Friday, April 10, 2009

Mexico’s brutal drug war

Ravaged by an escalating armed conflict between its army and five powerful drug gangs, Mexico is at risk of becoming a ‘failed state,’ U.S. officials say. Can the chaos at our border be contained?

How violent is Mexico?

Parts of the country have become a war zone, with murders, kidnappings, and armed robberies occurring daily, often in broad daylight. Some 6,000 Mexicans were killed in drug-related violence in 2008—double the previous year’s death toll. Already this year, more than 1,000 people have been murdered, mostly in the northern cities near the U.S. border. Authorities say nine of 10 victims are connected to the drug trade, but innocent bystanders are also dying, as are police and other officials who dare to stand up to the cartels. A Pentagon report in November concluded that the two countries most at risk of “collapse” are Pakistan and Mexico. Few were surprised that Pakistan is considered so precarious, but Mexico boasts the world’s 12th largest economy and shares a 2,000-mile border with the U.S. “We cannot afford to have a narco-state as a neighbor,” says retired U.S. Gen. Barry McCaffrey, a former U.S. drug czar. Indeed, the Mexican cartels already have begun moving into the U.S., growing marijuana in rural areas and national parks, sending gang members to U.S. cities, and selling drugs directly to Americans.

What’s behind the mounting bloodshed?

Five rival cartels are battling to control production of heroin, cocaine, methamphetamines, and marijuana—along with the drug routes into the United States. President Felipe Calderón assumed office in December 2006 vowing to take on organized crime, and since then, several cartel leaders have been killed or arrested. That triggered a full-fledged war between the government and the cartels. The results have been gruesome. Just before Christmas, the severed heads of eight soldiers were dumped near a shopping center in Chilpancingo, the capital of the state of Guerrero. In February, a newly retired general and two bodyguards were tortured, killed, and their bodies dumped near the resort city of Cancún. Police in Tijuana recently detained a man who confessed to having dissolved in acid the bodies of more than 300 people, on the orders of a drug lord. Newspapers dubbed him “the Soupmaker.”

Who’s winning the war?

The government has made inroads, but the cartels still rake in tens of billions of dollars a year. Gangs have amassed huge arsenals and have branched into other ventures, including extortion and protection rackets. It’s not unusual for troops to engage in pitched battles with gangs armed with rocket launchers, machine guns, and armor-piercing sniper rifles. Corruption is rampant. The prosecutor in charge of the federal organized-crime unit was recently charged with taking $450,000 a month in bribes to pass information to the Sinaloa drug cartel. Last month, drug traffickers threatened to kill one police officer in Juarez every 48 hours unless Police Chief Roberto Orduña Cruz stepped down. When he refused, his deputy turned up mutilated and dead, followed by another officer and a jail guard. Cruz finally resigned his post and fled the city.

Can the gangs get away with that?

Indeed they can. More than 450,000 Mexicans work in the drug trade, and in some places, the gangs are the dominant authority. In Villa Ahumada, about 80 miles south of El Paso, Texas, the entire police force quit last spring after 70 cartel hit men rampaged through town, killing the police chief, two officers, and three residents. Today, store owners and local officials are expected to pay a kind of tax to the gunslingers, who “protect” the town from rival gangs while taking their cut of the drug trade. “This was a mellow town where we would walk along Main Street at night,” says 14-year-old Zaida de Santiago. “But now we’re too scared to even go out.”

Is it hopeless?

President Calderón says he’s determined to restore order. He has taken the unprecedented step of deploying 45,000 federal troops and police to Juarez and other hot spots, and thousands of cartel “soldiers’’ have been arrrested. So have several major traffickers. The government has also rescued kidnap victims, seized caches of narcotics and weapons, and given crime-weary residents some relief by re-establishing order in some towns and villages. But the army has no authority to investigate drug trafficking itself—a task largely left to local police forces, most of which have a long track record of corruption and incompetence. Concerns have also been raised that poorly paid soldiers are no less vulnerable to bribery than local police. “The amount of money is huge,” says retired Gen. Luis Garfias. “You like women? You like alcohol? It’s free for you.”

What’s the U.S. doing?

