jbpeebles

Future a product of past Karma

2012-01-02T19:20:00.008-05:00

The New Year finds me choosing whether to blog about the last year, or the one to come. The past finds a lot of troubling events. The future, meanwhile, is blessedly free of all history's garbage, or is it? We may or may not be able to live a future free and clear of all the ramifications of our past.

The Buddhists have a Buddha of the future, Matreiya, whose role as harbinger of the future carries special merit. The Buddhists know much about the passage of time, with so much of what we base our lives on just an illusion to them. We can't escape our karma, except through enlightenment.

To Buddhists in some lands, enlightenment can come to anyone, where in southern Asia enlightenment is reserved to those who choose a monastic life, one of celibacy. To these scholars and monks falls the task of freeing esoteric knowledge locked away in arcane sutras and vast volumes of written material.

I bring up the Buddhists because they have a balanced life of sorts. Fundamentalists of Buddhism exist, but the religion itself emphasizes compassion and understanding, which are the opposites of ignorance and hate which motivate so much hate in fundamentalist Islam and Christianity.

In short, the Buddhists know how to get along with the world in which they live. They tend not to be prone towards extremes but rather strive to live a more fruitful existence by establishing harmony and abandoning mental attachments.

Such a state of mind must be learned and nurtured. In this regard it must be cultivated through the exercise of discipline and restraint, while accumulating knowledge (dharma.) And when the world inevitably intrudes on the still mind, the physical form is vulnerable but through powers of concentration--alongside a little help from the Buddha, which is always appreciated--the outside world's many distractions and pitfalls can be avoided.

I know someone who cast away all his possessions, and became a simple monk. He abides in various Buddhist monasteries of his order, which is known loosely as "Thai forest." He doesn't have a car or a bank account. Nor does he stockpile food. His possessions are limited to an alms bowl and a pair of saffron robes. (Alms is the process by which some kinds of Buddhist monks get their food--which they cannot touch--through gifts by those in the believer community.)

The point is that there is another way. We don't have to pile up goodies and claim victory in some monumental struggle: "He who has the most toys wins."

We don't consciously decide to be good consumers. We are programmed instead.

During Christmas-time, it's easy to see the hyperconsumer model so plainly--it comes out of its cave. It's as if the Invasion of the Body Snatchers has come, and that those who don't shop are considered deficient in some way. So bad was the rabid consumerism this year that melees erupted in the Mall of America and elsewhere. At least one individual died in a early morning retail stampede.

It's our attitude that kills us (or enslaves us, rather.) Americans also are taught that they can remain optimistic and wish away all the things they don't like, either but ignoring them, or pretending they don't exist. In this regard, our culture conditions us to be perfect debtors.

You may have heard the expression that "those who forget the past are doomed to repeat it." The average American's understanding of history is pathetic; like Vonnegut's Fahrenheit 451, who needs the past? It's only the present future the matters in a world focused totally on material gratification.

My thinking is that Americans think on a time scale far different from most other cultures, although I guess our model is being emulated everywhere. The plan is to get everything, now. The past is ten seconds ago. The not-so-subtle implication: Dare not be left behind, for the world moves at light speed. If you miss that call, you miss everything and we'll never go back!

In CSPER.org's "Renaissance 2.0," Dr. Martenson identifies this as what he calls the velocity problem in our society. Here I recite Lesson 5.2:

"The transformation is more than financial...(it) devalues traditional beliefs like Rest, Delight, Spirit, Philosophy, Joy, Love, Family, Humanity, and Relationships."

The speed at which things happen handicaps us. We lack time to decompress, to think, to reason. The ramifications of a hurried lifestyle are readily apparent in the prevalence of ADD/ADHD among children, who crave constant interaction with a bely of media and gaming options from the second they awake 'til bed.

Weaning one's child off a diet so rich in immediate gratification is no easy task. Yet it can be done, in a process not altogether different from overcoming addiction. At first, the child will no doubt resist, as an absence of constant action and immediate gratification is like stripping away the child's best friends and yanking them outside their comfort zone.

Medication might be one path to go, but I don't know because I'm not a parent of one of these children. The pharmaceutical companies are certainly lining up to cash in on every personality disorder. At a certain point, if a child gets too used to the velocity problem, then it might be too late for them to modulate their attention span or control their impulses, creating a lifelong condition.

Rapid consumerism is destroying the planet. If people in developing nations envy the American standard of living, with its dependence on cheap fossil fuels and consumer goods, then our world is surely done.

The American style of hyper-capitalism makes so much demands on the earth's resources that it simply can't be a model to offer to the developing world. If everyone needs a car and a house, there simply won't be enough natural resources to go around. The amount of money that needs to be generated to consume demands a income, which requires a job or, the accumulation of large amounts of debt.

