It's nice to know there's another perspective in the world.
I can only hope that people don't get all in a huff about Venezuela becoming a Socialist country. It doesn't really matter what ideology they espouse as a government and nation if it works.
While the idea of granting major restructuring powers to a president seems unnecessary, it has the potential to expedite the process. It also has the potential to founder in corruption and the betterment of a small cadre of insiders, rather than achieving its ambitious aims.
The idea of more effectively providing the necessities of a modern existence to an entire nation's population is noble. But socialism is an economic philosophy that engenders moralistic policy making and openly promotes vested interests, often to the detriment of a nation's long term productivity.
Odd that most capitalist/democratic countries practice the same abuses under another name.
But, again, if it works, the underlying philosophy is ultimately irrelevant.
1.31.2007
1.18.2007
Get Out! The Recap
How much stupider can you be? Or, at least, that's what I think when I see this and this.
Don't start shit that no one can finish! This and this convince me that our administration has a death wish.
Living in the present means living towards the future, too. Finally, a voice of sanity, from the last place on Earth from which I would expect sanity to spew.
Are we going to survive?
January 18, 2007
Bush on Iraq Plan: "I Believe It Will Work"
By REUTERS
Filed at 8:36 p.m. ET
WASHINGTON (Reuters) - President Bush insisted on Thursday his reworked Iraq strategy could succeed as he worked on a State of the Union speech expected to include a new defense of his much-criticized policy.
Bush's plan to send 21,500 more U.S. troops has been hammered by Democrats and many Republicans since it was unveiled last week. He suggested it should be given a chance and challenged critical lawmakers to offer an alternative.
``I believe it will work,'' Bush told Belo television, a U.S. group of local stations.
White House spokesman Tony Snow said Bush would use part of his prime-time televised address on Tuesday before a joint session of the U.S. Congress -- now controlled by Democrats -- to talk about the war on terrorism, which the administration says includes Iraq.
It comes as Democrats and many of Bush's own Republicans are preparing to vote on a nonbinding resolution to protest sending more troops to Iraq and to call for more diplomacy and an ``appropriately expedited'' transfer of military responsibilities to Iraqi forces.
``I understand resolutions,'' Bush told Sinclair television, another group of local stations. ``My advice to those who are speaking out against a new plan that hasn't been given a chance to work is present a plan you think will work. If disaster is not an option, what do you think will make it successful in Iraq?'' he said.
House Speaker Nancy Pelosi said Congress would vote to oppose Bush's new Iraq war strategy because it disagreed with the policy, but that she would not move to block funding for a troop increase.
``Democrats will never cut off funding for our troops when they are in harm's way.'' Pelosi said in a taped interview with ABC's ``Good Morning America,'' airing on Friday. ``The president knows that because the troops are in harm's way, that we won't cut off the resources. That's why he's moving so quickly to put them in harm's way.''
Bush's attempts to gain traction with his plan come amid frictions with Iraqi Prime Minister Nuri al-Maliki, who disputed Bush's contention this week that the hanging of Saddam Hussein looked like a revenge killing and said Iraq's need for U.S. forces would drop dramatically if Washington would speed up the equipping and arming of Iraq's security forces.
Bush tried to avoid a public clash with Maliki.
``My new strategy is aimed at helping the Iraqi government do exactly what the prime minister said what he wants to do,'' he told Sinclair. ``Now it's up to him.''
Snow said while ``there's a disagreement on the handling of the Saddam execution,'' the two governments are cooperating and ''he's (Maliki) not in a fight with us.''
With the debate in Washington dominated by Iraq, Bush planned to devote a great portion of his speech to raise the profile of his domestic agenda.
That includes changing immigration laws, improving health care and education and reducing U.S. dependence on foreign oil.
He is widely expected to announce ways to expand the production and use of alternative fuels. He is under pressure from European leaders to take bolder steps to slow greenhouse-gas emissions many scientists blame for global warming.
Bush opposes mandatory limits on greenhouse-gas emissions, saying they would hurt the U.S. economy, and prefers voluntary ways of reducing them.
Snow said Bush's objective was to ``balance the needs of security and at the same time also the environment and you can expect him to make that linkage in the speech.''
January 18, 2007
Retired Generals Criticize Bush’s Plan for Iraq
By JOHN HOLUSHA
A panel of retired generals told a United States Senate committee today that sending 21,500 additional troops to Iraq will do little to solve the underlying political problems in the country.
“Too little and too late,” is the way Gen. Joseph P. Hoar, a former chief of the Central Command, described the effort to the Senate Foreign Relations Committee. The additional troops are intended to help pacify Baghdad and a restive province, but General Hoar said American leaders had failed to understand the political forces at work in the country. “The solution is political, not military,” he said.
“A fool’s errand,” was the judgment of Gen. Barry R. McCaffrey, who commanded troops in the first Gulf War. He said other countries had concluded that the effort in Iraq was not succeeding, noting that “our allies are leaving us and will be gone by summer.”
Describing the situation in Iraq as “desperate but not terminal,” he said Iraqis had to try to make political deals domestically and negotiate for stability with neighboring nations, particularly Syria and Iran.
The American effort in Iraq has gone badly because the United States did not understand the consequences of deposing Saddam Hussein, said Lt. Gen. William E. Odom, a former director of the National Security Agency. He said the principal beneficiary of the war was Iran and Al Qaeda, not the United States.
“There is no way to win a war that is not in your interests,” he said.
In statements and in questioning, senators were skeptical about the increased commitment of troops and the likely outcome of the deployment. Senator Richard Lugar, a Republican from Indiana, noted that he had raised questions about the effort in Iraq as long ago as 2003, and said, “Today, I don’t have an understanding about how it will work militarily.”
One general warned that even a plan to start withdrawing American forces from the country carried the risk that the armed Iraqi population will step up the level of attacks. “We will be shot at as we are going out.” said Gen. Jack Keane, a former vice chief of staff of the Army.
January 18, 2007
Iran’s President Criticized Over Nuclear Issue
By NAZILA FATHI and MICHAEL SLACKMAN
TEHRAN, Jan. 18 — Iran’s outspoken president, Mahmoud Ahmadinejad, appears to be under pressure from the highest authorities in Iran to end his involvement in the country’s nuclear program, a sign that his political capital is declining as his country comes under increasing international pressure.
Less than a month after the United Nations Security Council imposed sanctions on Iran to curb its nuclear program, two hard-line newspapers, including one owned by Supreme Leader Ayatollah Ali Khamenei, called on the president to stay out of all matters nuclear.
