http://kunstler.com/blog/2009/07/evil-syndicated.html#more
Evil Syndicated
By now, everyone in that fraction of the world that pays attention to something other than American Idol and their platter of TGI Friday's loaded potato skins knows that Goldman Sachs has been caught at another racket in the stock market: front-running trades. What a clever gambit, done with the help of the markets themselves - the Nasdaq in particular - in which information on trades is held back a fraction of a second from public view, while the data is shoveled to the computers of privileged subscribers who can execute zillions of programmed micro-trades before the rest of the herd makes a move. This allows them to vacuum up hundreds of millions of dollars by doing absolutely nothing of value. The old-fashioned method used by brokers was called "churning," in which stocks were bought and sold incessantly (by phone) from the portfolios of inattentive clients merely to generate commissions. In any sensible society - i.e. a society with an instinct for self-preservation - it would be against the law and the people doing it would be sent to prison. I'm not a lawyer, but I've got to think that the actions at the Nasdaq end - shoveling the data to the privileged subscribers a fraction of a second early - is patently illegal in the first place, since the whole purpose of an exchange is to create a fair trading space. Where both parties are concerned, it should amount to a plain vanilla criminal conspiracy to commit stock trading fraud. Maybe the larger question is: since when did we become a society lacking the instinct for self-preservation - that is, a society bent on suicide? Or maybe the question is better put to Goldman Sachs's CEO Lloyd Blankfein. Since this racket was made public, there has been chatter all over the Web about how angry the American public is about Wall Street in general, and increasingly about Goldman Sachs in particular. Nobody has summed it up better than Rolling Stone's Matt Taibbi, calling the company "...a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." And Taibbi's fierce article about Goldman Sachs came out weeks before this latest outrage. As we turn the corner toward autumn, President Obama looks increasingly like a dupe, a tool, or a co-conspirator of Goldman Sachs. If he doesn't instruct the Justice Department to commence investigations of the company, and if he doesn't dissociate himself from their alumni hanging around the White House, the Treasury Department, and elsewhere in the government, he's going to become the object of an awful public wrath. Obama has no other choice at this point except to clean house - to fire Larry Summers, Robert Rubin, Tim Geithner, and all other former Goldman Sachs employees in positions of power and influence around him. Actually, it's not necessary for the whole general public to be fed up with this situation. According to the Pareto 80-20 rule, it only takes one-fifth of the public to set social actions in motion, and only one-fifth of that one-fifth to do the heavy lifting. I think we've reached that point. The sentiment is now overwhelmingly tipped against Goldman Sachs (and Wall Street generally) and the only questions are whether the President of the US ends up lumped in with them, and whether we'll see orderly prosecutions or disorderly persecutions. At this point, it even begins to look as though Mr. Obama is taking cover behind the health care reform debate to avoid answering for his government's association with Goldman Sachs. The trouble is, if the thoughtful and trustworthy members of the "Pareto 20 percent" don't stir themselves into action over Goldman's behavior, then sooner or later the thoughtless and reckless will take over. Bill Moyers hosted a fascinating report on his most recent podcast about the savagery of right-wing broadcasting and how it had led, in one instance, to the murder of a doctor who performed abortions. What bothers me is that, sooner or later, the conduct of Goldman Sachs will lead the growing ranks of the unemployed, foreclosed, disentitled, and hopeless into the hands of a savage right wing seeking mindless vengeance, for instance, against "the Jews," (as represented by Goldman Sachs), or brown-skinned people (as embodied by a vilified president). Readers of this blog know I'm allergic to conspiracy theories. But surveying the scene out there, it is hard to not conclude that Goldman Sachs has become the "front-runner" of a criminal syndicate defrauding US taxpayers. This isn't the first time in American history that business veered into extremely antisocial behavior on the grand scale. The last quarter of the 19th century was just as bad, with frauds, swindles, sociopathic trusts, and predatory corporations preying on people trying desperately to make an honest living. Then, one summer day in 1901, a factory drone named Leon Czolgosz stepped up to President William McKinley in a reception line at the Buffalo World's Fair and plugged him twice in the abdomen. (Czolgosz liked to think of himself as an "anarchist," a then-fashionable ideology among the simmering powerless.) Eight days later, McKinley expired and Teddy Roosevelt became president - to the extreme chagrin of the Republican business establishment - "... now that damned cowboy is in the White House!" cried Republican national leader Mark Hanna of Ohio. He was correct to be nervous. TR turned the corporate world upside down with reform, from dismantling monopolies to establishing the cabinet departments of Commerce and Labor, to bringing the new food industry under regulation. This naturally leads me to wonder if or when Barack Obama will have his TR Moment, when he stands up to the large malign forces operating arrantly in the daily life of this nation. I get volumes of email complaining about Mr. Obama. The writers behind them seem, on the whole, crankish, cynical to an extreme, and not very trustworthy observers of the scene. But I begin to sympathize with them. In the meantime, the US economy gives the illusion of recovery - but to what? Back to a "consumer" credit card shopping orgy? Another house-buying fiesta? I don't think so. Households are drowning in debt. They're using their credit cards, if they still can, to buy staple foods. Those are the lucky ones who still have lines of credit left. Soon, many of these families won't even amount to households because they won't have a house. There is absolutely no way we are going back to that particular bubble economy. The only bubble left is the government debt bubble, now leading to such extravagant excess that it can only end up wrecking the government, and perhaps American society with it. In the meantime, how much remaining wealth is Goldman Sachs and its cohorts vacuuming off the floor? Also meanwhile, oil is heading back to the $70 range (with the dollar shedding basis points). That's the oil price range where the economy begins to get wrecked all over again - that is, whatever remains of the economy. That's the price range where airlines go back to the intensive care unit and citizens have to max out their credit cards to buy gasoline. We're moving toward a very hard landing and very soon.
Monday, July 27, 2009
Sunday, July 26, 2009
SC94-1
http://thearchdruidreport.blogspot.com/
The Anti-Ecology of Money
Last week’s Archdruid Report post built on one of E.F. Schumacher’s more trenchant insights to propose a controversial way of making sense of modern economics. Schumacher, in Small Is Beautiful, drew a distinction between primary goods produced by natural processes, and secondary goods produced by human labor, and pointed out that secondary goods can’t be produced at all unless you have the necessary primary goods on hand.
This is quite true, though it’s a point often missed by today’s economists. There is at least an equal difference, though, between either of these classes of goods and a third class produced neither by nature nor by labor. These are tertiary or, more descriptively, financial goods; they form the largest single class of goods in the world today, in terms of dollar value, and the markets in which they are bought and sold dominate the economies of the industrial nations. To call this unfortunate is a drastic understatement, because the biases imposed on our societies by the domination of financial goods are among the most potent forces dragging the world to ruin.
A specific example of a tertiary good may be useful here to help clarify the concept. Consider a corporate bond with a face value of $1000. This is a good in the economic sense – that is, it can be bought for money, it can be sold for money, there are people who want to buy it and people who are able to produce and sell it. Compare it to any more tangible item of value, though, and the bond is clearly a very strange sort of good. It consists of nothing more than a promise, on the part of some corporation, to pay $1000 at some future date. That promise may or may not be honored – junk bonds are bought and sold, for example, in full knowledge of the fact that the chances the issuers will pay up are not good – but even then the chance of collecting on it is treated as an object of value.
The differences between a tertiary good and a primary or secondary one reach further than this. Tangible goods produced by natural cycles or human labor are available in amounts limited by the supply. If there’s only so much water in a river, for example, that’s how much water there is; the fact that people want more, if such is the case, does not produce any more water than the hydrologic cycle is already willing to provide. Equally, if a country’s labor force, capital plant, and resource base are fully engaged in making a certain quantity of secondary goods, producing more requires a good deal more than an agreement to do so; the country must increase its labor pool, its capital plant, its access to resources, or some combination of these, in order to increase the supply of goods.
Yet tertiary goods are available in amounts limited only by the demand. How many bonds can a corporation print? For all practical purposes, as many as people are willing to buy. A good number of the colorful bankruptcies that have enlivened the business pages in recent months, for example, took out firms that mistook a temporary bubble for permanent prosperity, issued bonds far beyond their ability to pay, and crashed and burned when all that debt started to come due. On an even more gargantuan scale, the United States government is currently trying to restart its economy by spending money it doesn’t have, selling bonds to cover the difference, and amassing debt on a scale that makes the most extravagant Third World kleptocracies look like a bunch of pikers. It’s hard to imagine any way in which the results of this absurd extravagance will be anything but ugly, and yet buyers around the world are still snapping up US treasury bonds as though there’s a scintilla of hope they will see their money again.
The difference between supply-limited and demand-limited goods, as this suggests, is among other things a difference between kinds of feedback. Think about a thermostat and it’s easy to understand the principle at work. When the temperature in the house goes below a certain threshold, the heat comes on and brings the temperature back up; when the temperature goes above a higher threshold, the heat shuts off and the temperature goes back down. This is called negative feedback.
In a market economy, all secondary goods are subject to negative feedback. That’s the secret of Adam Smith’s invisible hand: since the supply of any secondary good is limited by the available natural inputs, labor pool, and capital stock, increased demand pushes up the price of the good, forcing some potential buyers out of the market, while decreased demand causes the good to become less expensive and allows more buyers back into the market. Equally, rising prices for a good encourage manufacturers to allocate more resources, labor, and capital plant to producing that good, helping to meet additional demand, while falling prices make other uses of resources, labor and capital plant more lucrative and curb supply.
Negative feedback loops of a very similar kind control the production of primary goods by the Earth’s natural systems. Every primary good from the water levels in a river and the fertility of a given patch of soil, to more specialized examples such as the pollination services provided by bees to agricultural crops, is regulated by delicately balanced processes of negative feedback working through some subset of the planetary biosphere. The parallel is close enough that ecologists have drawn on metaphors from economics to make sense of their field, and it’s quite possible that an ecological economics using natural systems as metaphors for the secondary economy could return the favor and create an economics that makes sense in the real world.
It’s when we get to the tertiary economy of financial goods that things change, because the feedback loops governing tertiary goods are not negative but positive. Imagine a thermostat designed by a sadist. In the summer, whenever the temperature goes up above a certain level, the sadothermostat makes the heat come on and the house gets even hotter; in the winter, when the temperature goes below another threshold, the temperature shuts off and the house gets so cold the pipes freeze. That’s positive feedback, and it’s the way the tertiary economy works when it’s not constrained by limits imposed by the primary or secondary economies.
The late and loudly lamented housing bubble is a case in point. It’s a remarkable case, not least because houses – which are usually part of the secondary economy, being tangible goods created by human labor – were briefly and disastrously converted into tertiary goods, whose value consisted primarily in the implied promise that they could be cashed in for more than their sales price at some future time. (As a tertiary good, their physical structure had no more to do with their value than does the paper used to print a bond.) When the price of a secondary good goes up, demand decreases, but this is not what happened in the housing bubble; instead, the demand increased, since the rising price made further appreciation appear more likely, and the mis-, mal- and nonfeasance of banks and mortgage companies willing to make six- and seven-figure loans to anyone with a pulse removed all limits from the supply.
The limits, rather, were on the demand side, where they always are in a speculative bubble: eventually the supply of buyers runs out because everyone who is willing to plunge into the bubble has already done so. Once this happened, prices began to sink, and once again positive feedback came into play. Since the sole value of these homes to most purchasers consisted, again, of the implied promise that they could be cashed in someday for more than their sales price, each decline in price convinced more people that this would not happen, and drove waves of selling that forced the price down further. This process typically bottoms out around the time that prices are as far below the median as they were above it at the peak, and for a similar reason: as a demand-limited process, a speculative bubble peaks when everyone willing to buy has bought, and bottoms when everyone capable of selling has sold.
It’s important to note that in this case, as in many others, the positive feedback in the tertiary economy disrupted the workings of the secondary economy. Long before the housing boom came to its messy and inevitable end, there was a massive oversupply of housing in many markets – there are, for example, well over 50,000 empty houses in Phoenix, Arizona right now. Absent a speculative bubble, the mismatch between supply and demand would have brought the production of new houses to a gentle halt. Instead, due to the positive feedback of the tertiary economy, supply massively overshot demand, leading to a drastic misallocation of resources in the secondary economy, and thus to an equally massive recession.
It’s long been popular to compare the tertiary economy to gambling, but the role of positive feedback in the tertiary economy introduces an instructive difference. When four poker players sit down at a table and the cards come out, their game has negative feedback. The limiting factor is the ability of the players to make good on their bets; the amount of wealth in play at the start of the game is exactly equal to the amount at the end, though it’s likely to go through quite a bit of redistribution. For every winner, in other words, there is an equal and opposite loser.
The tertiary economy does not work this way. When a market is going up, everyone invested in it gains; when it goes down, everyone invested in it loses. Paper wealth appears out of thin air on the way up, and vanishes into thin air on the way down. The difference between this and the supply-limited negative feedback cycles of the environment could not be more marked. In this sense it’s not unreasonable to call the tertiary economy a kind of anti-ecology, a system in which all the laws that govern ecology are stood on their heads – until, that is, the delusional patterns of behavior generated by the tertiary economy collide with the hard limits of ecological reality.
It’s not all that controversial to describe financial bubbles in this way, though you can safely bet that during any given bubble, a bumper crop of economists and pundits will spring up to insist that the bubble isn’t a bubble and that rising prices for whatever the speculation du jour happens to be are perfectly justified by future prospects. On the other hand, it’s very controversial just now to suggest that the entire tertiary economy is driven by positive feedback. Still, I suggest that this is a fair assessment of the financial economy of the industrial world, and the only reason that it’s controversial is simply that we, our great-grandparents’ great-grandparents, and all the generations in between have lived during the upward arc of the mother of all speculative bubbles.
The vehicle for that bubble has not been stocks, bonds, real estate, derivatives, or what have you, but industrialism itself: the entire project of increasing the production of goods and services to historically unprecedented levels by amplifying human labor with energy drawn from the natural world, first from wind and water, and then from fossil fuels in ever-increasing amounts. Like the real estate at the core of the recent boom and bust, this project had its roots in the secondary economy, but quickly got transformed into a vehicle for the tertiary economy: people invested their money in industrial projects because of the promise of more money later on.
Like every other speculative bubble, the megabubble of industrialism paid off spectacularly along its upward arc. It’s inaccurate to claim, as some of its cheerleaders have, that everybody benefited from it; one important consequence of the industrial system was a massive distortion of patterns of exchange in favor of the major industrial nations, to the massive detriment of the rest of the planet. (It’s rarely understood just how much of today’s Third World poverty is a modern phenomenon, the mirror image and necessary product of the soaring prosperity of the industrial nations.) Still, for some three hundred years, standards of living across the industrial world soared so high that people of relatively modest means in America or western Europe had access to goods and services not even emperors could command a few centuries before.
In the absence of ecological limits, it’s conceivable that such a process could have continued until demand was exhausted, and then unraveled in the usual way. The joker in the deck, though, was the dependence of the industrial project on the extraction of fossil fuels at an ever-increasing pace. Beneath the giddy surface of industrialism’s bubble, in other words, lay the hard reality of the tertiary economy’s dependence on resources from the primary economy. The positive feedback loop driving the industrial bubble can’t make resources out of thin air – only money can be invented so casually – but it has proven quite successful at preventing industrial economies from responding to the depletion of their fossil fuel supplies fast enough to stave off what promises to be the great-grandmother of all speculative busts.
The results of this failure are beginning to come home to roost in our own time. To understand the economics of the resulting collision, though, it’s necessary to note the relationship between economics and the least popular law of physics – a subject central to next week’s post.
The Anti-Ecology of Money
Last week’s Archdruid Report post built on one of E.F. Schumacher’s more trenchant insights to propose a controversial way of making sense of modern economics. Schumacher, in Small Is Beautiful, drew a distinction between primary goods produced by natural processes, and secondary goods produced by human labor, and pointed out that secondary goods can’t be produced at all unless you have the necessary primary goods on hand.
This is quite true, though it’s a point often missed by today’s economists. There is at least an equal difference, though, between either of these classes of goods and a third class produced neither by nature nor by labor. These are tertiary or, more descriptively, financial goods; they form the largest single class of goods in the world today, in terms of dollar value, and the markets in which they are bought and sold dominate the economies of the industrial nations. To call this unfortunate is a drastic understatement, because the biases imposed on our societies by the domination of financial goods are among the most potent forces dragging the world to ruin.
A specific example of a tertiary good may be useful here to help clarify the concept. Consider a corporate bond with a face value of $1000. This is a good in the economic sense – that is, it can be bought for money, it can be sold for money, there are people who want to buy it and people who are able to produce and sell it. Compare it to any more tangible item of value, though, and the bond is clearly a very strange sort of good. It consists of nothing more than a promise, on the part of some corporation, to pay $1000 at some future date. That promise may or may not be honored – junk bonds are bought and sold, for example, in full knowledge of the fact that the chances the issuers will pay up are not good – but even then the chance of collecting on it is treated as an object of value.
The differences between a tertiary good and a primary or secondary one reach further than this. Tangible goods produced by natural cycles or human labor are available in amounts limited by the supply. If there’s only so much water in a river, for example, that’s how much water there is; the fact that people want more, if such is the case, does not produce any more water than the hydrologic cycle is already willing to provide. Equally, if a country’s labor force, capital plant, and resource base are fully engaged in making a certain quantity of secondary goods, producing more requires a good deal more than an agreement to do so; the country must increase its labor pool, its capital plant, its access to resources, or some combination of these, in order to increase the supply of goods.
