over half its membership (often maligned as a rabble of unrepresentative anoraks – but still the chief means by which Labour actually wins elections). At his last general election, moreover, Blair led the party to a truly hollow victory: the support of 22% of the electorate, an outcome sufficiently chastening that he stood outside Downing Street and claimed to have “listened and learned”. In both the noise surrounding publication or the text itself, almost none of this has been mentioned.

A typical leader in one of today’s papers paid tribute to his three “emphatic” victories, and in his Andrew Marr interview Blair looked back on the 2010 defeat with the same black-and-white analysis. “If we departed a millimetre from New Labour, we were in trouble,” he said, as if he bore none of the blame. Far from what the memoirs call “an approach based on reason, on the abstinence from ideological dogma”, this is its complete reverse: the thinking of the zealot, as full of dogmatic stupidity as the hard-left politics Blair still sees round every corner.

Of late – as evidenced by warnings from Blair, Mandelson and those voices who share their view of things – this has resulted in one of the more depressing aspects of the Labour leadership contest: claims that “Red” Ed Miliband is a dangerous old Labour throwback. No matter that his handful of policy proposals – for the tentative roll-out of a living wage, or a graduate tax, or the high pay commission also supported by his brother – are modest and somewhat cautious. In the wake of an editorial claiming that even his brother was in danger of drifting too far to the left, one Times columnist – the venerable David Aaronovitch – compared him to Michael Foot.

On Monday, I turned on the Today programme to hear another pundit say: “He is properly leftwing. Really leftwing. He wouldn’t admit this now, but if you’d asked him a few years ago who his political hero was, he’d have said Tony Benn. And I don’t mean cuddly, modern Tony Benn, I mean Tony Benn in his pomp, in the 1960s and 1970s.”

The Labour party, I would imagine, has the sense to understand that this is the stuff of fear, voiced by people with no real understanding of either the real world, or the problems Labour has to address, and soon. At least twice in his book, Blair parrots a rollcall of English towns – “Hastings, Crawley, Worcester, Basildon, Harrow” – whose people, he seems to imagine, have experienced no downside of his beloved “liberal economic policies”, and even as the cuts bite, will not want anything significantly different. One is reminded of a priceless sentence, uttered circa 2008 by an unnamed Labour minister, seemingly convinced that the stockbroker belt ran far wider than once thought. “£150,000 isn’t much money in Reading,” he reckoned. Just to set the record straight, half the people who work in that town earn less than £21,000 a year.

No housing shortages in “middle England”, surely; no insecurity at work, or time poverty, or fretting about the debt that people’s children now rack up in pursuit of an education; come to think of it, none of the bundle of worries that always sit under all those concerns about immigration. Even with the application of work and imagination, Blair and his cheerleaders allege, modern social democracy has no hope in these places; and by implication, it has no realistic chance at all. This is not just a counsel of despair, but a desertion of Labour’s most basic mission. In A Journey, the basics of the party’s fate are summed up with the unbending simplicity of a dalek: “Labour won when it was New Labour. It lost because it stopped being New Labour.”

Towards the end of the book, its author says he has come back to the fray to find politics in disarray, and feels more motivated to impart his gospel than ever. “I find my old world in a state of despair and feel shocked and galvanised by this,” he says. “Perhaps that is because I am removed from it and so think I see it more clearly.”

The next bit is in parentheses, but it’s among the most telling sentences he writes: “This could be an illusion.”

It is, of course. It probably always was.

Originally published here

More than 20,000 American mortgagees to hit Palm Beach as Naca’s five-day mortgage modification marathon gets under way

In the pre-dawn darkness of a steamy night of sub-tropical rain, a queue of anxious, soggy people snakes around the palm trees outside a cavernous Florida convention centre. Some have erected camp beds or makeshift tents. All clutch sheaves of mortgage documents.

Welcome to America’s biggest jamboree of delinquent borrowers. For five days, the Neighbourhood Assistance Corporation of America (Naca), a not-for-profit organisation, is working round the clock to help homeowners hang on to their houses. More than 12,000 people have signed up in advance and more than 20,000 are expected to turn up, travelling from as far afield as California, Georgia and Maryland.

“It’s either feed your kids or pay your mortgage,” says Omayra Delgado, a 33-year-old special education teacher whose Miami house has slumped in value from $160,000 (£103,000) to $60,000. “My home is in foreclosure. I’m trying to keep it.”

Politicians’ talk of an economic recovery is laughable to many of those here. This is a last, desperate bid to cling on to home ownership – the event is shrewdly named “save the dream”.

Inside, hundreds of loan advisers sit behind trestle tables. They are colour-coded: Bank of America workers wear red, Citigroup are in blue and Wells Fargo are in black. Even the moribund government-supported refinancing giants Fannie Mae and Freddie Mac are here, but their budgets don’t run to natty coloured clothing.