Just last week, the Obama administration said it would send more federal agents and high-tech equipment to the U.S.-Mexican border—the goal being to slow the flow of drugs into this country as well as the flow of guns out. (See below.) The move reflects growing concern over the violence that has been spilling into the United States. Mexican drug gangs have extended their operations to at least 230 U.S. cities, according to the Justice Department, which calls the Mexican cartels “the biggest organized crime threat to the U.S.” In recent weeks, police in Atlanta and Phoenix have blamed a wave of kidnappings and home invasions on the cartels’ turf war. “The situation in Mexico is very, very dangerous for everyone, including the U.S.,” says former Justice Department official Philip Heymann. “The situation hasn’t registered in the mind-set of Americans, but it will.”

Supply and demand

As American officials grow more alarmed about the violence in Mexico, Mexican officials have been pointing the finger right back. They note that the U.S. not only serves as Mexico’s largest consumer market for illegal drugs, it also is the source of most of the cartels’ munitions. In fact, more than 90 percent of AK-47s and other guns seized at the border or after raids and shootings in Mexico have been traced to the U.S.—most of them apparently purchased openly and legally by “straw buyers” who then sell the weapons to the gangs. Mexican leaders have called on the U.S. to re-examine its punitive drug policies, to put more emphasis on treatment, and consider legalization of marijuana. “The main cause of the problems associated with organized crime,” said President Felipe Calderón, “is having the world’s biggest consumer next to us.” Mexican officials also have called for tighter gun control in the U.S.—an unlikely prospect.

The scholar who told—and lived—the African-American story

John Hope Franklin (1915–2009)

When John Hope Franklin was about 6, he and his mother were kicked off a train in Oklahoma after Mrs. Franklin refused to enter an overcrowded, segregated car. Trudging through the woods to get home, she stopped her son’s tears by exhorting him to “prove you’re as good as any of them.” Franklin, who died last week at 94, certainly did that. His 1947 volume From Slavery to Freedom, which sold 3.5 million copies, established him as the nation’s leading scholar of the African-American experience. Franklin was a historian who made history himself with a series of groundbreaking academic appointments, as well as with his work during some of the key moments in the civil-rights movement.

“Franklin’s celebrated life was peppered with discrimination,” said the Charlotte, N.C., Observer. He was the son of Buck Franklin, one of Oklahoma’s first black lawyers, “who was once thrown out of a courtroom by a judge because of his race.” Growing up in Tulsa, the young John Hope witnessed the brutal 1921 race riots that destroyed part of the city, including the law office of his father, who for a while had to work out of a tent. Refused admission to the University of Oklahoma, in 1935 he graduated magna cum laude from historically black Fisk University, and was accepted to Harvard University’s graduate program in history. In the depths of the Depression, though, he could not afford the tuition. But his mentor at Fisk, professor Ted Currier, “went to the bank and borrowed $500 for his promising student. The next day, Franklin was on his way to Cambridge”—where he was one of the few black doctoral candidates on campus.

Franklin earned his Ph.D. in 1941, said The Atlanta Journal-Constitution. But “holding a degree from a prestigious university didn’t shield him from racial insults.” When Franklin returned to the South to teach at St. Augustine’s College in Raleigh, N.C., “he caused a stir by walking into the whites-only state archives.” Soon he was given a room of his own, “safely segregated from other scholars,” and told not to speak with white librarians. “It was one of many such slights over the years.” As president of the Southern Historical Association, for example, “he organized a convention in Memphis, but declined to attend because he couldn’t stay in the segregated headquarters hotel.” But he persevered, teaching and eventually publishing some 20 books. They included The Militant South (1956), about “the region’s martial spirit and appetite for violence,” and The Emancipation Proclamation (1963), which explored how Abraham Lincoln came to develop that historic document and its impact on the Civil War and on later generations.

His masterwork was From Slavery to Freedom, said the London Daily Telegraph. Drawing on vast stores of documentary evidence across 500 years, “the book explored the contribution African-Americans had made to the nation from the time of its foundation, revealing that black patriots had fought at Lexington and Concord, accompanied George Washington across the Delaware, and crossed to the Pacific with Lewis and Clark.” Franklin also argued that American history was “not comprehensible without an understanding that slavery was part of its economic dynamism.” Translated into many languages, From Slavery to Freedom became an indispensable text in black-studies classes. For its author, it represented a voyage of self-discovery. “I had seen it all,” Franklin later said, “and in the seeing I had become bewildered and yet in the process lost my own innocence.”

