London Independent

The pound surged against the dollar yesterday amid speculation that Warren Buffett and George Soros, the world's most famous speculators, are betting the US currency will plummet.

Sterling powered to a five-year high against the dollar for a second day as concerns over the US current account deficit continued to outweigh evidence of a rebounding economy.

Traders believe selling the dollar is a one-way bet, and some latched on to rumours that speculators were building "short" positions on the dollar - betting it will tumble in the coming months.

One hedge fund manager, who asked not to be named, said: "I have heard that both Soros and Buffett are shorting the dollar. There's a growing belief on Wall Street that the dollar is looking like a one-way bet downwards."

A spokesman for Mr Soros, who famously "broke" the Bank of England when the pound crashed out of the exchange rate mechanism a decade ago, said he never commented on speculation. Mr Buffett was unavailable for comment.

The surge in the pound to $1.7155, its strongest level since October 1998, was boosted after Merrill Lynch forecast the dollar would plunge a further 8 per cent by the end of next year.

Demand for the dollar has waned on concern the country will not attract enough capital to fund its record current account deficit, which is expected to break through 5 per cent of GDP this year.

In a massive revision to its forecast issued on the eve of yesterday's Thanksgiving holiday, Merrill Lynch said the pound would hit $1.85 - which would be its highest level since 1992.

The blue chip Wall Street bank said sterling would rise on signs of returning economic strength, rising interest rates and hope that the Government won't raise taxes before a 2005 election. But it warned that the surge in the pound would be short-lived as the concerns overhanging the UK - from a budget deficit, huge consumer indebtedness and a tight labour market - would come home to roost.

"Bubble trouble currencies such as the pound should continue to do well for now," it said. "But upsides in the currencies in these regions should end next year as tighter conditions threaten to burst credit bubbles and shape market expectations of lower rates."

Merrill Lynch expects the dollar to tumble to $1.33 against the euro, a drop of 12 per cent from yesterday's $1.19 value. But it cut its forecast for the euro to surge to 80p against the pound - a level that would smooth sterling's entry into the single currency - to 73p.

A surge in the pound against the dollar will be a boon for British tourists but could cause headaches for both businesses and the Bank of England.

Khuram Chaudhry, a strategist at Merrill Lynch, said: "UK investors may find company sales exposure to the US unfavourable in this scenario.A stronger domestic currency is likely to mean the Bank is less likely to raise interest rates aggressively." David Bloom, a global economist at HSBC who does not see the pound going much above $1.70, said any spike in the pound would be short-lived. "If you want to sell the dollar because you believe in the structural problems such as the current account deficit then you buy the pound but there's a downside because the UK is also looking a trade deficit, an indebted economy," he said.

"If you think those factors will cause the dollar to fall then the pound should fall as well."

He said the main beneficiary should be the euro, which has smaller deficits - despite the high-profile row over the stability and growth pact. He said HSBC was sticking with its historic forecast for a dollar-euro rate of $1.35.

Mr Bloom warned that if the pound were to fall it could tumble even further than the dollar as there would be little interest from other countries to prop it up.

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Paul Joseph Watson

Comment: Despite studying September 11 for two years solid, one fact I only just discovered is that George W. Bush's father was meeting with Osama bin Laden's brother, Shafig bin Laden, in the Ritz-Carlton Hotel, Washington, on the morning of 9/11. They were on Carlyle Group business just a few miles from where hijackers supposedly acting on behalf of Osama bin Laden would fly a plane into the Pentagon.

Recall that the chief financier of the so-called hijackers, Pakistan's Chief Spy General Mahmoud Ahmad, was meeting with Bush administration officials the week before 9/11. He also met with Bob Graham and Porter Goss on the morning of the attacks, who would later go on to head the first 9/11 investigative committee.

www.prisonplanet.com

The Bush senior/bin Laden meeting was reported on by CBC. See www.prisonplanet.com

This was also reported by the London Observer. See the last paragraph at observer.guardian.co.uk

"On 11 September, while Al-Qaeda's planes slammed into the World Trade Center and the Pentagon, the Carlyle Group hosted a conference at a Washington hotel. Among the guests of honour was a valued investor: Shafig bin Laden, brother to Osama."