Yet tertiary goods are available in amounts limited only by the demand. How many bonds can a corporation print? For all practical purposes, as many as people are willing to buy. A good number of the colorful bankruptcies that have enlivened the business pages in recent months, for example, took out firms that mistook a temporary bubble for permanent prosperity, issued bonds far beyond their ability to pay, and crashed and burned when all that debt started to come due. On an even more gargantuan scale, the United States government is currently trying to restart its economy by spending money it doesn’t have, selling bonds to cover the difference, and amassing debt on a scale that makes the most extravagant Third World kleptocracies look like a bunch of pikers. It’s hard to imagine any way in which the results of this absurd extravagance will be anything but ugly, and yet buyers around the world are still snapping up US treasury bonds as though there’s a scintilla of hope they will see their money again.
The difference between supply-limited and demand-limited goods, as this suggests, is among other things a difference between kinds of feedback. Think about a thermostat and it’s easy to understand the principle at work. When the temperature in the house goes below a certain threshold, the heat comes on and brings the temperature back up; when the temperature goes above a higher threshold, the heat shuts off and the temperature goes back down. This is called negative feedback.
In a market economy, all secondary goods are subject to negative feedback. That’s the secret of Adam Smith’s invisible hand: since the supply of any secondary good is limited by the available natural inputs, labor pool, and capital stock, increased demand pushes up the price of the good, forcing some potential buyers out of the market, while decreased demand causes the good to become less expensive and allows more buyers back into the market. Equally, rising prices for a good encourage manufacturers to allocate more resources, labor, and capital plant to producing that good, helping to meet additional demand, while falling prices make other uses of resources, labor and capital plant more lucrative and curb supply.
Negative feedback loops of a very similar kind control the production of primary goods by the Earth’s natural systems. Every primary good from the water levels in a river and the fertility of a given patch of soil, to more specialized examples such as the pollination services provided by bees to agricultural crops, is regulated by delicately balanced processes of negative feedback working through some subset of the planetary biosphere. The parallel is close enough that ecologists have drawn on metaphors from economics to make sense of their field, and it’s quite possible that an ecological economics using natural systems as metaphors for the secondary economy could return the favor and create an economics that makes sense in the real world.
It’s when we get to the tertiary economy of financial goods that things change, because the feedback loops governing tertiary goods are not negative but positive. Imagine a thermostat designed by a sadist. In the summer, whenever the temperature goes up above a certain level, the sadothermostat makes the heat come on and the house gets even hotter; in the winter, when the temperature goes below another threshold, the temperature shuts off and the house gets so cold the pipes freeze. That’s positive feedback, and it’s the way the tertiary economy works when it’s not constrained by limits imposed by the primary or secondary economies.
The late and loudly lamented housing bubble is a case in point. It’s a remarkable case, not least because houses – which are usually part of the secondary economy, being tangible goods created by human labor – were briefly and disastrously converted into tertiary goods, whose value consisted primarily in the implied promise that they could be cashed in for more than their sales price at some future time. (As a tertiary good, their physical structure had no more to do with their value than does the paper used to print a bond.) When the price of a secondary good goes up, demand decreases, but this is not what happened in the housing bubble; instead, the demand increased, since the rising price made further appreciation appear more likely, and the mis-, mal- and nonfeasance of banks and mortgage companies willing to make six- and seven-figure loans to anyone with a pulse removed all limits from the supply.
The limits, rather, were on the demand side, where they always are in a speculative bubble: eventually the supply of buyers runs out because everyone who is willing to plunge into the bubble has already done so. Once this happened, prices began to sink, and once again positive feedback came into play. Since the sole value of these homes to most purchasers consisted, again, of the implied promise that they could be cashed in someday for more than their sales price, each decline in price convinced more people that this would not happen, and drove waves of selling that forced the price down further. This process typically bottoms out around the time that prices are as far below the median as they were above it at the peak, and for a similar reason: as a demand-limited process, a speculative bubble peaks when everyone willing to buy has bought, and bottoms when everyone capable of selling has sold.
It’s important to note that in this case, as in many others, the positive feedback in the tertiary economy disrupted the workings of the secondary economy. Long before the housing boom came to its messy and inevitable end, there was a massive oversupply of housing in many markets – there are, for example, well over 50,000 empty houses in Phoenix, Arizona right now. Absent a speculative bubble, the mismatch between supply and demand would have brought the production of new houses to a gentle halt. Instead, due to the positive feedback of the tertiary economy, supply massively overshot demand, leading to a drastic misallocation of resources in the secondary economy, and thus to an equally massive recession.
It’s long been popular to compare the tertiary economy to gambling, but the role of positive feedback in the tertiary economy introduces an instructive difference. When four poker players sit down at a table and the cards come out, their game has negative feedback. The limiting factor is the ability of the players to make good on their bets; the amount of wealth in play at the start of the game is exactly equal to the amount at the end, though it’s likely to go through quite a bit of redistribution. For every winner, in other words, there is an equal and opposite loser.
The tertiary economy does not work this way. When a market is going up, everyone invested in it gains; when it goes down, everyone invested in it loses. Paper wealth appears out of thin air on the way up, and vanishes into thin air on the way down. The difference between this and the supply-limited negative feedback cycles of the environment could not be more marked. In this sense it’s not unreasonable to call the tertiary economy a kind of anti-ecology, a system in which all the laws that govern ecology are stood on their heads – until, that is, the delusional patterns of behavior generated by the tertiary economy collide with the hard limits of ecological reality.
It’s not all that controversial to describe financial bubbles in this way, though you can safely bet that during any given bubble, a bumper crop of economists and pundits will spring up to insist that the bubble isn’t a bubble and that rising prices for whatever the speculation du jour happens to be are perfectly justified by future prospects. On the other hand, it’s very controversial just now to suggest that the entire tertiary economy is driven by positive feedback. Still, I suggest that this is a fair assessment of the financial economy of the industrial world, and the only reason that it’s controversial is simply that we, our great-grandparents’ great-grandparents, and all the generations in between have lived during the upward arc of the mother of all speculative bubbles.
The vehicle for that bubble has not been stocks, bonds, real estate, derivatives, or what have you, but industrialism itself: the entire project of increasing the production of goods and services to historically unprecedented levels by amplifying human labor with energy drawn from the natural world, first from wind and water, and then from fossil fuels in ever-increasing amounts. Like the real estate at the core of the recent boom and bust, this project had its roots in the secondary economy, but quickly got transformed into a vehicle for the tertiary economy: people invested their money in industrial projects because of the promise of more money later on.
Like every other speculative bubble, the megabubble of industrialism paid off spectacularly along its upward arc. It’s inaccurate to claim, as some of its cheerleaders have, that everybody benefited from it; one important consequence of the industrial system was a massive distortion of patterns of exchange in favor of the major industrial nations, to the massive detriment of the rest of the planet. (It’s rarely understood just how much of today’s Third World poverty is a modern phenomenon, the mirror image and necessary product of the soaring prosperity of the industrial nations.) Still, for some three hundred years, standards of living across the industrial world soared so high that people of relatively modest means in America or western Europe had access to goods and services not even emperors could command a few centuries before.
In the absence of ecological limits, it’s conceivable that such a process could have continued until demand was exhausted, and then unraveled in the usual way. The joker in the deck, though, was the dependence of the industrial project on the extraction of fossil fuels at an ever-increasing pace. Beneath the giddy surface of industrialism’s bubble, in other words, lay the hard reality of the tertiary economy’s dependence on resources from the primary economy. The positive feedback loop driving the industrial bubble can’t make resources out of thin air – only money can be invented so casually – but it has proven quite successful at preventing industrial economies from responding to the depletion of their fossil fuel supplies fast enough to stave off what promises to be the great-grandmother of all speculative busts.
The results of this failure are beginning to come home to roost in our own time. To understand the economics of the resulting collision, though, it’s necessary to note the relationship between economics and the least popular law of physics – a subject central to next week’s post.
Wednesday, July 15, 2009
SC93-13
http://informationclearinghouse.info/article23068.htm
Can The Economy Recover?
There is no economy left to recover. The US manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical “New Economy.”
The “New Economy” was based on services. Its artificial life was fed by the Federal Reserve’s artificially low interest rates, which produced a real estate bubble, and by “free market” financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.
The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans’ wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.
The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.
And now suddenly Americans can’t borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America’s consumer economy, approximately 70% of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities.
Meanwhile the US government’s budget deficit has jumped from $455 billion in 2008 to $2,000 billion this year, with another $2,000 billion on the books for
2010. And President Obama has intensified America’s expensive war of aggression in Afghanistan and initiated a new war in Pakistan.
There is no way for these deficits to be financed except by printing money or by further collapse in stock markets that would drive people out of equity into bonds.
The US government’s budget is 50% in the red. That means half of every dollar the federal government spends must be borrowed or printed. Because of the worldwide debacle caused by Wall Street’s financial gangsterism, the world needs its own money and hasn’t $2 trillion annually to lend to Washington.
As dollars are printed, the growing supply adds to the pressure on the dollar’s role as reserve currency. Already America’s largest creditor, China, is admonishing Washington to protect China’s investment in US debt and lobbying for a new reserve currency to replace the dollar before it collapses. According to various reports, China is spending down its holdings of US dollars by acquiring gold and stocks of raw materials and energy.
The price of one ounce gold coins is $1,000 despite efforts of the US government to hold down the gold price. How high will this price jump when the rest of the world decides that the bankruptcy of “the world’s only superpower” is at hand?
And what will happen to America’s ability to import not only oil, but also the manufactured goods on which it is import-dependent?
When the over-supplied US dollar loses the reserve currency role, the US will no longer be able to pay for its massive imports of real goods and services with pieces of paper. Overnight, shortages will appear and Americans will be poorer.
Nothing in Presidents Bush and Obama’s economic policy addresses the real issues. Instead, Goldman Sachs was bailed out, more than once. As Eliot Spitzer said, the banks made a “bloody fortune” with US aid.
It was not the millions of now homeless homeowners who were bailed out. It was not the scant remains of American manufacturing--General Motors and Chrysler--that were bailed out. It was the Wall Street Banks.
According to Bloomberg.com, Goldman Sachs’ current record earnings from their free or low cost capital supplied by broke American taxpayers has led the firm to decide to boost compensation and benefits by 33 percent. On an annual basis, this comes to compensation of $773,000 per employee.
This should tell even the most dimwitted patriot who “their” government represents.
The worst of the economic crisis has not yet hit. I don’t mean the rest of the real estate crisis that is waiting in the wings. Home prices will fall further when the foreclosed properties currently held off the market are dumped. Store and office closings are adversely impacting the ability of owners of shopping malls and office buildings to make their mortgage payments. Commercial real estate loans were also securitized and turned into derivatives.
The real crisis awaits us. It is the crisis of high unemployment, of stagnant and declining real wages confronted with rising prices from the printing of money to pay the government’s bills and from the dollar’s loss of exchange value. Suddenly, Wal-Mart prices will look like Nieman Marcus prices.
Retirees dependent on state pension systems, which cannot print money, might not be paid, or might be paid with IOUs. They will not even have depreciating money with which to try to pay their bills. Desperate tax authorities will squeeze the remaining life out of the middle class.
Nothing in Obama’s economic policy is directed at saving the US dollar as reserve currency or the livelihoods of the American people. Obama’s policy, like Bush’s before him, is keyed to the enrichment of Goldman Sachs and the armament industries.
Matt Taibbi describes Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentless jamming its blood funnel into anything that smells like money.” Look at the Goldman Sachs representatives in the Clinton, Bush and Obama administrations. This bankster firm controls the economic policy of the United States.
Little wonder that Goldman Sachs has record earnings while the rest of us grow poorer by the day.
Can The Economy Recover?
There is no economy left to recover. The US manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical “New Economy.”
The “New Economy” was based on services. Its artificial life was fed by the Federal Reserve’s artificially low interest rates, which produced a real estate bubble, and by “free market” financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.
The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans’ wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.
The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.
And now suddenly Americans can’t borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America’s consumer economy, approximately 70% of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities.
Meanwhile the US government’s budget deficit has jumped from $455 billion in 2008 to $2,000 billion this year, with another $2,000 billion on the books for
2010. And President Obama has intensified America’s expensive war of aggression in Afghanistan and initiated a new war in Pakistan.
There is no way for these deficits to be financed except by printing money or by further collapse in stock markets that would drive people out of equity into bonds.
The US government’s budget is 50% in the red. That means half of every dollar the federal government spends must be borrowed or printed. Because of the worldwide debacle caused by Wall Street’s financial gangsterism, the world needs its own money and hasn’t $2 trillion annually to lend to Washington.
As dollars are printed, the growing supply adds to the pressure on the dollar’s role as reserve currency. Already America’s largest creditor, China, is admonishing Washington to protect China’s investment in US debt and lobbying for a new reserve currency to replace the dollar before it collapses. According to various reports, China is spending down its holdings of US dollars by acquiring gold and stocks of raw materials and energy.
The price of one ounce gold coins is $1,000 despite efforts of the US government to hold down the gold price. How high will this price jump when the rest of the world decides that the bankruptcy of “the world’s only superpower” is at hand?
And what will happen to America’s ability to import not only oil, but also the manufactured goods on which it is import-dependent?
When the over-supplied US dollar loses the reserve currency role, the US will no longer be able to pay for its massive imports of real goods and services with pieces of paper. Overnight, shortages will appear and Americans will be poorer.
Nothing in Presidents Bush and Obama’s economic policy addresses the real issues. Instead, Goldman Sachs was bailed out, more than once. As Eliot Spitzer said, the banks made a “bloody fortune” with US aid.
It was not the millions of now homeless homeowners who were bailed out. It was not the scant remains of American manufacturing--General Motors and Chrysler--that were bailed out. It was the Wall Street Banks.
According to Bloomberg.com, Goldman Sachs’ current record earnings from their free or low cost capital supplied by broke American taxpayers has led the firm to decide to boost compensation and benefits by 33 percent. On an annual basis, this comes to compensation of $773,000 per employee.
This should tell even the most dimwitted patriot who “their” government represents.
The worst of the economic crisis has not yet hit. I don’t mean the rest of the real estate crisis that is waiting in the wings. Home prices will fall further when the foreclosed properties currently held off the market are dumped. Store and office closings are adversely impacting the ability of owners of shopping malls and office buildings to make their mortgage payments. Commercial real estate loans were also securitized and turned into derivatives.
The real crisis awaits us. It is the crisis of high unemployment, of stagnant and declining real wages confronted with rising prices from the printing of money to pay the government’s bills and from the dollar’s loss of exchange value. Suddenly, Wal-Mart prices will look like Nieman Marcus prices.
Retirees dependent on state pension systems, which cannot print money, might not be paid, or might be paid with IOUs. They will not even have depreciating money with which to try to pay their bills. Desperate tax authorities will squeeze the remaining life out of the middle class.
Nothing in Obama’s economic policy is directed at saving the US dollar as reserve currency or the livelihoods of the American people. Obama’s policy, like Bush’s before him, is keyed to the enrichment of Goldman Sachs and the armament industries.
Matt Taibbi describes Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentless jamming its blood funnel into anything that smells like money.” Look at the Goldman Sachs representatives in the Clinton, Bush and Obama administrations. This bankster firm controls the economic policy of the United States.
Little wonder that Goldman Sachs has record earnings while the rest of us grow poorer by the day.
Sunday, July 12, 2009
SC93-12
http://www.onlineopinion.com.au/view.asp?article=9149
Peak oil means peak food as well
Optimism about our future is compulsory. It is politically incorrect to profess anything else. No matter what problems we face - ecological overshoot, global warming, energy decline, overpopulation - we must nevertheless be optimistic and hopeful that we will find solutions. People who do not believe that we will overcome our difficulties and continue ever upwards on a path of continuing economic growth and progress are "doomers". They spruik "doomer porn". They utter their nonsense because they hate the human race. If we fail and fall it will be their fault for being so pessimistic! They are undermining our resolve and ability to respond. Human ingenuity can always find a way if we only believe it!
I like to think of myself as a scientist (but that is always for others to judge). For a scientist the principal we hold most dear is objectivity. We must try to interpret data without superimposing our own beliefs, values or desires upon it. Even when it tells us what we do not want to believe. Even when the data make us sick to the pits of our stomachs with terror.
I am pessimistic about the future because I have seen and understood the data on resources. I know that oil production peaked in July 2008. (I have seen the unpublished reanalysis of the International Energy Agency’s own 2008 report that shows this conclusively.) I know that our use of other resources - such as water and phosphate - is critically unsustainable. Now that energy is declining there will not be enough to invest in building the alternative energy future that many of us dream of.
The nature of our economic/political system means that the declining fossil energy supply will go to the shorter term priorities of growing food, supporting armies and maintaining (as far as possible) the comfortable lifestyles of an ever-contracting circle of the wealthy. The time needed to build any form of alternative energy infrastructure - and the scale of the expansion needed in the face of the current and worsening energy decline - mean that it will simply never happen.
If I am so pessimistic, why do I bother writing about it? What good does it do? As a scientist I know that you must understand a problem in order to solve it. To have any chance of coping with this developing disaster we need to see it for what it truly is - not pretend that it does not exist (for example, the population problem) or that it will never happen (for example, peak oil). If we do not understand the true nature of the problem the "solutions" we attempt may make the problem worse. Like supporting future population growth through more efficient use of resources. Or growing biofuels on marginal land without considering how you will replace the soil nutrients they deplete. Or planning to electrify of the car fleet without considering the load that will place on an overstretched grid or where the energy and materials will come from to maintain the road network it requires.
If we objectively understand our true situation and what, feasibly, we can do about it then we can take appropriate action and not waste our precious remaining fossil energy on optimistic - but ultimately futile - "solutions". We will not end up where we want to be (there will be no return to the peak of the oil age and the extravagant technologies it supported) but we may avoid falling the entire distance to the brutal bottom of the energy curve that awaits.
"Optimism" is the problem, not the solution. We use it as an excuse to avoid thinking about the desperate measures we must take to cope with what is coming. We use it to put off actually doing anything. As long as Dr X, CEO Y or Minister Z says, "I’m optimistic that we will develop new energy sources" then we can go back to sleep because someone is obviously taking care of the problem - aren’t they?
