(Doug Casey Interviewed by Louis James, Editor, International Speculator) : L: Doug, a lot of readers have been asking for guidance on how to know when it's time to exit center stage and hunker down in some safe place. Few people want to hide from the world in a cabin in the woods while life goes on in the mainstream, but nobody wants to get caught once the gates clang shut on the police state the US is becoming. How do you know when it's time to go?

Doug: Well, the first thing to keep in mind is that it's better to be a year too early than a minute too late. David Galland recently read They Thought They Were Free: The Germans, 1933-45, by Milton Mayer. He quoted a passage in his column of last Friday. It goes a long way in explaining why Americans appear to be such whipped dogs today. They're no different from the Germans of recent memory. For those who missed it, let me quote it:

"You see," my colleague went on, "one doesn't see exactly where or how to move. Believe me, this is true. Each act, each occasion, is worse than the last, but only a little worse. You wait for the next and the next. You wait for one great shocking occasion, thinking that others, when such a shock comes, will join with you in resisting somehow. You don't want to act, or even talk, alone; you don't want to 'go out of your way to make trouble.' … In the university community, in your own community, you speak privately to your colleagues, some of whom certainly feel as you do; but what do they say? They say, 'It's not so bad' or 'You're seeing things' or 'You're an alarmist.'

"These are the beginnings, yes; but how do you know for sure when you don't know the end, and how do you know, or even surmise, the end? On the one hand, your enemies, the law, the regime, the Party, intimidate you. On the other, your colleagues pooh-pooh you as pessimistic or even neurotic… the one great shocking occasion, when tens or hundreds or thousands will join with you, never comes. That's the difficulty. If the last and worst act of the whole regime had come immediately after the first and smallest, thousands, yes, millions would have been sufficiently shocked… But of course this isn't the way it happens. In between come all the hundreds of little steps, some of them imperceptible, each of them preparing you not to be shocked by the next. Step C is not so much worse than Step B, and, if you did not make a stand at Step B, why should you at Step C?"

The fact is that the US has been on a slippery slope for decades, and it's about to go over a cliff. However, our standard of living, while declining, is still very high, both relatively and absolutely. But an American can enjoy a much higher standard of living abroad.

On the other hand, if I were some poor guy in a poverty-wracked country with few opportunities, I'd want to go where the action is, where the money is, now. Today, that means trying to get into the United States. The US is headed the wrong direction, but it's still a land of opportunity and a whole lot better than some flea-bitten village in Niger.

L: By the time things get worse than some Third-World dictatorship in the US, such a person could have remitted a whole lot of cash back home.

Doug: And you'd have a whole lot of experiences that would give you a competitive edge back where you came from, or in the next place you go to. The one-eyed man is king in the valley of the blind. People have to lose that backward, peasant mentality that ties them to the land of their birth. Sad to say, although the average American has somewhat more knowledge of the world – mainly due to television – his psychology is just as constrained as that of some serf from central Asia or some primitive village in Africa. It's all a matter of psychology.

But if you're not poor, you want to go someplace that is safe, nice – whatever that means to you – and with a lower cost of living. As most readers know, for me that's Cafayate, Argentina, but one size does not fit all. It needs to be a place you actually enjoy spending some time, with people whose company you enjoy.

L: Fair enough. But our readers want to know if your guru-sense is tingling yet, or how close you think we are to it being too late to leave – or at least too late to leave with any meaningful assets.

Doug: I'm a trend observer. This is one of the advantages of studying history, because it shows you that things like this rarely happen overnight. They are usually the result of trends that build over years and years, sometimes over generations. In the case of the US, I think the trend has been downhill, in many ways, for many years. Pick a time. You could make an argument, from a moral point of view, that things started heading downhill at the time of the Spanish-American War. That was when a previously peaceful and open country first started conquering overseas lands and staking colonies. America was still in the ascent towards its peak economically, but the seeds of its own demise were already sewn, and a libertarian watching the scene might have concluded that it was time to get out of Dodge –

L: [Laughs] That would have been a bit early…

Doug: [Chuckles] Yes, that would have been way too soon. As Adam Smith observed, there's a lot of ruin in a country.

L: On the other paw, it would have gotten you out before the War between the States, a disaster well worth avoiding.

Doug: No, the Spanish-American War was in 1898.

L: Oops! Sorry, I was thinking of what Americans call the Mexican-American War, but which Mexicans call the "American Invasion" –

Doug: [Laughs]

L: I'm not joking. That's what they called it in the history books I was given in Mexican schools when I lived there in the '70s. It has long seemed to me that that was an ominous turn for the worse for the US and a clear example of conquering a weaker neighbor purely for pillage – not just Texas, but everything from there all the way to California.