In the hazy world of Iranian politics, such a public rebuke was seen as a sign that the Supreme Leader himself — who has final say on all matters of state —may no longer support the president as the public face of defiance to the West. It is the first sign that the president has lost any degree of confidence from the leader, a potentially damaging reality for a president who has rallied his nation and defined his administration by declaring nuclear power to be Iran’s “inalienable right.”
It was unclear, however, whether this was merely an effort to improve Iran’s public image by lowering Mr. Ahmadinejad’s public profile or signaled any change in policy.
The Iranian presidency is a relatively weak position with no official authority over foreign policy, the domain of the supreme leader. But Mr. Ahmadinejad has used the bully pulpit to insert himself into the nuclear debate, and as long as he appeared to enjoy Mr. Khamenei’s support, he could continue.
While Iran remains publicly defiant, insisting it will move ahead with its nuclear ambitions, it is under increasing strain as political and economic pressures grow. And the message that Iran’s most senior officials seem to be sending is that the president, with his harsh approach and caustic comments, is undermining Iran’s cause and its standing.
Mr. Ahmadinejad dismissed the Security Council resolution as “a piece of torn paper.“
But the daily newspaper Jomhouri-Elsami, which belongs to Ayatollah Khamenei, said, “The resolution is certainly harmful for the country,” adding that it is “too much to call it a piece of torn paper.”
The newspaper said the nuclear case requires its own diplomacy, “sometimes toughness and sometimes flexibility.”“
In another sign of pressure on the president to distance himself from the nuclear issue, a second newspaper run by an aide to the country’s chief nuclear negotiator, Ali Larijani, also pressed him to end his involvement with the nuclear program. Mr. Larijani also ran for president and was selected for his post by the supreme leader.
“They want to minimize the consequences of sanctions now that they have been imposed,” said Mohammad Atrianfar, the former head of the daily Shargh and a reformist politician. “But they don’t have clear strategy and they are taking one step at a time.”
Iran’s president entered office more than a year ago as an outsider. He was mayor of Tehran and promised to challenge the status quo, to equally distribute Iran’s oil wealth and to restore what he saw as the lost values of the Islamic revolution. His was a populist message, centered on a socialist economic model and Islamic values. And from the start he found opposition from the right and left, in the Iranian parliament and among those who viewed themselves as being more pragmatic.
That pressure has continued — and seems now to have gained more credibility in the face of the sanctions and Iran’s troubled economic standing. The United States’ increased pressure on Iran in Iraq has also raised concerns in Tehran and may be behind efforts to restrain the president, political analysts in Tehran said.
“The resolution has decreased Iran’s political credibility in the international community and so other countries cannot defend Iran,” Ahmad Shirzad, a former member of parliament and reformist politician said.
Although the sanctions imposed by the Security Council on Dec. 23 were limited to Iran’s nuclear program, they have started to cause disruptions in the economy.
About 50 members of parliament signed a letter this week calling on the president to appear before parliament to answer questions about the nuclear case. The signatories need at least another 22 members to sign before it can be enforced.
In another letter 150 lawmakers criticized the president for his economic policies, which have led to a surge in inflation, and for his failure to submit his annual budget for next year in time.
The stock market, which was already in a slump, continued to decline more rapidly in the past month as buyers stayed away. The daily Kargozaran reported last week the number of traders decreased by 46 percent since the Security Council resolution was passed.
“The resolution has had a psychological effect on people,” said Ali Hagh, an economist in Tehran. “It does not make sense for investors not to consider political events when they want to invest their money.”
The daily Kargozaran reported that a group of powerful businessmen, the Islamic Coalition Party, met with Mohammad Nahavandian, a senior official at the Supreme National Security Council, and called for moderation in the country’s nuclear policies to prevent further damage to the economy.
Eight major European banks have severed their business ties with Iran.
Economists say that move by the banks will also lead to a further increase in the inflation because importers must turn to complicated ways to finance purchases.
“The nuclear issue has paved the way for other forms of pressures on Iran,” said Ahmad Shirzad, a reformist politician and former member of parliament.
Despite Mr. Ahmadinejad’s harsh language since the resolution was passed, Mr. Khamenei has not referred to the resolution directly and only once said that Iran will not give up its right to develop nuclear power. Mr. Larijani has said that Iran will not quit the Nuclear Nonproliferation Treaty or bar International Atomic Energy Inspectors despite earlier threats.
Nazila Fathi reported from Tehran, and Michael Slackman from Cairo.
January 18, 2007
Bernanke: Budget Action Needed Before "Storm"
By REUTERS
Filed at 12:50 p.m. ET
WASHINGTON ( Reuters) - Federal Reserve Chairman Ben Bernanke bluntly warned the U.S. Congress on Thursday that failure to act soon to deal with the budgetary strains posed by an aging U.S. population could lead to serious economic harm.
``We are experiencing what seems likely to be the calm before the storm,'' Bernanke told the Senate Budget Committee as he acknowledged projections that the U.S. budget deficit could hold steady or even narrow in the near-term.
``However, if early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost,'' he added, citing worrisome long-term projections on the cost of programs such as Social Security and Medicare.
``The longer we wait, the more severe, the more draconian, the more difficult the adjustments are going to be,'' Bernanke cautioned as he answered questions before the panel.
The Fed chairman did not discuss the outlook for interest rates in his testimony, the first he has delivered since Democrats took control of Congress after November elections. He is expected to testify on Fed policy on February 14-15.
Bernanke also hewed closely to a previous pledge to remain neutral in Washington budget policy debates, steering clear of specific advice on how Congress might meet or lower the projected costs of retirement and health-care programs even as he warned of the risks of inaction.
``Dealing with the resulting fiscal strains will pose difficult choices for the Congress, the administration, and the American people,'' Bernanke said.
``VICIOUS CYCLE''
Bernanke cited projections by the Congressional Budget Office that showed spending on entitlement programs would reach about 15 percent of U.S. gross domestic product by 2030, a size he said risked fueling an ever-growing mountain of debt.
``A vicious cycle may develop in which large deficits lead to rapid growth in debt and interest payments, which in turn adds to subsequent deficits,'' Bernanke said.
``Ultimately, this expansion of debt would spark a fiscal crisis, which could be addressed only by very sharp spending cuts or tax increases, or both,'' he added.
The Fed chief said whatever budget decisions were taken, tax rates would need to be set at a level that achieved ``an appropriate balance of spending and revenues in the long run.''
Bernanke said advocates of lower taxes would have to accept lower spending on entitlement programs. Likewise, proponents of more-expansive government programs must recognize the need for higher taxes brought about by higher spending, he added.