When Einstein and Szilárd wrote to President Franklin D. Roosevelt during World War II warning about German interest in uranium and nuclear fission (the letter that ultimately spawned the Manhattan Project to build the atomic bomb) they did not do it because they felt, "optimistic" about the future. They were shit scared the Germans would develop nuclear weapons first! Winston Churchill did not rally the British saying, "I’m optimistic we will develop new solutions to the Nazi problem". Rather, he declared, "I have nothing to offer but blood, toil, tears and sweat … It is victory, victory at all costs, … however long and hard the road may be; for without victory, there is no survival".
Today we are often told we need a new "Manhattan Project" for alternative energy but we will never make the sacrifices necessary for this in our already worsening economic situation if we are not truly, deeply fearful of the consequences of failure. Only fear - not optimism - can motivate populations sufficiently when they are already struggling with rising food prices, falling incomes and unemployment.
Tragically, our sensationalist media also know that fear grabs people’s attention. Our collective crisis fatigue is now so great that we ignore truly significant threats such as climate change and energy decline. Our anxiety is diverted into worrying whether it’s safe for our children to step outside the 4WD (SUV). But soon we will be worrying if we can find or afford to put food in their mouths.
Declining oil and water supplies, climate change and increasing population numbers are undermining Australia’s food security. We who formerly prided ourselves on our ability to feed other nations have now become a net importer of fruit and vegetables. Statistical stupidity by the Australian Bureau of Agricultural and Resource Economics (ABARE) has led us to believe we export 80 per cent of our agricultural production. However, as Mark McGovern of the Queensland University of Technology has shown, in fact we export less than 30 per cent.
This may not sound like much of a difference but it means that instead of producing 400 per cent more food than we ourselves consume it is less than 40 per cent! What will we do as energy decline, water shortages and climate change drastically cut our food production - or as our current record population growth rate doubles Australia’s population within 37 years - or both! As other nations struggle to feed themselves, who will feed us?
My grandmother was a refugee during World War II in Europe. She would skip her meagre rations to give her toddler daughter (my mother) more to eat. Unlike most Australians, she knew real hunger! Australia needs a "Manhattan Project" for local, sustainable food production. But it will take unaffordable staples, empty shelves at the supermarkets and empty middle-class stomachs before we wake up to our food insecurity. Optimism will not put food on the table as oil, water and fertiliser dwindle. I’m shit scared of the future and what it means for my two children. How about you?
Peak oil means peak food as well
Optimism about our future is compulsory. It is politically incorrect to profess anything else. No matter what problems we face - ecological overshoot, global warming, energy decline, overpopulation - we must nevertheless be optimistic and hopeful that we will find solutions. People who do not believe that we will overcome our difficulties and continue ever upwards on a path of continuing economic growth and progress are "doomers". They spruik "doomer porn". They utter their nonsense because they hate the human race. If we fail and fall it will be their fault for being so pessimistic! They are undermining our resolve and ability to respond. Human ingenuity can always find a way if we only believe it!
I like to think of myself as a scientist (but that is always for others to judge). For a scientist the principal we hold most dear is objectivity. We must try to interpret data without superimposing our own beliefs, values or desires upon it. Even when it tells us what we do not want to believe. Even when the data make us sick to the pits of our stomachs with terror.
I am pessimistic about the future because I have seen and understood the data on resources. I know that oil production peaked in July 2008. (I have seen the unpublished reanalysis of the International Energy Agency’s own 2008 report that shows this conclusively.) I know that our use of other resources - such as water and phosphate - is critically unsustainable. Now that energy is declining there will not be enough to invest in building the alternative energy future that many of us dream of.
The nature of our economic/political system means that the declining fossil energy supply will go to the shorter term priorities of growing food, supporting armies and maintaining (as far as possible) the comfortable lifestyles of an ever-contracting circle of the wealthy. The time needed to build any form of alternative energy infrastructure - and the scale of the expansion needed in the face of the current and worsening energy decline - mean that it will simply never happen.
If I am so pessimistic, why do I bother writing about it? What good does it do? As a scientist I know that you must understand a problem in order to solve it. To have any chance of coping with this developing disaster we need to see it for what it truly is - not pretend that it does not exist (for example, the population problem) or that it will never happen (for example, peak oil). If we do not understand the true nature of the problem the "solutions" we attempt may make the problem worse. Like supporting future population growth through more efficient use of resources. Or growing biofuels on marginal land without considering how you will replace the soil nutrients they deplete. Or planning to electrify of the car fleet without considering the load that will place on an overstretched grid or where the energy and materials will come from to maintain the road network it requires.
If we objectively understand our true situation and what, feasibly, we can do about it then we can take appropriate action and not waste our precious remaining fossil energy on optimistic - but ultimately futile - "solutions". We will not end up where we want to be (there will be no return to the peak of the oil age and the extravagant technologies it supported) but we may avoid falling the entire distance to the brutal bottom of the energy curve that awaits.
"Optimism" is the problem, not the solution. We use it as an excuse to avoid thinking about the desperate measures we must take to cope with what is coming. We use it to put off actually doing anything. As long as Dr X, CEO Y or Minister Z says, "I’m optimistic that we will develop new energy sources" then we can go back to sleep because someone is obviously taking care of the problem - aren’t they?
When Einstein and Szilárd wrote to President Franklin D. Roosevelt during World War II warning about German interest in uranium and nuclear fission (the letter that ultimately spawned the Manhattan Project to build the atomic bomb) they did not do it because they felt, "optimistic" about the future. They were shit scared the Germans would develop nuclear weapons first! Winston Churchill did not rally the British saying, "I’m optimistic we will develop new solutions to the Nazi problem". Rather, he declared, "I have nothing to offer but blood, toil, tears and sweat … It is victory, victory at all costs, … however long and hard the road may be; for without victory, there is no survival".
Today we are often told we need a new "Manhattan Project" for alternative energy but we will never make the sacrifices necessary for this in our already worsening economic situation if we are not truly, deeply fearful of the consequences of failure. Only fear - not optimism - can motivate populations sufficiently when they are already struggling with rising food prices, falling incomes and unemployment.
Tragically, our sensationalist media also know that fear grabs people’s attention. Our collective crisis fatigue is now so great that we ignore truly significant threats such as climate change and energy decline. Our anxiety is diverted into worrying whether it’s safe for our children to step outside the 4WD (SUV). But soon we will be worrying if we can find or afford to put food in their mouths.
Declining oil and water supplies, climate change and increasing population numbers are undermining Australia’s food security. We who formerly prided ourselves on our ability to feed other nations have now become a net importer of fruit and vegetables. Statistical stupidity by the Australian Bureau of Agricultural and Resource Economics (ABARE) has led us to believe we export 80 per cent of our agricultural production. However, as Mark McGovern of the Queensland University of Technology has shown, in fact we export less than 30 per cent.
This may not sound like much of a difference but it means that instead of producing 400 per cent more food than we ourselves consume it is less than 40 per cent! What will we do as energy decline, water shortages and climate change drastically cut our food production - or as our current record population growth rate doubles Australia’s population within 37 years - or both! As other nations struggle to feed themselves, who will feed us?
My grandmother was a refugee during World War II in Europe. She would skip her meagre rations to give her toddler daughter (my mother) more to eat. Unlike most Australians, she knew real hunger! Australia needs a "Manhattan Project" for local, sustainable food production. But it will take unaffordable staples, empty shelves at the supermarkets and empty middle-class stomachs before we wake up to our food insecurity. Optimism will not put food on the table as oil, water and fertiliser dwindle. I’m shit scared of the future and what it means for my two children. How about you?
SC93-11
http://informationclearinghouse.info/article23017.htm
Mourn On The 4th of July
Liberals say that the United States is once again a "nation of moral ideals", but behind the façade little has changed. With his government of warmongers, Wall Street cronies and polluters from the Bush and Clinton eras, Barack Obama is merely upholding the myths of a divine America
By John Pilger
July 09, 2009 "Information Clearing House" -- The monsoon had woven thick skeins of mist over the central highlands of Vietnam. I was a young war correspondent, bivouacked in the village of Tuylon with a unit of US marines whose orders were to win hearts and minds. "We are here not to kill," said the sergeant, "we are here to impart the American Way of Liberty as stated in the Pacification Handbook. This is designed to win the hearts and minds of folks, as stated on page 86."
Page 86 was headed WHAM. The sergeant's unit was called a combined action company, which meant, he explained, "we attack these folks on Mondays and we win their hearts and minds on Tuesdays". He was joking, though not quite. Standing in a jeep on the edge of a paddy, he had announced through a loudhailer: "Come on out, everybody. We got rice and candy and toothbrushes to give you."
Silence. Not a shadow moved.
"Now listen, either you gooks come on out from wherever you are, or we're going to come right in there and get you!"
The people of Tuylon finally came out and stood in line to receive packets of Uncle Ben's Long Grain Rice, Hershey bars, party balloons and several thousand toothbrushes. Three portable, battery-operated, yellow flush lavatories were kept for the colonel's arrival. And when the colonel arrived that evening, the district chief was summoned and the yellow flush lavatories were unveiled.
"Mr District Chief and all you folks out there," said the colonel, "what these gifts represent is more than the sum of their parts. They carry the spirit of America. Ladies and gentlemen, there's no place on earth like America. It's a guiding light for me, and for you. You see, back home, we count ourselves as real lucky having the greatest democracy the world has ever known, and we want you good folks to share in our good fortune."
Thomas Jefferson, George Washington and Davy Crockett got a mention. "Beacon" was a favourite, and as he evoked John Winthrop's "city upon a hill", the marines clapped, and the children clapped, understanding not a word.
It was a lesson in what historians call "exceptionalism", the notion that the United States has the divine right to bring what it describes as liberty and democracy to the rest of humanity. That this merely disguised a system of domination, which Martin Luther King described, shortly before his assassination, as "the greatest purveyor of violence in the world", was unspeakable. As the great people's historian Howard Zinn has pointed out, Winthrop's much-quoted description of the 17th-century Massachusetts Bay Colony as a "city upon a hill", a place of unlimited goodness and nobility, was rarely set against the violence of the first settlers, for whom burning alive some 400 Pequot Indians was a "triumphant joy". The countless massacres that followed, wrote Zinn, were justified by "the idea that American expansion is divinely ordained".
Not long ago, I visited the American Museum of History, part of the celebrated Smithsonian Institution in Washington, DC. One of the popular exhibitions was "The Price of Freedom: Americans at War". It was holiday time and lines of people, including many children, shuffled reverentially through a Santa's grotto of war and conquest where messages about their nation's "great mission" were dispensed. These included tributes to the "exceptional Americans [who] saved a million lives" in Vietnam, where they were "determined to stop communist expansion". In Iraq, other true hearts "employed air strikes of unprecedented precision". What was shocking was not so much the revisionist description of two of the epic crimes of modern times as the sheer scale of omission.
"History without memory," declared Time magazine at the end of the 20th century, "confines Americans to a sort of eternal present. They are especially weak in remembering what they did to other people, as opposed to what they did for them." Ironically, it was Henry Luce, founder of Time, who in 1941 divined the "American century" as an American social, political and cultural "victory" over humanity and the right "to exert upon the world the full impact of our influence, for such purposes as we see fit and by such means as we see fit".
None of this is to suggest that vainglory is exclusive to the United States. The British presented their often violent domination of much of the world as the natural progress of Christian gentlemen selflessly civilising the natives, and present-day TV historians perpetuate the myths. The French still celebrate their bloody "civilising mission". Prior to the Second World War, "imperialist" was an honoured political badge in Europe, while in the US an "age of innocence" was preferred. America was different from the Old World, said its mythologists. America was the Land of Liberty, uninterested in conquest. But what of George Washington's call for a "rising empire" and James Madison's "laying the foundation of a great empire"? What of slavery, the theft of Texas from Mexico, the bloody subjugation of central America, Cuba and the Philippines?
An ordained national memory consigned these to the historical margins and "imperialism" was all but discredited in the United States, especially after Adolf Hitler and the fascists, with their ideas of racial and cultural superiority, had left a legacy of guilt by association. The Nazis, after all, had been proud imperialists, too, and Germany was also "exceptional". The idea of imperialism, the word itself, was all but expunged from the American lexicon, "on the grounds that it falsely attributed immoral motives to western foreign policy", argued one historian. Those who persisted in using it were "disreputable purveyors of agitprop" and were "inspired by the communist doctrine", or they were "Negro intellectuals who had grievances of their own against white capitalism".
Meanwhile, the "city on the hill" remained a beacon of rapaciousness as US capital set about realising Luce's dream and recolonising the European empires in the postwar years. This was "the march of free enterprise". In truth, it was driven by a subsidised production boom in a country unravaged by war: a sort of socialism for the great corporations, or state capitalism, which left half the world's wealth in American hands. The cornerstone of this new imperialism was laid in 1944 at a conference of the western allies at Bretton Woods in New Hampshire. Described as "negotiations about economic stability", the conference marked America's conquest of most of the world.
What the American elite demanded, wrote Frederic F Clairmont in The Rise and Fall of Economic Liberalism, "was not allies but unctuous client states. What Bretton Woods bequeathed to the world was a lethal totalitarian blueprint for the carve-up of world markets." The World Bank, the International Monetary Fund, the Asian Development Bank, the Inter-American Development Bank and the African Development Bank were established in effect as arms of the US Treasury and would design and police the new order. The US military and its clients would guard the doors of these "international" institutions, and an "invisible government" of media would secure the myths, said Edward Bernays.
Bernays, described as the father of the media age, was the nephew of Sigmund Freud. "Propaganda," he wrote, "got to be a bad word because of the Germans . . . so what I did was to try and find other words [such as] Public Relations." Bernays used Freud's theories about control of the subconscious to promote a "mass culture" designed to promote fear of official enemies and servility to consumerism. It was Bernays who, on behalf of the tobacco industry, campaigned for American women to take up smoking as an act of feminist liberation, calling cigarettes "torches of freedom"; and it was his notion of disinformation that was deployed in overthrowing governments, such as Guatemala's democracy in 1954.
Above all, the goal was to distract and deter the social democratic impulses of working people. Big business was elevated from its public reputation as a kind of mafia to that of a patriotic force. "Free enterprise" became a divinity. "By the early 1950s," wrote Noam Chomsky, "20 million people a week were watching business-sponsored films. The entertainment industry was enlisted to the cause, portraying unions as the enemy, the outsider disrupting the ‘harmony' of the ‘American way of life' . . . Every aspect of social life was targeted and permeated schools and universities, churches, even recreational programmes. By 1954, business propaganda in public schools reached half the amount spent on textbooks."
The new "ism" was Americanism, an ideology whose distinction is its denial that it is an ideology. Recently, I saw the 1957 musical Silk Stockings, starring Fred Astaire and Cyd Charisse. Between the scenes of wonderful dancing to a score by Cole Porter was a series of loyalty statements that the colonel in Vietnam might well have written. I had forgotten how crude and pervasive the propaganda was; the Soviets could never compete. An oath of loyalty to all things American became an ideological commitment to the leviathan of business: from the business of armaments and war (which consumes 42 cents in every tax dollar today) to the business of food, known as "agripower" (which receives $157bn a year in government subsidies).
Barack Obama is the embodiment of the "ism". From his early political days, Obama's unerring theme has been not "change", the slogan of his presidential campaign, but America's right to rule and order the world. Of the United States, he says, "we lead the world in battling immediate evils and promoting the ultimate good . . . We must lead by building a 21st-century military to ensure the security of our people and advance the security of all people." And: "At moments of great peril in the past century our leaders ensured that America, by deed and by example, led and lifted the world, that we stood and fought for the freedoms sought by billions of people beyond their borders."
Since 1945, by deed and by example, the US has overthrown 50 governments, including democracies, crushed some 30 liberation movements and supported tyrannies from Egypt to Guatemala (see William Blum's histories). Bombing is apple pie. Having stacked his government with warmongers, Wall Street cronies and polluters from the Bush and Clinton eras, the 45th president is merely upholding tradition. The hearts and minds farce I witnessed in Vietnam is today repeated in villages in Afghanistan and, by proxy, Pakistan, which are Obama's wars.
In his acceptance speech for the 2005 Nobel Prize for Literature, Harold Pinter noted that "everyone knew that terrible crimes had been committed by the Soviet Union in the postwar period, but "US crimes in the same period have been only superficially recorded, let alone documented, let alone acknowledged, let alone recognised as crimes at all". It is as if "It never happened. Nothing ever happened. Even while it was happening, it wasn't happening . . . You have to hand it to America . . . masquerading as a force for universal good. It's a brilliant, even witty, highly successful act of hypnosis."
As Obama has sent drones to kill (since January) some 700 civilians, distinguished liberals have rejoiced that America is once again a "nation of moral ideals", as Paul Krugman wrote in the New York Times. In Britain, the elite has long seen in exceptional America an enduring place for British "influence", albeit as servitor or puppet. The pop historian Tristram Hunt says America under Obama is a land "where miracles happen". Justin Webb, until recently the BBC's man in Washington, refers adoringly, rather like the colonel in Vietnam, to the "city on the hill".
Behind this façade of "intensification of feeling and degradation of significance" (Walter Lippmann), ordinary Americans are stirring perhaps as never before, as if abandoning the deity of the "American Dream" that prosperity is a guarantee with hard work and thrift. Millions of angry emails from ordinary people have flooded Washington, expressing an outrage that the novelty of Obama has not calmed. On the contrary, those whose jobs have vanished and whose homes are repossessed see the new president rewarding crooked banks and an obese military, essentially protecting George W Bush's turf.