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Lurking in the background behind Bush, his Vice-President, Dick Cheney, and Defence Secretary Donald Rumsfeld are the people propelling US policy.

Sunday February 23, 2003 The Observer

Behind President George W. Bush's charge to war against Iraq, there is a carefully devised mission, drawn up by people who work over the shoulders of those whom America calls 'The Principals'. Lurking in the background behind Bush, his Vice-President, Dick Cheney, and Defence Secretary Donald Rumsfeld are the people propelling US policy. And behind them, the masterminds of the Bush presidency as it arrived at the White House from Texas, are Karl Rove and Paul Wolfowitz.

It is too simple to explain the upcoming war as 'blood for oil', as did millions of placards last weekend, for Rove and Wolfowitz are ideologists beyond the imperatives of profit. They represent an unlikely and formidable alliance forged between the gritty Texan Republicans who took over America, fuelled by fierce conservative Christianity, and a faction of the East Coast intelligentsia with roots in Ronald Reagan's time, devoted to achieving raw, unilateral power.

Rove and Wolfowitz have worked for decades to reach their moment, and that moment has come as war draws near. Bush calls Rove, depending on his mood, 'Boy Genius' or 'Turd Blossom'. Rove is one of a new political breed - the master craftsmen - nurturing a 24-year political campaign of his own design, but careful not to expose who he really is.

His Christian faith is a weapon of devastating cogency, but he never discusses it; no one knows if his politics are religious or politics are his religion. A Christmas Day child born in Denver, as a boy he had a poster above his bed reading 'Wake Up, America!' As a student, he was a fervent young Republican who pitched himself against the peace movement.

His first bonding with Bush was not over politics, but the two men's ideological and moral distaste for the Sixties - after Bush's born-again conversion from alcoholism to Christianity. Rove was courted by George Bush Snr during his unsuccessful bid to be the Republican presidential candidate for 1980.

But Rove's genius would show later, on Bush senior's election to the White House in 1988, when he co-opted the right-wing Christian Coalition - wary of Bush's lack of theocratic stridency - into the family camp.

Conservative Southern Protestantism was a constituency Bush Jr befriended and kept all the way to Washington, defining both his own political personality and the new-look Republican Party.

When Rove answered the call to come to Texas in 1978, every state office was held by a Democrat. Now, almost all of them are Republican. Every Republican campaign was run by Rove and in 1994 his client - challenging for the state governorship - was a man he knew well: George W. Bush.

'Rove and Bush came to an important strategic conclusion,' writes Lou Dubose, Rove's biographer. 'To govern on behalf of the corporate Right, they would have to appease the Christian Right.'

Bush's six years as Texas governor were a dry run for national domestic policy - steered by Rove - as President: lavish favours to the energy industry, tax breaks for the upper income brackets and social policy driven by evangelical zeal.

Bush had been governor for only a year when, as Rove says, it 'dawned on me' he should run for President; two years later, in 1997, he began secretly planning the campaign. In March 1999, Bush ordered Rove to sell his consulting firm - 'he wanted 120 per cent of his attention,' says a former employee, 'full-time, day and night'.

Rove hatched and ran the presidential campaign, deploying the Bush family Rolodex and the might of the oil industry and unleashing the most vigorous direct-mailing blizzard of all time. 'If the devil is in the details,' writes Dubose, 'he had found Rove waiting to greet him when he got there.'

By the time George W. became President, Rove was the hub of a Texan wheel connecting the family, the party, the Christian Right and the energy industry. A single episode serves as metaphor: during the Enron scandal last year, a shadow was cast over Rove when it was revealed that he had sold $100,000 of Enron stock just before the firm went bankrupt.

More intriguing, however, was the fact that Rove had personally arranged for the former leader of the Christian Coalition, Ralph Reed, to take up a consultancy at Enron - Bush's biggest single financial backer - worth between $10,000 and $20,000 a month.

This was the machine of perpetual motion that Rove built. His accomplishment was the 'Texanisation' of the national Republican Party under the leadership of the Bush family and to take that party back to presidential office after eight years. Rove is unquestionably the most powerful policy adviser in the White House.