``Unfortunately, economic growth alone is unlikely to solve the nation's impending fiscal problems,'' he said.
President George W. Bush has also warned of the risks of inaction but a plan he offered to shore-up Social Security by allowing workers to invest retirement accounts in stocks and bonds was rejected by Democrats, who argued it would undermine retirement security.
Trustees for the retirement program said last year Social Security would exhaust its assets in 2040, while the trust fund for Medicare, which covers retiree health-care costs, would run dry in just 12 years.
Don't start shit that no one can finish! This and this convince me that our administration has a death wish.
Living in the present means living towards the future, too. Finally, a voice of sanity, from the last place on Earth from which I would expect sanity to spew.
Are we going to survive?
January 18, 2007
Bush on Iraq Plan: "I Believe It Will Work"
By REUTERS
Filed at 8:36 p.m. ET
WASHINGTON (Reuters) - President Bush insisted on Thursday his reworked Iraq strategy could succeed as he worked on a State of the Union speech expected to include a new defense of his much-criticized policy.
Bush's plan to send 21,500 more U.S. troops has been hammered by Democrats and many Republicans since it was unveiled last week. He suggested it should be given a chance and challenged critical lawmakers to offer an alternative.
``I believe it will work,'' Bush told Belo television, a U.S. group of local stations.
White House spokesman Tony Snow said Bush would use part of his prime-time televised address on Tuesday before a joint session of the U.S. Congress -- now controlled by Democrats -- to talk about the war on terrorism, which the administration says includes Iraq.
It comes as Democrats and many of Bush's own Republicans are preparing to vote on a nonbinding resolution to protest sending more troops to Iraq and to call for more diplomacy and an ``appropriately expedited'' transfer of military responsibilities to Iraqi forces.
``I understand resolutions,'' Bush told Sinclair television, another group of local stations. ``My advice to those who are speaking out against a new plan that hasn't been given a chance to work is present a plan you think will work. If disaster is not an option, what do you think will make it successful in Iraq?'' he said.
House Speaker Nancy Pelosi said Congress would vote to oppose Bush's new Iraq war strategy because it disagreed with the policy, but that she would not move to block funding for a troop increase.
``Democrats will never cut off funding for our troops when they are in harm's way.'' Pelosi said in a taped interview with ABC's ``Good Morning America,'' airing on Friday. ``The president knows that because the troops are in harm's way, that we won't cut off the resources. That's why he's moving so quickly to put them in harm's way.''
Bush's attempts to gain traction with his plan come amid frictions with Iraqi Prime Minister Nuri al-Maliki, who disputed Bush's contention this week that the hanging of Saddam Hussein looked like a revenge killing and said Iraq's need for U.S. forces would drop dramatically if Washington would speed up the equipping and arming of Iraq's security forces.
Bush tried to avoid a public clash with Maliki.
``My new strategy is aimed at helping the Iraqi government do exactly what the prime minister said what he wants to do,'' he told Sinclair. ``Now it's up to him.''
Snow said while ``there's a disagreement on the handling of the Saddam execution,'' the two governments are cooperating and ''he's (Maliki) not in a fight with us.''
With the debate in Washington dominated by Iraq, Bush planned to devote a great portion of his speech to raise the profile of his domestic agenda.
That includes changing immigration laws, improving health care and education and reducing U.S. dependence on foreign oil.
He is widely expected to announce ways to expand the production and use of alternative fuels. He is under pressure from European leaders to take bolder steps to slow greenhouse-gas emissions many scientists blame for global warming.
Bush opposes mandatory limits on greenhouse-gas emissions, saying they would hurt the U.S. economy, and prefers voluntary ways of reducing them.
Snow said Bush's objective was to ``balance the needs of security and at the same time also the environment and you can expect him to make that linkage in the speech.''
January 18, 2007
Retired Generals Criticize Bush’s Plan for Iraq
By JOHN HOLUSHA
A panel of retired generals told a United States Senate committee today that sending 21,500 additional troops to Iraq will do little to solve the underlying political problems in the country.
“Too little and too late,” is the way Gen. Joseph P. Hoar, a former chief of the Central Command, described the effort to the Senate Foreign Relations Committee. The additional troops are intended to help pacify Baghdad and a restive province, but General Hoar said American leaders had failed to understand the political forces at work in the country. “The solution is political, not military,” he said.
“A fool’s errand,” was the judgment of Gen. Barry R. McCaffrey, who commanded troops in the first Gulf War. He said other countries had concluded that the effort in Iraq was not succeeding, noting that “our allies are leaving us and will be gone by summer.”
Describing the situation in Iraq as “desperate but not terminal,” he said Iraqis had to try to make political deals domestically and negotiate for stability with neighboring nations, particularly Syria and Iran.
The American effort in Iraq has gone badly because the United States did not understand the consequences of deposing Saddam Hussein, said Lt. Gen. William E. Odom, a former director of the National Security Agency. He said the principal beneficiary of the war was Iran and Al Qaeda, not the United States.
“There is no way to win a war that is not in your interests,” he said.
In statements and in questioning, senators were skeptical about the increased commitment of troops and the likely outcome of the deployment. Senator Richard Lugar, a Republican from Indiana, noted that he had raised questions about the effort in Iraq as long ago as 2003, and said, “Today, I don’t have an understanding about how it will work militarily.”
One general warned that even a plan to start withdrawing American forces from the country carried the risk that the armed Iraqi population will step up the level of attacks. “We will be shot at as we are going out.” said Gen. Jack Keane, a former vice chief of staff of the Army.
January 18, 2007
Iran’s President Criticized Over Nuclear Issue
By NAZILA FATHI and MICHAEL SLACKMAN
TEHRAN, Jan. 18 — Iran’s outspoken president, Mahmoud Ahmadinejad, appears to be under pressure from the highest authorities in Iran to end his involvement in the country’s nuclear program, a sign that his political capital is declining as his country comes under increasing international pressure.
Less than a month after the United Nations Security Council imposed sanctions on Iran to curb its nuclear program, two hard-line newspapers, including one owned by Supreme Leader Ayatollah Ali Khamenei, called on the president to stay out of all matters nuclear.
In the hazy world of Iranian politics, such a public rebuke was seen as a sign that the Supreme Leader himself — who has final say on all matters of state —may no longer support the president as the public face of defiance to the West. It is the first sign that the president has lost any degree of confidence from the leader, a potentially damaging reality for a president who has rallied his nation and defined his administration by declaring nuclear power to be Iran’s “inalienable right.”
It was unclear, however, whether this was merely an effort to improve Iran’s public image by lowering Mr. Ahmadinejad’s public profile or signaled any change in policy.