Spending is our lifeblood, much more so than the income we make it access to capital that determines our quality of life. From the days of our youth, we subconsciously adopt a materialistic mindset. Brands forged into our minds lead us to be good consumers first, and responsible users of bank credits second. We taught to believe that work solves

What we get instead is a dangerous level of overconfidence, which turns us into perfect debt slaves. This happens gradually over time, without ourselves consciously accepting that we'll be paying off debt for the entirety of our lives.

The amount of debt we carry shows something in our lives is out of balance. On a purely secular level, increasing debt means our spending exceeds our income (an obvious fact, I know, but you'd be amazed at how few accept at that reality.)

Easy it is to rack up debt when so much credit is available. Nowadays, the credit is less available to middle class people, but of course the debt they accumulated lingers. And despite politicized pronouncements of "low interest rates," the interest on most forms of consumer debt isn't low, it's very high! It's not uncommon for banks with access to infinite amounts of money charge 18 to 20% or more on the debt they're owed. Not too fair. Nor are the interest payments beneficial to the general economy: the interest payments represent a transfer of spending from the real economy (R.E.) into the financial one, where the money likely goes into deep dark pools rather than work its way back out into the Real Economy (R.E.).

Credit unions offer an alternative. Their interest rates are lower--showing that they don't have to be, unless of course the lending entities' shareholders demand it. That credit union rates on their credit cards run under 10% came as a complete surprise to me, not so much because they were lower but because the lower rates showed credit cards don't have to be so costly to use.

If the banks were nationalized--credit union'o'fied--think about how much interest would be freed and spent, remain in circulation, where it could be reinvested. Way it is with interest payment these days, the money disappears forever from the economy where it was earned. If it resurfaces, it'll likely be in a major financial center, where it will likely be used to speculate or possibly reenter the Real Economy as compensation for the already rich who work there. Wages for P.O.P.O.P--pushers of piles of paper (really not paper but digital investments)--have been rising far faster than other industries, with record bonuses even as Wall Street collapsed in 2008-9.

In this way things might look just fine in the nation's major banking and financial centers even as depression-like conditions dominate out in the far flung expanses of empire. Condo prices can go up; luxury good makers (who hire many middle income people) increase their sales.

I don't know if we've become an economy built to pleasure the rich. Not so sure how well that kind of economy would function. My take on the economy is that it needs to be broad, inclusive, and focused on building wealth not only for the already wealthy but for everyone, in what's called social mobility.

The stock markets are good evidence of how the wealth effect works. By increasing participation in investing, individual investors add a stabilizing force to the market (institutional holders tend to be more skittish.) And the dollars going in to the market get invested, put into work to make more money, rather than sequestered as is the case with most interest payments.

The opposite is just as true: when stock market participation is low, the markets tend to become more volatile, and trend sideways. Participation also indicates healthy income growth, something we've not had if the top quintile of income earners is excluded. As a matter of fact, adjusted for inflation, middle class wages have remained flat since 1980. Yes, 1980! Meanwhile, income for the wealthy went up over 15% in a single year! This due of course to Bush's tax cuts, which have drained the Treasury but made the wealthy much wealthier.

Many of our problems that we face here in America are the product of too much debt. Collectively we consume so much that the amount we owe simply can't be repaid by the present generation.

The debts of the Treasury are so large that the interest alone will consume a significant portion of our overall spending, something like one-fifth of the overall budget by 2020.

Now debt is one thing, but when spending gets cut look out. You'd think that we're doing a better job here than in Europe, with all its "social programs." Think again, even with a population aging faster than ours and so-called "entitlements," government spending has been cut far more in countries like Greece than the U.S..

Just look at the last page of The Economist magazine: it shows the percentage of Gross Domestic Product of various countries. Guess whose number two in the list, exceeded only by Greece? The U.S.. Spending $1.4 trillion more than you take in is an unsustainable problem.

The reason for American fiscal deficit higher than Europe's is simple: defense spending. We're tossing away over $600 billion on "defense." No one in Europe--heck, no one in the world--is spending so much on their military.

Another reason for our debt woes--and also suppressed in what's formerly been known as the media in this country--is the inability of our government to tax. Congress is beholden to powerful interests. Essentially federal politicians are being reelected based on their ability to attract campaign donations. And with such huge sums being directed towards lobbying efforts to protect the wealthy and their interests, it should come as no surprise that Congress passes laws that reinforce the economic status quo, which is more like a pyramid with the 1% and their enabling organizations like the Fed at the top.

The real surprise is how gullible Americans are about their tax burden. If they knew their dislike of taxes was setting us up for a budget collapse, they might demand fairer tax policy. But masterfully the forces of the Right have sold average Americans on lower taxes--I mean, who doesn't want that?--despite the reality they will pay more and derive less future benefit from services currently provided by the federal government.