Doug: That's right. Davey Crockett and the boys, we love them, but in many ways they were the equivalent of today's Mexicans who want to recolonize the southwest and turn it back into part of Mexico, in what they call the Reconquista.

L: Indeed, but this is ancient history to most US taxpayers today – I'm reminded that it's not correct in many cases to call them Americans.

Doug: Yes, just as it was a misnomer to call the people who lived in the Roman Empire after Diocletian Romans – because Roman citizens were once free men. After about 300 AD most of them were bound to the land or their occupations as serfs. But the slide for Rome started at least 120 years earlier, after the death of Marcus Aurelius. Politically, the decline started with the accession of Julius Caesar 240 years before that. So, when did the slide – politically, economically, and socially – really start for the US? When were there no more trends going up?

L: FDR? The New Deal was really a moral, economic, and political turning point.

Doug: You could make that argument, but the US still grew economically, despite the roadblocks FDR threw in its path. US military power and global prestige continued growing from that point, although, paradoxically, the accelerating growth of the US military was directly responsible for the decline of the US economically and in terms of personal freedom. One reason for the ascendancy of the US after World War II was that we were the only major country in the world not physically devastated by the war.

L: Ah. Right.

Doug: So it seems to me that the peak of American civilization was in the 1960s. As for evidence, well, I like to put my finger on the 1959 Cadillac. Those twin bullet taillights, the opulence of it… In terms of then-current technology, things couldn't get much better.

L: "Opulence. I has it."

Doug: [Laughs – a real belly laugh] That's my favorite TV commercial! Anyway, that was the peak, in my mind. Though things continued getting better for a while, the US started to live out of capital.

L: Had to pay for guns and butter.

Doug: That's right. The Johnson administration's so-called Great Society created vast new federal bureaucracies that promised Americans free food, shelter, medical care, education, and what-have-you. Americans became true wards of the state. But the real, final nail in the coffin for America was in 1971 –

L: Nixon taking the US off the gold standard.

Doug: Nixon taking the US off the gold standard – open devaluation of the dollar, combined with wage and price controls for some months. And that was not long after the so-called Bank Secrecy Act, which abolished bank secrecy, and required the reporting of all foreign financial accounts. Nixon was, in many ways, even more of a disaster than Johnson. Republicans are usually worse than Democrats when it comes to freedom, partly because they like to couch their depredations in the rhetoric of defending the free market. While everyone understands that Democrats are socialists just under the surface, Republicans actually give capitalism a bad name. Baby Bush is a perfect, recent example.

L: But don't you worry your pretty little head about devaluation – it's just a "bugaboo" – and as long as you're not one of those unpatriotic people wanting to buy imports or vacation abroad, your dollar will be worth just as much tomorrow as it is today. The scary thing is that the Belarusian dictator Lukashenko said almost the same thing when the Belarusian ruble lost two thirds of its forex value earlier this year, asking his countrymen why they need to go on vacation in Germany or buy German cars…

Doug: You see why I like to study history? It doesn't repeat, but it sure does rhyme…

L: With a vengeance.

Doug: So, anyway, since 1971, some things have improved largely due to technological advances, but the America That Was has been fading into the past. It was a decisive turning point. You can see that in the accelerated proliferation of undeclared wars we've had since then. I don't just mean the penny-ante invasions of Granada and Panama – the US has always lorded it over Caribbean and Central American banana republics; those are just sport wars. But Iraq and Afghanistan are alien cultures on the other side of the world – apart from never posing any threat to the US. Now it looks like Iran and Pakistan are on the dance card, and they're big game. The War Against Islam has started in earnest, and it's going to end badly for the US. I explained all this at great length in the white paper, Learn to Make Terror Your Friend, that I wrote for The Casey Report last month.

Domestically, saying that the US is turning into a police state when you started this conversation was quite accurate. You can see more and more videos spreading over the Internet, not just of police brutality, but demonstrating the militarization and federalization of police, who are being inculcated with both disdain for and paranoia about ordinary citizens.

In the old days, if you were stopped for speeding, the peace officer was polite – you could get out of your car, meet the cop on neutral ground, and chat with him. You didn't have a serious problem unless you were obviously drunk or combative. Now, you don't dare make a move. You better keep your hands in plain sight on the steering wheel and be ready for a Breathalyzer test without probable cause. The law enforcement officer will stand behind you with his hand on his gun. And you're the one who'd better be polite.

L: There has been a polar reversal. The cops used to address citizens as "sir" or "ma'am." Now, the correct response in a traffic stop is: "Yes, sir! I would love to inspect the bottom of your boot, sir!"