Borrowers go through orientation and financial counselling sessions. Then, for the luckier applicants who can show a steady income, the loan advisers have the power to reduce interest rates or even write off a proportion of loans.

Bruce Marks, Naca’s chief executive, says this is the only way to dig the nation out of the housing morass: “What you hear from the Obama administration is ‘we’re helpless, our programmes aren’t working’. What you hear from Congress is ‘we don’t know what to do so we’re going to do nothing’.”

Every little adjustment is crucial, because for all the White House’s hopes of a swift bounce back from recession, the US property market is showing signs of renewed distress. Some 10% of US households with mortgages are behind on their payments, according to figures last week from the Mortgage Bankers Association. The percentage of people beginning to have trouble with their loans has begun to rise again, after falling earlier this year – loans that are one month in arrears have gone up from 3.31% to 3.51%. And home sales in July were down 12.4% on June, dropping to 276,000 – the lowest since records began in 1963.

Repossessions

Radar Logic, a property data firm, says the usual summer uptick in property prices has barely happened this year. Thousands of repossessed homes have been put on sale by banks at knockdown prices, inhibiting any vitality in the market. “The inventory of distressed property for sale in this country is just staggering,” says Radar Logic’s chief executive, Michael Feder, who predicts an imminent “double dip” in housing. “There’s just no momentum in pricing, no momentum in inventory.”

The US treasury’s efforts to help borrowers aren’t bearing fruit. The government’s “making home affordable” programme was supposed to protect 3 million homeowners from foreclosure. But the treasury admitted this month that only 422,000 loans have been permanently adjusted so far. The rate is slipping by the month and 616,000 trial modifications have ended in failure.

This outlook is alarming. In the same way the mortgage crisis pushed America into the worst financial storm since the 1930s, a fresh collapse in housing could scupper a fragile recovery that is barely taking root in the world’s largest economy. Goldman Sachs puts the chance of a double-dip recession in the US at 25%. Mark Zandi, the chief executive of rating agency Moody’s, has raised his view of the likelihood from 20% to 33.3%. Nouriel Roubini, the economic guru dubbed “Doctor Doom” for his early prediction of the credit crunch, reckons the probability is more than 40%.

Experts at Capital Economics predict that by the end of the crisis, as many as 4 million Americans may lose their homes: “Aside from the considerable social costs, this does not bode well for consumer spending, bank profits or the housing market itself.”

Florida is an ideal spot for the latest in Naca’s mortgage-altering marathons, which have also taken place in Washington, Atlanta, Phoenix and Las Vegas. The Sunshine State, beloved of British holidaymakers, is in property hell. About 45% of homes here are in negative equity, according to CoreLogic, a research firm, which calculates that Florida’s stock of property is worth $859bn but has $771bn of mortgage debt outstanding.

Irresponsible borrowers are partly at fault. As Tea Party activists never tire of pointing out, property purchasers should not have taken on mortgages they were not able to afford. A CNBC presenter, Rick Santelli, articulated this view with an on-air rant that went viral on the internet last year, calling for a referendum “to see if we really want to subsidise the losers’ mortgages”, claiming government aid for strugglers “will make Thomas Jefferson and Benjamin Franklin roll over in their graves”.

But irrespective of blame, many of those who have travelled to Palm Beach are simply desperate. Darnette Anderson, a receptionist whose husband, Kenneth, spent the night queuing, says her house, which she bought for $115,000 in 2004, was recently valued at $42,000. With her husband out of work, she cannot afford mortgage payments of $1,400 a month: “I just hope and pray that we can get this settled and move on to a comfortable repayment schedule.”

Yrena Cruz, a Wal-Mart worker from Miami, says she and her boyfriend were sucked into an unrealistic mortgage by a low “teaser” rate which subsequently changed to an impossible amount – and the housing crash made it unfeasible to refinance. She said: “I’m worried sick. I can’t wait to get this finished with. My house was worth $400,000. Now, it’s probably half that.”

Some come from surprising backgrounds. A Californian dentist, Dennis Jacobs, 65, flew 2,600 miles from San Diego to try to renegotiate a mortgage on his apartment. He sold his dentistry practice to pay off debts and is now working part-time. He is pessimistic: “I don’t see any uptick in the economy at all. I think the unemployment figures are understated – there are large numbers of people underemployed.”

The jobless rate in the US is 9.6% and has stayed stubbornly close to double figures in spite of Barack Obama’s $787bn economic stimulus package. One reason, say economists, is that older people in states such as Florida are delaying their retirement to cope with straitened finances.

Naca’s chief executive worries the US property crisis may have swung to the opposite extreme, with risk-averse banks reluctant to write even the most sensible of mortgages. Marks says banks “just refuse to lend” because they see no prospect of the “abusive” profits they once made. He is pessimistic about a short-term return to stability: “If somebody is used to getting intoxicated, to taking an extreme amount of drugs or alcohol, then they’re never going to be satisfied with just a beer.”