“Franklin often argued that historians have an important role in shaping policy,” said The New York Times. “He put that position into practice when he worked with Thurgood Marshall’s team of lawyers in their effort to strike down segregation in the landmark 1954 case of Brown v. Board of Education.” Franklin also participated in the famous 1965 Selma march with Martin Luther King Jr.; testified against the Supreme Court nomination of Robert Bork in 1987, because he viewed Bork as a foe of civil rights; and in 1997 headed Bill Clinton’s Advisory Board to the President’s Initiative on Race. “One might argue that the historian is the conscience of the nation,” he reasoned, “if honesty and consistency are factors that nurture conscience.” But Franklin warned against mixing activism and scholarship; academics, he said, should “make it clear which activity they are engaging in at any given time.”

With his thin moustache and elegant manners, Franklin cut a distinguished figure, said The Boston Globe. “He was noted for his Southern graciousness and his talent for friendship (he sent out 600 Christmas cards annually).” He received many honors, including some 130 honorary degrees and, in 1995, the Presidential Medal of Freedom. But Franklin’s outward ease masked a tough resolve. He had an “Old Testament righteousness that could make him a formidable figure in debate,” and in his later years he became pessimistic about the country’s racial progress. Shortly before the Medal of Freedom ceremony, a white woman at a Washington club, thinking him an attendant, told him to retrieve her coat. “Yes, we’ve come some distance,” he reflected in 2006. “But we’ve got so much further to go.”

Yet Franklin’s own life story demonstrated how far the nation had come, said the London Independent. “His career, inevitably, was a catalogue of firsts.” At Brooklyn College in 1956 Franklin became “the first black head of a department at a predominantly white university.” In 1967, he became the first black History Department chairman at the University of Chicago. Franklin was also the American Historical Association’s first black president. “But no first gave him greater joy than the one consummated on Nov. 4, 2008, with the election of Barack Obama as the country’s first black president.” It was, he said, “the closest thing to a peaceful revolution in our entire history.”

Franklin’s wife of 59 years, Aurelia Whittington Franklin, died in 1999. He is survived by his son, John, a program manager at the Smithsonian Institution.

A regulatory revolution

The Obama administration has mapped out a bold “new era of regulation,” said Damian Paletta and Jenny Strasburg in The Wall Street Journal. The regulatory reform, outlined last week by Treasury Secretary Timothy Geithner, would be the biggest overhaul of market rules since the New Deal. If approved by Congress, the rules would empower an independent super-regulator to monitor risks to the financial system and dramatically tighten oversight of hedge funds and private equity firms. The government would also oversee trading in credit default swaps and other risky derivatives. Most controversially, Geithner asked for the power to seize nonbank financial firms such as insurer AIG. Many Wall Street insiders “were quick to announce their opposition.” But facing popular outrage over bonus payments to AIG executives and other abuses, opponents of the muscular new approach will be lucky if they can even manage to limit a few provisions that they consider too intrusive, “such as making their trading records public.”

Obama is operating on the high ground here, said Clive Crook in TheAtlantic.com. House Minority Leader John Boehner was quick to call Geithner’s proposal for seizing financial firms “an unprecedented grab for power.” But there’s nothing unprecedented about it. The FDIC already has the power to take over failing banks and put them into a “pre-packaged bankruptcy.” It then restores the banks to financial health or merges them with more stable banks. Can anyone “intelligently oppose an FDIC-like resolution regime for AIG and other systemically important nonbanks?” The firm is the beneficiary of $173 billion in federal loans and guarantees. With that kind of money at stake, the feds have the right and the obligation to protect the taxpayers’ interest.

Unfortunately, there’s little reason to believe that government bureaucrats are up to this task, said Francis Diebold and David Skeel in The Wall Street Journal. Consider the saga of IndyMac, the troubled California mortgage lender. “It was not taken over by the FDIC until long after it was obvious it should be closed.” The delay cost taxpayers some $10 billion. Shortly after the IndyMac takeover last year, the FDIC brokered the sale of Wachovia Bancorp to Citigroup “at a lowball price.” When Wells Fargo snatched Wachovia away from Citi with “a vastly superior offer,” the FDIC “wound up with egg on its face.” The point is, the government is just not equipped to micromanage the financial world.