The Iranian presidency is a relatively weak position with no official authority over foreign policy, the domain of the supreme leader. But Mr. Ahmadinejad has used the bully pulpit to insert himself into the nuclear debate, and as long as he appeared to enjoy Mr. Khamenei’s support, he could continue.
While Iran remains publicly defiant, insisting it will move ahead with its nuclear ambitions, it is under increasing strain as political and economic pressures grow. And the message that Iran’s most senior officials seem to be sending is that the president, with his harsh approach and caustic comments, is undermining Iran’s cause and its standing.
Mr. Ahmadinejad dismissed the Security Council resolution as “a piece of torn paper.“
But the daily newspaper Jomhouri-Elsami, which belongs to Ayatollah Khamenei, said, “The resolution is certainly harmful for the country,” adding that it is “too much to call it a piece of torn paper.”
The newspaper said the nuclear case requires its own diplomacy, “sometimes toughness and sometimes flexibility.”“
In another sign of pressure on the president to distance himself from the nuclear issue, a second newspaper run by an aide to the country’s chief nuclear negotiator, Ali Larijani, also pressed him to end his involvement with the nuclear program. Mr. Larijani also ran for president and was selected for his post by the supreme leader.
“They want to minimize the consequences of sanctions now that they have been imposed,” said Mohammad Atrianfar, the former head of the daily Shargh and a reformist politician. “But they don’t have clear strategy and they are taking one step at a time.”
Iran’s president entered office more than a year ago as an outsider. He was mayor of Tehran and promised to challenge the status quo, to equally distribute Iran’s oil wealth and to restore what he saw as the lost values of the Islamic revolution. His was a populist message, centered on a socialist economic model and Islamic values. And from the start he found opposition from the right and left, in the Iranian parliament and among those who viewed themselves as being more pragmatic.
That pressure has continued — and seems now to have gained more credibility in the face of the sanctions and Iran’s troubled economic standing. The United States’ increased pressure on Iran in Iraq has also raised concerns in Tehran and may be behind efforts to restrain the president, political analysts in Tehran said.
“The resolution has decreased Iran’s political credibility in the international community and so other countries cannot defend Iran,” Ahmad Shirzad, a former member of parliament and reformist politician said.
Although the sanctions imposed by the Security Council on Dec. 23 were limited to Iran’s nuclear program, they have started to cause disruptions in the economy.
About 50 members of parliament signed a letter this week calling on the president to appear before parliament to answer questions about the nuclear case. The signatories need at least another 22 members to sign before it can be enforced.
In another letter 150 lawmakers criticized the president for his economic policies, which have led to a surge in inflation, and for his failure to submit his annual budget for next year in time.
The stock market, which was already in a slump, continued to decline more rapidly in the past month as buyers stayed away. The daily Kargozaran reported last week the number of traders decreased by 46 percent since the Security Council resolution was passed.
“The resolution has had a psychological effect on people,” said Ali Hagh, an economist in Tehran. “It does not make sense for investors not to consider political events when they want to invest their money.”
The daily Kargozaran reported that a group of powerful businessmen, the Islamic Coalition Party, met with Mohammad Nahavandian, a senior official at the Supreme National Security Council, and called for moderation in the country’s nuclear policies to prevent further damage to the economy.
Eight major European banks have severed their business ties with Iran.
Economists say that move by the banks will also lead to a further increase in the inflation because importers must turn to complicated ways to finance purchases.
“The nuclear issue has paved the way for other forms of pressures on Iran,” said Ahmad Shirzad, a reformist politician and former member of parliament.
Despite Mr. Ahmadinejad’s harsh language since the resolution was passed, Mr. Khamenei has not referred to the resolution directly and only once said that Iran will not give up its right to develop nuclear power. Mr. Larijani has said that Iran will not quit the Nuclear Nonproliferation Treaty or bar International Atomic Energy Inspectors despite earlier threats.
Nazila Fathi reported from Tehran, and Michael Slackman from Cairo.
January 18, 2007
Bernanke: Budget Action Needed Before "Storm"
By REUTERS
Filed at 12:50 p.m. ET
WASHINGTON ( Reuters) - Federal Reserve Chairman Ben Bernanke bluntly warned the U.S. Congress on Thursday that failure to act soon to deal with the budgetary strains posed by an aging U.S. population could lead to serious economic harm.
``We are experiencing what seems likely to be the calm before the storm,'' Bernanke told the Senate Budget Committee as he acknowledged projections that the U.S. budget deficit could hold steady or even narrow in the near-term.
``However, if early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost,'' he added, citing worrisome long-term projections on the cost of programs such as Social Security and Medicare.
``The longer we wait, the more severe, the more draconian, the more difficult the adjustments are going to be,'' Bernanke cautioned as he answered questions before the panel.
The Fed chairman did not discuss the outlook for interest rates in his testimony, the first he has delivered since Democrats took control of Congress after November elections. He is expected to testify on Fed policy on February 14-15.
Bernanke also hewed closely to a previous pledge to remain neutral in Washington budget policy debates, steering clear of specific advice on how Congress might meet or lower the projected costs of retirement and health-care programs even as he warned of the risks of inaction.
``Dealing with the resulting fiscal strains will pose difficult choices for the Congress, the administration, and the American people,'' Bernanke said.
``VICIOUS CYCLE''
Bernanke cited projections by the Congressional Budget Office that showed spending on entitlement programs would reach about 15 percent of U.S. gross domestic product by 2030, a size he said risked fueling an ever-growing mountain of debt.
``A vicious cycle may develop in which large deficits lead to rapid growth in debt and interest payments, which in turn adds to subsequent deficits,'' Bernanke said.
``Ultimately, this expansion of debt would spark a fiscal crisis, which could be addressed only by very sharp spending cuts or tax increases, or both,'' he added.
The Fed chief said whatever budget decisions were taken, tax rates would need to be set at a level that achieved ``an appropriate balance of spending and revenues in the long run.''
Bernanke said advocates of lower taxes would have to accept lower spending on entitlement programs. Likewise, proponents of more-expansive government programs must recognize the need for higher taxes brought about by higher spending, he added.
``Unfortunately, economic growth alone is unlikely to solve the nation's impending fiscal problems,'' he said.
President George W. Bush has also warned of the risks of inaction but a plan he offered to shore-up Social Security by allowing workers to invest retirement accounts in stocks and bonds was rejected by Democrats, who argued it would undermine retirement security.
Trustees for the retirement program said last year Social Security would exhaust its assets in 2040, while the trust fund for Medicare, which covers retiree health-care costs, would run dry in just 12 years.