Doug: [Laughs] That's right. My friend Marc Victor gives out magnetized business cards. People ask, "Why?" He answers that it's so clients can put them on the bottom of their cars or refrigerators, so they can see it when the cops throw them to the ground.

L: Marc's a good man. There's a handy video on Marc's website, offering advice on what to do if you're pulled over by the police in a traffic stop.

Doug: A good public service announcement. At any rate, I think there's no question that the US has turned the corner on every basis: politically, socially, morally, and now, economically…

L: Okay, but, Doug, you said that in 1979 too. The question is, how do we know when the door is going to close?

Doug: [Laughs.] Well, sometimes I feel a little like the boy who cried wolf. But Roman writers like Tacitus and Sallust saw where Rome was going before it got completely out of control. Should they have said nothing, for fear of being too early? Here in the US, it should have gone over the edge back in the 1980s, but we got lucky. There was still a lot of forward momentum, which can last for decades when you're speaking of civilizations. There was the computer productivity boom. The Soviet Union collapsed, China liberalized, and Communism was discredited everywhere except on US college campuses. The end of the Cold War opened up vast areas of the world to the global market. And most surprising of all, Volker tightened up the money supply and interest rates went high, causing people to save money and stop borrowing to consume.

L: That's not happening this time.

Doug: No. We got lucky back then. Since the '90s we've had a long and totally phony, debt-driven boom that's now come to an end. I feel very confident that there's no way out this time. There are huge distortions and misallocations of capital that have been cranked into the system for two decades. And not just in the US this time, but in Europe, China, Japan, and elsewhere.

The US is very clearly on the decline. The fact that in spite of bankrupting military expenditures to no gain for the American people, those in power are talking overtly and aggressively about attacking more countries – Iran and Pakistan in particular – is extremely grave. The fact that they attacked Libya – which, incidentally, is going to turn into a total disaster, a civil war that will last for years – shows it's not stopping. Sure, Obama brought troops home from Iraq – another disaster that's going to remain a disaster for years to come – but at the same time he put a company of combat troops in Uganda, of all places and Marines in Australia, to provoke the Chinese.

Back home, I've read reports that people are being stopped for carrying gold coins out of the US, in Houston in particular. Now we have authorization of the military to detain US citizens, on US soil, with no trail, and indefinitely, on the verge of becoming law. And Predator Drones have been used to hunt down farmers on their own ranches.

I could go on and on. This is not like spotting early signs of decay in America's expansionist wars of the 19th century or things getting worse with FDR. Most people can't see it with all the noise and confusion, but we've reached the edge of the precipice.

L: Don't worry about exactly where the edge is, just assume it's there and take appropriate action?

Doug: Yes. It really is there. It's a clear and present danger. But most Americans are as oblivious as most Germans were in the '30s. In fact, most of them support what's going on, just as most Germans supported their government in the '30s and '40s.

L: So… don't worry about figuring out exactly when the gates will shut. Assume they are shutting now?

Doug: That's right. One should be actively and vigorously looking to expatriate assets, cash, and even one's self. A prudent person will always be diversified politically and internationally.

L: What about people who have jobs they can't continue doing from abroad and who need the income?

Doug: They should still prepare, as best they can, to be ready to go on a vacation when things get hot – a vacation from which they might not return for a long time. All that needs happen, with the hysteria that's building in the US, is for a major terrorist incident – real or imagined – to occur. Homeland Security will lock the country down. I hate to admit it, but I'm almost starting to credit the stories about those FEMA camps.

Look, I know it sounds extreme, and the comparison to pre-WWII Germany has been made many times, but it bears repeating. Germany was the most literate, civilized, and even mellow, in some ways, country in Europe. It was much admired all around the world – a nation of shopkeepers, small farmers, and scholars. But the whole character of the place started changing in 1933, and it just got worse and worse. By the end of 1939, if you weren't out, you were done.

L: [Pauses] Well, not a cheerful thought. Actions to take?

Doug: Things we've said before: Set up foreign bank accounts in places you like to travel, while you can. Set up vault arrangements for physical precious metals outside the US. Buy foreign real estate that you'd like to own, because it can't be forcibly repatriated. Offshore asset protection trusts are a good idea too. Become an International Man. Let me emphasize that US taxpayers should stay within all US laws, because the consequences of breaking them are unbelievably draconian.

Generally, one simply must internationalize one's assets. The biggest danger investors face, by far, is not market risk – huge as that will be – but political risk. The only way to insulate yourself from such risk is to diversify yourself politically and geographically.

L: Right then… words to the wise. Thanks for your insight.

Doug: You're welcome. Most won't, but I just hope readers listen.

