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In one of my very favorite movies, Morpheus explained that phenomena like deja vu resulted from glitches in the Matrix.

Every society in history, since the rise of class domination (and of states as its instruments), has had a cultural reproduction apparatus.  The purpose is to process newborn human beings into the kind of “human resources” a given system needs to continue on a stable basis:  people who accept the prevailing system of power as normal, and who dismiss fundamental challenges to the system of power as “radical” or “extremist.”

But the Matrix we live in has its own glitches:  internal contradictions built into the system’s own propaganda, which act as stumbling blocks and regularly cause ideological “defects” in the human resources being processed by the system.

This is unavoidable.  What the system does cannot be reconciled with what it says.  What it says this week cannot be reconciled with what it said last week.   And sometimes people notice, and put two and two together.  Every time that happens, the cultural reproduction appratus has generated another defect that could potentially bring the system down.  I’m writing this because I’m one of those defects.  Maybe someday you’ll be one too, if you’re not already.

The nature of the system means such glitches are bound to occur quite frequently.  The “free market” rhetoric we regularly hear from the right wing of the ruling class directly contradicts the observed reality that the dominant players in the corporate plutocracy are the world’s biggest welfare queens.   The “putting people first” rhetoric of the ruling class’s left wing, likewise, runs up against the observed reality that the main actual function of the regulatory state (despite the “Progressive” Upton Sinclair marketing) is to enforce the artificial scarcity rents and subsidies that the corporate plutocracy depends on.

The system relies heavily on the legitimizing ideology that rewards go to hard work, that wealth is the reward for superior performance in the market, that people should pull their own weight.  But that ideology doesn’t hold up very well in a perceived reality characterized by Halliburton and Blackwater, by the RIAA/MPAA and Microsoft, or by Boeing and McDonnell-Douglass.  When the vast majority of the big corporate interests are turtles on fenceposts, who got where they were with government protections or taxpayer subsidies, all that Horatio Alger crap just don’t cut it.

And it also helps that the people formulating the propaganda are just so pathetically stupid.

Did you ever see “Reefer Madness”?  It’s quite a howler, particularly under the proper herbally-induced conditions.  And most of the state’s heavy-handed behavioral control propaganda is just more Reefer Madnesses in the making.

Consider the PSA, directed at schoolkids, telling them to “Be Cool.  Don’t Do Drugs.”  How do they think the average teenager’s going to react?  “Well, golly gee — I used to think smoking weed was fun — but if a bunch of middle-aged, white men  in suits sitting around a conference table somewhere on Madison Avenue say it’s not cool, I guess I was wrong!”  All my life I’ve just assumed that anything said in a PSA was a lie unless proven otherwise, and immediately responded to those “Did you know….” posters by saying “No — and I still don’t.”

Or how about those mandatory “anti-songlifting” classes they teach in school — for anyone with even a minimum level of critical thinking skills, it’s just something else to make fun of like the cult followers of Reefer Madness.  Most of those kids have accepted file-sharing as normal for most of their lives, and can see with their own eyes the obscene amounts of money raked in by the record companies — very little of which goes to the actual artists.  Just how stupid does the RIAA think people are?  Most people instinctively gag at having something so heavy-handed and lame shoved down their throats.

The simple fact of the matter is, human beings are thinking beings.  Some are more gullible than others.  But most people will tend to be skeptical when something is forced down their throats.  And when an authority figure behind a desk attempts to indoctrinate people with some form of propaganda, there’s a serious danger that the person of at least average intelligence will stop to ask what’s in it for the people who are pushing it on him.

The cultural reproduction apparatus of the state and the class interests controlling it is intended, in Noam Chomsky’s words, to manufacture consent.  But often as not, it inadvertently manufactures dissent.

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The investment arms of the CIA and Google are both backing a company that monitors the web in real time — and says it uses that information to predict the future.

The company is called Recorded Future, and it scours tens of thousands of websites, blogs and Twitter accounts to find the relationships between people, organizations, actions and incidents — both present and still-to-come. In a white paper, the company says its temporal analytics engine “goes beyond search” by “looking at the ‘invisible links’ between documents that talk about the same, or related, entities and events.”

The idea is to figure out for each incident who was involved, where it happened and when it might go down. Recorded Future then plots that chatter, showing online “momentum” for any given event.

“The cool thing is, you can actually predict the curve, in many cases,” says company CEO Christopher Ahlberg, a former Swedish Army Ranger with a PhD in computer science.