My guess is that a populism will emerge in the next few years, igniting a powerful force that lies beneath America's surface and which has a proud past. It cannot be predicted which way it will go. However, from such an authentic grass-roots Americanism came women's suffrage, the eight-hour day, graduated income tax and public ownership. In the late 19th century, the populists were betrayed by leaders who urged them to compromise and merge with the Democratic Party. In the Obama era, the familiarity of this resonates.
What is most extraordinary about the United States today is the rejection and defiance, in so many attitudes, of the all-pervasive historical and contemporary propaganda of the "invisible government". Credible polls have long confirmed that more than two-thirds of Americans hold progressive views. A majority want the government to care for those who cannot care for themselves. They would pay higher taxes to guarantee health care for everyone. They want complete nuclear disarmament; 72 per cent want the US to end its colonial wars; and so on. They are informed, subversive, even "anti-American".
I once asked a friend, the great American war correspondent and humanitarian Martha Gellhorn, to explain the term to me. "I'll tell you what ‘anti-American' is," she said. "It's what governments and their vested interests call those who honour America by objecting to war and the theft of resources and believing in all of humanity.
"There are millions of these anti-Americans in the United States. They are ordinary people who belong to no elite and who judge their government in moral terms, though they would call it common decency. They are not vain. They are the people with a wakeful conscience, the best of America's citizens. They can be counted on. They were in the South with the civil rights movement, ending slavery. They were in the streets, demanding an end to the wars in Asia. Sure, they disappear from view now and then, but they are like seeds beneath the snow. I would say they are truly exceptional."
Mourn On The 4th of July
Liberals say that the United States is once again a "nation of moral ideals", but behind the façade little has changed. With his government of warmongers, Wall Street cronies and polluters from the Bush and Clinton eras, Barack Obama is merely upholding the myths of a divine America
By John Pilger
July 09, 2009 "Information Clearing House" -- The monsoon had woven thick skeins of mist over the central highlands of Vietnam. I was a young war correspondent, bivouacked in the village of Tuylon with a unit of US marines whose orders were to win hearts and minds. "We are here not to kill," said the sergeant, "we are here to impart the American Way of Liberty as stated in the Pacification Handbook. This is designed to win the hearts and minds of folks, as stated on page 86."
Page 86 was headed WHAM. The sergeant's unit was called a combined action company, which meant, he explained, "we attack these folks on Mondays and we win their hearts and minds on Tuesdays". He was joking, though not quite. Standing in a jeep on the edge of a paddy, he had announced through a loudhailer: "Come on out, everybody. We got rice and candy and toothbrushes to give you."
Silence. Not a shadow moved.
"Now listen, either you gooks come on out from wherever you are, or we're going to come right in there and get you!"
The people of Tuylon finally came out and stood in line to receive packets of Uncle Ben's Long Grain Rice, Hershey bars, party balloons and several thousand toothbrushes. Three portable, battery-operated, yellow flush lavatories were kept for the colonel's arrival. And when the colonel arrived that evening, the district chief was summoned and the yellow flush lavatories were unveiled.
"Mr District Chief and all you folks out there," said the colonel, "what these gifts represent is more than the sum of their parts. They carry the spirit of America. Ladies and gentlemen, there's no place on earth like America. It's a guiding light for me, and for you. You see, back home, we count ourselves as real lucky having the greatest democracy the world has ever known, and we want you good folks to share in our good fortune."
Thomas Jefferson, George Washington and Davy Crockett got a mention. "Beacon" was a favourite, and as he evoked John Winthrop's "city upon a hill", the marines clapped, and the children clapped, understanding not a word.
It was a lesson in what historians call "exceptionalism", the notion that the United States has the divine right to bring what it describes as liberty and democracy to the rest of humanity. That this merely disguised a system of domination, which Martin Luther King described, shortly before his assassination, as "the greatest purveyor of violence in the world", was unspeakable. As the great people's historian Howard Zinn has pointed out, Winthrop's much-quoted description of the 17th-century Massachusetts Bay Colony as a "city upon a hill", a place of unlimited goodness and nobility, was rarely set against the violence of the first settlers, for whom burning alive some 400 Pequot Indians was a "triumphant joy". The countless massacres that followed, wrote Zinn, were justified by "the idea that American expansion is divinely ordained".
Not long ago, I visited the American Museum of History, part of the celebrated Smithsonian Institution in Washington, DC. One of the popular exhibitions was "The Price of Freedom: Americans at War". It was holiday time and lines of people, including many children, shuffled reverentially through a Santa's grotto of war and conquest where messages about their nation's "great mission" were dispensed. These included tributes to the "exceptional Americans [who] saved a million lives" in Vietnam, where they were "determined to stop communist expansion". In Iraq, other true hearts "employed air strikes of unprecedented precision". What was shocking was not so much the revisionist description of two of the epic crimes of modern times as the sheer scale of omission.
"History without memory," declared Time magazine at the end of the 20th century, "confines Americans to a sort of eternal present. They are especially weak in remembering what they did to other people, as opposed to what they did for them." Ironically, it was Henry Luce, founder of Time, who in 1941 divined the "American century" as an American social, political and cultural "victory" over humanity and the right "to exert upon the world the full impact of our influence, for such purposes as we see fit and by such means as we see fit".
None of this is to suggest that vainglory is exclusive to the United States. The British presented their often violent domination of much of the world as the natural progress of Christian gentlemen selflessly civilising the natives, and present-day TV historians perpetuate the myths. The French still celebrate their bloody "civilising mission". Prior to the Second World War, "imperialist" was an honoured political badge in Europe, while in the US an "age of innocence" was preferred. America was different from the Old World, said its mythologists. America was the Land of Liberty, uninterested in conquest. But what of George Washington's call for a "rising empire" and James Madison's "laying the foundation of a great empire"? What of slavery, the theft of Texas from Mexico, the bloody subjugation of central America, Cuba and the Philippines?
An ordained national memory consigned these to the historical margins and "imperialism" was all but discredited in the United States, especially after Adolf Hitler and the fascists, with their ideas of racial and cultural superiority, had left a legacy of guilt by association. The Nazis, after all, had been proud imperialists, too, and Germany was also "exceptional". The idea of imperialism, the word itself, was all but expunged from the American lexicon, "on the grounds that it falsely attributed immoral motives to western foreign policy", argued one historian. Those who persisted in using it were "disreputable purveyors of agitprop" and were "inspired by the communist doctrine", or they were "Negro intellectuals who had grievances of their own against white capitalism".
Meanwhile, the "city on the hill" remained a beacon of rapaciousness as US capital set about realising Luce's dream and recolonising the European empires in the postwar years. This was "the march of free enterprise". In truth, it was driven by a subsidised production boom in a country unravaged by war: a sort of socialism for the great corporations, or state capitalism, which left half the world's wealth in American hands. The cornerstone of this new imperialism was laid in 1944 at a conference of the western allies at Bretton Woods in New Hampshire. Described as "negotiations about economic stability", the conference marked America's conquest of most of the world.
What the American elite demanded, wrote Frederic F Clairmont in The Rise and Fall of Economic Liberalism, "was not allies but unctuous client states. What Bretton Woods bequeathed to the world was a lethal totalitarian blueprint for the carve-up of world markets." The World Bank, the International Monetary Fund, the Asian Development Bank, the Inter-American Development Bank and the African Development Bank were established in effect as arms of the US Treasury and would design and police the new order. The US military and its clients would guard the doors of these "international" institutions, and an "invisible government" of media would secure the myths, said Edward Bernays.
Bernays, described as the father of the media age, was the nephew of Sigmund Freud. "Propaganda," he wrote, "got to be a bad word because of the Germans . . . so what I did was to try and find other words [such as] Public Relations." Bernays used Freud's theories about control of the subconscious to promote a "mass culture" designed to promote fear of official enemies and servility to consumerism. It was Bernays who, on behalf of the tobacco industry, campaigned for American women to take up smoking as an act of feminist liberation, calling cigarettes "torches of freedom"; and it was his notion of disinformation that was deployed in overthrowing governments, such as Guatemala's democracy in 1954.
Above all, the goal was to distract and deter the social democratic impulses of working people. Big business was elevated from its public reputation as a kind of mafia to that of a patriotic force. "Free enterprise" became a divinity. "By the early 1950s," wrote Noam Chomsky, "20 million people a week were watching business-sponsored films. The entertainment industry was enlisted to the cause, portraying unions as the enemy, the outsider disrupting the ‘harmony' of the ‘American way of life' . . . Every aspect of social life was targeted and permeated schools and universities, churches, even recreational programmes. By 1954, business propaganda in public schools reached half the amount spent on textbooks."
The new "ism" was Americanism, an ideology whose distinction is its denial that it is an ideology. Recently, I saw the 1957 musical Silk Stockings, starring Fred Astaire and Cyd Charisse. Between the scenes of wonderful dancing to a score by Cole Porter was a series of loyalty statements that the colonel in Vietnam might well have written. I had forgotten how crude and pervasive the propaganda was; the Soviets could never compete. An oath of loyalty to all things American became an ideological commitment to the leviathan of business: from the business of armaments and war (which consumes 42 cents in every tax dollar today) to the business of food, known as "agripower" (which receives $157bn a year in government subsidies).
Barack Obama is the embodiment of the "ism". From his early political days, Obama's unerring theme has been not "change", the slogan of his presidential campaign, but America's right to rule and order the world. Of the United States, he says, "we lead the world in battling immediate evils and promoting the ultimate good . . . We must lead by building a 21st-century military to ensure the security of our people and advance the security of all people." And: "At moments of great peril in the past century our leaders ensured that America, by deed and by example, led and lifted the world, that we stood and fought for the freedoms sought by billions of people beyond their borders."
Since 1945, by deed and by example, the US has overthrown 50 governments, including democracies, crushed some 30 liberation movements and supported tyrannies from Egypt to Guatemala (see William Blum's histories). Bombing is apple pie. Having stacked his government with warmongers, Wall Street cronies and polluters from the Bush and Clinton eras, the 45th president is merely upholding tradition. The hearts and minds farce I witnessed in Vietnam is today repeated in villages in Afghanistan and, by proxy, Pakistan, which are Obama's wars.
In his acceptance speech for the 2005 Nobel Prize for Literature, Harold Pinter noted that "everyone knew that terrible crimes had been committed by the Soviet Union in the postwar period, but "US crimes in the same period have been only superficially recorded, let alone documented, let alone acknowledged, let alone recognised as crimes at all". It is as if "It never happened. Nothing ever happened. Even while it was happening, it wasn't happening . . . You have to hand it to America . . . masquerading as a force for universal good. It's a brilliant, even witty, highly successful act of hypnosis."
As Obama has sent drones to kill (since January) some 700 civilians, distinguished liberals have rejoiced that America is once again a "nation of moral ideals", as Paul Krugman wrote in the New York Times. In Britain, the elite has long seen in exceptional America an enduring place for British "influence", albeit as servitor or puppet. The pop historian Tristram Hunt says America under Obama is a land "where miracles happen". Justin Webb, until recently the BBC's man in Washington, refers adoringly, rather like the colonel in Vietnam, to the "city on the hill".
Behind this façade of "intensification of feeling and degradation of significance" (Walter Lippmann), ordinary Americans are stirring perhaps as never before, as if abandoning the deity of the "American Dream" that prosperity is a guarantee with hard work and thrift. Millions of angry emails from ordinary people have flooded Washington, expressing an outrage that the novelty of Obama has not calmed. On the contrary, those whose jobs have vanished and whose homes are repossessed see the new president rewarding crooked banks and an obese military, essentially protecting George W Bush's turf.
My guess is that a populism will emerge in the next few years, igniting a powerful force that lies beneath America's surface and which has a proud past. It cannot be predicted which way it will go. However, from such an authentic grass-roots Americanism came women's suffrage, the eight-hour day, graduated income tax and public ownership. In the late 19th century, the populists were betrayed by leaders who urged them to compromise and merge with the Democratic Party. In the Obama era, the familiarity of this resonates.
What is most extraordinary about the United States today is the rejection and defiance, in so many attitudes, of the all-pervasive historical and contemporary propaganda of the "invisible government". Credible polls have long confirmed that more than two-thirds of Americans hold progressive views. A majority want the government to care for those who cannot care for themselves. They would pay higher taxes to guarantee health care for everyone. They want complete nuclear disarmament; 72 per cent want the US to end its colonial wars; and so on. They are informed, subversive, even "anti-American".
I once asked a friend, the great American war correspondent and humanitarian Martha Gellhorn, to explain the term to me. "I'll tell you what ‘anti-American' is," she said. "It's what governments and their vested interests call those who honour America by objecting to war and the theft of resources and believing in all of humanity.
"There are millions of these anti-Americans in the United States. They are ordinary people who belong to no elite and who judge their government in moral terms, though they would call it common decency. They are not vain. They are the people with a wakeful conscience, the best of America's citizens. They can be counted on. They were in the South with the civil rights movement, ending slavery. They were in the streets, demanding an end to the wars in Asia. Sure, they disappear from view now and then, but they are like seeds beneath the snow. I would say they are truly exceptional."
Saturday, July 11, 2009
SC93-10
http://carolynbaker.net/site/content/view/1185/1/
THE CONTINUED FLEECING OF AMERICA BY FINANCIAL ELITES
.........one has to wonder about the morality of numerous U.S. government and business leaders, especially the ones who routinely put their own limitless self-gain above the needs of others. What sorts of people are these? Just how did their families and society in general fail them in matters of conscience?
In considering the answers, one often winds up incredulous and outraged by their actions. After all, what kinds of individuals lie about their underlying motives while they systematically destroy the people, the culture and the country of Iraq primarily in order to wrestle control of their oil for companies that favor American interests? What sort of individuals condone torture as their nation's covert plan to help ensure that domination of the Middle East can be better assured? What sort of individuals publicly talk of service to society and change in which we can all believe while expanding resource wars in order to secure geo-political supremacy over regions rich in fossil fuels at a time during which scientific evidence inarguable points to the need to direct national focus on benign forms of energy?
Certainly, they are aware that this redirection of plans is a necessary precondition for future generations to not face a living hell on Earth due to climate change effects. Surely they must know that they have no moral or legal right to invade other lands for coveted war spoils regardless of the degree that they seem essential to have. Do they?
It is especially worthwhile to ponder the responses to these kinds of questions as one, also, considers that these same individuals, of whom many are U.S. Congressmen, annually allocate fifty-four percent of the federal budget to military related endeavors. Simultaneously, they are mandated to hand over nineteen percent further to the ongoing payment of interest on monies currently owed to maintain their present scale of funding for armed service, bailouts and other reckless ventures.
These circumstances leave a whopping twenty-seven percent left over for ALL other U.S. programs unless, of course, further loans beyond the ongoing intended ones are taken out, i.e., to purchase Swine Flu vaccines. With these additional costs in mind, one can anticipate that legislators will continue in arrangements to borrow staggering sums of money to sustain their disastrous spending patterns, as is mentioned in "The U.S. Federal Budget Pipeline: Where Do The Dollars Drain?" All the while that individual States, like California, and individuals continue to be devastated by the indirect consequences.
In a similar vein, one questions about the morality of people who keep supporting big business practices and amassing wealth for themselves [1] like modern duplicates of mad King Midas while an increasing number of their fellow Americans wind up jobless and homeless. Meanwhile, a backdrop like this leads Ramsey Clark to suggest, "But we're not a democracy. It’s a terrible misunderstanding and a slander to the idea of democracy to call us that. In reality, we're a plutocracy: a government by the wealthy."
Accordingly, U.S. employment positions continue to transfer to offshore sites to bolster a plan for maximum profits for the already grossly enriched at the expense of the populace at large. Analogously for companies on U.S. soil, cutbacks and closures have a similarly deleterious effect in terms of under and unemployment.
In relation, the public, obviously, cannot make lots of purchases while an inadequate supply of money is coming into households during which time store shelves are overstocked due to past practices wherein the market became saturated with far too many items for a wide variety of products. Consequently, the manufacture of goods grinds to an almost complete halt and the economy continues to tumble.
Yet no Works Progress Administration (WPA) and extended Civilian Conservation Corps (CCC) programs are put in place to make up for the financial deficits that average people are experiencing even though the move could, indirectly, jumpstart spending. Further, the groups that stand to fabulously benefit from the status quo remaining as is continue to do so even as the masses flounder...........
..........Meanwhile, the health-care industry lobbyists are trying their utmost to guarantee that there are no major shifts in US medical policies. Why would they press for alternatives when it has proven to be such a boon for them and many legislators to keep everything the same? Therefore, they throw almost a million and a half dollars per day at the effort to shape Congressional opinion while sometimes bribing or threatening government officials in the process. [4]
Concurrently, let's not forget that these tempted lawmakers are the very same ones who vote on war and black ops budgets for which, if they make certain choices, they'll be lavishly compensated with money for their reelection campaigns, as well as receive stock option tips and other perks, such as highly lucrative job offers after they leave public office. All considered, what a boon such alluring plans en toto have been!
For example, "members of Congress invested nearly 196 million dollars of their own money in companies that receive hundreds of millions of dollars a day from Pentagon."[5] At the same time, the heads of companies that receive favorable legislation pertaining to subsidies and bailout cash do not make out poorly either. As such, the salaries for directors of certain organizations and their bonus payments are considerable and, for the ones who don't get direct funding, they still make out well due to favorable deals made relative to resources (i.e., the petrol, minerals, metals, etc.) indirectly obtained through U.S. military assaults.
As such, they can do well for themselves even when they do not make out as well as the banking/oil Rockefeller family or the Rothschilds, with their respective holdings equaling roughly (US) $11 trillion and (U.S.) $100 trillion according to Gaylon Ross Sr., author of Who's Who of the Global Elite. [6] Correspondingly, Bank of America chief Ken Lewis made a mere $24.8 million in 2007 while performance bonuses were lavishly paid out in this banksters' paradise, one managed so poorly that it has taken in at least $25 billion in bailout funds. [7]
This sort of happening being more the norm than not, it is apparent that no importance has been attached to Abraham Lincoln's counsel: "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country; corporations have been enthroned, an era of corruption in High Places will follow, and the Money Power of the Country will endeavor to prolong its reign by working upon the prejudices of the People, until the wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war."