Originally published here

For £5,000 he tracked down young women fleeing a forced marriage and brought them back to their families

On the face of it, Zakir was simply a veteran taxi driver and a popular member of the community in Bradford. Few customers would have realised that behind his bubbly exterior he provided another, much more sinister service. For around £5,000, Zakir would track down women and girls who had run away from home to escape a forced marriage. A bounty hunter, Zakir’s mission was to bring them back to their families.

While most locals in the tightly knit south Asian community thought Zakir was merely picking up and dropping off passengers each day, his work provided perfect cover to exploit his contacts with fellow drivers and shopkeepers to hunt down runaway teenagers. According to Zakir, some bounty hunters would also befriend officials in housing departments and in the Department for Work and Pensions to get National Insurance numbers – a strategy confirmed by campaigners against forced marriages.

Zakir’s job was never to harm his targets, but to return them home to face their “destiny” of being made to marry someone their parents had chosen. Despite the fact that runaways can be beaten for having escaped, he sides with the families on the issue. The softly spoken driver, speaking to G2 on the condition his real name was not used, insisted: “I did it as a favour to the families, as I knew most of them. It wasn’t about the money. It was about izzat [honour]. I saw the effect it had on them when their daughter ran away. The worry and the shame from the community talking about them. I was part of the ‘taxi driver network’, so we shared information about who we picked up and where they got dropped off.

“I didn’t harm any of the girls: among aapnes [ the Asian community; literally 'ours'] discipline is up to their families. Only a couple of occasions I had to speak forcefully to them because they wouldn’t come home. But it is obviously not a career, so I stopped. I got tired of chasing people around.”

Zakir prowled the streets of Bradford, Huddersfield, Leeds and Sheffield. According to women’s groups, bounty hunters are more common in places such as Yorkshire and Lancashire because the large south Asian populations are more closely knit, entrenched in conservative values, and there is a better chance of finding women who disappear in the north than in London. The community grapevine is a powerful tool in those areas; word spreads quickly about a person’s whereabouts and welfare. And while this can nurture a closer community and ensure everyone looks out for one another, it can also be used to patrol the behaviour of those who do not conform to the unwritten rules –meaning young women may be ostracised by disapproving elders for wearing “western” clothes or speaking to a boy.

Some families are so fearful of this kind of gossip they agree a verbal contract with a bounty hunter where the reward can be as much as £10,000. Others even hire female bounty hunters to pose as domestic violence victims to enter refuges and find their target.

One woman who knows what it feels like to be hunted down is Jaspreet. She ran away from her home in Sheffield after discovering that her father was arranging her marriage. The 21-year-old said: “I overheard my dad talking to his brother in Pakistan about getting me married to my cousin over there. He’d never discussed marriage with me.

“I didn’t want to get married yet. I wanted to finish my law degree. I would have been happy to have an arranged marriage in my mid-20s. But when I protested, my dad threatened me physically and said I would be letting the family down if I refused. I couldn’t take any more of the rows, so I ran away.”

Days later, Jaspreet found out that her father had asked a family friend to track her down. “It didn’t surprise me; towards the end, my dad pretty much disowned me. The hardest thing was leaving my mum and sister – they weren’t fussed if I got married to my cousin, but were powerless to stop my dad. I was told [the family friend] was passing my photo around and contacting my friends. So I moved down to London to stay with a friend and changed my appearance.

“It was horrible waking up and having that fear that someone is looking for you, and could hurt you. I used to always think ‘when will this end?’ I had counselling for my anxiety and panic attacks. My dad would have probably beaten me if I returned home; he had no love for me any more. That’s why I moved to London.”

Another alarming case was Zena Briggs, who was forced to live on a witness protection scheme after fleeing an arranged marriage in 1993. When she ran away with her white partner Jack Briggs, her Pakistani family in Yorkshire hired a bounty hunter to try and kill them both. She has since divorced and set up a charity called the Zena Foundation to help victims of honour violence.

So why do families pursue such ruthless tactics to hunt down their missing child? Southall Black Sisters (SBS), who support victims of domestic violence, says south Asian and Middle Eastern families are under huge pressure to conform to the traditional values of their community. “Conservative sections of the community will go as far as hiring a bounty hunter as they have a shared value system which takes priority, along with patriarchal structures and religious value systems,” explains Hannana Siddiqui, an SBS spokeswoman.

“The family’s future is down to marrying their daughter. Men can have friends, get an education and job, and can get married when they’re older. But women are [seen as] the embodiment of honour, so their sexuality and moral behaviour is controlled.”

Karma Nirvana, a charity which recently put on a touring road show on forced marriages, is calling for people fleeing them to be given extra police protection. They want a “witness protection” type-scheme, as recommended by a home affairs select committee inquiry into domestic violence in 2008.