Medicare is an excellent example. People in the system today paid in only a fraction of what their medical expenses now cost the program. With so little going in and so much going out, the benefits will be scaled back.

Now maybe the rich will be asked to pay more when the time comes to adequately fund our government's spending, sometime in the future. Yet I'm not so convinced that Washington politicians will be able to impose financial demands on their wealthy supporters and the corporations they own, being that the crony system we see there today is so firmly entrenched.

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Money pushers profit from growing debt

2011-12-01T19:13:00.007-05:00

Big rally on Tuesday, the 30th. On the surface, the markets look to be building momentum. I couldn't help but think back to the "green shoots" theme of spring two years ago, in 2009.

At that time, we were told to expect a growing economy. Yes, things were bad but they're getting better, so on and so forth.

In the media, we were painted a rosy future. We were told to expect a quick rebound from the dark days during the height of the crisis. This after being told that the world end was neigh, or at least not if financial companies were bailed out.

The crisis really was an opportunity to profit through crisis. Banks were able to get through Paulson and Geithner everything they could imagine. Bank of America for instance, got over $80 billion in a single day! See the activistpost link here, complete with a link to this Bloomberg article.

Media company Bloomberg sued the Federal Reserve successfully under the Freedom of Information Act (FOIA). You may remember the initial findings of Bloomberg's report on the illicit (or at least previously unreported) loans by the Federal Reserve to banks of all kinds.

This I commented in OpEdNews.com:

Bloomberg deserves credit for forcing--through court action--the Federal Reserve to divulge a list of recipients of its discount lending. Among these was the Central Bank of Libya. Deutschebank and other non-US lenders (but major holders of US mortgage debt) got billions.

The Federal Reserve's lending to companies of all kinds is a major story.
People need to know what was done by the Central Bank during the 2008-9 crisis because it affects us today. The solvency of the US Treasury has been put in jeopardy by the unaudited, illicit activities of the Fed and the toxic debt they've accumulated in swapping our Treasuries for their banker friends' falling mortgage securities and derivatives. [link]

The media plays a role in disguising the true aims of the new paradigm, one which relies on public ignorance and apathy. Baring some direct intervention like Occupy, the American public will remain docile until such time as their nation's credit has been depleted and that further borrowing becomes impossible: a juncture that grows closer every day and will lead to massive inflation.

The Federal Reserve and its for-profit member banks will buy Treasuries, but I'm firmly in the camp that believes our monetary system is a Ponzi scheme where early investors get paid off by new ones. Theoretically, the Fed can buy the government's debt forever but the more they own, the more interest will have to be paid to the holders of the debt (who are, not by coincidence, the recipients of Fed lending!)

It's the accumulation of interest payments (alongside higher interest rates) that presents the greatest threat to our fiscal solvency, no matter what the size of the national debt. Such payments are projected to grow to 20% of the federal budget by the end of the decade.

Japan all over again

The Japanese have a word for it--kikai. The kanji, or character, for kikai uses one ideogram (or representation) meaning problems, and another representing opportunity. The lingual takeaway is that, as Rahm Emanuel once said, "to let no opportunity go to waste." Emmanuel, Obama's former chief of staff, is now mayor of Chicago.

The idea is that someone else's problem represent another's potential windfall. Naomi Klein calls the practice disaster capitalism. Create the conditions for failure--by deregulating the banks so they could speculate wildly--and which a massive intervention--the bailout--becomes inevitable. In this way, private sector failures (the trouble element in the kanji) are shifted into the public domain in a process NYU economist Roubini calls "lemon socialism." For the private sector, the inability of the Federal government to cope presents the opportunity--for a bailout, contracts, whatever.

As Michael Moore summed it up so well in his Wisconsin speech in March, "we bought it." We fell for the whole act. Our representatives in Congress voted for the massive unprecedented bailout, at least the one they knowingly authorized. Moore didn't know then what we know now: that the TARP bailout was dwarfed by the size of secret Fed lending.

We can't assume that our government was operating in a vacuum at the time. Its priorities reflected the consensus of corporation with the most influence. The bailout (at least the one made public) plan was designed by government insiders with deep ties to the banks. We know Treasury Secretary Paulson was working behind the scenes with the bankers, in constant telephone contact with Goldman's Sach's Blankfein. Who's telling who what to do?

The more transparency, the more damage done to the Establishment. As I say in my OpEdNews.com comment:

"Like the movie "The Usual Suspects" says, the Devil's primary job is to get people to believe he doesn't exist. Expose the cronyism, the connection between politicians and corporate campaign contributors, and the truth threatens the status quo, which they can't afford to have happen (or more support for Occupy.)"