Ultimately, the tools we give regulators matter less than their willingness to use them, said The New York Times in an editorial. The financial crisis, “including what went wrong at AIG,” came about not because of some missing rule or regulatory agency. It happened because regulators, lawmakers, and executive-branch officials failed “to heed warnings about risks in the system and to use their powers to head them off.” Intoxicated by then-fashionable free-market rhetoric, they lost “the will to regulate.” Still, “tighter rules” would help, said USA Today. The current, creaky regulatory framework is a “patchwork of rules and agencies,” some of which date back to the Civil War. It’s way past time for a new system suited to “an era of computerized global trading and exotic financial instruments.”

The stock market: Will the bear reawaken?

Details of the U.S. government’s plans to help banks dump toxic assets delivered a dose of “desperately needed optimism” to Wall Street, said Ellis Mnyandu in Reuters. Over the course of just 10 trading sessions, the Standard & Poor’s 500 bounced 20 percent from its March 9 lows. That prompted speculation that the bear market was finally on its way out. “We think there is a very good chance that the lows are in place for the stock market,” says Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville. Then again, more bad economic news could quickly thwart any such recovery, in which case the “recent spurt of gains could yet again be another false dawn.”

Bull markets typically begin about five months before the economy bottoms out, said Steven Goldberg in Kiplinger.com. In fact, the market may continue to rally even in the face of bad economic news, according to Jim Stack, publisher of InvesTech Research and a longtime bear who sees “classic signs” that the market is about to turn the corner, even if the economy itself isn’t. Among other things, we’ve already experienced “all the extremes in pessimism that typically accompany a bear-market bottom,” he says. Many stocks are starting to look like bargains compared with their historical averages, “whether you consider price-to-cash flow, price-to-book value, price-to-sales ratio, or dividend yield.” When will Stack officially turn bullish? When he sees a “dramatic drop” in the number of stocks hitting new 52-week lows. “Once everyone who wants to sell has sold, then pressure dries up,” he says.

Don’t assume that the climb back up will be quick and easy, said Paul Lim in The New York Times. Where recessions in the 1980s and 1990s were short-lived, this one is already a year and a half old, and any recovery could be a long, slow slog. Even if the stock market enjoys an initial bump and then gains 10 percent annually—an optimistic expectation in any case—it could still take years to return to its former glory. Annual returns of about 8.5 percent are more realistic, says Research Affiliates Chairman Robert Arnott. “Single-digit stock returns may not seem all that thrilling, compared with the huge numbers posted during the bull market of the ’90s.” But, hey, it’s better than double-digit losses.

‘Sexting’: When a fad is a felony

Marisa Miller, 15, may not look like your typical child pornographer, said Erin Nissley in the Scranton, Pa., Times-Tribune, but appearances can deceive. When a “provocative” photo of bra-clad Miller turned up on a male classmate’s cell phone, Wyoming County District Attorney George Skumanick threatened her and several other students with child-porn charges. To avoid arrest as a sex offender and possible time in jail, Skumanick said, Miller would have to complete a five-week class on the dangers of pornography and sexual violence. Miller thus became the latest high-schooler to find herself facing criminal charges for “sexting”—a fad in which teens take nude or semi-nude photos on cell phone cameras and send them to friends. But unlike the defendants in previous “sexting” cases, said Sean Hamill in The New York Times, Miller is fighting back. With the backing of their parents and the American Civil Liberties Union, Miller and two co-defendants sued Skumanick, claiming he filed the draconian charges in “retaliation” for their refusal to bend to his legal blackmail.

Sorry, but I’m siding with the prosecutor, said Brent Bozell in Townhall.com. He doesn’t want to put Miller in jail; he’s trying to teach her, and her classmates, an important lesson about “a toxic trend.” A recent survey found that one in five teens has sent or posted a nude photo of himself or herself, and nearly a third said they’d received one. These photos often are widely distributed, causing shame and damaged reputations. Last year, an Ohio girl was horrified when a nude photo she’d sent to a boyfriend was distributed to four high schools, and students began calling her “whore.” After weeks of this abuse, she hanged herself. “Sexting” is out of control, and “parents and prosecutors alike are correct to put the brakes on this mistake.”