Jasvinder Sanghera, the founder of Karma Nirvana and herself a survivor of a forced marriage, said: “Currently, there is nothing to wipe a person’s history if they want to start a new life. Under the scheme, the police would wipe out your history so you can’t be traced, and would give you a new passport and National Insurance number.”

Campaigners point to the success of the government’s Forced Marriage Unit and the Forced Marriage (Civil Protection) Act as justification for a specialist strategy. The unit rescues around 300 people each year, while the Act gives courts the power to stop families taking their child abroad, and has resulted in more than 120 injunctions preventing children from leaving the country.

But campaigners are troubled by newly announced cuts to the legal aid system. A recent survey by Resolution, the family lawyers’ association, found that denying people the right to free legal advice would have a “devastating” impact on family law cases such as forced marriages.

Not everyone, though, agrees that a specialist strategy is required to address the problem. Nazir Afzal, community liaison director at the Crown Prosecution Service and an expert on forced marriages, says: “There is a scheme for additional protection for any victim of crime. It already exists and is an individual response to individual cases. What we have suffices.”

As for the former bounty hunter Zakir, he is clear about what will stop the problem. “Nothing. Families will do anything in the name of honour.”

Some names have been changed.

Originally published here

For £5,000 he tracked down young women fleeing a forced marriage and brought them back to their families

On the face of it, Zakir was simply a veteran taxi driver and a popular member of the community in Bradford. Few customers would have realised that behind his bubbly exterior he provided another, much more sinister service. For around £5,000, Zakir would track down women and girls who had run away from home to escape a forced marriage. A bounty hunter, Zakir’s mission was to bring them back to their families.

While most locals in the tightly knit south Asian community thought Zakir was merely picking up and dropping off passengers each day, his work provided perfect cover to exploit his contacts with fellow drivers and shopkeepers to hunt down runaway teenagers. According to Zakir, some bounty hunters would also befriend officials in housing departments and in the Department for Work and Pensions to get National Insurance numbers – a strategy confirmed by campaigners against forced marriages.

Zakir’s job was never to harm his targets, but to return them home to face their “destiny” of being made to marry someone their parents had chosen. Despite the fact that runaways can be beaten for having escaped, he sides with the families on the issue. The softly spoken driver, speaking to G2 on the condition his real name was not used, insisted: “I did it as a favour to the families, as I knew most of them. It wasn’t about the money. It was about izzat [honour]. I saw the effect it had on them when their daughter ran away. The worry and the shame from the community talking about them. I was part of the ‘taxi driver network’, so we shared information about who we picked up and where they got dropped off.

“I didn’t harm any of the girls: among aapnes [ the Asian community; literally 'ours'] discipline is up to their families. Only a couple of occasions I had to speak forcefully to them because they wouldn’t come home. But it is obviously not a career, so I stopped. I got tired of chasing people around.”

Zakir prowled the streets of Bradford, Huddersfield, Leeds and Sheffield. According to women’s groups, bounty hunters are more common in places such as Yorkshire and Lancashire because the large south Asian populations are more closely knit, entrenched in conservative values, and there is a better chance of finding women who disappear in the north than in London. The community grapevine is a powerful tool in those areas; word spreads quickly about a person’s whereabouts and welfare. And while this can nurture a closer community and ensure everyone looks out for one another, it can also be used to patrol the behaviour of those who do not conform to the unwritten rules –meaning young women may be ostracised by disapproving elders for wearing “western” clothes or speaking to a boy.

Some families are so fearful of this kind of gossip they agree a verbal contract with a bounty hunter where the reward can be as much as £10,000. Others even hire female bounty hunters to pose as domestic violence victims to enter refuges and find their target.

One woman who knows what it feels like to be hunted down is Jaspreet. She ran away from her home in Sheffield after discovering that her father was arranging her marriage. The 21-year-old said: “I overheard my dad talking to his brother in Pakistan about getting me married to my cousin over there. He’d never discussed marriage with me.

“I didn’t want to get married yet. I wanted to finish my law degree. I would have been happy to have an arranged marriage in my mid-20s. But when I protested, my dad threatened me physically and said I would be letting the family down if I refused. I couldn’t take any more of the rows, so I ran away.”

Days later, Jaspreet found out that her father had asked a family friend to track her down. “It didn’t surprise me; towards the end, my dad pretty much disowned me. The hardest thing was leaving my mum and sister – they weren’t fussed if I got married to my cousin, but were powerless to stop my dad. I was told [the family friend] was passing my photo around and contacting my friends. So I moved down to London to stay with a friend and changed my appearance.

“It was horrible waking up and having that fear that someone is looking for you, and could hurt you. I used to always think ‘when will this end?’ I had counselling for my anxiety and panic attacks. My dad would have probably beaten me if I returned home; he had no love for me any more. That’s why I moved to London.”