Our political problems can't be remedied by dimming transparency, by corporatizing the Fourth Estate which plays a vital role in preserving our democracy. We're in an information war. The Powers That Be don't want the true scope of cronyism, favoritism known. The masquerade, with all its accompanying rhetoric and feel-good speeches by politicians and squawking is just for show.

Can you handle the purple pill?

My take is that our economic problems are systemic. Therefore no amount of variable-tweaking will solve our nation's financial and economic woes.

Identifying our problems as systemic is important part of a critical thinking. To craft an effective solution, it's necessary to understand the problem.

If we're looking at a war, for instance, as winnable by formula, it's easy to think we can alter the outcome simply by adding more of one variable.

Take the number of soldiers, N, for example. We may think that an increase in the number of soldiers will assure victory. But Iraq and Afghanistan show us adding more (money, N, or whatever) won't necessarily achieve a favorable outcome.

Much as we might throw more money at a problem, it doesn't necessarily produce the desired outcome. In a similar way, creating more fiat money (or making it available to banks) doesn't stimulate the economy. Just as more soldiers doesn't determine a favorable outcome in war, so too adding money automatically make everyone rich.

Monetary policy alone can't produce the desired outcome because it's only one variable in the recipe for economic success. It's not just the quantity of money out there--it's the amount of money available to those who need it. We're a consumer economy, which means people must borrow in order to spend more, unless their incomes are rising or they tap their savings.

One distinct trait of our current economic times is the availability of credit for those who use it well, and a scarcity of credit for those who abuse it. Our economy has been "financialized" for this purpose: burden income-earners with enough debt and they will suffer the interest burden.

It's a Machiavellian notion: the wealthy so enslave the many. Such a crass environment stinks of undue influence wielded upon the political system by the owners of the means of production: Marx's 1%ers.

I've cited many times Dr. Martenson's analysis of the pyramidal imperial economy, as per Renaissance 2.0. Under this interpretation of how the economy works, those at the top of the pyramid (the owners of the means of production, the 1%) receive taxes and interest payments from below.

In a quid pro quo, politicians whore themselves out to rack up campaign contributions. In the Guardian, Naomi Wolf offers an interesting take on the opportunities inherent in acting as the puppets of industry:

...in recent years, members of Congress have started entering the system as members of the middle class (or upper middle class) – but they are leaving DC privy to vast personal wealth, as we see from the "scandal" of presidential contender Newt Gingrich's having been paid $1.8m for a few hours' "consulting" to special interests. The inflated fees to lawmakers who turn lobbyists are common knowledge, but the notion that congressmen and women are legislating their own companies' profitsis less widely known – and if the books were to be opened, they would surely reveal corruption on a Wall Street spectrum. Indeed, we do already know that congresspeople are massively profiting from trading on non-public information they have on companies about which they are legislating – a form of insider trading that sent Martha Stewart to jail.[link.]

Eisenhower's Military Industrial Complex is one of the industries that shapes our nation's budgetary priorities. Alongside it are the many outstretched palms dependent on government discretion, from the Medical Establishment, Insurance, Pharmaceuticals, etc..

With so many industries and their friends in the media world, it's no wonder how we hear about how great the free market is, but not about how corporate fealty and cronyism are killing our budget. Few in power these days would accept Jefferson's statement that:
“It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world."

I like the second part of that statement because of the tight bond between wars, imperial overstretch and hubris, the "Emperor has no clothes" syndrome. If one constituency, the MIC, can slurp endlessly from the government trough, why not another? And another, until eventually the trough runs dry. The last pigs standing will be the fattest, made so by their gluttonous appetites and their well anchored position at the start of the trough.

The young have the most to lose from a tax-starved government. Already the projected amount needed by our government to pay its obligations to Freddie/Fannie, Medicare/Medicaid, help for states, etc. reaches over $60 trillion, not counting whatever else the Federal Reserve has gotten us into.

Social Security funds--real Treasuries held by the trustee--were stolen under Clinton, and replaced by IOUs to the point the program must depend entirely on new money (from taxes or, more likely, additional borrowings.) With no new taxes, borrowing becomes the only way to keep the program running.

The goal is and has been to starve the beast. It's a strategy that will force Democrats to choose between funding our "social programs" or defense. Defunding the latter will of course make them look weak on terror. You can bet any subsequent terror attack would be blamed for our failure to build enough submarines and new weapon systems, despite their questionable effectiveness in fighting terror.

We're hooked on debt. Without increases in Federal spending, our economy is doomed. Federal spending contributes over 30% of the economy now. The average wage for a Federal employee recently surpasses twice that of private sector workers. A sustainable bureaucracy? Not without lots more taxes at least. Our nation's political leaders lack the political will to achieve that, as the SuperCommittee showed.