Which naturally makes the 16-person Cambridge, Massachusetts, firm attractive to Google Ventures, the search giant’s investment division, and to In-Q-Tel, which handles similar duties for the CIA and the wider intelligence community.

It’s not the very first time Google has done business with America’s spy agencies. Long before it reportedly enlisted the help of the National Security Agency to secure its networks, Google sold equipment to the secret signals-intelligence group. In-Q-Tel backed the mapping firm Keyhole, which was bought by Google in 2004 — and then became the backbone for Google Earth.

This appears to be the first time, however, that the intelligence community and Google have funded the same startup, at the same time. No one is accusing Google of directly collaborating with the CIA. But the investments are bound to be fodder for critics of Google, who already see the search giant as overly cozy with the U.S. government, and worry that the company is starting to forget its “don’t be evil” mantra.

America’s spy services have become increasingly interested in mining “open source intelligence” — information that’s publicly available, but often hidden in the daily avalanche of TV shows, newspaper articles, blog posts, online videos and radio reports.

“Secret information isn’t always the brass ring in our profession,” then CIA-director General Michael Hayden told a conference in 2008. “In fact, there’s a real satisfaction in solving a problem or answering a tough question with information that someone was dumb enough to leave out in the open.”

U.S. spy agencies, through In-Q-Tel, have invested in a number of firms to help them better find that information. Visible Technologies crawls over half a million web 2.0 sites a day, scraping more than a million posts and conversations taking place on blogs, YouTube, Twitter and Amazon. Attensity applies the rules of grammar to the so-called “unstructured text” of the web to make it more easily digestible by government databases. Keyhole (now Google Earth) is a staple of the targeting cells in military-intelligence units.

Recorded Future strips from web pages the people, places and activities they mention. The company examines when and where these events happened (“spatial and temporal analysis”) and the tone of the document (“sentiment analysis”). Then it applies some artificial-intelligence algorithms to tease out connections between the players. Recorded Future maintains an index with more than 100 million events, hosted on Amazon.com servers. The analysis, however, is on the living web.

“We’re right there as it happens,” Ahlberg told Danger Room as he clicked through a demonstration. “We can assemble actual real-time dossiers on people.”

Recorded Future certainly has the potential to spot events and trends early. Take the case of Hezbollah’s long-range missiles. On March 21, Israeli President Shimon Peres leveled the allegation that the terror group had Scud-like weapons. Scouring Hezbollah leader Hassan Nasrallah’s past statements, Recorded Future found corroborating evidence from a month prior that appeared to back up Peres’ accusations.

That’s one of several hypothetical cases Recorded Future runs in its blog devoted to intelligence analysis. But it’s safe to assume that the company already has at least one spy agency’s attention. In-Q-Tel doesn’t make investments in firms without an “end customer” ready to test out that company’s products.

Both Google Ventures and In-Q-Tel made their investments in 2009, shortly after the company was founded. The exact amounts weren’t disclosed, but were under $10 million each. Google’s investment came to light earlier this year online. In-Q-Tel, which often announces its new holdings in press releases, quietly uploaded a brief mention of its investment a few weeks ago.

Both In-Q-Tel and Google Ventures have seats on Recorded Future’s board. Ahlberg says those board members have been “very helpful,” providing business and technology advice, as well as introducing him to potential customers. Both organizations, it’s safe to say, will profit handsomely if Recorded Future is ever sold or taken public. Ahlberg’s last company, the corporate intelligence firm Spotfire, was acquired in 2007 for $195 million in cash.

Google Ventures did not return requests to comment for this article. In-Q-Tel Chief of Staff Lisbeth Poulos e-mailed a one-line statement: “We are pleased that Recorded Future is now part of IQT’s portfolio of innovative startup companies who support the mission of the U.S. Intelligence Community.”

Just because Google and In-Q-Tel have both invested in Recorded Future doesn’t mean Google is suddenly in bed with the government. Of course, to Google’s critics — including conservative legal groups, and Republican congressmen — the Obama Administration and the Mountain View, California, company slipped between the sheets a long time ago.

Google CEO Eric Schmidt hosted a town hall at company headquarters in the early days of Obama’s presidential campaign. Senior White House officials like economic chief Larry Summers give speeches at the New America Foundation, the left-of-center think tank chaired by Schmidt. Former Google public policy chief Andrew McLaughlin is now the White House’s deputy CTO, and was publicly (if mildly) reprimanded by the administration for continuing to hash out issues with his former colleagues.