Another alarming case was Zena Briggs, who was forced to live on a witness protection scheme after fleeing an arranged marriage in 1993. When she ran away with her white partner Jack Briggs, her Pakistani family in Yorkshire hired a bounty hunter to try and kill them both. She has since divorced and set up a charity called the Zena Foundation to help victims of honour violence.

So why do families pursue such ruthless tactics to hunt down their missing child? Southall Black Sisters (SBS), who support victims of domestic violence, says south Asian and Middle Eastern families are under huge pressure to conform to the traditional values of their community. “Conservative sections of the community will go as far as hiring a bounty hunter as they have a shared value system which takes priority, along with patriarchal structures and religious value systems,” explains Hannana Siddiqui, an SBS spokeswoman.

“The family’s future is down to marrying their daughter. Men can have friends, get an education and job, and can get married when they’re older. But women are [seen as] the embodiment of honour, so their sexuality and moral behaviour is controlled.”

Karma Nirvana, a charity which recently put on a touring road show on forced marriages, is calling for people fleeing them to be given extra police protection. They want a “witness protection” type-scheme, as recommended by a home affairs select committee inquiry into domestic violence in 2008.

Jasvinder Sanghera, the founder of Karma Nirvana and herself a survivor of a forced marriage, said: “Currently, there is nothing to wipe a person’s history if they want to start a new life. Under the scheme, the police would wipe out your history so you can’t be traced, and would give you a new passport and National Insurance number.”

Campaigners point to the success of the government’s Forced Marriage Unit and the Forced Marriage (Civil Protection) Act as justification for a specialist strategy. The unit rescues around 300 people each year, while the Act gives courts the power to stop families taking their child abroad, and has resulted in more than 120 injunctions preventing children from leaving the country.

But campaigners are troubled by newly announced cuts to the legal aid system. A recent survey by Resolution, the family lawyers’ association, found that denying people the right to free legal advice would have a “devastating” impact on family law cases such as forced marriages.

Not everyone, though, agrees that a specialist strategy is required to address the problem. Nazir Afzal, community liaison director at the Crown Prosecution Service and an expert on forced marriages, says: “There is a scheme for additional protection for any victim of crime. It already exists and is an individual response to individual cases. What we have suffices.”

As for the former bounty hunter Zakir, he is clear about what will stop the problem. “Nothing. Families will do anything in the name of honour.”

Some names have been changed.

Originally published here

Ceremony was supposed to give victims closure, but that is difficult for many who fled and can’t afford to rebuild or return

The coffin lay open. The mourners approached one by one.

Some spat their contempt and turned away swiftly. Others reached inside the grand, silver casket and kept a hand there for a moment as if trying to purge the years of terrible memories and suffering. Each left a handwritten note.

“Since this is a church, I’m going to be nice,” said one. “You made me lose my home. You may have taken away my life as I know it but you’ll never take away my spirit.”

Another said: “Thank God you are gone but unfortunately you will never be forgotten.”

The congregation had gathered to bury Hurricane Katrina five years after it smashed through New Orleans’ inadequate levees, flooded most of the city and erased entire communities. About 1,800 died and more than a million fled, many never to return. Tens of thousands are still living in trailers scattered across neighbouring Texas and beyond. Many of those who did come back faced desolation, the destruction of their homes, the loss of their jobs.

The Roman Catholic archbishop of New Orleans, Gregory Aymond, said the symbolic funeral would lay to rest “the hurt, the pain, the woundedness, the hopelessness”.

He then looked on slightly astonished at the vigour of an evangelical preacher, Jesse Boyd, who put it another way: “We’re here to say arrivederci, adios, goodbye to Katrina. Rest well.”

Five years on, the government has spent $143bn on the reconstruction of public buildings and private homes, roads and bridges, in one of the largest programmes of its kind in US history.

But the anger of the notes dropped into the coffin echoes across large areas of a city that has recovered so completely in parts that the only evidence of Katrina is how often it still comes up in conversation.

The money-spinning French Quarter is again busy with tourists, and white southern gentlemen in panama hats and bow ties populate the restaurants of the smarter ends of town as if nothing ever happened.

Then there is Ventura Drive, a few blocks from Katrina’s funeral in St Bernard parish. House number 3112 stands almost alone. There is a compulsory demolition notice taped to the window. There is no 3110 or 3114.

The blocks to the left and right, in front and behind have been wiped of all sign of the homes that once stood there. Today grass stretches right across the space where the houses stood close to an oil refinery at the water’s edge, which poured fuel into the flood five years ago.

More than one third of the population of St Bernard has still not returned.

Across the administrative line in the neighbouring Lower Ninth, the predominantly working-class African American district that bore the worst of the disaster, just one in four residents has moved back. One is Henry Irvin, whose house sits virtually alone on St Louis Avenue.

“The house next door had almost blown on top of mine but it didn’t. But my house did fill with water, covered with water. Everything inside was destroyed. All my personal stuff,” he said. “Volunteers gutted my house out. We had to air it out and then we had to rebuild. New insulation, new electrics, new everything.”