The failure to cut just $100 billion a year shows just how politically influential the favored industries are on the Hill. And the hypocrisy on Europe! The Greeks cut 8% of their budget yet the market fundamentalists prattle on about the Europeans' need to cut more--an inadequacy no doubt fostered by the comparative efficacy of their retirement and health care systems, compared to ours. Public services need to be eviscerated, so the neoliberals and market fundamentalists believe.

I'm sick of hearing about the "Europe" problem. While problems there are extreme, they're eerily reminiscent of the same risky practices that our banks engaged in, leveraging themselves 35- to 40-1, using their access to cheap capital not to lend back out in the consumer (real) economy but to speculate, to gamble in the financial economy.

"Europe's" downfall has been hyped in the mainstream financial media, despite the fact that the damage has mostly occurred with PIGS debt (and the position held by many Germans who don't support a bailout there.

A stream of editorial genuflexions on "Europe" allows our media to avoid mention of our own problems. The desire to ignore our own failings isn't a surprise; those most susceptible to free market dogma are also equally deluded by the concept of American exceptionalism. It can't happen here, they think, despite our vast war budget, swelling entitlements, and utter inability to restrain spending. Expressed as a percentage of GDP, our annual budget deficit (at 9%) is worse than any country in the E.U., except Greece's (source: The Economist magazine, back page.)

"Europe's" supposed failure masks our own. By focusing attention on the other side of the Atlantic, the vast and obvious failures of our own nation to keep its fiscal house in order can be ignored. I guess the thinking goes that postponing the consequences of inadequate regulations and enforcement can wait until after the next political cycle. Such short-term thinking is hardly the path to devising a long-term solution to our budgetary woes.

There are hard limits to the impact politics can make on the economy. In some ways, those in authority can only screw things up. Obama isn't at the center of our economy, so nothing the White House does can solve our problems (plus they're systemic in nature.) Republicans clearly have no interest in seeing a recovery blossom, which it could given spending on real things like infrastructure.

Perhaps we forget too easily how ineffective central planning fails, like the Soviet example. Interesting I mention the Soviets because I'm theorizing that we may be entering a period similar to Russia's. Privatization is in place. Look no farther than Chicago. Goldman Sachs came in and bought public parking throughout the city's downtown. Rates skyrocketed.

In Russia during the Nineties, pensioners (read Social Security and public sector retirees here) were stripped of benefits and made to live humbly even as Russian oligarchs swept up and sold off the best performing industries as they were privatized.

According to Peter Schiff, the hidden, or under-story, is S&P's downgrade of credit rating of many major banks. Despite the political influence it wields, Goldman Sachs was one of the companies downgrade. I've railed on the company repeatedly in the past. Maybe all their political shenanigans aren't so lucrative after all.

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Universal humanity drives Occupy movement

2011-11-01T00:07:00.004-04:00

Shooting Scott Olsen in the face with a tear gas canister, nearing killing him, won't stop Vendetta. The Vendetta is of course a refence to the movie of that title, V for Vendetta, where on Guy Fawkes Day the people rise up and otherthrew their dictator.

I did see some Guy Fawkes masks (holding "I Wish I Could Go to the Doctor" poster and here) on display at a Occupy: Bloomington demonstration late last month. Bloomington is a town about an hour and a half south of Indianapolis, made famous in the iconic film Breaking Away.

The Occupy movement has spread so quickly that the Establishment must be scared. I think the police actions recently in Denver and Oakland show that imperial opposition to the movement has progressed from the Ghandian second first base--"First they ignore you"--to third, "fighting you" which represents progress to the anti-Establishmentarian. (The second step, ridiculing you, seems to have been skipped altogether, although pictures of champagne glass-holding 1%ers/Wall Streeters mocking the Occupiers were posted.)

Boldly proclaiming himself to be the 1%, Peter Schiff did confront the mob and tried to reason with them. Schiff writes a good article here. Schiff writes:
"...it seemed like the protesters fell into two categories: those who generally understood and agreed that Washington caused this mess, and those who could only recite Marxist talking points."

In a brief video clip, Schiff jabs back at an angry mob, trying to make sense with people who clearly aren't in a mood for intellectual discourse. Get people angry enough and reasons don't matter. And the people are certainly angry.

Marxism, or any "ism" for that matter, probably sounds better than capitalism if you're disenfranchised. Facts are, our country's economy has declined, real wages for working folks have remained frozen, and the chance of upward social mobility is now higher in Europe than here.

Capitalism symbolizes the ascent of individualism. Our society has "progressed" to the point monetary capital is valued more then social capital. We do measure ourselves and each other by the size of our pocketbooks. Yeah, we might all pretend to we care more about other things more--family, God, or whatever--but in our system, we can't survive without means to eat and find shelter. (In defense of religion, money is discussed some 25 times by Jesus...)