1.15.2007
Virtual Diamonds - This is Only the Beginning
This is the beginning of the essay I planned to submit along with my graduate school application today. The completed version - when I get there - will of course be submitted unsolicited as an addendum to my portfolio. Read on.
Virtual Diamonds: The Economics of Massively Multiplayer Online Role-Playing Games and the Impact on Perceptions of the Value of Intangible Goods
A revolution is occurring in our economy. As economists in rich countries note the diminishing returns of happiness from large increases in wealth , and the developing world strives to reach even the most basic foundations of modern life , a conceptual shift in human understanding of value is taking place in the vibrant economies of Massively Multiplayer Online Role-Playing Games (MMORPGs) . The integration of these “virtual” economies with the “real world” economy will have far reaching implications across all social systems, and may cause a dramatic revision in global systems of exchange and the valuation of goods, especially intangible goods and their importance to the global economy.
Massively Multiplayer Online Role-Playing Games (MMORPGs) exist in a digitally rendered environment, popularly referred to as “virtual” or “synthetic” worlds. Definitions of these worlds use three main components: computer- or digitally-mediated interactions with humans, persistence of the world through time, and the existence of a complete environment based on a set of rules . The exceptional aspect of this communication technology is its immersive quality, which translates into an investment of emotional energy through an (almost) all-encompassing medium. This immensely powerful pull relies on two essential human phenomena: the brain registers all visual stimuli as “real”, and collective confidence or belief reinforces the individual’s tendency to have “real” interactions with the game environment . Because of this, the societies growing in these worlds develop many, if not all of the systems that arise from human interactions in Earth societies.
The economies of virtual worlds demand particular notice, partly because they have already resulted in measurable transactions with Earth societies, and partly because they have the most potential for generating conflict with the systems and conventions accepted by Earth’s economy. The mainstream acceptance, and future integration of the conceptual and financial aspects of virtual world economies, however, has the potential for far-reaching benefits to the global economy in the form of expanded productivity, harnessed human capital and the redistribution, or reassessment of wealth.
The popular, and, to a small extent, academic debate surrounding the emerging economies of MMORPGs hinges on the real world monetizing of the goods that exist in these virtual worlds. The exchange of real world currencies for these goods outside of the game platforms is called Real Money Trade (RMT). For some critics and players, the commodifying of these goods by assigning a dollar value represents a rejection of these worlds as fantasy, and is resented as cheating and undermining the purity of play, inspiring some game companies and player organizations to take an active position against RMT. Sony Online Entertainment, the developer of EverQuest and partner (with LucasArts) in Star Wars: Galaxies, “has done a u-turn in its hardline position on virtual trade. The company was adamant about pursuing professional virtual traders, and even made a deal with eBay to prosecute sellers of EverQuest goods. Yet last month it announced Sony Online Station Exchange, a service that acts as an in-game marketplace for players who wish to trade real money for virtual properties” . The potential for real world profits is too compelling to reject for philosophical objections; MMORPG goods have already developed trade on a massive scale – some estimates for the year 2006 put the total value at around $1 billion, rising to $1.5 billion in 2007 . For all participants, the existence of RMT has altered the perceptions of virtual worlds as games, and for some, has changed the nature of their participation in these worlds .
Concepts of value, the foundation of all systems of economic exchange, develop in virtual worlds in a similar way to the concepts of value that apply to the physical world, even though the goods that exist in these game worlds may not be rendered in physical form. The intangible value of virtual goods distinguishes them from their physical equivalents only in cases where the primary function of the good is for physical consumption; virtual food and water, though they may sustain your avatar (your virtual world projected identity) in the game, can not hold the same value to your physical body. All other real world goods, however, retain elements of intangible value that are directly translated into the virtual realm. Building a large, architecturally imposing home serves two purposes – it provides shelter, certainly, but its value is derived from the intangible aspects of status and wealth that it represents. The value of a virtual good is derived from the same intangible elements of collective consensus – the more that the society desires it and individuals can apply it to their real or perceived advantage, the more valuable it becomes.
Value is a social construct. As expressed in economist language, “Society consists of thousands or millions of people in decentralized relationships, quietly expressing their interests; the aggregate effect of their activity is to create an anonymous force that dictates the price of things” . The “activity” refers to the buying and selling of goods and services - this movement is the economy. Since the introduction of Keynesian economics, even capitalist governments (and in the game context, the developers) have influenced the supply side of the market to manipulate price, but the value of goods and services still exists as a social perception. “The more people who accept an illusion…the more it becomes real. A ‘share in a company’ is not a tangible thing, for example, but folk deal in them on stock exchanges every day. If a player can buy and sell virtual goods in a virtual world, there’s no conceptual barrier to buying and selling them in the real world. People can trade in intellectual property, so why not virtual property” ?
All forms of currency, from the cowrie shells of ancient times to the stocks, bonds and e-gold of today, have derived value from a collective agreement. The abstraction of value into currency, and the comparative valuation and exchange of many currencies, has created increasingly complex and expansive systems of exchange, upon which much of the planet’s population is now entirely dependent – the advanced industrialized countries most of all. “Egyptians were casting bars of gold thousands of years ago; but the thrust of human history has been away from hard money and toward virtual money, like paper bills, or even electronic pulses shot off by the trillion across the ether” . Metcalf goes on to say that, “the set of conventions that lend money its credibility as a medium of exchange must be universal and stable, so that the shells for which I relinquished my good cow today will be worth as much tomorrow, when I exchange them for something else.” .
Gold served as the universally accepted common denominator of value until forty years ago, when the world’s economies formally freed their currencies from the Bretton-Woods Agreement and the limitations of the gold standard. The United States government still owns huge reserves, despite the obvious fact that, “If the markets and economies were to crash, a basement full of gold bullion would just take space. I couldn’t imagine farmers trading chickens and milk cows or fresh vegetables for gold bullion. For guns, ammunition, gas and oil, yes. For gold, no” . Nonetheless, for a small and enthusiastic cadre of traders and hoarders, gold is the only medium of exchange that they trust – into which they have invested unparalleled value. For them, “Gold is money; and not just money, but the one true money” . This collective illusion of value is worth approximately $2 trillion annually in movement through the world’s economy . It is, however, interesting to note that the value of the world’s gold is expressed in dollars, what the gold bugs call “fiat currency” , because the dollars that gold can be converted into have more practical value in the real world.