In some corners, the scrutiny of the company’s political ties have dovetailed with concerns about how Google collects and uses its enormous storehouse of search data, e-mail, maps and online documents. Google, as we all know, keeps a titanic amount of information about every aspect of our online lives. Customers largely have trusted the company so far, because of the quality of their products, and because of Google’s pledges not to misuse the information still ring true to many.

But unease has been growing. Thirty seven state Attorneys General are demanding answers from the company after Google hoovered up 600 gigabytes of data from open Wi-Fi networks as it snapped pictures for its Street View project. (The company swears the incident was an accident.)

“Assurances from the likes of Google that the company can be trusted to respect consumers’ privacy because its corporate motto is ‘don’t be evil’ have been shown by recent events such as the ‘Wi-Spy’ debacle to be unwarranted,” long-time corporate gadfly John M. Simpson told a Congressional hearing in a prepared statement. Any business dealings with the CIA’s investment arm are unlikely to make critics like him more comfortable.

But Steven Aftergood, a critical observer of the intelligence community from his perch at the Federation of American Scientists, isn’t worried about the Recorded Future deal. Yet.

“To me, whether this is troublesome or not depends on the degree of transparency involved. If everything is aboveboard — from contracts to deliverables — I don’t see a problem with it,” he told Danger Room by e-mail. “But if there are blank spots in the record, then they will be filled with public skepticism or worse, both here and abroad, and not without reason.”

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These smart cards are the actual keys to the Internet. There are seven of them and they hold the power to restarting the world wide web “in the event of a catastrophic event.”

The basic idea is that in the event of an Internet catastrophe, the DNSSEC (domain name system security) could be damaged or compromised and we’d be left without a way to verify if a URL is pointing to the correct website. That’s when the holders of these smart cards would be called into action:

A minimum of five of the seven keyholders – one each from Britain, the U.S., Burkina Faso, Trinidad and Tobago, Canada, China, and the Czech Republic – would have to converge at a U.S. base with their keys to restart the system and connect everything once again.

A minimum of five people is needed because each of the smart cards contains only a fraction of the recovery key necessary to set things right again. This means that no single person will hold all the power to resetting our little cyber world. [BBC via PopSci]

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I originally hammered this out at my blog. But after thinking about it, I decided to also post this up here.

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A recent ABC News/Washington Post poll shows that 51 percent of the voting cattle are upset with Obama and the Democrats. Their solution is to replace the Democrats with Republicans! This is similar to actual beef cattle preferring Burger King to McDonalds. Either way, the cattle lose.

The Republicans, who the voting cattle are taking a shine to, send the children of the voters through the meat-grinders in Iraq and Afghanistan just as the Democrats do. The principle is no different than both parties sending them in years past through the meat-grinders of WWI, WWII, Korea and Vietnam. Both parties put America’s resources, including her children, at the disposal of Israel, both parties are trying to get a war started with Iran for Israel’s benefit, both parties keep the same gang of thieves in control of American currency, neither party helps the people to find employment. In short, both parties are full of liars and con-artists. Voting for either of these political machines is an exercise in “stupid is as stupid does,” which allows us to view those who vote as stupid based on the foolish/stupid act they commit which in this case is voting.

Albert Einstein once defined insanity as, “doing the same thing over and over again and expecting different results.”  By Einstein’s definition, it is very clear that voting falls squarely within Einstein’s definition of insanity. Every two or four years the politicians from both parties determine what the voting cattle want to hear and they tell it to them. The voters actually believe what they’re being told each and every time and do their duty to the national scam and cast their vote for their favorite liar. Then, after an appropriate amount of time passes, the voters realize they’ve been fooled by the politicians and get “mad as Hell” and vow to “vote the bums out of office” in the next election. A major problem with this is there are only other bums to replace the first set of bums with! However, since voting is much easier and safer than revolution, the sheeple are happy to perform their patriotic duty. They are so sold on the scam of replacing one group of charlatans with another group of charlatans, they tell people who are smart enough not to fall for the voting scam that they/we can’t complain about what the elected politicians do or don’t do since we did not vote. The fact that voting for one crook over another only reinforces evil and gives more life to the scam, the politically insane cannot grasp.