The refreshing part about OWS is that it isn't limited to a singular persona. In this sense it's the opposite of the President. We seem to channel all our fears, hopes, and dreams into the person who occupies the White House. Like a celebrity, the President these days interjects himself into virtually every issue, in realtime.

Are we so deficient as to require the President to speak for us? Agree or not, Presidents use the bully pulpit to sound Presidential. Like most ecumenical services, we don't get any real meat when words are watered down to public statements.
I think OWS represents everyman. In the society we've created our collective voice, the quiet one, and perhaps the more enlightened side of who we are as a people rarely gets heard. The simple act of coming together unifies the individual, transforming people into more than the summations of the things they chose to buy, to quote Rachel Corrie.

Individually, we yearn to be more than just consumers, but the capitalist system (and even Schiff) seem to fixate singularly on sales and money. Quality of life can't be measured in money--look at the 1% and you won't find an especially happy bunch. Many 1%ers are scared of losing what they have-that someday they'll run out of that which makes them different: money and slide down into the pack.

Being wealthy can be a curse that way. Sure you have more, but quality of life is a subjective and relative notion. Get used to sipping Dom Perignon every night and Korbel will end up tasting like crap. Drive a Porsche too long and a Honda just isn't acceptable.

The lifestyle of our rich and famous comes down to the common people in the form of celebrity worship. The rich are framed as superior in every way because they're rich. It's a message meant for a child and people want more than that. They won't buy the rags-to-riches myth because they know full well they work hard and never seem to get ahead while the already rich get richer not through work but by virtue of being rich.

Pat Buchanon said OWS will "end badly" but I can't see how it will, at least not anytime soon. The problems we face are largely structural. Our economy is deficient: anyone born more than a few decades ago knows full well that things were better in America. They can see our crumbling infrastructure, all the money being spent not on them but for bright and shiny toys the generals can use, among other things.

Bullets can't kill a leader, because Occupy Wall Street has no leader. There's no one in charge. Perhaps the message suffers for want of direction-from having some . Yes, there are leaders persay, though I can't quite seem to come up with any names at the moment. I can remember some good speeches (repeated in that way they do, with everyone saying what the speakers say, sometimes to farcical effect yet intellectual, open, and honest shared all the way through.)
The authorities can storm the plaza but in so doing lose the base of their support--the people. Nonviolent resistance generates sympathy for the victims of police brutality.

The act of participating manifests itself physically as people come together in one single time and place. History can be rewritten, a new form of government created, forever altering a nation's past, its psyche and indeliably, its future.

While there may be violence, peaceable revolution isn't about the end justifying the means. Soldiers and police can be converted. After all, it's mostly psychopaths who revel in the violence. I doubt even White-shirted Bologna liked what he did; he may even feel guilty. Then again, I know not what lurks in the hearts of men like that.

Tahrir Square showed us the power of the people--how a population that commits--goes all-out, risking life and limb, transcends individualism.

If all the people are united and not divided, they present an unbeatable force.

They lose their oneness, although not their sense of individuality, only their sense of being more different from one another than they truly are.

Corpratism, the evil monster that this is all about, must bow to the power of the people. Wow, I'm sounding like a Marxist. Too much time watching the LiveStream from occupywallst.org.

More than the message which it sends, Occupy Wall Street represents a mass popular movement with legs. Its sustenance and energy will grow in the following months, and yield fruit as more and more people catch on to the face the America they've known has changed. And not for the better.

We have a nation cast into doubt and self-recrimination over the longest war in American history, Afghanistan. Just a few days ago some NATO service members--13 of whom happened to be Americans--died in a bombing attack. The war machine grinds on relentless, chewing up young American servicepeople with no end or goal in site, facing unseen enemies in a hostile, alien land.

The pipeline must go in. Yes, the pipeline agreed to by Condoleezza Rice during her Unocal days. Among Rice's accomplishments was serving as Bush National Security Adviser, and being obsessed over by Muammar Qadafi, and having a oil tanker bear her name. Yes, you read the second one right: among Qadafi's scattered possessions was found some bizarre assemblage of Leezza, Leezza, Leezza eye candy (links below.)

Qadafi was crazy as a loon, but nonetheless capable of staying in power for forty years. I mean, just how far can the excess of power be taken? Someone should have done something about him years ago. Looking back now, it's a miracle even that such a cretin could have lasted so long.

Then there was Tahrir Square and the Arab Spring. As much as the Washington Consensus wishes it didn't, the revolutionary tide has changed things. And not just over there.