If we understand that all currency serves as a representation of value, a medium of exchange to acquire those things we need to live – at a lower or higher standard – then the tangible existence of the currency itself is irrelevant. We should, therefore, have no difficulty accepting the viable economic contribution of digital gold pieces, or Linden Dollars (from Second Life). And once we move past the conceptual barrier of “real”, or tangible, as a predicate for value, and see parity in the convention of value accepted by participants in MMORPGs, we can address the globally economic relevance of monetizing the productivity generated by humans in “games”. For the purposes of the remainder of this essay, then, we shall agree to suspend the distinction between “real” and “virtual” economic activity, and discuss all MMORPG-generated value as equal to value in the physical world.
If currency is merely a representation of value, its form irrelevant, we must take a closer look at what these markers of value attempt to quantify. This is simple: all money represents the hours of time and levels of skill we do not have to “spend” on acquiring the goods and services we need (or want) to live.
Virtual Diamonds: The Economics of Massively Multiplayer Online Role-Playing Games and the Impact on Perceptions of the Value of Intangible Goods
A revolution is occurring in our economy. As economists in rich countries note the diminishing returns of happiness from large increases in wealth , and the developing world strives to reach even the most basic foundations of modern life , a conceptual shift in human understanding of value is taking place in the vibrant economies of Massively Multiplayer Online Role-Playing Games (MMORPGs) . The integration of these “virtual” economies with the “real world” economy will have far reaching implications across all social systems, and may cause a dramatic revision in global systems of exchange and the valuation of goods, especially intangible goods and their importance to the global economy.
Massively Multiplayer Online Role-Playing Games (MMORPGs) exist in a digitally rendered environment, popularly referred to as “virtual” or “synthetic” worlds. Definitions of these worlds use three main components: computer- or digitally-mediated interactions with humans, persistence of the world through time, and the existence of a complete environment based on a set of rules . The exceptional aspect of this communication technology is its immersive quality, which translates into an investment of emotional energy through an (almost) all-encompassing medium. This immensely powerful pull relies on two essential human phenomena: the brain registers all visual stimuli as “real”, and collective confidence or belief reinforces the individual’s tendency to have “real” interactions with the game environment . Because of this, the societies growing in these worlds develop many, if not all of the systems that arise from human interactions in Earth societies.
The economies of virtual worlds demand particular notice, partly because they have already resulted in measurable transactions with Earth societies, and partly because they have the most potential for generating conflict with the systems and conventions accepted by Earth’s economy. The mainstream acceptance, and future integration of the conceptual and financial aspects of virtual world economies, however, has the potential for far-reaching benefits to the global economy in the form of expanded productivity, harnessed human capital and the redistribution, or reassessment of wealth.
The popular, and, to a small extent, academic debate surrounding the emerging economies of MMORPGs hinges on the real world monetizing of the goods that exist in these virtual worlds. The exchange of real world currencies for these goods outside of the game platforms is called Real Money Trade (RMT). For some critics and players, the commodifying of these goods by assigning a dollar value represents a rejection of these worlds as fantasy, and is resented as cheating and undermining the purity of play, inspiring some game companies and player organizations to take an active position against RMT. Sony Online Entertainment, the developer of EverQuest and partner (with LucasArts) in Star Wars: Galaxies, “has done a u-turn in its hardline position on virtual trade. The company was adamant about pursuing professional virtual traders, and even made a deal with eBay to prosecute sellers of EverQuest goods. Yet last month it announced Sony Online Station Exchange, a service that acts as an in-game marketplace for players who wish to trade real money for virtual properties” . The potential for real world profits is too compelling to reject for philosophical objections; MMORPG goods have already developed trade on a massive scale – some estimates for the year 2006 put the total value at around $1 billion, rising to $1.5 billion in 2007 . For all participants, the existence of RMT has altered the perceptions of virtual worlds as games, and for some, has changed the nature of their participation in these worlds .
Concepts of value, the foundation of all systems of economic exchange, develop in virtual worlds in a similar way to the concepts of value that apply to the physical world, even though the goods that exist in these game worlds may not be rendered in physical form. The intangible value of virtual goods distinguishes them from their physical equivalents only in cases where the primary function of the good is for physical consumption; virtual food and water, though they may sustain your avatar (your virtual world projected identity) in the game, can not hold the same value to your physical body. All other real world goods, however, retain elements of intangible value that are directly translated into the virtual realm. Building a large, architecturally imposing home serves two purposes – it provides shelter, certainly, but its value is derived from the intangible aspects of status and wealth that it represents. The value of a virtual good is derived from the same intangible elements of collective consensus – the more that the society desires it and individuals can apply it to their real or perceived advantage, the more valuable it becomes.
Value is a social construct. As expressed in economist language, “Society consists of thousands or millions of people in decentralized relationships, quietly expressing their interests; the aggregate effect of their activity is to create an anonymous force that dictates the price of things” . The “activity” refers to the buying and selling of goods and services - this movement is the economy. Since the introduction of Keynesian economics, even capitalist governments (and in the game context, the developers) have influenced the supply side of the market to manipulate price, but the value of goods and services still exists as a social perception. “The more people who accept an illusion…the more it becomes real. A ‘share in a company’ is not a tangible thing, for example, but folk deal in them on stock exchanges every day. If a player can buy and sell virtual goods in a virtual world, there’s no conceptual barrier to buying and selling them in the real world. People can trade in intellectual property, so why not virtual property” ?
All forms of currency, from the cowrie shells of ancient times to the stocks, bonds and e-gold of today, have derived value from a collective agreement. The abstraction of value into currency, and the comparative valuation and exchange of many currencies, has created increasingly complex and expansive systems of exchange, upon which much of the planet’s population is now entirely dependent – the advanced industrialized countries most of all. “Egyptians were casting bars of gold thousands of years ago; but the thrust of human history has been away from hard money and toward virtual money, like paper bills, or even electronic pulses shot off by the trillion across the ether” . Metcalf goes on to say that, “the set of conventions that lend money its credibility as a medium of exchange must be universal and stable, so that the shells for which I relinquished my good cow today will be worth as much tomorrow, when I exchange them for something else.” .
Gold served as the universally accepted common denominator of value until forty years ago, when the world’s economies formally freed their currencies from the Bretton-Woods Agreement and the limitations of the gold standard. The United States government still owns huge reserves, despite the obvious fact that, “If the markets and economies were to crash, a basement full of gold bullion would just take space. I couldn’t imagine farmers trading chickens and milk cows or fresh vegetables for gold bullion. For guns, ammunition, gas and oil, yes. For gold, no” . Nonetheless, for a small and enthusiastic cadre of traders and hoarders, gold is the only medium of exchange that they trust – into which they have invested unparalleled value. For them, “Gold is money; and not just money, but the one true money” . This collective illusion of value is worth approximately $2 trillion annually in movement through the world’s economy . It is, however, interesting to note that the value of the world’s gold is expressed in dollars, what the gold bugs call “fiat currency” , because the dollars that gold can be converted into have more practical value in the real world.