With the beefed up surveillance of private citizens by operatives in assorted government agencies and the above sorts of disasters, some researchers are understandably questioning whether the U.S. is slipping towards a permanent plutocratic, oligarchical and/or fascist state. If so for the latter condition, the opinions of Naomi Wolf and Laurence Britt, as well as this following description from the Wikipedia anti-capitalism section, [8] might have an uncomfortable ring of familiarity.
"...Fascism protected the land-owning elites and is regarded as a reaction against the rising power of the working class...
"Adolf Hitler stated in Mein Kampf that 'the attitude of the State towards capital would be comparatively simple and clear. Its only object would be to make sure that capital remained subservient to the State'. Hitler made a clear distinction between 'capital which is purely the product of creative labour and ... capital which is exclusively the result of financial speculation.'...
"Marxists argue that fascism is a form of state capitalism that emerges when laissez-faire capitalism is in crisis and in need of rescue by government intervention. Fascists have operated from a Social Darwinist view of human relations. Their aim has been to promote 'superior' individuals and weed out the weak. In terms of economic practice, this meant promoting the interests of successful businessmen while destroying trade unions and other organizations of the working class. Lawrence Britt suggests that protection of corporate power is an essential part of fascism. Historian Gaetano Salvemini argued in 1936 that fascism makes taxpayers responsible to private enterprise, because 'the State pays for the blunders of private enterprise... Profit is private and individual. Loss is public and social.'
"Classical liberal economist Ludwig von Mises argued that fascism was collectivist and anti-capitalistic. According to Mises, fascism maintained an illusion of respecting private property, since individuals could not use their property how they wished because the government frequently enacted regulations (on behalf of government allies in the business sector) that were not in line with the functioning of a free market.
"Historian Robert Paxton contends that fascists' anti-capitalism was highly selective; the socialism that the fascists wanted was National Socialism, which denied only foreign or enemy property rights (including that of internal enemies). They did, however, cherish national producers."
One might add that they particularly cherish fiscal producers, wizards that magically pull a seemingly endless stream of money out of the air for their favorite recipients. As H. L. Birum, Sr., suggests, "The Federal Reserve Bank is nothing but a banking fraud and an unlawful crime against civilization. Why? Because they 'create' the money made out of nothing, and our Uncle Sap Government issues their 'Federal Reserve Notes' and stamps our Government approval with NO obligation whatever from these Federal Reserve Banks, Individual Banks or National Banks, etc."
Moreover, one can easily supplement his views with those of John Adams: "Banks have done more injury to the religion, morality, tranquility, prosperity, and even wealth of the nation than they can have done or ever will do good." (Can you imagine the comments that John Adams, Thomas Jefferson, Thomas Paine, Benjamin Franklin and other founders of the nation would make were they to observe a number of contemporary Congressional activities in relation to banks and other organizations?)
At the same time, it's not all that hard to conclude that, for some time, U.S. government policy has been one typically called "last man standing." In other words, it is to throw the majority of federal funds into an effort to commandeer the last amounts of nonrenewable (and, in some cases, renewable, although depleting) critical material goods (through global resource battles, programs like NAFTA and so forth) with a sort of survival of the fittest (a modernized Social Darwinian derivative) model in mind. As Henry Kissinger quipped, "Military men are dumb, stupid animals to be used as pawns for foreign policy" and "control oil and you control nations; control food and you control the people." In other words, let's use the troops to enforce hegemony everywhere!
With such a Machiavellian frame of reference for expert guidance, the majority of US federal funds, of course, will continue to be slated for such endeavors as broadening wars, interest payments on further borrowed money and ongoing bailouts. In a similar vein, the fittest do not include the looted American middle and poor classes. They are immaterial and, as such, are mostly ignored or, if in terribly dire straits, pushed out of homes to live in city streets (90,000 in L.A. alone), tent cities (updated Hoovervilles) and car parks if they are fortunate enough to still have a vehicle in which to live after their domiciles are foreclosed and their jobs are removed. (Meanwhile, such loss is simply another program to enhance the monetary advancement by the elites -- the ones fittest to survive in the ever worsening environmental and financial downturns brought on by draconian economic growth policies.)
In the end, one has to ask whether practices that are aimed at government and business leaders mutually servicing each other represent the best interests of Americans and other peoples of the world. Assuming that this is not the case, great accountability must be demanded of these so-called leaders.
If they cannot be made to conform to reasonable moral codes of conduct, the USA will surely become a terrible place to be a citizen for the majority of people who find that, while conditions in their personal lives deteriorate, the wealthy elites make out just fine due to self-enriching agendas, like deficient public health-care programs, that put everyone else in jeopardy. Put another way, "we can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." - Justice Louis D. Brandeis..........
And regarding the last point made, we truly have the later, and not the former. America, the " shinning city on the hill " is in truth just a gigantic circus of corruption on so many levels and things in this regard are not getting better, they are getting worse. Abraham Lincoln expressed so succintly and accurately what he feared we would devolve into, and now we have gone down this dire path he predicted. Empires come and empires go, and the US will be no exception to this truth.
THE CONTINUED FLEECING OF AMERICA BY FINANCIAL ELITES
.........one has to wonder about the morality of numerous U.S. government and business leaders, especially the ones who routinely put their own limitless self-gain above the needs of others. What sorts of people are these? Just how did their families and society in general fail them in matters of conscience?
In considering the answers, one often winds up incredulous and outraged by their actions. After all, what kinds of individuals lie about their underlying motives while they systematically destroy the people, the culture and the country of Iraq primarily in order to wrestle control of their oil for companies that favor American interests? What sort of individuals condone torture as their nation's covert plan to help ensure that domination of the Middle East can be better assured? What sort of individuals publicly talk of service to society and change in which we can all believe while expanding resource wars in order to secure geo-political supremacy over regions rich in fossil fuels at a time during which scientific evidence inarguable points to the need to direct national focus on benign forms of energy?
Certainly, they are aware that this redirection of plans is a necessary precondition for future generations to not face a living hell on Earth due to climate change effects. Surely they must know that they have no moral or legal right to invade other lands for coveted war spoils regardless of the degree that they seem essential to have. Do they?
It is especially worthwhile to ponder the responses to these kinds of questions as one, also, considers that these same individuals, of whom many are U.S. Congressmen, annually allocate fifty-four percent of the federal budget to military related endeavors. Simultaneously, they are mandated to hand over nineteen percent further to the ongoing payment of interest on monies currently owed to maintain their present scale of funding for armed service, bailouts and other reckless ventures.
These circumstances leave a whopping twenty-seven percent left over for ALL other U.S. programs unless, of course, further loans beyond the ongoing intended ones are taken out, i.e., to purchase Swine Flu vaccines. With these additional costs in mind, one can anticipate that legislators will continue in arrangements to borrow staggering sums of money to sustain their disastrous spending patterns, as is mentioned in "The U.S. Federal Budget Pipeline: Where Do The Dollars Drain?" All the while that individual States, like California, and individuals continue to be devastated by the indirect consequences.
In a similar vein, one questions about the morality of people who keep supporting big business practices and amassing wealth for themselves [1] like modern duplicates of mad King Midas while an increasing number of their fellow Americans wind up jobless and homeless. Meanwhile, a backdrop like this leads Ramsey Clark to suggest, "But we're not a democracy. It’s a terrible misunderstanding and a slander to the idea of democracy to call us that. In reality, we're a plutocracy: a government by the wealthy."
Accordingly, U.S. employment positions continue to transfer to offshore sites to bolster a plan for maximum profits for the already grossly enriched at the expense of the populace at large. Analogously for companies on U.S. soil, cutbacks and closures have a similarly deleterious effect in terms of under and unemployment.
In relation, the public, obviously, cannot make lots of purchases while an inadequate supply of money is coming into households during which time store shelves are overstocked due to past practices wherein the market became saturated with far too many items for a wide variety of products. Consequently, the manufacture of goods grinds to an almost complete halt and the economy continues to tumble.
Yet no Works Progress Administration (WPA) and extended Civilian Conservation Corps (CCC) programs are put in place to make up for the financial deficits that average people are experiencing even though the move could, indirectly, jumpstart spending. Further, the groups that stand to fabulously benefit from the status quo remaining as is continue to do so even as the masses flounder...........
..........Meanwhile, the health-care industry lobbyists are trying their utmost to guarantee that there are no major shifts in US medical policies. Why would they press for alternatives when it has proven to be such a boon for them and many legislators to keep everything the same? Therefore, they throw almost a million and a half dollars per day at the effort to shape Congressional opinion while sometimes bribing or threatening government officials in the process. [4]
Concurrently, let's not forget that these tempted lawmakers are the very same ones who vote on war and black ops budgets for which, if they make certain choices, they'll be lavishly compensated with money for their reelection campaigns, as well as receive stock option tips and other perks, such as highly lucrative job offers after they leave public office. All considered, what a boon such alluring plans en toto have been!
For example, "members of Congress invested nearly 196 million dollars of their own money in companies that receive hundreds of millions of dollars a day from Pentagon."[5] At the same time, the heads of companies that receive favorable legislation pertaining to subsidies and bailout cash do not make out poorly either. As such, the salaries for directors of certain organizations and their bonus payments are considerable and, for the ones who don't get direct funding, they still make out well due to favorable deals made relative to resources (i.e., the petrol, minerals, metals, etc.) indirectly obtained through U.S. military assaults.
As such, they can do well for themselves even when they do not make out as well as the banking/oil Rockefeller family or the Rothschilds, with their respective holdings equaling roughly (US) $11 trillion and (U.S.) $100 trillion according to Gaylon Ross Sr., author of Who's Who of the Global Elite. [6] Correspondingly, Bank of America chief Ken Lewis made a mere $24.8 million in 2007 while performance bonuses were lavishly paid out in this banksters' paradise, one managed so poorly that it has taken in at least $25 billion in bailout funds. [7]
This sort of happening being more the norm than not, it is apparent that no importance has been attached to Abraham Lincoln's counsel: "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country; corporations have been enthroned, an era of corruption in High Places will follow, and the Money Power of the Country will endeavor to prolong its reign by working upon the prejudices of the People, until the wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war."
With the beefed up surveillance of private citizens by operatives in assorted government agencies and the above sorts of disasters, some researchers are understandably questioning whether the U.S. is slipping towards a permanent plutocratic, oligarchical and/or fascist state. If so for the latter condition, the opinions of Naomi Wolf and Laurence Britt, as well as this following description from the Wikipedia anti-capitalism section, [8] might have an uncomfortable ring of familiarity.
"...Fascism protected the land-owning elites and is regarded as a reaction against the rising power of the working class...
"Adolf Hitler stated in Mein Kampf that 'the attitude of the State towards capital would be comparatively simple and clear. Its only object would be to make sure that capital remained subservient to the State'. Hitler made a clear distinction between 'capital which is purely the product of creative labour and ... capital which is exclusively the result of financial speculation.'...
"Marxists argue that fascism is a form of state capitalism that emerges when laissez-faire capitalism is in crisis and in need of rescue by government intervention. Fascists have operated from a Social Darwinist view of human relations. Their aim has been to promote 'superior' individuals and weed out the weak. In terms of economic practice, this meant promoting the interests of successful businessmen while destroying trade unions and other organizations of the working class. Lawrence Britt suggests that protection of corporate power is an essential part of fascism. Historian Gaetano Salvemini argued in 1936 that fascism makes taxpayers responsible to private enterprise, because 'the State pays for the blunders of private enterprise... Profit is private and individual. Loss is public and social.'
"Classical liberal economist Ludwig von Mises argued that fascism was collectivist and anti-capitalistic. According to Mises, fascism maintained an illusion of respecting private property, since individuals could not use their property how they wished because the government frequently enacted regulations (on behalf of government allies in the business sector) that were not in line with the functioning of a free market.
"Historian Robert Paxton contends that fascists' anti-capitalism was highly selective; the socialism that the fascists wanted was National Socialism, which denied only foreign or enemy property rights (including that of internal enemies). They did, however, cherish national producers."
One might add that they particularly cherish fiscal producers, wizards that magically pull a seemingly endless stream of money out of the air for their favorite recipients. As H. L. Birum, Sr., suggests, "The Federal Reserve Bank is nothing but a banking fraud and an unlawful crime against civilization. Why? Because they 'create' the money made out of nothing, and our Uncle Sap Government issues their 'Federal Reserve Notes' and stamps our Government approval with NO obligation whatever from these Federal Reserve Banks, Individual Banks or National Banks, etc."
Moreover, one can easily supplement his views with those of John Adams: "Banks have done more injury to the religion, morality, tranquility, prosperity, and even wealth of the nation than they can have done or ever will do good." (Can you imagine the comments that John Adams, Thomas Jefferson, Thomas Paine, Benjamin Franklin and other founders of the nation would make were they to observe a number of contemporary Congressional activities in relation to banks and other organizations?)
At the same time, it's not all that hard to conclude that, for some time, U.S. government policy has been one typically called "last man standing." In other words, it is to throw the majority of federal funds into an effort to commandeer the last amounts of nonrenewable (and, in some cases, renewable, although depleting) critical material goods (through global resource battles, programs like NAFTA and so forth) with a sort of survival of the fittest (a modernized Social Darwinian derivative) model in mind. As Henry Kissinger quipped, "Military men are dumb, stupid animals to be used as pawns for foreign policy" and "control oil and you control nations; control food and you control the people." In other words, let's use the troops to enforce hegemony everywhere!
With such a Machiavellian frame of reference for expert guidance, the majority of US federal funds, of course, will continue to be slated for such endeavors as broadening wars, interest payments on further borrowed money and ongoing bailouts. In a similar vein, the fittest do not include the looted American middle and poor classes. They are immaterial and, as such, are mostly ignored or, if in terribly dire straits, pushed out of homes to live in city streets (90,000 in L.A. alone), tent cities (updated Hoovervilles) and car parks if they are fortunate enough to still have a vehicle in which to live after their domiciles are foreclosed and their jobs are removed. (Meanwhile, such loss is simply another program to enhance the monetary advancement by the elites -- the ones fittest to survive in the ever worsening environmental and financial downturns brought on by draconian economic growth policies.)
In the end, one has to ask whether practices that are aimed at government and business leaders mutually servicing each other represent the best interests of Americans and other peoples of the world. Assuming that this is not the case, great accountability must be demanded of these so-called leaders.
If they cannot be made to conform to reasonable moral codes of conduct, the USA will surely become a terrible place to be a citizen for the majority of people who find that, while conditions in their personal lives deteriorate, the wealthy elites make out just fine due to self-enriching agendas, like deficient public health-care programs, that put everyone else in jeopardy. Put another way, "we can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." - Justice Louis D. Brandeis..........
And regarding the last point made, we truly have the later, and not the former. America, the " shinning city on the hill " is in truth just a gigantic circus of corruption on so many levels and things in this regard are not getting better, they are getting worse. Abraham Lincoln expressed so succintly and accurately what he feared we would devolve into, and now we have gone down this dire path he predicted. Empires come and empires go, and the US will be no exception to this truth.
Friday, July 10, 2009
SC93-9
http://www.nytimes.com/2009/06/29/opinion/29krugman.html?_r=1
Betraying the Planet
So the House passed the Waxman-Markey climate-change bill. In political terms, it was a remarkable achievement.
But 212 representatives voted no. A handful of these no votes came from representatives who considered the bill too weak, but most rejected the bill because they rejected the whole notion that we have to do something about greenhouse gases.
And as I watched the deniers make their arguments, I couldn’t help thinking that I was watching a form of treason — treason against the planet.
To fully appreciate the irresponsibility and immorality of climate-change denial, you need to know about the grim turn taken by the latest climate research.
The fact is that the planet is changing faster than even pessimists expected: ice caps are shrinking, arid zones spreading, at a terrifying rate. And according to a number of recent studies, catastrophe — a rise in temperature so large as to be almost unthinkable — can no longer be considered a mere possibility. It is, instead, the most likely outcome if we continue along our present course.
Thus researchers at M.I.T., who were previously predicting a temperature rise of a little more than 4 degrees by the end of this century, are now predicting a rise of more than 9 degrees. Why? Global greenhouse gas emissions are rising faster than expected; some mitigating factors, like absorption of carbon dioxide by the oceans, are turning out to be weaker than hoped; and there’s growing evidence that climate change is self-reinforcing — that, for example, rising temperatures will cause some arctic tundra to defrost, releasing even more carbon dioxide into the atmosphere.
Temperature increases on the scale predicted by the M.I.T. researchers and others would create huge disruptions in our lives and our economy. As a recent authoritative U.S. government report points out, by the end of this century New Hampshire may well have the climate of North Carolina today, Illinois may have the climate of East Texas, and across the country extreme, deadly heat waves — the kind that traditionally occur only once in a generation — may become annual or biannual events.
In other words, we’re facing a clear and present danger to our way of life, perhaps even to civilization itself. How can anyone justify failing to act?
Well, sometimes even the most authoritative analyses get things wrong. And if dissenting opinion-makers and politicians based their dissent on hard work and hard thinking — if they had carefully studied the issue, consulted with experts and concluded that the overwhelming scientific consensus was misguided — they could at least claim to be acting responsibly.
But if you watched the debate on Friday, you didn’t see people who’ve thought hard about a crucial issue, and are trying to do the right thing. What you saw, instead, were people who show no sign of being interested in the truth. They don’t like the political and policy implications of climate change, so they’ve decided not to believe in it — and they’ll grab any argument, no matter how disreputable, that feeds their denial.