The tide that swept Qadafy, the Tunisian Ben Ali, Egyptian Mubarak, and may also take down Syria's Assad. Dictators all. Cold War leftovers for the most part, all of whom have long since outlived their usefulness--although Qadafi's coming out against terrorism did spawn a thaw in relations with the US. Mubarak served his purpose: to keep the radical fundamentalists at bay. They'd killed his predecessor, Anwar Sadat, for signing the Camp David accords.

Included in Mubarak's jails at one point was the Egyptian doctor turned radical (dictators' jails have a tendency to do that), al Zawahiri. Zawahiri did more to plan the 9-11 task than OSama bin Laden, or Khalid Shiek Muhammed--the patsy who confessed to everything--including things there was no way he could have done!--when his kids were traumatized by bugs in a Pakistani interrogation center.

Another inhabitant of Mubarak's prison was Egyptian-born cleric Abu Omar. Omar, you may remember, was abducted from the streets in Milan, Italy in 2003, then shipped off in a process known as extraordinary rendition. Some 26 Americans and five Italians "intelligence operatives" faced (are facing) charges for the abduction.
[The Chicago Tribune article on Omar's story, one of many, can be found here.]

The point with Omar is how Mubarak's prisons served the very important purpose of intimidating people who'd otherwise be more sympathetic to the jihad cause. Mubarak's regime had a long track record of torture and barbaric treatment of prisoners, particularly radical fundamentalists, who'd killed Sadat.

The Tribune article cites Omar's account of the ordeal:
"he was kept in an underground cell "where you cannot distinguish between night and day and the cockroaches and rats and insects walk all over my body night and day."
You get the idea. And so too does the message resonate, although not so deeply as to keep the masses afraid.

Mubarak may have continued in power for years because he was considered a useful ally in the War on Terror. Without that attempt to align countries against terror in a sort of Cold War us-vs.them alignment, Mubarak's demise may have come much sooner.

My point here is that these dictators had their enablers. In the case of Mubarak, it was all the aid the US sent to him year after year that forestalled regime change. In our zeal to fight terror, we ended up creating new enemies. Or is it the other way around--did we create the enemies in order to launch the war? At this point I guess it doesn't matter how it started only that the War on Terror is continuing.

Assuming the least malignancy on the part of our government, it's highly possible that unforeseen consequences emerge from our persistent meddling. I define "meddling" to military aid, which is a major element in projecting "hard power" across the world. It's acceptable to label all forms of foregin aid as arbitrarily "meddling," though I doubt the Peace Corps--who come in peace--are scarcely seen as meddlers but rather an example of low-profile yet effective "soft power".

I've talked about the benefits of soft power over hard power, and the way that hard power--military force--crowds out and diminishes the effectiveness of soft power. Kind of hard to not hate someone when they--or the government they're supporting--is raining missiles down on you.

A good example of this comes from the classic "Goodmorning Vietnam," where Robin Williams tries to befriend a young Vietnamese man, Tung Thanh Tran, or Tuan. Williams is likable, personable, and through the music he plays projects an image so very American. In one scene, as raucus American music plays simultaneously in the sound track, young Vietnamese are gathered up in a coffee bar and shot, in retaliation for a bomb set by Tuan and his VC sympathizers.

Tuan symbolizes the mind of the South Vietnamese people, to be won alongside the hearts. Meanwhile the music projects the appeal of a many splendored America: catchy, glitz, rocking and rolling, carefree and fun...in sum, the exact opposite of the stark realities and dangerous and unpredictable facing the Vietnamese, particulary those faced with befriending an American, a process tantamount to fraternizing with the enemy, treason even, in Tuan's cause against the occupier.

Adrian Cronauer, played by Williams, almost pulls it off. Surely no one could hate someone so nice! And Tuan struggles with it. Cronauer tries to reconcile the two halves of Tuan, one a friend and the other his mortal enemy. Which will he win? In the end it doesn't matter, the war consumes everyone and their soul, friendship is belittled. Seen through its music, the niceties of American culture are marred by the crushing infliction of firepower playing out in the streets and rice paddies of South Vietnam.

I guess in some future age, we'll have movies where charismatic Americans try to befriend Afghans, who are crushed twixt loyalty to their cause and human instinct. The latter is universal; the former absolute. When the two are apart, a cause--no matter how noble--can last. However, if the cause is to preserve our humanness, to connect again in a way that celebrity-worship can't provide, then we can overcome our individual differences and perhaps recapture, in time, what made this country great.

Links
"V for Vendetta."

Condi affixation before Quadafi's death and
after

///

Money Power bailout fuels growing rage

2011-10-01T21:42:00.007-04:00

"We are the 99 percent!" the chanters chantabout halfway through this video, taken in the streets of downtown Chicago. Soon the chant turns to "we got sold out...banks got bailed out." Michael Moore's reference to how the banks urged bailouts and "we bought it" during the "We Ain't Broke" speech in Madison in March echoes the same meme.