Good luck with that, said Nancy Gibbs in Time. “Every parent understands that handing over the car keys marks a fateful passage,” but cell phones have proved to be just as dangerous—and subversive. Teens already have figured out how to text under desks without looking down, and how to set their phones with ringtones pitched too high for their adult teachers to hear. They use their cells to cheat on tests, order drugs, bully classmates—and send one another nude photos. Unfortunately, parents and prosecutors are fighting on teens’ turf. “They are up in the trees and underground and in caves while we march around in our bright red uniforms, trying to defend their dignity and virtue.”

Three Mile Island: The fallout, 30 years later

When Mary Osborn of Swatara Township, Pa., awoke on March 28, 1979, she knew something was wrong, said Bonnie Pfister in the Pittsburgh Tribune-Review. Normally, the birds would have been chirping and the air perfumed with chocolate from the Hershey’s factory. But on this morning, Osborn recalls, no birds sang, and “all we could smell and taste was metal.” Just a few miles away, the worst nuclear accident in U.S. history was unfolding at Three Mile Island. Thirty years ago last week, equipment malfunctions and worker error triggered a partial meltdown of Unit Two’s reactor core, releasing an explosion of toxic steam that exposed 2 million people to low-level radiation. More than an environmental disaster, said David Shribman in the Pittsburgh Post-Gazette, the accident was “a cultural marker,” rendering nuclear power politically toxic. “It chilled a nation, and the industry, for decades.”

But fortunately, said Jeff Jacoby in The Boston Globe, we could be on the cusp of a “nuclear renaissance.” Due to “overblown claims about the dangers of reactor meltdowns,” not a single nuclear plant has been built since the TMI accident. But with new safeguards in place, and solar and wind power still struggling to prove their efficacy, the “war against the atom” is fading. A new Gallup poll found that 59 percent of Americans—an all-time high—favor nuclear power to help meet our energy needs, and utilities have asked permission to license 30 new nuclear plants. Most significantly, the environmentalists who were the loudest foes of nuclear power have found “a new pariah—fossil fuels and their carbon dioxide emissions.” Now that it has dawned on them that nuclear plants release no greenhouse gases, “some of the world’s most ardent Greens have come around to embracing nuclear power.”

Before we throw caution to the wind, said Susan Stranahan in The Philadelphia Inquirer, let’s remember “the issue that has haunted nuclear power since Day One: waste disposal.’’ We still have no long-term place to store the highly radioactive, spent fuel rods from the 103 existing reactors. That waste “remains dangerous for thousands of years.” The fuel rods and other radioactive waste was supposed to go to Yucca Mountain in Nevada, but fierce local opposition and fading federal resolve mean the storage facility there “will never open.’’ So all the waste is being stored at the power plants, which are running out of room. Face it: A generation after Three Mile Island, nuclear power remains “a high-stakes gamble.”

Obama: Is he overexposed?

Barack Obama is a natural crowd pleaser, said Mike Lupica in the New York Daily News, but if he doesn’t cut back on the TV appearances soon, he’ll become “the first American president to suffer from overexposure before his first 100 days are up.” Every time you turn on the TV, there’s our new president—yukking it up with Jay Leno on The Tonight Show, letting down his hair on 60 Minutes, and fencing with reporters at a prime-time press conference. Most bizarre of all was seeing the world’s most powerful man filling out his NCAA bracket on ESPN. What’s next, American Idol? Obama was elected “to be the smartest guy in the room, not the most popular kid in class.” I know he’s trying to win people over to his ambitious agenda, said David Zurawik in the Baltimore Sun. But “there’s something disquieting” about Obama’s constant presence on our screens. “All hell is breaking loose” in the economy and all over the world, so when the president is on TV, making jokes, who’s running the country?

This is a “phony issue,” said Michelle Cottle in TheNewrepublic.com. Unlike his predecessor, who communicated with the nation rarely and grudgingly, Obama seems to have an appetite for both halves of the job: running the country, and explaining how he’s doing it. With the nation in crisis, this second task is more important than ever, and Obama knows it, which is why he’s trying to be seen “by as many people as possible—looking calm, confident, and in command.” It’s called leadership, said The Hartford Courant in an editorial. Watching Obama talk about the economy, Afghanistan—or anything—it’s hard not to be impressed by “his patience, his persistence, and his ability to think and speak in complete thoughts.” More, please.