Indeed, if there was a defining moment in Friday’s debate, it was the declaration by Representative Paul Broun of Georgia that climate change is nothing but a “hoax” that has been “perpetrated out of the scientific community.” I’d call this a crazy conspiracy theory, but doing so would actually be unfair to crazy conspiracy theorists. After all, to believe that global warming is a hoax you have to believe in a vast cabal consisting of thousands of scientists — a cabal so powerful that it has managed to create false records on everything from global temperatures to Arctic sea ice.
Yet Mr. Broun’s declaration was met with applause.
Given this contempt for hard science, I’m almost reluctant to mention the deniers’ dishonesty on matters economic. But in addition to rejecting climate science, the opponents of the climate bill made a point of misrepresenting the results of studies of the bill’s economic impact, which all suggest that the cost will be relatively low.
Still, is it fair to call climate denial a form of treason? Isn’t it politics as usual?
Yes, it is — and that’s why it’s unforgivable.
Do you remember the days when Bush administration officials claimed that terrorism posed an “existential threat” to America, a threat in whose face normal rules no longer applied? That was hyperbole — but the existential threat from climate change is all too real.
Yet the deniers are choosing, willfully, to ignore that threat, placing future generations of Americans in grave danger, simply because it’s in their political interest to pretend that there’s nothing to worry about. If that’s not betrayal, I don’t know what is.
Betraying the Planet
So the House passed the Waxman-Markey climate-change bill. In political terms, it was a remarkable achievement.
But 212 representatives voted no. A handful of these no votes came from representatives who considered the bill too weak, but most rejected the bill because they rejected the whole notion that we have to do something about greenhouse gases.
And as I watched the deniers make their arguments, I couldn’t help thinking that I was watching a form of treason — treason against the planet.
To fully appreciate the irresponsibility and immorality of climate-change denial, you need to know about the grim turn taken by the latest climate research.
The fact is that the planet is changing faster than even pessimists expected: ice caps are shrinking, arid zones spreading, at a terrifying rate. And according to a number of recent studies, catastrophe — a rise in temperature so large as to be almost unthinkable — can no longer be considered a mere possibility. It is, instead, the most likely outcome if we continue along our present course.
Thus researchers at M.I.T., who were previously predicting a temperature rise of a little more than 4 degrees by the end of this century, are now predicting a rise of more than 9 degrees. Why? Global greenhouse gas emissions are rising faster than expected; some mitigating factors, like absorption of carbon dioxide by the oceans, are turning out to be weaker than hoped; and there’s growing evidence that climate change is self-reinforcing — that, for example, rising temperatures will cause some arctic tundra to defrost, releasing even more carbon dioxide into the atmosphere.
Temperature increases on the scale predicted by the M.I.T. researchers and others would create huge disruptions in our lives and our economy. As a recent authoritative U.S. government report points out, by the end of this century New Hampshire may well have the climate of North Carolina today, Illinois may have the climate of East Texas, and across the country extreme, deadly heat waves — the kind that traditionally occur only once in a generation — may become annual or biannual events.
In other words, we’re facing a clear and present danger to our way of life, perhaps even to civilization itself. How can anyone justify failing to act?
Well, sometimes even the most authoritative analyses get things wrong. And if dissenting opinion-makers and politicians based their dissent on hard work and hard thinking — if they had carefully studied the issue, consulted with experts and concluded that the overwhelming scientific consensus was misguided — they could at least claim to be acting responsibly.
But if you watched the debate on Friday, you didn’t see people who’ve thought hard about a crucial issue, and are trying to do the right thing. What you saw, instead, were people who show no sign of being interested in the truth. They don’t like the political and policy implications of climate change, so they’ve decided not to believe in it — and they’ll grab any argument, no matter how disreputable, that feeds their denial.
Indeed, if there was a defining moment in Friday’s debate, it was the declaration by Representative Paul Broun of Georgia that climate change is nothing but a “hoax” that has been “perpetrated out of the scientific community.” I’d call this a crazy conspiracy theory, but doing so would actually be unfair to crazy conspiracy theorists. After all, to believe that global warming is a hoax you have to believe in a vast cabal consisting of thousands of scientists — a cabal so powerful that it has managed to create false records on everything from global temperatures to Arctic sea ice.
Yet Mr. Broun’s declaration was met with applause.
Given this contempt for hard science, I’m almost reluctant to mention the deniers’ dishonesty on matters economic. But in addition to rejecting climate science, the opponents of the climate bill made a point of misrepresenting the results of studies of the bill’s economic impact, which all suggest that the cost will be relatively low.
Still, is it fair to call climate denial a form of treason? Isn’t it politics as usual?
Yes, it is — and that’s why it’s unforgivable.
Do you remember the days when Bush administration officials claimed that terrorism posed an “existential threat” to America, a threat in whose face normal rules no longer applied? That was hyperbole — but the existential threat from climate change is all too real.
Yet the deniers are choosing, willfully, to ignore that threat, placing future generations of Americans in grave danger, simply because it’s in their political interest to pretend that there’s nothing to worry about. If that’s not betrayal, I don’t know what is.
Monday, July 6, 2009
SC93-8
http://kunstler.com/blog/2009/07/the-free-and-the-dead.html#more
The Free and the Dead
I was out on a big Adirondack lake in a canoe this weekend while the American economy was dying -- but you wouldn't have known it for the fleets of giant power boats dragging children back and forth across the water on rubber tubes, and the giant camping vehicles crammed into every bare spot. How do people pay for these things, I wondered. For not a few, installment loans, no doubt -- though that still begs the question. The sheer programming of American life runs wide and deep. We are, apparently, a people born to drag children behind hundred-and-fifty horsepower two-stroke engines, so that's what we do, no matter what is really going on in the world. Alas, mindless programming is the sort of thing that kills societies. Watching the summer panorama on an Adirondack lake is like reading a history of the post World War Two decades, because almost nothing on view there now existed before 1945 and we'll be stunned to see how swiftly it all terminates. The fantastic prosperity of these postwar decades killed the wildness of these once-remote lakes. Fortunes were made -- like everywhere else in the USA -- carving up the landscape and deploying graceless houses made of cheap, fabricated materials. All the diabolical genius brought to engineering the New Jersey and Long Island suburbs was eventually turned loose on the Adirondack wilderness, with predictable results. The lakes themselves, stuffed with all those sleek plastic power boats, are like the Long Island Expressway minus the painted lanes. The American victory over manifest evil in World War Two was so total that there was no one else left on earth to compete with in making and selling useful articles, at least for a while. And it produced a middle class so well-paid that it could express itself in a vast spewage of plastic and leisure across the land. The human race will look back on this society with wonder and nausea for whatever remains of its time on Earth. For at least twenty years, though, this way of life has been running on fumes, inertia, and promissory notes. The amazing thing is that these life-extension strategies worked, especially the past ten years when there was really nothing left besides a Ponzi structure of interlocked swindles and rackets. When the time comes when we do look back to understand what went wrong, I think we'll see that the Woodstock generation went off the rails in 1980, with the election of the actor, Ronald Reagan, who really established the idea that a society could benefit hugely just by lying to itself, or simply pretending. It wasn't "morning in America," of course. It was more like eleven-thirty at night, and the rest of the world had eaten our breakfast, lunch, and dinner, and we decided that inflating our national self-esteem was more important than paying attention to reality. That was when we became a something-for-nothing society -- and, incidentally, it was also the take-off point for legalized gambling all over America (an "industry" based on the worship of unearned riches). And that was, coincidentally, the moment when we became a nation of dupes, grifters, marks, and suckers. Now, when I look around that Adirondack lake, I can easily imagine the time -- not far off -- when the motors cease to ring, and the big, white plastic ridiculous power boats vanish from the scene, and the houses along the shore de-laminate, or are plundered for their materials, and the sites they occupy return to nature, and the aroma of roasting hot dogs no longer wafts on the summer air, and the pastures and orchards run back from the shoreline up the slopes, with people laboring earnestly in them -- rather than dragging children on plastic tubes around the water behind a boat that gets four miles to the gallon of gasoline. For those still capable of paying attention to our national predicament, the questions are: what happens from here... and how does it happen? Over the last ten days, somebody shot the "Green Shoots" narrative in the head. There is no way the American economy can re-expand. This is a debt deflation like unto nothing the world has ever seen before. We've entered the really painful zone of the "work-out" where insolvency can no longer be denied. Things will be heard crashing every day -- enterprises, households, assets, institutions, prospects, deals. No amount of simulus, first, second, or beyond, will avail to stop this process. President Obama had better turn his efforts from pretending to re-start the revolving credit rackets to overseeing the comprehensive re-simplifying of American life. I think he has a few weeks to turn his rhetoric around before the political mischief begins for real, and the aggrieved classes start shooting things up and burning things down. These classes really do need something to hope for, and something to work at, and something to occupy their attention besides their grief over the massive losses in their lives. But none of that energy will be focused beneficially unless they hear the truth... that there really is no going back to what was before. It's also vitally important to commence public hearings and official investigations of those who committed real crimes and malfeasances. Bernie Madoff has been salted away for two and a half lifetimes, but Henry Paulson is still at large after overseeing the creation of the biggest heap of fraudulent securities the world has ever known -- and then betting against them in the swaps market, in effect shorting his own swindle -- not to mention his misdeeds at the US Deparftment of the Treasury. Why are those other Wall Street smoothies still enjoying their Hamptons villas while the foreclosed set up tents in the Sacramento Delta? Why are the government officials who failed so miserably at regulation still enjoying their salaries, perqs, and pensions while those not employed by a bloated government struggle to stay alive another week. And how many more weeks will go by before Michael Jackson is buried in the ground?
The Free and the Dead
I was out on a big Adirondack lake in a canoe this weekend while the American economy was dying -- but you wouldn't have known it for the fleets of giant power boats dragging children back and forth across the water on rubber tubes, and the giant camping vehicles crammed into every bare spot. How do people pay for these things, I wondered. For not a few, installment loans, no doubt -- though that still begs the question. The sheer programming of American life runs wide and deep. We are, apparently, a people born to drag children behind hundred-and-fifty horsepower two-stroke engines, so that's what we do, no matter what is really going on in the world. Alas, mindless programming is the sort of thing that kills societies. Watching the summer panorama on an Adirondack lake is like reading a history of the post World War Two decades, because almost nothing on view there now existed before 1945 and we'll be stunned to see how swiftly it all terminates. The fantastic prosperity of these postwar decades killed the wildness of these once-remote lakes. Fortunes were made -- like everywhere else in the USA -- carving up the landscape and deploying graceless houses made of cheap, fabricated materials. All the diabolical genius brought to engineering the New Jersey and Long Island suburbs was eventually turned loose on the Adirondack wilderness, with predictable results. The lakes themselves, stuffed with all those sleek plastic power boats, are like the Long Island Expressway minus the painted lanes. The American victory over manifest evil in World War Two was so total that there was no one else left on earth to compete with in making and selling useful articles, at least for a while. And it produced a middle class so well-paid that it could express itself in a vast spewage of plastic and leisure across the land. The human race will look back on this society with wonder and nausea for whatever remains of its time on Earth. For at least twenty years, though, this way of life has been running on fumes, inertia, and promissory notes. The amazing thing is that these life-extension strategies worked, especially the past ten years when there was really nothing left besides a Ponzi structure of interlocked swindles and rackets. When the time comes when we do look back to understand what went wrong, I think we'll see that the Woodstock generation went off the rails in 1980, with the election of the actor, Ronald Reagan, who really established the idea that a society could benefit hugely just by lying to itself, or simply pretending. It wasn't "morning in America," of course. It was more like eleven-thirty at night, and the rest of the world had eaten our breakfast, lunch, and dinner, and we decided that inflating our national self-esteem was more important than paying attention to reality. That was when we became a something-for-nothing society -- and, incidentally, it was also the take-off point for legalized gambling all over America (an "industry" based on the worship of unearned riches). And that was, coincidentally, the moment when we became a nation of dupes, grifters, marks, and suckers. Now, when I look around that Adirondack lake, I can easily imagine the time -- not far off -- when the motors cease to ring, and the big, white plastic ridiculous power boats vanish from the scene, and the houses along the shore de-laminate, or are plundered for their materials, and the sites they occupy return to nature, and the aroma of roasting hot dogs no longer wafts on the summer air, and the pastures and orchards run back from the shoreline up the slopes, with people laboring earnestly in them -- rather than dragging children on plastic tubes around the water behind a boat that gets four miles to the gallon of gasoline. For those still capable of paying attention to our national predicament, the questions are: what happens from here... and how does it happen? Over the last ten days, somebody shot the "Green Shoots" narrative in the head. There is no way the American economy can re-expand. This is a debt deflation like unto nothing the world has ever seen before. We've entered the really painful zone of the "work-out" where insolvency can no longer be denied. Things will be heard crashing every day -- enterprises, households, assets, institutions, prospects, deals. No amount of simulus, first, second, or beyond, will avail to stop this process. President Obama had better turn his efforts from pretending to re-start the revolving credit rackets to overseeing the comprehensive re-simplifying of American life. I think he has a few weeks to turn his rhetoric around before the political mischief begins for real, and the aggrieved classes start shooting things up and burning things down. These classes really do need something to hope for, and something to work at, and something to occupy their attention besides their grief over the massive losses in their lives. But none of that energy will be focused beneficially unless they hear the truth... that there really is no going back to what was before. It's also vitally important to commence public hearings and official investigations of those who committed real crimes and malfeasances. Bernie Madoff has been salted away for two and a half lifetimes, but Henry Paulson is still at large after overseeing the creation of the biggest heap of fraudulent securities the world has ever known -- and then betting against them in the swaps market, in effect shorting his own swindle -- not to mention his misdeeds at the US Deparftment of the Treasury. Why are those other Wall Street smoothies still enjoying their Hamptons villas while the foreclosed set up tents in the Sacramento Delta? Why are the government officials who failed so miserably at regulation still enjoying their salaries, perqs, and pensions while those not employed by a bloated government struggle to stay alive another week. And how many more weeks will go by before Michael Jackson is buried in the ground?
Friday, July 3, 2009
SC93-7
http://thearchdruidreport.blogspot.com/
Where economics fails
.........the decline and fall of industrial civilization, that troubled and dysfunctional superstar still wobbling across the historical stage, can’t be tracked that effectively by taking in music videos or soundbite interviews. Instead, I spent the weekend reading through economics textbooks. “Thriller” is not exactly the word I’d use to describe these hefty tomes, but I’d recommend that anyone concerned with the future of our society ought to read at least one. This is not because current economic textbooks offer useful guidance to the challenges of our time. Quite the contrary; the world they describe is as imaginary as Oz, and rather less relevant to contemporary life. What makes them important is precisely that so many of the decision makers of our time treat this fantasy as reality.
Understand current economic thought and you understand most of the mistakes that are dragging industrial civilization down to ruin. The Energy Information Administration (EIA), a branch of the US government, has become infamous in the peak oil scene over the last decade or so for publishing estimates of future petroleum production that have no relationship to geological reality. Their methodology, as described in EIA publications, was simply to estimate probable increases in demand, and then to assume that increased demand would automatically be met with a corresponding increase in supply. Quite a few peak oil writers have suggested some dark conspiracy behind this blithe disregard for the limits of a finite planet, but it takes only a few minutes’ worth of reading to identify the real culprit as the standard notion of the law of supply and demand taught in every first-year economics textbook today.
According to this model of the world, the amount of any commodity available in a free market is controlled by the demand for that commodity. When consumers want more of a commodity than is available on the market, and are willing to pay more for it, the price of the commodity goes up; this provides an economic incentive for producers to produce more of the commodity, and so the amount of the commodity on the market goes up. Increased production sets an upper limit on price increases, since producers competing against one another will cut prices to gain market share, and the willingness of consumers to pay rising prices is also limited. Thus, in theory, the production and price of a commodity are set by a shifting balance between the desire of consumers to buy it and the desire of producers to make a profit from producing it.
What makes the theory so seductive is that within certain limits, and in certain circumstances, it works tolerably well. The problem creeps in when economists lose track of the existence of those limits and circumstances, and this, to a remarkable degree, is exactly what they have done. To be fair, they had good reason to do so, because during the three-hundred-year boom that created the industrial world following the successful harnessing of fossil fuels, the limits rarely applied and the circumstances were far more often present than not. Among the most important roots of the current crisis, in turn, are the hard facts that the limits have begun to come into play, and the circumstances no longer exist.
Let’s start with the obvious. Imagine that a plane full of investment bankers makes a forced landing in the Pacific close to a desert island. The island has no food, no water, and no shelter; it’s just a bare lump of rock and sand with a few salt-tolerant grasses on it. As the bankers struggle ashore from the sinking plane, the need for food, water, and shelter on that island is going to be considerable, but even if each of the bankers have a suitcase full of $134 billion dollars in bearer bonds – like those guys who were caught trying to enter Switzerland a little while back – that need is going to go unfilled, until and unless a ship arrives from somewhere else. The lesson here is simple: economics doesn’t trump physical reality.
More generally, the theoretical relationship between supply and demand functions only when supply is not constrained by factors outside the economic sphere. The constraints in question can be physical: no matter how much money you’re willing to pay for a perpetual motion machine, for instance, you can’t have one, because the laws of thermodynamics don’t take bribes. They may be political: Nazi Germany had a large demand for oil from 1943 to 1945, for example, and the Allies had plenty of oil to sell, but anyone who assumed on that basis that a deal would be cut was in for a big disappointment. They may be technical: no matter how much you spend on health care, for instance, sooner or later it’s going to fail, because nobody’s yet been able to develop an effective treatment for death. Economists have come up with various workarounds to deal with external factors of this sort, some more convincing than others.