How is it that the world's fortunes hang on the life or death of a murderous thug that the US has been supporting for 30 years? And why, in fact, if Yemen's President Ali Abdullah Saleh is so important, isn't it common knowledge? Saleh was wounded yesterday when opposition forces blew up his palace. But as I'll discuss, below, there's more to the story. (Isn't there always?)

In my opinion, this story is so big it should be on the front pages of the New York Times and The Wall Street Journal: "US dollar hegemony hangs in the balance." Or how's this: "Future of the world's monetary system may be decided in Yemen's Sana’a."

How can one silly, little and desperately poor country full of people in ankle-length white robes be in the position to shake the foundations of the current monetary system of the Anglo-American empire?

First, context. It hasn't been a good year for the West's power elite. Yemen is only one country in tumult. Other countries verging on civil war are Bahrain and Syria. (Libya is already convulsed.) But in fact there are hundreds of places in the Middle East, Africa and Europe now where people are demonstrating and marching – or fighting with various levels of efficiency and organization.

In Afghanistan, the Obama administration is said to be desperately searching for Mullah Omar, the one-eyed leader of the Taliban, now and again reported dead or missing. US officials, in turn, wish to find Omar so that they can work out a deal where the US declares victory and Omar retains the territory. Some victory.

Libya is currently in a stalemate; China is Pakistan's new best friend; Pakistan's generals are again denying what Ms. Hillary Clinton – US Secretary of State – said only a week ago, that the Pakistan army was about to launch a significant attack against the Pashtun/Taliban. It's not true, the generals say.

Meanwhile, Egypt's youths sleep on the streets; Tunisian youth are no happier; Iran is gaining considerable regional influence because of the "color revolutions" that the CIA apparently triggered. Iraq is destabilizing again, and even the Palestinians are resurgent.

The Arab Awakening is truly a regional if not global phenomenon. Of course, we have our own name for it: The Internet Reformation. It's really the same thing. Just as the Gutenberg press spawned the Renaissance and Reformation, so the Internet has now spawned a truly significant social convulsion. The world will never be the same.

America's CIA-sponsored AYM youth movements were behind the initial color revolutions. But notice how the mainstream press has stopped celebrating them. Perhaps they haven't worked out as planned. Either Western elites are encouraging a series of Arab Islamic Republics (so as to buttress what seems to be an essentially phony "war on terror") or they are trying to create controllable regulatory democracies that will likely be run by dependable militaries with a constitutional façade. Neither of these options looks to be feasible in the near term.

Alternatively, the West seeks generalized chaos for some reason – or, more intriguingly, it has simply lost control of the situation. As we've stated before, Yemen is important because it may well indicate how much control the West actually has over the Arab Awakening. So far, what's been most apparent is dithering. The West hasn't shown a firm hand. There are reasons why.

Yemen may be spinning out of Western control. After Saleh was wounded, he was quoted as saying, "I salute our armed forces and the security forces for standing up firmly to confront this challenge by an outlaw gang that has nothing to do with the so-called youth revolution." It's interesting that the words Saleh used were "outlaw gang" as the tribal opposition to his rule denied making the attack. Apparently, it was what one might call "an inside job."

That means that individuals nominally allied with Saleh tried to knock him off. And why not? He is a thoroughly despicable man. He has ruled Yemen for about 30 years through a mixture of truculence and torture; like Gaddaffi, his favorite method of staying in power is one of "divide and conquer" in which he set various tribes against each other.

Yup ... Yemen is another "tribal backwater" like Afghanistan – a place where the Anglo-American elite (exaggeratedly) has no interest. It is like a kid kicking a stone past the house of a pretty girl. He just happened along the way ... and thus the US just "happened' into Afghanistan and Iraq. In fact, the US is intensely interested – mesmerized in a kind of Ted Bundy (bad) way.

How seriously does the Anglo-American empire take Afghanistan (as a speed-bump on the way to world government)? Try, probably, say ... US$2 trillion in expenditures, thousands killed and tens of thousands wounded. True the total all-in cost hasn't been as much as Vietnam (50,000 dead and 500,000 wounded) but there's considerable evidence that the US has been undercounting the dead and wounded through a variety of manipulations.

Yemen has never presented the same kind of problem as Afghanistan. In part that's because Yemen is even more difficult to subdue militarily than the stiff-necked Pashtun Taliban. The West has wanted as little to do with Yemen as possible (outside of controlling the coastline). Here's a description of Yemen by Paul Herman of the New Zealand Post in a recent article entitled "Cry, cry and cry again for my beloved Yemen."