Irvin, 74, fled the day before the storm. For the next three years he moved around, living with relatives and in a trailer provided by the authorities. Finally he moved back home in 2008.

“I was just trying to hurry up and get home because there was nothing like living in that damn trailer. Most of my neighbours are gone. In my square I’m the only house. All around are empty lots. Turn the corner and there’s nothing there but grass and trees,” he said. “There was a time when everybody around here knew everybody. It changed. There’s not the people, not the community. Perhaps they can change it for the better, but they’ve got to give us a fair share of the pie. There’s a lot of people all the way to Texas that want to come back home but they can’t because they can’t afford to rebuild or bring their kids back here because we don’t have the schools. They give the grants to the people with the big houses.”

Only one of the five schools in the Lower Ninth has reopened. Hundreds of businesses have been abandoned. Where housing plots are not empty many are filled with rotting wooden buildings, disintegrating and overgrown. Irvin, like many residents of the Lower Ninth, thinks the city does not want the residents back.

“It’s racism. We’ve been suffering from racism down here for many, many years,” he said. “There are some who want to run us all out of here. Some big people in this town are trying to buy all that land and make it a green space with motels and gambling and casinos.”

It’s a common view in the Lower Ninth, though it has been dismissed by state and city leaders. But earlier this month, a federal judge ruled that the criteria for awarding grants to rebuild discriminated against black people.

The Louisiana state government offers up to $150,000 (£98,000) for people to reconstruct their homes, but applicants are not permitted to claim for more than the pre-hurricane value of their properties, no matter that the cost of repairing or replacing a house is similar city-wide. Those living in the Lower Ninth, where property values were the lowest in New Orleans, have been hit hardest by the rule.

A recent poll by the Kaiser Family Foundation found that a third of New Orleans residents say their lives are still getting worse because of the hurricane. African Americans were more than twice as likely as whites to say they had not recovered from Katrina.

The hurricane is often spoken of not as a passing disaster but as a living entity. People say “she” not “it”. Joey DiFatta, chairman of the local council at the time the hurricane struck, declared at the symbolic funeral: “Today we’re burying this witch.”

For Doris Voitier, who had not long been schools superintendent for the St Bernard parish when the hurricane hit, Katrina lives on in people’s anger at the human failings that compounded the disaster. These began with the collapse of the levees because of a lack of government investment and the disastrously slow response of the Bush administration – the first outsiders to arrive in St Bernard were the Canadian Mounties.

When the disaster struck, Voitier was looking after about 250 people who could not be evacuated and were sheltering in a school. These included an elderly woman who was a double amputee, people in need of dialysis and wheelchair users. Hundreds more arrived after the levees broke. There was little food or water, and no assistance came for days.

“There was no rescue. While the world was watching downtown New Orleans, we were under water and no one came for us for five days,” she said.

She has been at the forefront of rebuilding St Bernard. When the federal government failed to respond, she worked with the local oil refineries to bring in trailers to use as schools in order to help families return. Tears well up in her eyes as she speaks of those early days of the disaster.

“We had kids living in trailers, we had kids living in tents. People didn’t have running water or anything. Parents would bring their kids to school in pyjamas in the morning and we’d change them at school,” she said.

But even for those who returned, everything had changed.

“It’s been longer getting rid of that anger because we haven’t seen too much of a sense of normalcy returning. It’s been too catastrophic. When you lose everything, you’ve lost people and friends, you’ve lost homes, you’ve lost the sense of community that you’ve been involved with your entire life, and you felt that nobody cared enough, nobody would do something about it.

“I’m 61 years old. This has been the defining moment of my life. Everything we talk about is before Katrina and after Katrina. I think for people of my generation it will always be that way. On a personal level, it will never be buried.”

Originally published here

A month after floods devastated the country, small boats still rescue those strong, and lucky, enough to have survived the waters

At first it looks like just another tiny island of ruined and abandoned buildings, poking out of the vast, unnatural inland sea that stretches away into the distance on all sides.

But as the boat edges closer, gliding over the tops of bushes and brushing over raised banks that were once roads, it is clear that this one is different. There are people here, pouring out of their rough shelters, streaming down to the water’s edge, shielding their eyes from the sun, squinting to get a better glimpse of salvation.

It is clear, too, that there are far too many to fit on the two small boats that have been sent to rescue them. They will hold 20 people each, but there are maybe 100 or more standing among the graves in the burial ground – the only piece of land high enough in the village of Bago Daro to remain above the floodwaters of the Indus.

People push and shove to get to the boats, wading through the water, men lifting children onto the wooden benches, women with babies clambering over the sides. A few men elbow their way through the mass of bodies and hold their ground: those women and children not strong enough to compete are left behind.