The article about the ABC News/Washington Post poll says, “Registered voters by 62-26 percent are inclined to look around for someone new for Congress rather than to re-elect their current representative.” It appears their insanity has blinded them to the fact that there is absolutely nothing new in either political party. This consistency in the commonality of corruption found deep in both parties is a primary reason America is consistently sinking. Voting only accelerates the decline in happiness and the quality of life as well as the continued erosion of our rights and liberties. By keeping their heads buried deep in the scams of politics as usual, the voters cannot possibly see the bold words of instruction written in the Declaration of Independence. The instruction reads, “whenever any Form of Government becomes destructive of these ends,” (life, liberty and the pursuit of happiness of the individual) “it is the Right of the People to alter or to abolish it,” which puts much more responsibility and risk on the individual than merely continuing the voting game/scam.

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News headlines state that cleanup workers are having a hard time finding oil.

Sounds good, right?

Actually, if BP had let things run their course:

• Oil-skimming vessels could have sucked up most of the oil

• Booms would have stopped most of the oil from hitting the shore

• And oil-eating bacteria would have broken down most of the remaining oil

Instead, BP has used millions of gallons of dispersants to hide the oil by breaking it up, so it sinks beneath the surface.

That means that oil-skimming vessels can’t find it or suck it up. As the Times-Picayune pointed out on July 16th:

The massive “A Whale” oil skimmer has effectively been beached after it proved inefficient in sucking up oil from the Gulf of Mexico spill.

The oil is too dispersed to take advantage of the converted Taiwanese supertanker’s enormous capacity, said Bob Grantham, a spokesman for shipowner TMT.

He said BP’s use of chemical dispersants prevented A Whale, billed as the world’s largest skimmer, from collecting a “significant amount” of oil during a week of testing that ended Friday.

“When dispersants are used in high volume virtually from the point that oil leaves the well, it presents real challenges for high-volume skimming,” Grantham said in a written statement that did not include oil-collection figures from the test.

Similarly, the use of dispersants means that Booms can’t stop it from hitting the shore. As marine biologist and oil spill expert Paul Horsman explains, using dispersants and oil booms are competing strategies. Specifically, breaking something down into tiny bits and dispersing it throughout a mile-plus deep and hundreds-miles wide region (the reason massive amounts of dispersants are being applied at the 5,000 foot-deep spill site as well as at the surface) makes it more difficult to cordon off and contain oil on the surface (the reason booms are being used).

And Corexit might be killing the oil-eating bacteria which would otherwise break down the oil. University of Georgia scientist Samantha Joye notes that scientists have no idea how the large quanties of dispersant will effect the Gulf’s microbial communities (for more information, watch part 1, part 2, part 3, part 4 and part 5 of Dr. Joye’s July 13th press conference).

Moreover, as MSNBC notes, oil-eating bacteria are less active in deepwater, where much of the oil sinks after treatment with dispersants:

Some note that little is known about the deepwater ecosystem — or how the oil and dispersants will react under extremely high water pressure, very low temperatures, limited oxygen and virtually no light.

***

The conditions at the bottom of the Gulf also could affect the bacteria that help break down the oil near the surface, as they are less active in cold temperatures than in the warm surface waters, and they may be less abundant in the deep.

“We know that the surface material has been degrading,” says Ralph J. Portier, professor of environmental studies at LSU. “But what about the microbial population at depth?”

As Scientific American points out:

The last (and only) defense against the ongoing Deepwater Horizon oil spill in the Gulf of Mexico is tiny—billions of hydrocarbon-chewing microbes, such as Alcanivorax borkumensis. In fact, the primary motive for using the more than 830,000 gallons of chemical dispersants on the oil slick both above and below the surface of the sea is to break the oil into smaller droplets that bacteria can more easily consume.

“If the oil is in very small droplets, microbial degradation is much quicker,” says microbial ecologist Kenneth Lee, director of the Center for Offshore Oil, Gas and Energy Research with Fisheries and Oceans Canada, who has been measuring the oil droplets in the Gulf of Mexico to determine the effectiveness of the dispersant use. “The dispersants can also stimulate microbial growth. Bacteria will chew on the dispersants as well as the oil.”

***

[But] colder, deeper waters inhibit microbial growth. “Metabolism slows by about a factor of two or three for every 10 degree[s] Celsius you drop in temperature,” notes biogeochemist David Valentine of the University of California, Santa Barbara, who just received funding from the National Science Foundation to characterize the microbial response to the ongoing oil spill. “The deeper stuff, that’s going to happen very slowly because the temperature is so low.”