Another set of factors that can crumple up the law of supply and demand and toss it into the wastebasket, though, has received far less attention. These are constraints that we might as well call “ecological,” and they unfold from the awkward fact that human economic activity is far less independent of the natural world than economists often try to pretend. The scale of this dependence is as rarely recognized as it is hard to overstate. One of the few attempts to quantify it, an attempt to work out the replacement costs for natural services carried out a few years back by a team headed by heretical economist Robert Costanza, came up with a midrange figure equal to around three times the gross domestic product of all human economic activity on earth.
Out of every dollar of value circulating in the world’s economy, in other words, something like 75 cents were provided by natural processes rather than human labor. What’s more, most if not all of that 75 cents of value had to be there in advance in order for the production of the other 25 cents to be possible at all. Before you can begin farming, for example, you need to have arable soil, water, and an adequate growing season, as well as more specialized natural services such as pollination. These are nonnegotiable requirements; if you don’t have them, you can’t farm. The same is true of every other kind of productive work in the human economy: nature’s contribution comes first, and generally determines how much the human economy can produce.
It’s for this reason that E.F. Schumacher, the maverick economist whose ideas are the launching pad for this series of posts, drew a hard distinction between what he called primary goods and secondary goods. Secondary goods are the goods and services provided by human labor, the ordinary subject of economic theory. Primary goods are the goods and services provided by nature, and they make the production of secondary goods possible. The difference between the two is very much like the difference between income and profit in a business: you have to have income in order to have profit, and if you neglect income while maximizing your profit, sooner or later you go bust.
A failure to distinguish between primary and secondary goods is at the root of a great deal of current economic nonsense. It’s usually possible, for example, to substitute one secondary good for another if the supply runs short or the price gets too high, and for this reason it’s a standard assumption of economics – and one of the foundations of the law of supply and demand – that consumers can meet their needs equally well with many different goods. Yet this assumption does not apply to natural goods. In the world of nature, a different rule – Liebig’s law of the minimum – applies instead: production is limited by the scarcest necessary resource. Thus if you have a farm and can’t get water for your crops, it doesn’t matter if you have excellent soil and all the other requisites of farming; you can’t grow anything.
In certain limited situations, to be sure, it’s possible to substitute one primary good for another – for instance, to use low-grade iron ores such as taconite when the high-grade ores have been exhausted. Even when this can be done, though, a law of diminishing returns always applies. You can get iron out of low-grade ore, but the extraction process is less efficient and takes much larger inputs of energy. When energy is cheap, you can ignore this – and this is exactly what happened over the course of the 20th century, as the iron industry retooled itself to use steadily lower grades of ore and steadily larger inputs of energy – but that in itself simply passes costs onto the future, since the fossil fuels that provided the energy inputs are themselves subject to depletion, and to a law of diminishing returns. One way or another, the substitution imposes additional costs without providing any additional economic benefit.
This same rule also applies to every other natural good. Consider the valuable service provided to the world’s economies by the honeybees that pollinate most nongrain food crops. If we succeed in adding the honeybee to the already long list of the world’s extinct life forms, it would doubtless be possible to replace their pollination services by other means, whether that took the form of huge pollinating machines rumbling across the fields or the simpler and probably more economical approach of migrant workers using little brushes to wipe pollen from a bag onto the stamen of every single flower. Note, though, that no farmer in his or her right mind would hire a thousand laborers with brushes instead of calling up the local beekeeper and arranging for a few hives to be left in the fields; substituting some other pollination method for bees would add a huge additional cost to farming, without yielding any additional benefit.
I’ve come to think that the unrecognized difference between secondary goods, which can be readily replaced by other goods without additional cost, and primary goods, which cannot, is among the most important forces driving our current crisis. For the last three centuries, the industrial economies of the world have been using up every primary good that can be converted into secondary goods at extravagant and steadily increasing rates. Think of any good or service provided by nature – from topsoil to oceanic fish stocks, from the pollution-absorbing capacities of rivers to the storm-buffering properties of wetlands, from breathable air and drinkable water to the mineral stocks and fossil fuel reserves that keep the entire system running – and you’ve just identified something that’s being used up rapidly by industrial societies, with no thought of the potential costs of substituting something else for it, much less of the hard fact that nothing we can possibly do can provide a substitute for some of them once they’re gone.
The mismatch between this hopelessly shortsighted approach and the unforgiving limits of nature is imposing a rising toll of substitution costs on industrial economies around the world. Of course there are other factors involved. Still, as I hope to show in a future post, the best explanation for the “stagflation” that beset economies and baffled economists in the 1970s was the unrecognized burden of substitution costs for a range of natural goods depleted or damaged during the previous decades. Equally, the economic dysfunctions that led central banks around 2002 to flood financial markets with cheap credit – a disastrous decision that ended up powering the boom and bust that landed us in the current Great Recession – were driven by mounting substitution costs for another range of natural goods that had been depleted or overused in the previous decades of prosperity. As peak oil adds a new round of substitution costs to those already in play, this same process is likely to have even more dramatic impacts on the future.
Where economics fails
.........the decline and fall of industrial civilization, that troubled and dysfunctional superstar still wobbling across the historical stage, can’t be tracked that effectively by taking in music videos or soundbite interviews. Instead, I spent the weekend reading through economics textbooks. “Thriller” is not exactly the word I’d use to describe these hefty tomes, but I’d recommend that anyone concerned with the future of our society ought to read at least one. This is not because current economic textbooks offer useful guidance to the challenges of our time. Quite the contrary; the world they describe is as imaginary as Oz, and rather less relevant to contemporary life. What makes them important is precisely that so many of the decision makers of our time treat this fantasy as reality.
Understand current economic thought and you understand most of the mistakes that are dragging industrial civilization down to ruin. The Energy Information Administration (EIA), a branch of the US government, has become infamous in the peak oil scene over the last decade or so for publishing estimates of future petroleum production that have no relationship to geological reality. Their methodology, as described in EIA publications, was simply to estimate probable increases in demand, and then to assume that increased demand would automatically be met with a corresponding increase in supply. Quite a few peak oil writers have suggested some dark conspiracy behind this blithe disregard for the limits of a finite planet, but it takes only a few minutes’ worth of reading to identify the real culprit as the standard notion of the law of supply and demand taught in every first-year economics textbook today.
According to this model of the world, the amount of any commodity available in a free market is controlled by the demand for that commodity. When consumers want more of a commodity than is available on the market, and are willing to pay more for it, the price of the commodity goes up; this provides an economic incentive for producers to produce more of the commodity, and so the amount of the commodity on the market goes up. Increased production sets an upper limit on price increases, since producers competing against one another will cut prices to gain market share, and the willingness of consumers to pay rising prices is also limited. Thus, in theory, the production and price of a commodity are set by a shifting balance between the desire of consumers to buy it and the desire of producers to make a profit from producing it.
What makes the theory so seductive is that within certain limits, and in certain circumstances, it works tolerably well. The problem creeps in when economists lose track of the existence of those limits and circumstances, and this, to a remarkable degree, is exactly what they have done. To be fair, they had good reason to do so, because during the three-hundred-year boom that created the industrial world following the successful harnessing of fossil fuels, the limits rarely applied and the circumstances were far more often present than not. Among the most important roots of the current crisis, in turn, are the hard facts that the limits have begun to come into play, and the circumstances no longer exist.
Let’s start with the obvious. Imagine that a plane full of investment bankers makes a forced landing in the Pacific close to a desert island. The island has no food, no water, and no shelter; it’s just a bare lump of rock and sand with a few salt-tolerant grasses on it. As the bankers struggle ashore from the sinking plane, the need for food, water, and shelter on that island is going to be considerable, but even if each of the bankers have a suitcase full of $134 billion dollars in bearer bonds – like those guys who were caught trying to enter Switzerland a little while back – that need is going to go unfilled, until and unless a ship arrives from somewhere else. The lesson here is simple: economics doesn’t trump physical reality.
More generally, the theoretical relationship between supply and demand functions only when supply is not constrained by factors outside the economic sphere. The constraints in question can be physical: no matter how much money you’re willing to pay for a perpetual motion machine, for instance, you can’t have one, because the laws of thermodynamics don’t take bribes. They may be political: Nazi Germany had a large demand for oil from 1943 to 1945, for example, and the Allies had plenty of oil to sell, but anyone who assumed on that basis that a deal would be cut was in for a big disappointment. They may be technical: no matter how much you spend on health care, for instance, sooner or later it’s going to fail, because nobody’s yet been able to develop an effective treatment for death. Economists have come up with various workarounds to deal with external factors of this sort, some more convincing than others.
Another set of factors that can crumple up the law of supply and demand and toss it into the wastebasket, though, has received far less attention. These are constraints that we might as well call “ecological,” and they unfold from the awkward fact that human economic activity is far less independent of the natural world than economists often try to pretend. The scale of this dependence is as rarely recognized as it is hard to overstate. One of the few attempts to quantify it, an attempt to work out the replacement costs for natural services carried out a few years back by a team headed by heretical economist Robert Costanza, came up with a midrange figure equal to around three times the gross domestic product of all human economic activity on earth.
Out of every dollar of value circulating in the world’s economy, in other words, something like 75 cents were provided by natural processes rather than human labor. What’s more, most if not all of that 75 cents of value had to be there in advance in order for the production of the other 25 cents to be possible at all. Before you can begin farming, for example, you need to have arable soil, water, and an adequate growing season, as well as more specialized natural services such as pollination. These are nonnegotiable requirements; if you don’t have them, you can’t farm. The same is true of every other kind of productive work in the human economy: nature’s contribution comes first, and generally determines how much the human economy can produce.
It’s for this reason that E.F. Schumacher, the maverick economist whose ideas are the launching pad for this series of posts, drew a hard distinction between what he called primary goods and secondary goods. Secondary goods are the goods and services provided by human labor, the ordinary subject of economic theory. Primary goods are the goods and services provided by nature, and they make the production of secondary goods possible. The difference between the two is very much like the difference between income and profit in a business: you have to have income in order to have profit, and if you neglect income while maximizing your profit, sooner or later you go bust.
A failure to distinguish between primary and secondary goods is at the root of a great deal of current economic nonsense. It’s usually possible, for example, to substitute one secondary good for another if the supply runs short or the price gets too high, and for this reason it’s a standard assumption of economics – and one of the foundations of the law of supply and demand – that consumers can meet their needs equally well with many different goods. Yet this assumption does not apply to natural goods. In the world of nature, a different rule – Liebig’s law of the minimum – applies instead: production is limited by the scarcest necessary resource. Thus if you have a farm and can’t get water for your crops, it doesn’t matter if you have excellent soil and all the other requisites of farming; you can’t grow anything.
In certain limited situations, to be sure, it’s possible to substitute one primary good for another – for instance, to use low-grade iron ores such as taconite when the high-grade ores have been exhausted. Even when this can be done, though, a law of diminishing returns always applies. You can get iron out of low-grade ore, but the extraction process is less efficient and takes much larger inputs of energy. When energy is cheap, you can ignore this – and this is exactly what happened over the course of the 20th century, as the iron industry retooled itself to use steadily lower grades of ore and steadily larger inputs of energy – but that in itself simply passes costs onto the future, since the fossil fuels that provided the energy inputs are themselves subject to depletion, and to a law of diminishing returns. One way or another, the substitution imposes additional costs without providing any additional economic benefit.
This same rule also applies to every other natural good. Consider the valuable service provided to the world’s economies by the honeybees that pollinate most nongrain food crops. If we succeed in adding the honeybee to the already long list of the world’s extinct life forms, it would doubtless be possible to replace their pollination services by other means, whether that took the form of huge pollinating machines rumbling across the fields or the simpler and probably more economical approach of migrant workers using little brushes to wipe pollen from a bag onto the stamen of every single flower. Note, though, that no farmer in his or her right mind would hire a thousand laborers with brushes instead of calling up the local beekeeper and arranging for a few hives to be left in the fields; substituting some other pollination method for bees would add a huge additional cost to farming, without yielding any additional benefit.
I’ve come to think that the unrecognized difference between secondary goods, which can be readily replaced by other goods without additional cost, and primary goods, which cannot, is among the most important forces driving our current crisis. For the last three centuries, the industrial economies of the world have been using up every primary good that can be converted into secondary goods at extravagant and steadily increasing rates. Think of any good or service provided by nature – from topsoil to oceanic fish stocks, from the pollution-absorbing capacities of rivers to the storm-buffering properties of wetlands, from breathable air and drinkable water to the mineral stocks and fossil fuel reserves that keep the entire system running – and you’ve just identified something that’s being used up rapidly by industrial societies, with no thought of the potential costs of substituting something else for it, much less of the hard fact that nothing we can possibly do can provide a substitute for some of them once they’re gone.
The mismatch between this hopelessly shortsighted approach and the unforgiving limits of nature is imposing a rising toll of substitution costs on industrial economies around the world. Of course there are other factors involved. Still, as I hope to show in a future post, the best explanation for the “stagflation” that beset economies and baffled economists in the 1970s was the unrecognized burden of substitution costs for a range of natural goods depleted or damaged during the previous decades. Equally, the economic dysfunctions that led central banks around 2002 to flood financial markets with cheap credit – a disastrous decision that ended up powering the boom and bust that landed us in the current Great Recession – were driven by mounting substitution costs for another range of natural goods that had been depleted or overused in the previous decades of prosperity. As peak oil adds a new round of substitution costs to those already in play, this same process is likely to have even more dramatic impacts on the future.
SC93-6
http://www.globalresearch.ca/index.php?context=va&aid=14178
The Great Bank Robbery: How the Federal Reserve is destroying America
..........In the Fed We Trust
It usually comes as a shock to people – especially diehard Americans who place infinite trust in their sacred Constitution – when they discover that the US dollar is not a product of the American government. That’s right, fellow consumers, that crumpled wad of dollars in your pocket is the product of the U.S. Federal Reserve, and despite the very official title, is about as “federal” as Federal Express. The reality is that the U.S. Federal Reserve is a profit-making venture just like Wal-Mart, General Motors or McDonald’s.
Yet the US Constitution clearly states (Article 1, Section 8) that one of the many functions of government is to “coin money, regulate the value thereof.” Indeed, this task was deemed so important that the Founding Fathers mentioned it ahead of the obligation to “raise and support armies.” The Constitution says absolutely nothing about outside parties being responsible for printing money or regulating interest rates.
To quote Abraham Lincoln, the 16th president of the United States, “The privilege of creating and issuing money is… the supreme prerogative of government.”
Today, a handful of blue-blooded American politicians (a very rare breed these days, it seems) are beginning to echo ol’ Abe on the very same issue.
Ron Paul, the congressman from Texas who made an unsuccessful bid for the 2008 Republican Party presidential nomination, represents a growing number of Americans who want to see the Fed severely tamed, or put out of business altogether.
“Congress created the Fed although it had no constitutional authority to do so,” Paul told his peers during a recent House investigative meeting. “We forget that those powers not explicitly granted to Congress by the Constitution are inherently denied to the Congress and thus the authority to establish a central bank was never given.
“Congress… has essentially given up its oversight responsibilities over the Fed: there are no true audits; Congress knows nothing of the conversations, the plans, and the action-taking in concert with other central banks. We get less and less information regarding the money supply each year,” Paul continued.
Incidentally, but certainly not insignificantly, Paul, despite his huge grassroots popularity, was deliberately snubbed by the American media on numerous occasions, including during a primetime debate on Fox News.
“Despite his $20 million and 10% showing in new Hampshire polls, Fox News excluded Paul from its Sunday night republican debate,” wrote Andrew Malcolm in his Los Angeles blog. “So Paul gets 10% in Iowa and gets excluded, but Rudy (Giuliani) gets 4% and sits on the left end of the Fox Box desk. Hmmm.” (To see why CNN probably won’t be hosting another ‘College Week’ political program in the near future, click here ).
How does the US media justify the outright snub of a proven politician (Paul has served 10 consecutive terms in the House of Representatives)? The answer is simple: Ron Paul is one of the few men who poses a threat to the powers that be: The U.S. Federal Reserve System.
Top of the PyramidIt is no secret that the power to print money and set interest rates constitutes the greatest power of any government.
“Let me issue and control a nation’s money,” commented international banker Amschel Rothschild, “and I care not who makes the laws.”
Henry Kissinger reduced the almighty powers of the Federal Reserve to one line: “Who controls money controls the world.”
Former chairman of the Federal Reserve Alan Greenspan, who served for 18+ years in his position, was asked by political talk show host Jim Lehrer: “What should be the proper relationship between a chairman of the Fed and the president of the United States?”
“Well, first of all, the Federal Reserve is an independent agency, and that means basically that there is no other agency of government (including the executive office) which can overrule actions that we take,” Greenspan responded matter-of-factly. “So long as that is in place… then, what the relationships are don’t frankly matter.”
In light of the above statements, it is safe to say that it is not US Commander-in-Chief Barack Obama who holds the reigns of real power in America, but rather Ben Bernanke, the chairman of the Fed.
Indeed, last December’s Newsweek magazine proudly announced that Bernanke was the “fourth most powerful person in the world,” behind Barack Obama, Hu Jintao and Nicolas Sarkozy, but ahead of Gordon Brown, Angela Merkel and Vladimir Putin (fourth, fifth and sixth place in the Newsweek power list went to central bankers, Bernanke, Jean-Claude Trichet (EU) and Masaaki Shirakawa (Japan), as opposed to national leaders)!
But there is another infallible maxim that also dictates our political life. “Power corrupts,” said Lord Acton, “but absolute power corrupts absolutely.”
So guess who is in the hot chair today for (possibly) corrupting his absolute power? Yes, that’s right, Mr. Ben Bernanke, who appeared last week before the House Oversight and Reform committee to explain some irregularities in his office.
At issue was the question of the Central Bank’s involvement in Bank of America’s controversial acquisition of Merrill Lynch.