Sometimes, though, you can have too much of a good thing, said John Mashek in Newsday. Even the most persuasive communicator will start to grate “if his face appears every time a viewer surfs the channels.” Soon, the public will start to tune Obama out. Maybe that’s the point, said Jon Friedman in Marketwatch.com. By being “everywhere all the time,” Obama could be trying to make the press and the public so tired of him that they stop scrutinizing his every move—and thereby give him the space he needs to get things done. “When you think about it, that isn’t a bad game plan.”

A deadline for the auto industry

What happened

President Obama this week delivered an ultimatum to the auto industry, demanding that General Motors and Chrysler reinvent their companies in much leaner form or face an end to federal bailout funds. Obama and his auto-industry task force rejected a restructuring plan submitted by the two floundering auto companies, and in an indication of its displeasure, the task force forced out GM CEO Rick Wagoner. GM was given 60 days to submit a new restructuring plan, while Chrysler was given 30 days to complete a merger with the Italian company Fiat. “This restructuring, as painful as it will be,” said Obama, “will mark not an end but a new beginning for a great American industry.”

If Chrysler and GM cannot satisfy Obama’s terms, the government will lead them through what it is calling “surgical” bankruptcies. The auto giants would continue manufacturing cars while being split into “good” and “bad” components, with the bad portions assuming the companies’ pension and health-care obligations, which total tens of billions of dollars.

What the editorials said

Obama’s ultimatum was “believable, sharp, and necessary,” said The Washington Post. GM is mired in debt to creditors that won’t renegotiate, and it has failed to extract necessary reductions in benefits from the autoworkers’ union. Chrysler is simply no longer viable as an independent company and needs Fiat’s expertise in making small, efficient cars. To stay in business, the White House is saying, these two companies must embrace truly radical change—and it’s a demand Obama has a right to make, after $17.4 billion in taxpayer bailouts thus far.

Actually, Obama is beginning to sound like the hapless parent of a spoiled teenager, said the Los Angeles Times: Just one more chance and then you’re really in trouble, I mean it! It’s time for both companies to declare Chapter 11, so they and their bondholders can shed some of their costly obligations, and reassume control of their own destiny. “We’re more comfortable letting the stakeholders decide what the firms should look like in the future, rather than have the administration decide what’s best for them and the car-buying public.”

What the columnists said

Obama just sent “a chilling message” to anyone who believes in the free market, said Daniel Howes in The Detroit News. The federal government, which “doesn’t own a single share” of GM, ousted a sitting CEO over the wishes of a company’s directors. A good CEO, too, said William J. Holstein in The New York Times. Under Wagoner, GM forced concessions out of the unions that allowed it to shed workers and trim wages, and redesigned the manufacturing process so that its cars were equal in quality to those of the Japanese automakers. But the people needed “a scapegoat,” so Obama gave them one.

You can’t be serious, said Paul Ingrassia in The Wall Street Journal. Since Wagoner assumed control a decade ago, GM’s market share went from 28 percent to 22 percent, and its stock price has plummeted from $70 a share to under $3. He bet heavily on gas-guzzling SUVs and pickup trucks just as gas prices rose, and failed to shut down any of GM’s redundant brands. “Business executives are supposed to be hard-nosed realists, but we heard more realism from Mr. Obama this week than we’ve heard from Detroit in years.”

But if Obama is suddenly so hard on Detroit, said Andrew Leonard in Salon.com, why has the president been “so soft on Wall Street?” My guess is that Obama knows the public is fed up, and is trying out a new get-tough stance on the auto companies, in preparation for giving ultimatums to the most troubled banks and financial institutions, such as Citigroup, Bank of America, and AIG. Watch out, Wall Street: “The big reckoning is still coming.”

What next?

GM’s new CEO, Fritz Henderson, said this week that it was “more probable” now that the company would end up in bankruptcy. The company that emerges, whether as a result of that process or of independent restructuring, will be significantly smaller than the current one, said Bill Vlasic and Nick Bunkley in The New York Times. Tens of thousands of jobs will be cut, retired autoworkers will lose some of their benefits, thousands of dealerships will be closed, and brands such as Hummer, Saturn, Buick, Pontiac, and GMC will be downsized or eliminated.