***
At the same time, the addition of … dispersants deep beneath the surface is having uncertain effects; it may even end up killing the microbes it is meant to help thanks to the fact that Corexit 9527A contains the solvent 2-butoxyethanol, which is a known human carcinogen and toxic to animals and other life.

Mother Jones provides additional details:

David Valentine … warns the stuff may be riskier than just its toxicity. Corexit may undermine the microbes that naturally eat oil.

Some of the most potent oil-eaters— Alcanivorax borkumensis —are relatively rare organisms that have evolved to eat hydrocarbons from naturally occurring oil seeps. Valentine tells Eli Kintisch at Science Insider that after spills, Alcanivorax tend to be the dominant microbes found near the oil and that they secrete their own surfactant molecules to break up the oil before consuming the hydrocarbons. Other microbes don’t make surfactants but devour oil already broken into small enough globs—including those broken down by Alcanivorax.

What we don’t know is how the surfactants in Corexit and its ilk might affect the ability of Alcanivorax and other surfactant-makers to eat oil. Could Corexit exclude Alcanivorax from binding to the oil? Could it affect the way microbes makes their own surfactants? Could Corexit render natural surfactants less effective?

The National Science Foundation has awarded Valentine a grant to study the problem.

So it’s not a good thing that clean up workers can’t find the oil. It means that the oil will lurk under the surface, in deeper waters where bacterial activity is slower, poisoning the sealife that lives beneath the surface, and washing back up during storms for years to come.

Even Admiral Thad Allen, the government’s point man for the crisis, said that breaking up the oil has complicated the cleanup. As AP reported on June 7th:

The hopeful report was offset by a warning that the farflung slick has broken up into hundreds and even thousands of patches of oil that may inflict damage that could persist for years.

Coast Guard Adm. Thad Allen, the government’s point man for the crisis, said the breakup has complicated the cleanup.”

Dealing with the oil spill on the surface is going to go on for a couple of months,” he said at a briefing in Washington. But “long-term issues of restoring the environment and the habitats and stuff will be years.”

And Admiral Allen admitted in his press conference yesterday that oil could re-surface far into the future:

[Question] There have been reports of very large undersea plumes of oil thousands of feet below the ocean’s surface. So when you say there’s the possibility of the shore being impacted for four to six weeks, how do you come up with that four to six week number? And are you taking into account these very large plumes of oil that are out there and very difficult to sort of gauge where they’re going?

[Admiral Allen] What we’re going to continue to watch for is the oil we can’t see…. But the ultimate impact of this spill… whether or not oil surfaces at a later date will be the subject of long-term surveillance…. Impacts are going to go on for a long, long time.

As Congressman Markey said today, BP has made the Gulf “a toxic bowl” that will “haunt this region” for years, because “all of that oil is still under the surface”:

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—-

From Fox Business

So much for transparency.

Under a little-noticed provision of the recently passed financial-reform legislation, the Securities and Exchange Commission no longer has to comply with virtually all requests for information releases from the public, including those filed under the Freedom of Information Act.

The law, signed last week by President Obama, exempts the SEC from disclosing records or information derived from “surveillance, risk assessments, or other regulatory and oversight activities.” Given that the SEC is a regulatory body, the provision covers almost every action by the agency, lawyers say. Congress and federal agencies can request information, but the public cannot.

That argument comes despite the President saying that one of the cornerstones of the sweeping new legislation was more transparent financial markets. Indeed, in touting the new law, Obama specifically said it would “increase transparency in financial dealings.”

The SEC cited the new law Tuesday in a FOIA action brought by FOX Business Network. Steven Mintz, founding partner of law firm Mintz & Gold LLC in New York, lamented what he described as “the backroom deal that was cut between Congress and the SEC to keep the  SEC’s failures secret. The only losers here are the American public.”

If the SEC’s interpretation stands, Mintz, who represents FOX Business Network, predicted “the next time there is a Bernie Madoff failure the American public will not be able to obtain the SEC documents that describe the failure,” referring to the shamed broker whose Ponzi scheme cost investors billions.

The SEC didn’t immediately respond to a request for comment.

Criticism of the provision has been swift. “It allows the SEC to block the public’s access to virtually all SEC records,” said Gary Aguirre, a former SEC staff attorney-turned-whistleblower who had accused the agency of thwarting an investigation into hedge fund Pequot Asset Management in 2005. “It permits the SEC to promulgate its own rules and regulations regarding the disclosure of records without getting the approval of the Office of Management and Budget, which typically applies to all federal agencies.”