If we understand that all currency serves as a representation of value, a medium of exchange to acquire those things we need to live – at a lower or higher standard – then the tangible existence of the currency itself is irrelevant. We should, therefore, have no difficulty accepting the viable economic contribution of digital gold pieces, or Linden Dollars (from Second Life). And once we move past the conceptual barrier of “real”, or tangible, as a predicate for value, and see parity in the convention of value accepted by participants in MMORPGs, we can address the globally economic relevance of monetizing the productivity generated by humans in “games”. For the purposes of the remainder of this essay, then, we shall agree to suspend the distinction between “real” and “virtual” economic activity, and discuss all MMORPG-generated value as equal to value in the physical world.
If currency is merely a representation of value, its form irrelevant, we must take a closer look at what these markers of value attempt to quantify. This is simple: all money represents the hours of time and levels of skill we do not have to “spend” on acquiring the goods and services we need (or want) to live.
1.10.2007
Pure Political Propaganda - Get Active!
Generation Engage [http://www.generationengage.org/index.html]
Damned If You Don't
We've sauntered so far down the path of arrogant imperialism in Iraq that it almost seems ludicrous to start growing a conscience now. Or at least, to start thinking of ways to leave before cleaning up our mess.
It makes me think of late night frat parties, where the usual response to someone vomiting up their cold pizza and alcohol poisoning onto the floor is to cover it with a piece of newspaper.
I never thought I could agree with the Bush administration on their military policy, but for once I think they have the right idea. Not "right" in the sense of right and wrong, but right in the sense of you-fucked-it-up-so-now-you-clean-it-up.
But, as usual with the Bushies, they have the right idea and the wrongest possible plan for execution. No pun intended.
What I really think we should do is pull out and then foot the bill, or at least split it with Iraq and her immediate neighbors for the repatriation of refugees and rebuilding infrastructure. This would be a much more positive outcome for billions of US taxpayer dollars than sending our own children to be killed.
I've been reading about the utter incompetence of the US government in accomodating the massive movement of rural Southern blacks to urban areas, especially Chicago and the Northeast, after the collapse of the sharecropper system. What's so interesting to note about the inability of the enfranchised white people to even acknowledge the systemic nature of the social and economic barriers facing blacks (not just at that time, but throughout US history) is that the same self-righteous, isolationist psychological and collective tactics are still used today - with blacks, certainly, but with anyone else that has a different, less privileged life, and thereby threatens the self-indulgent stupor in which we blissfully float.
It makes me think of late night frat parties, where the usual response to someone vomiting up their cold pizza and alcohol poisoning onto the floor is to cover it with a piece of newspaper.
I never thought I could agree with the Bush administration on their military policy, but for once I think they have the right idea. Not "right" in the sense of right and wrong, but right in the sense of you-fucked-it-up-so-now-you-clean-it-up.
But, as usual with the Bushies, they have the right idea and the wrongest possible plan for execution. No pun intended.
What I really think we should do is pull out and then foot the bill, or at least split it with Iraq and her immediate neighbors for the repatriation of refugees and rebuilding infrastructure. This would be a much more positive outcome for billions of US taxpayer dollars than sending our own children to be killed.
I've been reading about the utter incompetence of the US government in accomodating the massive movement of rural Southern blacks to urban areas, especially Chicago and the Northeast, after the collapse of the sharecropper system. What's so interesting to note about the inability of the enfranchised white people to even acknowledge the systemic nature of the social and economic barriers facing blacks (not just at that time, but throughout US history) is that the same self-righteous, isolationist psychological and collective tactics are still used today - with blacks, certainly, but with anyone else that has a different, less privileged life, and thereby threatens the self-indulgent stupor in which we blissfully float.
1.09.2007
Propaganda Wars - Vol. 007, Pt. 2
It's hard to stay involved in international politics when it sometimes seems impossibly inane, and the rest of the time it seems like "cunts are running the world" (to take a phrase from Jarvis Cocker).
So the US has launched attacks on groupings of Somalian "Islamists", purported supporters of Al Qaeda. And even though they deny that these air raids are continuing, eye witnesses claim that more attacks have been launched in the same area.
Given that there are three or four battleships off the cost of Somalia, which is roughly the size of Texas, my bet is that they plan to carry on for a while.
Funny that they're back to Somalia, since Afghanistan and Iraq are (almost) complete failures.
And why does the reporting from Al Jazeera look exactly like the stuff on the BBC?
These articles are nearly identical. Word for word. Disturbing? Or just bad reporting? Or just no reporting, perhaps?
I'd also like to note the use of a few interesting phrases:
"first overt military action in Somalia since 1994" - OVERT?
"they were targeting suspected al-Qaeda leaders" - SUSPECTED?
"accuses the Islamists of having links to al-Qaeda..." - ACCUSES?
"...charges they deny" - What can I say? Guilty before proven...anything other than Islamist?
And then, of course, the NY Times:
January 9, 2007
U.S. Airstrike Aims at Qaeda Cell in Somalia
By DAVID S. CLOUD
WASHINGTON, Jan. 9 — United States Air Force gunships have struck against suspected operatives of Al Qaeda in southern Somalia, according to a senior Pentagon official and news agency reports.
On Monday night, the official described the first raid, which was carried out Sunday night. A report by Reuters today said there was apparently a new strike today.
The latest attack by American warplanes apparently came in a remote area of southern Somalia and killed between 22 and 27 people, according to an elder from a neighboring town, who spoke to Reuters by telephone from the Kenya-Somalia border crossing at Liboi.
The American involvement complicates matters for the transitional government of Somalia, which is struggling to establish order after suddenly winning control of most of the country from Islamic forces in recent weeks.
The country’s transitional president, Abdullahi Yusuf Ahmed, said today that he had given American forces permission to carry out the strike on Sunday.
That attack, by an AC-130 gunship operated by the Special Forces Command, is believed to have produced multiple casualties, the Pentagon official said. It was not known immediately known whether the casualties included members of a Qaeda cell that American officials have long suspected was hiding in Somalia.
Special Forces units operating from an American base in Djibouti are conducting a hunt Qaeda operatives who were forced to flee Mogadishu, the Somali capital, when the Islamic militants who formerly dominated the capital were driven out by an Ethiopian military offensive last month.