Shortly after the US housing markets tanked, Bank of America moved to acquire Merrill Lynch. However, once it became known (at least in financial circles) that the investment bank was suffering major losses, Bank of America CEO Kenneth Lewis balked on the merger. What happened next is the center of the congressional investigation.
US lawmakers, armed with email correspondences taken from the Central Bank, argue that Bernanke overstepped his already-awesome authority by working behind the scenes to ensure that Lewis went ahead with the shotgun wedding.
In one email, it appears that Bernanke threatened that the Federal Reserve would replace Bank of America’s management if Lewis decided to pull out of his planned acquisition of Merrill Lynch, or seek government aid to clinch the deal. Forcing bank mergers through outright coercion was never intended to be the function of the Fed. Bernanke, of course, denies any wrongdoing.
“I believe that the Federal Reserve acted with the highest integrity throughout its discussions with Bank of America regarding that company’s acquisition of Merrill Lynch,” Bernanke told the committee members, while reclaiming the moral high ground by arguing that the Fed’s actions “averted a major financial crisis.”
Nevertheless, US lawmakers are swirling around Bernanke and the Fed like sharks that sense blood.
Congressman Dennis Kucinich, D-OH, criticized Bernanke for failing to provide information about Merrill Lynch’s huge losses in November so that shareholders could vote on the transaction.
“If the Fed knew that there were losses before the government deal took place, why didn’t it provide information to the SEC (Securities and Exchange Committee) so that shareholders were informed?” Kucinich asked.
Bank of America closed the deal with Merrill Lynch on Jan. 1 after the US government agreed to a $138 billion aid package to help bank of America complete the acquisition. The closed-door deal cost American taxpayers a cool $20 billion dollars. Meanwhile, the House investigation into the Fed actions will continue for weeks.
US Department of UsuryBesides having lost the power to regulate its own currency, the United States must also pay interest on the dollars it borrows. Given that the current bailout (and buy-in) of the American economy is in the ballpark of 9 trillion dollars it will take incalculable generations to pay back this monstrous bill.
“Henry Ford thinks its stupid and so do I, that for the loan of its own money the United States should be compelled to pay… interest,” complained the famous American inventor, Thomas A. Edison. “Why must we pay interest to money-brokers for the use of our own money!”
Given the trillions of dollars that the Federal Reserve has pumped into the economy to jumpstart consumer spending (indeed, Capitalism itself), many generations of Americans will be struggling financially as the United States goes from creditor nation to debtor nation practically overnight. Yet somehow US President Barack Obama still promises to create a long overdue national healthcare plan.
Much of the present financial stress began just after 9/11, some economists argue, when George W. Bush beseeched the American people to show defiance in the face of al Qaeda. Their recourse to action: ascend on the shopping malls in their Fords and Chevrolets en masse and shop! So the Federal Reserve, caught up in the euphoria, happily slashed interest rates and the banks, in cooperation with Wall Street, began to underwrite dangerously risky loans and subprime mortgages. Exactly how dangerous was revealed last year with the collapse of the US housing markets. The globe is still feeling the aftershocks, and some are predicting the arrival of yet another ‘big one’ before it’s all over.
For any American to see the US Constitution being arrogantly ignored to disastrous effect is enough to make a man want to activate other parts of the US Constitution – like form a standing militia and buy a rifle – and drive these pesky bankers straight out of town. To see how serious some Americans feel about the Fed and their shadow leaders, click here.
A less drastic course of action would be to limit the powers of the Federal Reserve, but rather incredibly Chairman Bernanke is requesting the strengthening of the Fed.
The Chairman of the Senate Banking Committee, Christopher Dodd, said the request to expand the powers of the Federal Reserve’s powers as being like giving your son a “bigger, faster car right after he crashed the family station wagon.”
But things seem to be heading in the opposite direction. As the Associated Press reported: “Obama wants to empower the Federal Reserve to oversee the largest and most influential financial firms.”
It seems absolutely ludicrous that Congress would want entrust more powers to the Federal Reserve, an “independent agency” that is not answerable to Congress.
“There’s not a lot of confidence in the Fed at this point,” Dodd commented after Obama’s speech.
End of the World’s Reserve Currency?Since the start of the ongoing economic crisis, which caused a tremendous loss of confidence in the US dollar, there have been calls to rebuild the world’s financial architecture.
“We must rethink the financial system from scratch, as at Bretton Woods,” said French President Nicolas Sarkozy in September.
In July 1944, with World War II drawing to a close, 730 representatives from over 40 nations assembled at the Mount Washington Hotel in Bretton Woods, New Hampshire, US. Here, the delegates agreed on financial legislation – including the creation of the International Monetary Fund and World Bank – that would dictate economic policy in the West for the next half a century.
At the center of the agreement was the decision to make the US dollar the ‘world’s reserve currency,’ which was based on the gold standard. This system collapsed on August 15, 1971 when US President Richard Nixon “closed the gold window.” In other words, the dollar is no longer backed up by gold reserves, and to this day the US currency enjoys “dollar hegemony.” But for how long is another question.
In October, Prime Minister Vladimir Putin rattled financial markets when he hinted to his Chinese counterpart, Wen Jiabao, that the two countries “stop using US dollars in Russian-Chinese settlements.”
RT reported that Putin has also called for a complete overhaul of the world’s financial system to “end monopoly in world finance.”
China owns around $700 billion dollars of US debt in the form of Treasury Bonds, so it is understandable that the Chinese authorities are seriously considering what the heck to do with their investment at this point.
A US delegation that met with central bankers in China early this month provided some insight.
“It’s clear that China would like to diversify from its dollar investments,” said Republican Mark Kirk said at the Center for Strategic and International Studies, a Washington think tank.
Kirk said the Chinese leaders were critical in private of the US Federal Reserve’s policy of “quantitative easing” – which is in essence a flooding of the financial markets with cash. China views this as a reckless policy of printing cash out of thin air.
US officials estimate a deficit of $1.841 trillion for the 2009 budget............
Also, the people running and owning the FED are not elected by the US Public in any way whatsoever. Another smoke and Mirrors ruse the FED does to strengthen the illusion that the US Government controls the FED is that the US President " chooses " the FED Chairman who is the go-between from FED to US Government. In actuality the FED makes up its own approved list of canditates for this position as if there is a number of canditates being considered. Truthfully the person the President " decides " to choose has been already been agreed on and choosen by the FED itself. This whole process is fake and an illusion meant to fool the public and further the publics misconceptions of the FED being part of and controlled by the US Government. As you can see from the above information the FED is operating in violation of the US constitution in that they are very definitely a private entity who has gained control of the issuance of US money, charging the US public interest on top of that for its issuance, and since the FED's inception they have gained very complete control of the US econmic policy itself. The FED is truly bleeding this country and its citizens of their combined economic resources and like some out of control giant parasite on the system are now threatening to kill the host ( the US economy ) on which they are voraciously feeding.
The Great Bank Robbery: How the Federal Reserve is destroying America
..........In the Fed We Trust
It usually comes as a shock to people – especially diehard Americans who place infinite trust in their sacred Constitution – when they discover that the US dollar is not a product of the American government. That’s right, fellow consumers, that crumpled wad of dollars in your pocket is the product of the U.S. Federal Reserve, and despite the very official title, is about as “federal” as Federal Express. The reality is that the U.S. Federal Reserve is a profit-making venture just like Wal-Mart, General Motors or McDonald’s.
Yet the US Constitution clearly states (Article 1, Section 8) that one of the many functions of government is to “coin money, regulate the value thereof.” Indeed, this task was deemed so important that the Founding Fathers mentioned it ahead of the obligation to “raise and support armies.” The Constitution says absolutely nothing about outside parties being responsible for printing money or regulating interest rates.
To quote Abraham Lincoln, the 16th president of the United States, “The privilege of creating and issuing money is… the supreme prerogative of government.”
Today, a handful of blue-blooded American politicians (a very rare breed these days, it seems) are beginning to echo ol’ Abe on the very same issue.
Ron Paul, the congressman from Texas who made an unsuccessful bid for the 2008 Republican Party presidential nomination, represents a growing number of Americans who want to see the Fed severely tamed, or put out of business altogether.
“Congress created the Fed although it had no constitutional authority to do so,” Paul told his peers during a recent House investigative meeting. “We forget that those powers not explicitly granted to Congress by the Constitution are inherently denied to the Congress and thus the authority to establish a central bank was never given.
“Congress… has essentially given up its oversight responsibilities over the Fed: there are no true audits; Congress knows nothing of the conversations, the plans, and the action-taking in concert with other central banks. We get less and less information regarding the money supply each year,” Paul continued.
Incidentally, but certainly not insignificantly, Paul, despite his huge grassroots popularity, was deliberately snubbed by the American media on numerous occasions, including during a primetime debate on Fox News.
“Despite his $20 million and 10% showing in new Hampshire polls, Fox News excluded Paul from its Sunday night republican debate,” wrote Andrew Malcolm in his Los Angeles blog. “So Paul gets 10% in Iowa and gets excluded, but Rudy (Giuliani) gets 4% and sits on the left end of the Fox Box desk. Hmmm.” (To see why CNN probably won’t be hosting another ‘College Week’ political program in the near future, click here ).
How does the US media justify the outright snub of a proven politician (Paul has served 10 consecutive terms in the House of Representatives)? The answer is simple: Ron Paul is one of the few men who poses a threat to the powers that be: The U.S. Federal Reserve System.
Top of the PyramidIt is no secret that the power to print money and set interest rates constitutes the greatest power of any government.
“Let me issue and control a nation’s money,” commented international banker Amschel Rothschild, “and I care not who makes the laws.”
Henry Kissinger reduced the almighty powers of the Federal Reserve to one line: “Who controls money controls the world.”
Former chairman of the Federal Reserve Alan Greenspan, who served for 18+ years in his position, was asked by political talk show host Jim Lehrer: “What should be the proper relationship between a chairman of the Fed and the president of the United States?”
“Well, first of all, the Federal Reserve is an independent agency, and that means basically that there is no other agency of government (including the executive office) which can overrule actions that we take,” Greenspan responded matter-of-factly. “So long as that is in place… then, what the relationships are don’t frankly matter.”
In light of the above statements, it is safe to say that it is not US Commander-in-Chief Barack Obama who holds the reigns of real power in America, but rather Ben Bernanke, the chairman of the Fed.
Indeed, last December’s Newsweek magazine proudly announced that Bernanke was the “fourth most powerful person in the world,” behind Barack Obama, Hu Jintao and Nicolas Sarkozy, but ahead of Gordon Brown, Angela Merkel and Vladimir Putin (fourth, fifth and sixth place in the Newsweek power list went to central bankers, Bernanke, Jean-Claude Trichet (EU) and Masaaki Shirakawa (Japan), as opposed to national leaders)!
But there is another infallible maxim that also dictates our political life. “Power corrupts,” said Lord Acton, “but absolute power corrupts absolutely.”
So guess who is in the hot chair today for (possibly) corrupting his absolute power? Yes, that’s right, Mr. Ben Bernanke, who appeared last week before the House Oversight and Reform committee to explain some irregularities in his office.
At issue was the question of the Central Bank’s involvement in Bank of America’s controversial acquisition of Merrill Lynch.
Shortly after the US housing markets tanked, Bank of America moved to acquire Merrill Lynch. However, once it became known (at least in financial circles) that the investment bank was suffering major losses, Bank of America CEO Kenneth Lewis balked on the merger. What happened next is the center of the congressional investigation.
US lawmakers, armed with email correspondences taken from the Central Bank, argue that Bernanke overstepped his already-awesome authority by working behind the scenes to ensure that Lewis went ahead with the shotgun wedding.
In one email, it appears that Bernanke threatened that the Federal Reserve would replace Bank of America’s management if Lewis decided to pull out of his planned acquisition of Merrill Lynch, or seek government aid to clinch the deal. Forcing bank mergers through outright coercion was never intended to be the function of the Fed. Bernanke, of course, denies any wrongdoing.
“I believe that the Federal Reserve acted with the highest integrity throughout its discussions with Bank of America regarding that company’s acquisition of Merrill Lynch,” Bernanke told the committee members, while reclaiming the moral high ground by arguing that the Fed’s actions “averted a major financial crisis.”
Nevertheless, US lawmakers are swirling around Bernanke and the Fed like sharks that sense blood.
Congressman Dennis Kucinich, D-OH, criticized Bernanke for failing to provide information about Merrill Lynch’s huge losses in November so that shareholders could vote on the transaction.
“If the Fed knew that there were losses before the government deal took place, why didn’t it provide information to the SEC (Securities and Exchange Committee) so that shareholders were informed?” Kucinich asked.
Bank of America closed the deal with Merrill Lynch on Jan. 1 after the US government agreed to a $138 billion aid package to help bank of America complete the acquisition. The closed-door deal cost American taxpayers a cool $20 billion dollars. Meanwhile, the House investigation into the Fed actions will continue for weeks.
US Department of UsuryBesides having lost the power to regulate its own currency, the United States must also pay interest on the dollars it borrows. Given that the current bailout (and buy-in) of the American economy is in the ballpark of 9 trillion dollars it will take incalculable generations to pay back this monstrous bill.
“Henry Ford thinks its stupid and so do I, that for the loan of its own money the United States should be compelled to pay… interest,” complained the famous American inventor, Thomas A. Edison. “Why must we pay interest to money-brokers for the use of our own money!”
Given the trillions of dollars that the Federal Reserve has pumped into the economy to jumpstart consumer spending (indeed, Capitalism itself), many generations of Americans will be struggling financially as the United States goes from creditor nation to debtor nation practically overnight. Yet somehow US President Barack Obama still promises to create a long overdue national healthcare plan.
Much of the present financial stress began just after 9/11, some economists argue, when George W. Bush beseeched the American people to show defiance in the face of al Qaeda. Their recourse to action: ascend on the shopping malls in their Fords and Chevrolets en masse and shop! So the Federal Reserve, caught up in the euphoria, happily slashed interest rates and the banks, in cooperation with Wall Street, began to underwrite dangerously risky loans and subprime mortgages. Exactly how dangerous was revealed last year with the collapse of the US housing markets. The globe is still feeling the aftershocks, and some are predicting the arrival of yet another ‘big one’ before it’s all over.
For any American to see the US Constitution being arrogantly ignored to disastrous effect is enough to make a man want to activate other parts of the US Constitution – like form a standing militia and buy a rifle – and drive these pesky bankers straight out of town. To see how serious some Americans feel about the Fed and their shadow leaders, click here.
A less drastic course of action would be to limit the powers of the Federal Reserve, but rather incredibly Chairman Bernanke is requesting the strengthening of the Fed.
The Chairman of the Senate Banking Committee, Christopher Dodd, said the request to expand the powers of the Federal Reserve’s powers as being like giving your son a “bigger, faster car right after he crashed the family station wagon.”
But things seem to be heading in the opposite direction. As the Associated Press reported: “Obama wants to empower the Federal Reserve to oversee the largest and most influential financial firms.”
It seems absolutely ludicrous that Congress would want entrust more powers to the Federal Reserve, an “independent agency” that is not answerable to Congress.
“There’s not a lot of confidence in the Fed at this point,” Dodd commented after Obama’s speech.
End of the World’s Reserve Currency?Since the start of the ongoing economic crisis, which caused a tremendous loss of confidence in the US dollar, there have been calls to rebuild the world’s financial architecture.
“We must rethink the financial system from scratch, as at Bretton Woods,” said French President Nicolas Sarkozy in September.
In July 1944, with World War II drawing to a close, 730 representatives from over 40 nations assembled at the Mount Washington Hotel in Bretton Woods, New Hampshire, US. Here, the delegates agreed on financial legislation – including the creation of the International Monetary Fund and World Bank – that would dictate economic policy in the West for the next half a century.
At the center of the agreement was the decision to make the US dollar the ‘world’s reserve currency,’ which was based on the gold standard. This system collapsed on August 15, 1971 when US President Richard Nixon “closed the gold window.” In other words, the dollar is no longer backed up by gold reserves, and to this day the US currency enjoys “dollar hegemony.” But for how long is another question.
In October, Prime Minister Vladimir Putin rattled financial markets when he hinted to his Chinese counterpart, Wen Jiabao, that the two countries “stop using US dollars in Russian-Chinese settlements.”
RT reported that Putin has also called for a complete overhaul of the world’s financial system to “end monopoly in world finance.”
China owns around $700 billion dollars of US debt in the form of Treasury Bonds, so it is understandable that the Chinese authorities are seriously considering what the heck to do with their investment at this point.
A US delegation that met with central bankers in China early this month provided some insight.
“It’s clear that China would like to diversify from its dollar investments,” said Republican Mark Kirk said at the Center for Strategic and International Studies, a Washington think tank.
Kirk said the Chinese leaders were critical in private of the US Federal Reserve’s policy of “quantitative easing” – which is in essence a flooding of the financial markets with cash. China views this as a reckless policy of printing cash out of thin air.
US officials estimate a deficit of $1.841 trillion for the 2009 budget............
Also, the people running and owning the FED are not elected by the US Public in any way whatsoever. Another smoke and Mirrors ruse the FED does to strengthen the illusion that the US Government controls the FED is that the US President " chooses " the FED Chairman who is the go-between from FED to US Government. In actuality the FED makes up its own approved list of canditates for this position as if there is a number of canditates being considered. Truthfully the person the President " decides " to choose has been already been agreed on and choosen by the FED itself. This whole process is fake and an illusion meant to fool the public and further the publics misconceptions of the FED being part of and controlled by the US Government. As you can see from the above information the FED is operating in violation of the US constitution in that they are very definitely a private entity who has gained control of the issuance of US money, charging the US public interest on top of that for its issuance, and since the FED's inception they have gained very complete control of the US econmic policy itself. The FED is truly bleeding this country and its citizens of their combined economic resources and like some out of control giant parasite on the system are now threatening to kill the host ( the US economy ) on which they are voraciously feeding.
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