Aguirre used FOIA requests in his own lawsuit against the SEC, which the SEC settled this year by paying him $755,000. Aguirre, who was fired in September 2005, argued that supervisors at the SEC stymied an investigation of Pequot – a charge that prompted an investigation by the Senate Judiciary and Finance committees.

The SEC closed the case in 2006, but would re-open it three years later. This year, Pequot and its founder, Arthur Samberg, were forced to pay $28 million to settle insider-trading charges related to shares of Microsoft (MSFT: 25.93 ,-0.23 ,-0.88%). The settlement with Aguirre came shortly later.

“From November 2008 through January 2009, I relied heavily on records obtained from the SEC through FOIA in communications to the FBI, Senate investigators, and the SEC in arguing the SEC had botched its initial investigation of Pequot’s trading in Microsoft securities and thus the SEC should reopen it, which it did,” Aguirre said. “The new legislation closes access to such records, even when the investigation is closed.

“It is hard to imagine how the bill could be more counterproductive,” Aguirre added.

FOX Business Network sued the SEC in March 2009 over its failure to produce documents related to its failed investigations into alleged investment frauds being perpetrated by Madoff and R. Allen Stanford. Following the Madoff and Stanford arrests it, was revealed that the SEC conducted investigations into both men prior to their arrests but failed to uncover their alleged frauds.

FOX Business made its initial request to the SEC in February 2009 seeking any information related to the agency’s response to complaints, tips and inquiries or any potential violations of the securities law or wrongdoing by Stanford.

FOX Business has also filed lawsuits against the Treasury Department and Federal Reserve over their failure to respond to FOIA requests regarding use of the bailout funds and the Fed’s extended loan facilities. In February, the Federal Court in New York sided with FOX Business and ordered the Treasury to comply with its requests.

Last year, the network won a legal victory to force the release of documents related to New York University’s lawsuit against Madoff feeder Ezra Merkin.

FOX Business’ FOIA requests have so far led the SEC to release several important and damaging documents:

•FOX Business used the FOIA to obtain a 2005 survey that the SEC in Fort Worth was sending to Stanford investors. The survey showed that the SEC had suspicions about Stanford several years prior to the collapse of his $7 billion empire.

•FOX Business used the FOIA to obtain copies of emails between Federal Reserve lawyers, AIG and staff at the Federal Reserve Bank of New York in which it was revealed the Fed staffers knew that bailing out AIG would result in bonuses being paid.

Recently, TARP Congressional Oversight Panel chair Elizabeth Warren told FOX Business that the network’s Freedom of Information Act efforts played a “very important part” of the panel’s investigation into AIG.

Warren told the network the government “crossed a line” with the AIG bailout.

“FOX News and the congressional oversight panel has pushed, pushed, pushed, for transparency, give us the documents, let us look at everything. Your Freedom of Information Act suit, which ultimately produced 250,000 pages of documentation, was a very important part of our report. We were able to rely on the documents that you pried out for a significant part of our being able to put this report together,” Warren said.

The SEC first made its intention to block further FOIA requests known on Tuesday. FOX Business was preparing for another round of “skirmishes” with the SEC, according to Mintz, when the agency called and said it intended to use Section 929I of the 2000-page legislation to refuse FBN’s ongoing requests for information.

Mintz said the network will challenge the SEC’s interpretation of the law.

“I believe this is subject to challenge,” he said. “The contours will have to be figured out by a court.”

SEC Financial Regulatory Law H.R. 4173

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BAGHDAD – A U.S. audit has found that the Pentagon cannot account for over 95 percent of $9.1 billion in Iraq reconstruction money, spotlighting Iraqi complaints that there is little to show for the massive funds pumped into their cash-strapped, war-ravaged nation.

The $8.7 billion in question was Iraqi money managed by the Pentagon, not part of the $53 billion that Congress has allocated for rebuilding. It’s cash that Iraq, which relies on volatile oil revenues to fuel its spending, can ill afford to lose.

“Iraq should take legal action to get back this huge amount of money,” said Sabah al-Saedi, chairman of the Parliamentary Integrity Committee. The money “should be spent for rebuilding the country and providing services for this poor nation.”

The report by the Special Inspector General for Iraq Reconstruction accused the Defense Department of lax oversight and weak controls, though not fraud.