Militant Islam was another world from Rove's. However, on 11 September, 2001, it became a new piece of political raw material needing urgent attention. Rove and Bush had been isolationists, wanting as little to do with the Middle East - or any other corner of the planet - as possible. But suddenly there was a new arena in which to work for political results: and, as Rove entered it, he met and was greeted by a group of people who had for years been as busy as he in crafting their political model; this time, the export of unchallenged American power across the world.

Rove in theory has no role in foreign policy, but Washington insiders agree he is now as preoccupied with global affairs as he is with those at home. In a recent book, conservative staff speech writer David Frum recalls the approach of the presidency towards Islam after the attacks and criticises Bush as being 'soft on Islam' for his emphasis on a 'religion of peace'.

Rove, writes Frum, was 'drawn to a very different answer'. Islam, Rove argued, 'was one of the world's great empires' which had 'never reconciled... to the loss of power and dominion'. In response, he said, 'the United States should recognise that, although it cannot expect to be loved, it can enforce respect'.

Rove's position dovetailed with the beliefs of Paul Wolfowitz, and the axis between conservative Southern Protestantism and fervent, highly intellectual, East Coast Zionism was forged - each as zealous about their religion as the other.

There is a shorthand view of Wolfowitz as a firebrand hawk, but he is more like Rove than that - patient, calculating, logical, soft-spoken and deliberate. Wolfowitz was a Jewish son of academe, a brilliant scholar of mathematics and a diplomat. When he joined the Pentagon after the Yom Kippur war, he set about laying out what is now US policy in the Middle East.

In 1992, just before Bush's father was defeated by Bill Clinton, Wolfowitz wrote a blueprint to 'set the nation's direction for the next century', which is now the foreign policy of George W. Bush. Entitled 'Defence Planning Guidance', it put an onus on the Pentagon to 'establish and protect a new order' under unchallenged American authority.

The US, it said, must be sure of 'deterring potential competitors from even aspiring to a larger regional or global role' - including Germany and Japan. It contemplated the use of nuclear, biological and chemical weaponry pre-emptively, 'even in conflicts that do not directly engage US interests'.

Wolfowitz's group formalised itself into a group called Project for the New American Century, which included Cheney and another old friend, former Pentagon Under-Secretary for Policy under Reagan, Richard Perle.

In a document two years ago, the Project pondered that what was needed to assure US global power was 'some catastrophic and catalysing event, like a new Pearl Harbor'. The document had noted that 'while the unresolved conflict with Iraq provides immediate justification' for intervention, 'the need for a substantial American force presence in the Gulf transcends the issue of the regime of Saddam Hussein'.

At a graduation speech to the Military Academy at West Point, Bush last June affirmed the Wolfowitz doctrine as official policy. 'America has, and intends to keep,' he said, 'military strengths beyond challenge.'

At the Pentagon, Wolfowitz and his boss Rumsfeld set up an intelligence group under Abram Schulsky and the Under-Secretary for Defence, Douglas Feith, both old friends of Wolfowitz. The group's public face is the semi-official Defence Policy Board, headed by Perle. Perle and Feith wrote a paper in 1996 called 'A Clean Break' for the then leader of Israel's Likud bloc, Binyamin Netanyahu; the clean break was from the Oslo peace process. Israel's 'claim to the land (including the West Bank) is legitimate and noble,' said the paper. 'Only the unconditional acceptance by Arabs of our rights is a solid basis for the future.' At the State Department, the 'Arabist' faction of regional experts favouring the diplomacy of alliances in the area was drowned out by the hawks, markedly by another new unit with favoured access to the White House.

And in Rove's White House, with his backing, the circle was closed and the last piece of the jigsaw was put in place, with the appointment of Elliot Abrams to handle policy for the Middle East, for the National Security Council.

Abrams is another veteran of Reagan days and the 'dirty wars' in Central America, convicted by Congress for lying alongside Colonel Oliver North over the Iran-Contra scandal, but pardoned by President Bush's father.

He has since written a book warning that American Jewry faces extinction through intermarriage and has counselled against the peace process and for the righteousness of Ariel Sharon's Israel. He is Wolfowitz's man, talking every day to his office neighbour, Rove.

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