So now my beloved Yemen is on the verge of going up in flames, on the verge of a cataclysmic civil war. I say "my beloved" because I had such an extraordinary time there on an Intrepid Journey a few years back Not a lot of people actually know where Yemen is. I don't think I really did until I checked a map before we went there. It is essentially the bottom left portion of the Arabian Peninsula. And what I certainly didn't realise about the entire Arabian Peninsula is that a massive mountain range runs north to south down its western side, sloping down eventually to the Red Sea.

In fact, the Saudis move their capital up to the mountains, to Taif, during the ferocious Arabian summers. The Yemeni capital Sana'a sits in this same mountain range. The thing about Yemen is the architecture. There is nothing like it in the world. They seem to have engineering in their genes. They built skyscrapers when no one was doing it.

Osama Bin Laden's father, who got rich building roads in Saudi Arabia, was Yemeni. He got so rich he rebuilt the mosque at Mecca with his own money. Old Man bin Laden came from one of the most spectacular parts of the world I have ever seen, the Wadi Hadromaut. It is probably as vast and as breathtaking as the Grand Canyon. And all through this great and ancient valley are villages perched on high, impossible sites, above steep cliffs, and you look at them and marvel because they have been there hundreds and hundreds of years.

How in God's name did they do that, you find yourself asking time and again, round every corner. It's the same through the entire country, especially in that great mountain range, villages with slim, square buildings six or seven storeys on the most unreachable ridges and peaks. And, of course, that was the point. Defensively, they are brilliantly sited. The truth is, neither the Turks - of whom there are still some 10,000 in Yemen - nor the British ever really conquered anywhere but the Yemeni coast. You couldn't get near those mountain villages. The Yemenis simply rolled great rocks down on you.

As Afghanistan is the key to Middle Asia, so Yemen is the key to "Arabia." The tribes of Oman and the Arab Emirates flowed out of Yemen. And today Yemen is no less important than before in terms of the Great Game. It is perched on the edge of one of the most important waterways in the world and fronts the soft underbelly of Saudi Arabia – the part where many of the most profitable oil wells are located.

Yemen is formidable, and strangely important. But because of the mountains, because of the tribes, because of the weaponry (three rifles for every Yemeni), because boys are expected to be proficient with weapons from an early age, Yemen has not been high on the list of the Anglosphere's "civilizing" influences.
Ironically, the Yemenis are very similar culturally to the Somalis – from the same Somalia that Western newscasters like to call a failed state. (A failed state is any country that stands in the way of the West's dash toward One World Government.)

What Western mainstream media isn't bothering to report, however, is that the Anglo-American power elite could already have done away with Saleh if it wanted to. He's their man and has been for all of his violent existence. It is reprehensible that that Western elites would rather let Yemen drift into civil war than cease to support Saleh. There have been no moves made in the UN to put pressure on Saleh, no sanctions – only apparently regular ammo and tear gas refills, which he has used to slaughter hundreds of Yemenis.

The Western elites have not moved to do away with Saleh because they cannot apparently find a thug to put in his place that will garner a modicum of tribal support. The result of all this is growing antipathy. Possibly, because Yemen is another funny "impoverished backwater," the US has handled the Yemen very badly. The whole country is inflamed. Saleh, now wounded, will likely never get his power back and the chances that the CIA will have the opportunity to create a new Saleh are growing slimmer by the minute.

The Saudis worked desperately to move Saleh out of power. It is easy to see why now; that was their leverage. But now the nightmare scenario has occurred: increasingly the Saudis are perceived as propping Saleh up (which they are doing actually by not removing him). Ultimately all this returns to the US and the Pentagon, which in turn does the bidding of the City of London. So, here is the answer to the question asked at the beginning of this article. The answer is ...

SAUDI ARABIA!

The corrupt and vicious Saudi regime lies at the heart of Money Power. Without Saudi willingness to support the continued dollar-oil exchange (forcing the rest of the world to hold dollars) the dollar reserve currency system seriously degrades.

The current system was put in place in the 1940s, but it was elaborated on in 1971, when the US severed the last link between gold and the dollar and substituted oil. How did the Anglosphere elites manage this trick? Using Mao's observation: "power springs from the barrel of a gun."

The Saudis were willing accomplices, but in reality they didn't have a choice. The world's economy, when you come down to it, is a product of American military force. Use the dollar to buy oil or else ... But if the US and Saudi Arabia cannot control the spiraling disaster in Yemen, the next stop on the revolutionary train is Bahrain. And after that ... Saudi Arabia. And THIS time, events may not be easily salvageable. The Internet has educated the Arab world about its history.

If the Anglosphere elites had only used their tremendous industrial and monetary advantages to build a free-market instead of a phony one (disguised as a free one)! But the elites chose to propagate a central banking economy in order to chase after world government, and now they are in danger of an eroding dollar reserve, which could eventually result in the creation of an entirely new (and uncontrollable) currency. Anyway, if Saudi Arabia falls, the dominoes may simply keep tumbling. Who pays any attention to funny little countries like Yemen anyway?