It is all over in minutes, the boatmen pulling on the cords to start the outboard motors, the boats pushing backwards and away. Those not strong or lucky enough to grab a place stand and watch in despair. In the water, a little boy stands bewildered. He does not cry, or wave, or show any emotion. He just stands there, staring blankly, receding into the distance. And then he is gone, obscured by the top of a tree, and the boats are once again out on the open water, heading for the city of Shahdadkot and what amounts, in the flood-ravaged province of Sind, to safety.

Most of the villagers have never been on a boat before. They sit quietly for a while, then start to talk.

It was five days ago that the water arrived, five days that they have been trapped by the rising waters. They had been asleep in their houses, says Nawabi Khatoon, when they realised. They had heard no warnings, she says, cradling the youngest of her four children, one-year-old Zenat. No-one told them their homes, miles from the river, were in the slightest danger.

They have been drinking the flood waters, she says, because there was nothing else. They had no food, no medicines. Her husband is missing, along with their animals. She has no idea if they are alive or dead.

They grabbed what they could, says Shabeer Ahmad, and waded through the rising water to the highest ground they could find: the graveyard. One person drowned, he says; others are very ill. The very sick were not among those who managed to fight their way onto today’s rescue mission.

A month into the unfolding disaster, hundreds of thousands of people are still being forced to abandon their homes, fleeing before a fresh surge of water swelling the already overflowing Indus as it rushes towards the sea. High tides have slowed the rate at which the Indus can empty into the Arabian Sea. Hundreds of thousands of people were still being evacuated this week from areas of Sind, including around Shahdadkot and Hyderabad. An estimated 3.6 million people are homeless in Sind alone.

That morning, the boat pushed off two hours late at 9.45 from the levee on the outskirts of the city. First the boatmen were late, then there was no fuel, then there was a crush of men wanting to be ferried back to their villages to retrieve possessions.

Behind the levee, towards the city, the land was mostly dry. In front, there was only water and the tops of trees poking out as far as the horizon. There should be no water here, but a breach in a canal has inundated the vast plain, wiping out villages, livestock and crops, everything that stood in its way.

Local agency NGO’s Development Society, a partner of the UK’s Action Aid, has rescued about 650 people so far over the last week, Ghaffar Pandrani told me as we sat in the rear of the boat. “They don’t have support from our government or anyone. We are only a small group; we can’t help them all,” he said.

The journey to Bago Daro covered 35km and took the best part of three hours. There was no shade in the boats and the water quickly ran out. The bottom of the boat quickly filled with water and had to be bailed out every few minutes.

The sheer scale of the flood became clear as we headed further away from Shahdadkot. A few broken buildings poked above the surface, but the only signs of life were the water birds and four dogs trapped on a broken levee. They ran backwards and forwards, barking frantically as the boat passed.

By the time the boat returns to Shahdadkot, it is 3.30pm. Yasin Brohi watches it pull up to the levee. The 45-year-old was rescued two days ago with his wife from a scrap of higher ground. It took less than half an hour for his house to disappear. “All we have left is our lives,” he says.

A cloud of flies has settled on two-year-old Ambreen Magsi and her brother and sisters. They sit or lie listlessly in the heat of a schoolyard in the abandoned city, where once more than 100,000 people lived.

Shahdadkot’s streets are virtually empty, the shops shuttered, a few dogs trotting down the dusty lanes. Ninety per cent of the population has gone, fleeing ahead of the advancing waters.

Ambreen’s mother, Nawabzadi, flicks at the flies, which rise up and settle again on her one-year-old sister, Samreen, lying asleep on the concrete. They were at home a week ago when they spotted the water rushing towards their village, Haibat Magsi. Within a couple of hours, it was surrounded. Muzir Ahmed Magsi packed his family onto a tractor and they fled.

“It was so fast rising: it took only a couple of hours,” says the 35-year-old, shaking his head in disbelief. “I saw the water in the fields and we got on the tractor and went as fast as it would go.” When they looked back, the water was closing over their home.

Everything they ever had has gone, not that it was much to start with. “We are waiting for God to help us because there is no support from the government,” Muzir says.

They were farmers. Now they sleep in the schoolyard and wonder what will become of them. They will have to find work as labourers, he says, and try to slowly start again. All gone, he says, and looks away.

An old man and his wife appear in the distance along the levee. Mushtaq Jamali leans heavily on a stick; Islam Hatoum has a few possessions tied in a cloth. Behind them, a digger is pushing more earth up against the bulwark that is all that stands between the city and disaster. Slowly, they make their way towards the point where the boats are tied up. They are confused, hot, disconsolate. They have left their animals behind on a piece of dry ground and tottered along the railway line, and then on to the levee. They want someone to help; they cannot understand why no help has come.

The UN estimates that 800,000 people remain trapped in areas accessible only by air. A fifth of the country is under water. As many as 5 million people have no shelter at all. Sind alone has 1,800 makeshift relief camps, housing about 700,000 people. Disease remains a significant threat and the numbers needing food aid are rising daily. To complicate matters further, the Taliban threatened last week to target what it called the “unacceptable horde” of foreigners involved in the relief efforts.