“The breakdown in controls left the funds vulnerable to inappropriate uses and undetected loss,” the audit said.

The Pentagon has repeatedly come under fire for apparent mismanagement of the reconstruction effort — as have Iraqi officials themselves.

Seven years after the U.S.-led invasion, electricity service is spotty, with generation capacity falling far short of demand. Fuel shortages are common and unemployment remains high, a testament to the country’s inability to create new jobs or attract foreign investors.

Complaints surfaced from the start of the war in 2003, when soldiers failed to secure banks, armories and other facilities against looters. Since then the allegations have only multiplied, including investigations of fraud, awarding of contracts without the required government bidding process and allowing contractors to charge exorbitant fees with little oversight, or oversight that came too late.

But the latest report comes at a particularly critical time for Iraq. Four months after inconclusive elections, a new government has yet to be formed, raising fears that insurgents will tap into the political vacuum to stir sectarian unrest.

In a sign that insurgents are still intent on igniting sectarian violence, at least six people were killed and dozens more wounded when a female suicide bomber blew herself up near a checkpoint in the holy city of Karbala, local police said. They spoke on condition of anonymity because they were not authorized to speak to the media.

Thousands of Shiite pilgrims are converging on the city, 50 miles (80 kilometers) south of Baghdad, for an important religious holiday marking the birth of a Shiite saint known as the “Hidden Imam” who disappeared in the ninth century. Such mass displays of devotion by Shiites have often been targeted by Sunni extremists.

Iraqi lawmakers met Tuesday, but for the second time this month failed to convene a parliament session, leaving wide open the question of when the new government will take shape.

Underscoring its financial challenges, the International Monetary Fund in March approved a $3.6 billion loan to help Iraq meet its obligations. Iraq is projected to run a deficit through 2011, according to analysts, with a possibility of a surplus following that hinging on oil prices.

Iraq took a financial hit in 2008 as oil prices plummeted on the back of the global financial meltdown. While those prices have since rebounded, Iraq remains at the mercy of international oil markets, with revenues from petroleum sales accounting for over 90 percent of its government budget.

The $9.1 billion in question came from the Development Fund for Iraq, which was set up by the U.N. Security Council in 2003. The DFI includes revenues from Iraq’s oil and gas exports, as well as frozen Iraqi assets and surplus funds from the defunct, Saddam Hussein-era U.N. oil-for-food program.

Iraq had given the U.S. authorization to tap into the fund, which is held in New York, for humanitarian and reconstruction efforts, withdrawing that approval in December 2007.

With the establishment of the Coalition Provisional Authority, which ran Iraq shortly after the start of the U.S. invasion in 2003 until mid-2004, about $20 billion was placed into the account. The $9.1 billion audited by the Iraq reconstruction inspector general were funds withdrawn from that account between 2004 and 2007.

The report found that the Defense Department could not “readily account for its obligations, expenditures and remaining balances associated” with the DFI. At issue was $8.7 billion, or 95 percent of the withdrawn funds.

Of this amount, the Pentagon could not account at all for $2.6 billion, according to the audit.

Tracing the rest of the money is difficult because of a combination of lax financial controls and management, the failure to designate an organization to oversee the spending and the failure to set up and deposit the funds in special accounts, as required by the Treasury Department.

The Defense Department, in responses attached to the audit, said it agreed with the report’s recommendations to establish better guidelines for monitoring such funds, including appointing an oversight organization mostly likely by November.

The failure to properly manage billions in reconstruction funds has also hobbled the troubled U.S.-led effort to rebuild Afghanistan. About $60 billion have poured into Afghanistan since 2001 in hopes of bringing electricity, clean water, jobs, roads and education to the crippled country.

The U.S. alone has committed $51 billion to the project since 2001, and plans to raise the stakes to $71 billion over the next year — more than it has spent on reconstruction in Iraq since 2003.

An Associated Press investigation showed that the results so far — or lack of them — threaten to do more harm than good. The number of Afghans with access to electricity has increased from 6 percent in 2001 to only about 10 percent now, far short of the goal of providing power to 65 percent of urban and 25 percent of rural households by the end of this year.

As an example of the problems, a $100 million diesel-fueled power plant was built with the goal of delivering electricity to more than 500,000 residents of the capital, Kabul. The plant’s costs tripled to $305 million as construction lagged a year behind schedule. The plant now often sits idle because the Afghans were able to import cheaper power from neighboring Uzbekistan before the plant came online.

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