An unexpected side-effect of the flooding in parts of Pakistan has been that millions of spiders climbed up into the trees to escape the rising flood waters.

Because of the scale of the flooding and the fact that the water has taken so long to recede, many trees have become cocooned in spiders webs. People in this part of Sindh have never seen this phenonemon before - but they also report that there are now less mosquitos than they would expect, given the amoungt of stagnant, standing water that is around.

It is thought that the mosquitos are getting caught in the webs and may be reducing the risk of malaria, which would be one blessing for the people of Sindh, facing so many other hardships after the floods.

A Pakistani court has freed a US CIA contractor after acquitting him of two counts of murder at a hearing held at a prison in Lahore, officials say.

Raymond Davis, 36, was alleged to have shot dead two men in the eastern city of Lahore in January following what he said was an attempted armed robbery.

The acquittal came when relatives of the dead men pardoned him in court.

They confirmed to the judge overseeing the case that they had received compensation - known as "blood money".

Under Pakistani Sharia law, relatives of a murder victim can pardon the killer.

Reports say about 18 family members of the two dead men were in court on Wednesday and confirmed that they wanted Mr Davis to be freed and pardoned because they had received "blood money".

About 200 people protested against the acquittal in Lahore and there were small protests in other Pakistani cities.

Cameron Munter, the US ambassador to Pakistan, said that he was "grateful for the generosity" of the families.

"I wish to express, once again, my regret for the incident and my sorrow at the suffering it caused," he said.

Mr Munter said that the US Department of Justice has opened an investigation into the incident.

Washington has always insisted that Mr Davis had diplomatic immunity and was acting in self-defence.

A lawyer representing the family of one of those killed - Faizan Haider - told the BBC that the "blood money" deal was done without his knowledge and that he was in detention when it was made.

"I was not allowed to participate in the proceedings of the case... and could not see or approach my clients," Asad Manzoor Butt said.

"I and my associate were kept under forced detention for four hours.

"If my clients have indeed signed a blood money deal, then this has been done behind my back and I don't know anything about it."

As recently as three days ago, relatives told the BBC they wanted justice not compensation.

Aijaz Ahmad, a cousin of Faizan Haider, said that eight members of his immediate family have not been traceable since news of the deal emerged.

"There is a padlock on their door. Their phones are all switched off. If they have done this then they have acted dishonourably," he said.

The immediate family of the other man killed is also reported to have gone missing.

Illegal weapons

The BBC's Orla Guerin in Islamabad said that Mr Davis - a former US special forces member - had already been released from jail but his exact whereabouts were unknown.
Protesters shout slogans in protest against Raymond Davis earlier this month Public anger intensified after US officials said Mr Davis had been secretly working for the CIA

She added that there were unconfirmed reports that he had already left Pakistan.

The deal to release him - made by the court sitting in his Lahore jail - ends a long-simmering diplomatic stand-off between Pakistan and the United States which had severely strained relations. It will come as a relief to both governments.

"The court first indicted him but the families later told court that they have accepted the blood money and they have pardoned him," Punjab Law Minister Rana Sanaullah told Reuters.

"The court acquitted him in the murder case."

Ms Sanaullah said that because Mr Davis was already on bail in a parallel case relating to possession of illegal weapons at the time of the killings, there was no reason why he should not also be released in that case too.

Mr Davis was arrested immediately after he shot dead two men. He has said that he killed them in self-defence as they were trying to rob him.

A third man was run over by a US vehicle that came to the American's aid but there have so far been no charges in relation to that case.

Public anger intensified after unnamed US officials said that Mr Davis had been secretly working for the CIA at the time and questions are likely to remain as to what he was exactly doing at the time.

The BBC's M Ilyas Khan in Islamabad says it is not clear how much blood money was paid to the families of the dead men, and it may never be known.

WASHINGTON (AP) — An American jailed in Pakistan for the fatal shooting of two armed men was secretly working for the CIA and scouting a neighborhood when he was arrested, a disclosure likely to further frustrate U.S. government efforts to free the man and strain relations between two countries partnered in a fragile alliance in the war on terror.

Raymond Allen Davis, 36, had been working as a CIA security contractor for the U.S. consulate in Lahore, according to former and current U.S. officials, who spoke on condition of anonymity because they weren’t authorized to talk publicly about the incident.

Davis, a former Special Forces soldier who left the military in 2003, shot the men in what he described as an attempted armed robbery in the eastern city of Lahore as they approached him on a motorcycle. A third Pakistani, a bystander, died when a car rushing to help Davis struck him. Davis was reportedly carrying a Glock handgun, a pocket telescope and papers with different identifications.