President Zardari has said recovery will take at least three years. Those in Sind cannot see that far ahead. The planting season is nearly upon them, but there is nowhere to plant. Without crops, there will be no food.

Though the death toll has remained markedly low for such a disaster, at an estimated 1,600, more than 1.2m homes have been damaged or destroyed, and many families have lost everything they owned. For many farmers, the loss of their animals is the cruellest blow: they can rebuild their homes, but their animals represented their real wealth.

UK public donations to the Disasters Emergency Committee have now topped £40m. Still the UN says that the disaster remains underfunded.

Action Aid, which is helping to evacuate those stranded around Shahdadkot, is one of 13 aid agencies that make up the Disasters Emergency Committee. Donations can be made at www.dec.org.uk or by telephone on 0370 60 60 900

Originally published here

Ben Bernanke, chairman of the Federal Reserve, says the Fed needs help to revive the US economy. But it won’t get any

What did the chairman of the Federal Reserve say in Jackson Hole? According to much of the reaction, Ben Bernanke said the “Fed stands by to boost US growth” (FT), or that the “Fed is ready to prop up economy” (NYT) or even that the “Fed stands ready to support recovery” (WSJ).

In other news, a man was bitten by a dog. And by that I mean: the reverse would actually be news.

Yes, Bernanke said the Fed would act if the economic outlook deteriorated further, or if there were signs of deflation. He doesn’t appear to think that either of those events are likely to occur, especially the deflation, but if they do, the Fed will do stuff. Which is exactly what you’d expect a modern central bank governor to say.

But what was missed was Bernanke’s low-key plea for help – from the government.

Bernanke kicked off his Jackson Hole speech by detailing the problem the US faces, notably: “In many countries, including the United States and most other advanced industrial nations, growth during the past year has been too slow and joblessness remains too high.”

He followed that by saying: “This list of concerns makes clear that a return to strong and stable economic growth will require appropriate and effective responses from economic policymakers across a wide spectrum, as well as from leaders in the private sector. Central bankers alone cannot solve the world’s economic problems.”

Now, appointed technocrats such as Fed chairmen have to avoid getting involved in politics. They can’t come out and say “what the US economy really needs is another fiscal stimulus passed by Congress”, even if that’s what they believe.

Americans, more than the citizens of other advanced economies, are particularly spooked by the prospect of unemployment because, as the FT’s Martin Wolf observes, “jobs are, in the US, the only safety net for those of working age.” So consumers react to economic uncertainty by cutting back on spending and saving money or paying off debt. Bernanke noted: “Households, collectively, are even more cautious about the economic outlook and their own prospects than we previously believed.”

To combat this there’s only so much that can be done by monetary policy, the part of the economy under Bernanke’s domain. There’s an old joke that relying on monetary policy to run an economy is like playing golf with only one club. The missing club is of course fiscal policy.

The White House and Democrats could exploit Bernanke’s plea by pushing for further fiscal stimulus and allowing monetary and fiscal policy to work in tandem. Given the fervour of Republican opposition, the chances of Barack Obama passing another stimulus package worth serious money – in the hundreds of billions of dollars – are non-existent, despite the fact that the bond market’s appetite for buying US Treasuries means it could be cheaply financed. And once the Republicans take control of the House and possibly Senate after the 2010 midterm elections in November, the chances are less than zero. So the Fed is going to have to do all the heavy lifting by itself.

There’s little the Fed can do that it’s not doing already about the central problem of the US economy: its housing market. Some 29% of all houses with mortgages in the US are “under water” – that is, the resale value is less than the outstanding mortgage. That’s a dead weight around the economy’s throat but US policymakers mistakenly believe that the housing market’s distress is a symptom and not a cause.

Bernanke thinks the housing market will pick up, if prices fall far enough and credit remains easy, but the problem there is that a further fall in house prices drags more mortgages under water, and puts off the day when house building starts adding new jobs to the economy.

In the meantime, Bernanke’s Fed doesn’t have much powder left in its locker, with monetary policy already extraordinarily easy. Earlier this week Alan Blinder, a former Fed official and a very smart economist, outlined steps the Fed could still take – all of which Bernanke ticked off in his Jackson Hole speech.

“The bad news is that the Fed has already spent its most powerful ammunition, only the weak stuff is left,” Blinder warned. And he’s right.

Bernanke, though, is also right that a durable recovery is underway. The prospects of a “double dip” into a second recession are far fetched. Unemployment remains weak but the jobs market always lags behind the rest of the economy.

The only surprise is that the economy has not recovered more quickly, based on its revival from previous slumps. But that, I believe, is because of the housing market, which has never seen such a dramatic collapse in the course of US history. Fixing that needs the “appropriate and effective responses from economic policymakers” that Bernanke is asking for.

Originally published here