The Special Forces attack Sunday night was the first American military action in Somalia that Pentagon officials have acknowledged since United States forces pulled out of the anarchic country in the wake of the infamous “Black Hawk Down” episode in 1993, when 18 American soldiers were killed in street fighting in Mogadishu.
Many Somalis were angered by news of the new American intervention, and some said it reminded them of the troubled aid mission that ended with the 1993 incident.
American officials have suspected for years that a handful of Qaeda suspects who were responsible for the 1998 bombings of American embassies in Kenya and Tanzania have been hiding inside Somalia, which has not had a central government since 1991.
The search for the terrorism suspects has been the driving force in American policy toward Somalia for several years.
Earlier this year, the Central Intelligence Agency began making cash payments to a group of Somali warlords who pledged to help hunt down members of the Qaeda cell.
After Islamist militias took control of Mogadishu in the summer, officials in Washington charged that the Islamists had ties to the terror suspects, and made demands for their handover to American custody.
The Ethiopian military offensive that began last month recently drove the Islamists from the seaside Somali capital, raising hopes in Washington that the Qaeda operatives might surface as they fled. The Islamists have retreated to areas around the southern port city of Kismayo. Ethiopian officials have said they have intelligence reports that members of the Qaeda cell were hiding near the city.
The transitional government had been accused of being a pawn for Ethiopia and the United States, both roundly disliked and viewed with suspicion by many Somalis.
The AC-130 gunship is a heavily armed propeller plane that, because of its slow speed, operates primarily at night. It can direct an immense barrage of gunfire onto a target as it circles overhead.
The attack against suspected Qaeda operatives is the sort of targeted operation that senior Bush administration officials have been pressing the Special Operation Command, based in Tampa, Fla., to undertake in recent years.
But officials have said that Special Operations forces have had difficulty carrying out targeted strikes in the past because of the difficulty establishing the whereabouts of wanted terrorists or getting forces in place when a suspected militant is located.
The Central Intelligence Agency has killed a small number of suspected Qaeda members, using a pilotless drone armed with a missile. Among them were five people killed in Yemen in 2002.
Jeffrey Gettleman contributed reporting from Mogadishu and Mark Mazzetti from Washington.
So the US has launched attacks on groupings of Somalian "Islamists", purported supporters of Al Qaeda. And even though they deny that these air raids are continuing, eye witnesses claim that more attacks have been launched in the same area.
Given that there are three or four battleships off the cost of Somalia, which is roughly the size of Texas, my bet is that they plan to carry on for a while.
Funny that they're back to Somalia, since Afghanistan and Iraq are (almost) complete failures.
And why does the reporting from Al Jazeera look exactly like the stuff on the BBC?
These articles are nearly identical. Word for word. Disturbing? Or just bad reporting? Or just no reporting, perhaps?
I'd also like to note the use of a few interesting phrases:
"first overt military action in Somalia since 1994" - OVERT?
"they were targeting suspected al-Qaeda leaders" - SUSPECTED?
"accuses the Islamists of having links to al-Qaeda..." - ACCUSES?
"...charges they deny" - What can I say? Guilty before proven...anything other than Islamist?
And then, of course, the NY Times:
January 9, 2007
U.S. Airstrike Aims at Qaeda Cell in Somalia
By DAVID S. CLOUD
WASHINGTON, Jan. 9 — United States Air Force gunships have struck against suspected operatives of Al Qaeda in southern Somalia, according to a senior Pentagon official and news agency reports.
On Monday night, the official described the first raid, which was carried out Sunday night. A report by Reuters today said there was apparently a new strike today.
The latest attack by American warplanes apparently came in a remote area of southern Somalia and killed between 22 and 27 people, according to an elder from a neighboring town, who spoke to Reuters by telephone from the Kenya-Somalia border crossing at Liboi.
The American involvement complicates matters for the transitional government of Somalia, which is struggling to establish order after suddenly winning control of most of the country from Islamic forces in recent weeks.
The country’s transitional president, Abdullahi Yusuf Ahmed, said today that he had given American forces permission to carry out the strike on Sunday.
That attack, by an AC-130 gunship operated by the Special Forces Command, is believed to have produced multiple casualties, the Pentagon official said. It was not known immediately known whether the casualties included members of a Qaeda cell that American officials have long suspected was hiding in Somalia.
Special Forces units operating from an American base in Djibouti are conducting a hunt Qaeda operatives who were forced to flee Mogadishu, the Somali capital, when the Islamic militants who formerly dominated the capital were driven out by an Ethiopian military offensive last month.
The Special Forces attack Sunday night was the first American military action in Somalia that Pentagon officials have acknowledged since United States forces pulled out of the anarchic country in the wake of the infamous “Black Hawk Down” episode in 1993, when 18 American soldiers were killed in street fighting in Mogadishu.
Many Somalis were angered by news of the new American intervention, and some said it reminded them of the troubled aid mission that ended with the 1993 incident.
American officials have suspected for years that a handful of Qaeda suspects who were responsible for the 1998 bombings of American embassies in Kenya and Tanzania have been hiding inside Somalia, which has not had a central government since 1991.
The search for the terrorism suspects has been the driving force in American policy toward Somalia for several years.
Earlier this year, the Central Intelligence Agency began making cash payments to a group of Somali warlords who pledged to help hunt down members of the Qaeda cell.
After Islamist militias took control of Mogadishu in the summer, officials in Washington charged that the Islamists had ties to the terror suspects, and made demands for their handover to American custody.
The Ethiopian military offensive that began last month recently drove the Islamists from the seaside Somali capital, raising hopes in Washington that the Qaeda operatives might surface as they fled. The Islamists have retreated to areas around the southern port city of Kismayo. Ethiopian officials have said they have intelligence reports that members of the Qaeda cell were hiding near the city.
The transitional government had been accused of being a pawn for Ethiopia and the United States, both roundly disliked and viewed with suspicion by many Somalis.
The AC-130 gunship is a heavily armed propeller plane that, because of its slow speed, operates primarily at night. It can direct an immense barrage of gunfire onto a target as it circles overhead.
The attack against suspected Qaeda operatives is the sort of targeted operation that senior Bush administration officials have been pressing the Special Operation Command, based in Tampa, Fla., to undertake in recent years.
But officials have said that Special Operations forces have had difficulty carrying out targeted strikes in the past because of the difficulty establishing the whereabouts of wanted terrorists or getting forces in place when a suspected militant is located.
The Central Intelligence Agency has killed a small number of suspected Qaeda members, using a pilotless drone armed with a missile. Among them were five people killed in Yemen in 2002.
Jeffrey Gettleman contributed reporting from Mogadishu and Mark Mazzetti from Washington.
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