The revelation that Davis was an employee of the CIA comes amid a tumultuous dispute over whether he is immune from criminal prosecution under international rules enacted to protect diplomats overseas. New protests in Pakistan erupted after The Guardian newspaper in London decided to publish details about Davis’ relationship with the CIA.

The U.S. had repeatedly asserted that Davis had diplomatic immunity and should have been released immediately. The State Department had claimed Davis was “entitled to full criminal immunity in accordance with the Vienna Convention” and was a member of the “technical and administrative staff” at the U.S. Embassy in Islamabad.

...

Davis identified himself as a diplomat to police when he was arrested and “has repeatedly requested immunity” to no avail, Crowley said. The U.S. Embassy said he has a diplomatic passport and a visa valid through June 2012. It also said in a recent statement the U.S. had notified the Pakistani government of Davis’ assignment more than a year ago. However, a senior Pakistani intelligence official says that Davis’ visa application contained bogus U.S. contact information.

Since Pakistani authorities took the ex-Special Forces soldier into custody Jan. 27, U.S. officials said, the situation has slowly escalated into a crisis, threatening the CIA’s ability to wage a dangerous war against al-Qaida and militants. Some members of Congress have threatened to cut off the billions in funding to Pakistan if Davis isn’t released.

Davis was attached to the CIA’s Global Response Staff, which provides security overseas to agency bases and stations, former and current U.S. officials told the AP. In that role, he was assigned to protect CIA personnel. One of their duties includes protecting case officers when they meet with sources. On the day he was captured, he was familiarizing himself with the area.

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Military records show Davis, a Virginia native, served a decade in the Army, including five years with the 3rd Special Forces Group in Fort Bragg, N.C., home to the Green Berets.

Davis also worked for Xe Services, the security contractor formerly known as Blackwater.

Davis and his wife run a Las Vegas-registered company called Hyperion Protective Services. The address for its headquarters is a mailbox at a UPS store in a strip mall. The truth about Davis’ true employer briefly slipped out after a local television reporter in Colorado called his wife.

In a story posted on the website of Denver’s 9News, the wife provided the name and number of a “CIA spokesperson” in Washington, D.C. But the story was quickly taken down, edited and then reposted with new language eliminating any reference to the CIA.

Even with its potential for providing predictable and sustainable electricity generation with no visual impact, tidal power still accounts for only a fraction of a percent of the world’s total electricity generation. That is slowly changing though, with numerous tidal power plants being constructed or planned for coastlines around the world. India is the latest country to wade into the tidal power waters with the announcement of its first commercial scale tidal current power plant to be constructed in the Indian State of Gujarat.

Following a recent economic and technical study of prime sites in the Gulf of Kutch by Atlantis Resources Corporation, which yielded the discovery of as much as 300MW of economically extractable tidal power resources, the Chief Minister of Gujarat, Narenda Modi, this week approved a 50MW tidal power project to be constructed in the Gulf of Kutch.

The project will see Gujarat Power Corporation Ltd. partner with London-based Atlantis Resources Corporation, which recently revealed plans to develop one of the world’s largest marine power projects in the UK using its new 1MW AK1000 tidal turbine. Both companies have signed a memorandum of understanding (MoU) with the Gujarat government for the project, which could commence construction as early as this year.

As part of the agreed upon terms of the MoU for a total of 250MW of future tidal power development, the initial 50MW project could be scaled up to more than 200MW of installed capacity. The project is expected to cost around Rs 750 crore (approx. US$164 million).


Atlantis Resources Corp. also has plans to expand into China and South Korea, where it hopes to soon start commercial-scale trials. At last year’s Clean Energy conference in Singapore, Atlantis CEO Timothy Cornelius said global production of electricity harnessing the ocean waves may climb ten-fold to as much as 300MW in the next couple of years.

“China’s the next big market for tidal energy,” Cornelius said. “It has the most natural tidal resources in the world and can be home to more than 1,000 megawatts of tidal energy.”

India’s rapidly growing private microcredit industry faces imminent collapse as almost all borrowers in one of India’s largest states have stopped repaying their loans, egged on by politicians who accuse the industry of earning outsize profits on the backs of the poor.

D. Mallama spoke about her daughter, Durgamma, who ran away from her village in Andhra Pradesh, India, after not being able to pay back loans from microfinance agencies.

The crisis has been building for weeks, but has now reached a critical stage. Indian banks, which put up about 80 percent of the money that the companies lent to poor consumers, are increasingly worried that after surviving the global financial crisis mostly unscathed, they could now face serious losses. Indian banks have about $4 billion tied up in the industry, banking officials say.

“We are extremely worried about our exposure to the microfinance sector,” said Sunand K. Mitra, a senior executive at Axis Bank, speaking Tuesday on a panel at the India Economic Summit.

The region’s crisis is likely to reverberate around the globe. Initially the work of nonprofit groups, the tiny loans to the poor known as microcredit once seemed a promising path out of poverty for millions. In recent years, foundations, venture capitalists and the World Bank have used India as a petri dish for similar for-profit “social enterprises” that seek to make money while filling a social need. Like-minded industries have sprung up in Africa, Latin America and other parts of Asia.

But microfinance in pursuit of profits has led some microcredit companies around the world to extend loans to poor villagers at exorbitant interest rates and without enough regard for their ability to repay. Some companies have more than doubled their revenues annually.

Now some Indian officials fear that microfinance could become India’s version of the United States’ subprime mortgage debacle, in which the seemingly noble idea of extending home ownership to low-income households threatened to collapse the global banking system because of a reckless, grow-at-any-cost strategy.

Responding to public anger over abuses in the microcredit industry — and growing reports of suicides among people unable to pay mounting debts — legislators in the state of Andhra Pradesh last month passed a stringent new law restricting how the companies can lend and collect money.

Even as the new legislation was being passed, local leaders urged people to renege on their loans, and repayments on nearly $2 billion in loans in the state have virtually ceased. Lenders say that less than 10 percent of borrowers have made payments in the past couple of weeks.

Government officials in the state say they had little choice but to act, and point to women like Durgamma Dappu, a widowed laborer from this impoverished village who took a loan from a private microfinance company because she wanted to build a house.

She had never had a bank account or earned a regular salary but was given a $200 loan anyway, which she struggled to repay. So she took another from a different company, then another, until she was nearly $2,000 in debt. In September she fled her village, leaving her family little choice but to forfeit her tiny plot of land, and her dreams.

“These institutions are using quite coercive methods to collect,” said V. Vasant Kumar, the state’s minister for rural development. “They aren’t looking at sustainability or ensuring the money is going to income-generating activities. They are just making money.”

Reddy Subrahmanyam, a senior official who helped write the Andhra Pradesh legislation, accuses microfinance companies of making “hyperprofits off the poor,” and said the industry had become no better than the widely despised village loan sharks it was intended to replace.

“The money lender lives in the community,” he said. “At least you can burn down his house. With these companies, it is loot and scoot.”

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Indian microfinance companies have some of the world’s lowest interest rates for small loans. Mr. Akula said that his company had reduced its interest rate by six percentage points, to 24 percent, in the past several years as volume had brought down expenses.

The White House will, of course, stay in Washington but the heart of the famous building will move to India when President Barack Obama lands in Mumbai on Saturday.

Communications set-up and nuclear button and majority of the White House staff will be in India accompanying the President on this three-day visit that will cover Mumbai and Delhi.

He will also be protected by a fleet of 34 warships, including an aircraft carrier, which will patrol the sea lanes off the Mumbai coast during his two-day stay there beginning Saturday. The measure has been taken as Mumbai attack in 2008 took place from the sea.

Arrangements have been put in place for emergency evacuation, if needed.

Obama is expected to fly by a helicopter -- Marine One -- from the city airport to the Indian Navy's helibase INS Shikra at Colaba in south Mumbai.

Two jets, armed with advanced communication and security systems, and a fleet of over 40 cars will be part of Obama's convoy.

Around 800 rooms have been booked for the President and his entourage in Taj Hotel and Hyatt.

The President will have a security ring of American elite Secret Service, which are tasked to guard the President, along with National Security Guards (NSG) and personnel from central paramilitary forces and local police in Mumbai and Delhi.

Similar arrangements will be in place in Delhi, with the Air Force One to be kept in all readiness throughout Obama's stay here from Sunday afternoon to Tuesday morning.

Maurya Hotel, where the President will stay, has already been swarmed by American security personnel and protective measures have been put in place.

Security drills have already been carried out at the hotel as well as Rajghat, where he will visit.

Sources said 13 heavy-lift aircraft with high-tech equipment, three helicopters and 500 US security personnel have arrived in India ahead of Obama's visit.

The US security has also brought interception and obstruction device, sniffer dogs, rescue gadgets.

Apart from Obama's Air Force One, a few private luxury jets carrying top American corporate leaders, who are part of Obama's entourage, are also expected to arrive in India in the next 2-3 days.

All high-rise buildings in the vicinity of Mumbai's Taj Mahal hotel and Delhi's Maurya Sheraton hotel, where the US President will stay, are being sanitised and security personnel will be positioned on rooftops to prevent any air-borne attack.