As the occupywallstreet movement rages, its momentum grows, as many have turned on the Wall Street establishment. The amount of money poured from public coffers into those of the mismanaged banks could reach over $13 trillion, when the Federal Reserve's activities are exposed.

Among the long list of recipients of Federal Reserve largesse were foreign banks, including the central bank of Libya. Why, one might ask, if the purpose of the largest bailout in history was to protect Americans, why so much help for foreign banks? Last time I check, not too many Americans--at least middle class ones--held deposits in Libya. The fruits of intervention go the investment class instead, socializing private losses with borrowed public funds.

It's important to understand how the American people got snookered. Some of their taxes (or to be more accurate, their children's taxes since this is mostly borrowed money) went to TARP, which was the direct subsidy to the banks and conglomerates hurt by the collapse in mortgage securities.

TARP was sold as a stimulus package. A good portion of TARP consisted of tax cuts which were meant to stimulate economic activity. Tax cuts aren't direct expenditures, but they do represent a loss of revenue and thus a need for more future taxation (including of course all the interest that accrues until the debt is repaid.)

Taxes and interest payments on borrowings will be used to finance the current deficit--debt spent on wars and bailouts, although the immediate impact of the latter may not be felt for some time, assuming toxic debt doesn't infiltrate the financial markets once again. Interest payments on government debt have been minimal but are set to rise, time bomb-like, consuming much more than the 7% of the budget that it currently does, with the average interest rate on outstanding government debt at about 3% currently.

TARP itself is just a tiny fraction of the total amount lent to banks and financial entities. The Federal Reserve's activities opened the spigot, allowing everyone connected to the financial establishment to borrow. The idea was to allow those in established financial circles access to as much capital as they want. Providing money virtually free of any interest meant that any borrowers in trouble could repay creditors, who were the banks at the top of the economic pyramid the Fed intended to protected. This wild feeding of debt--to reflate the debt whose value had crashed--extended even to the wives of bankers. See the Rolling Stone articel by Matt Taibbi here.

The implications of so much borrowing aren't readily grasped by average Americans. The sheer size of the entire derivatives debt bubble is over $250 trillion, a number so large none of us could scarcely fathom. We got take every bit of wealth owned by every person on the planet and not be able to come up with that much. See the post by Tyler Durden on this topic at Zero Hedge.

The cause of so much debt is the ability to leverage. Much of this borrowing is "off balance sheet," generated by trading and lending among TBTF financial entities. No direct financing is necessary with this form of shadow banking--a promise to pay is enough to keep the derivatives shell game rolling.

Under normal circumstances, the promise to pay is backed by access to nearly unlimited quantities of capital. However, should one of the players lose access to new money--Lehman--then the whole system can crash because the derivatives are based on trust. The tiny bits of over-leveraged assets which serve as an anemic tidbit of collateral offer nothing more than a token connection to the vast pile of leveraged debt tied to it.

It's important to lift up the rock and see how this insidious derivates trade, coupled with access to vast amounts of almost free capital--goes on. Leverage is essentially the piling up of debt based on other debt. One purchase of debt becomes the collateral for a second loan. The second loan can be several multiples higher than the initial amount of securities bought. In this way profits can be synthesized--generated without actually owning anything but rather through pushing piles of purely speculative, highly leveraged money around to create more synthetic, paper profits to further leverage more speculative capital, so on and so forth until the underlying collateral may be leveraged 35-45 times.

Unregulated speculation on oil is a good example of shadow banking at work. Some of my readers may have remembered the testimony of Commodities Futures Trading Association director Michael Greenberger before a Senate subcommittee a few years back bemoaning dismantling of regulatory constraints on speculation by the banks in oil futures...[ Here is a recording of an Greenberger interview. I blogged on Greenberger in two posts from 2008 and 2009. A C-SPAN interview can be found under Greenberger's C-Span bio. ]

Now with real assets, take silver for instance, there's the silver sitting there being used as collateral. So if the borrower puts up the silver as collateral, the lender can grab hold of it should the balance on the borrower's account shrink below margin requirements. (As a sidenote, Comex did increase margin requirements for the third time recently, in a move which has driven silver below $30/oz.. Some theorize the tightening margin requirements aid JP Morgan, which has a huge losing short position on the metal.)

Back to our leverage example. Banks and other financial entities with access to virtually interest-free loans found themselves able to leverage up, once freed of the regulatory shackles imposed on the industry by Glass Steagall, a post-Depression regulatory framework meant to avoid the kind of over-speculation by commercial banks we saw prior to the '08-9 collapse.

A glimpse back at the '08-09 crisis might serve to reveal the genesis of the next crisis. After all, the bad debt is still out there. Sure the Fed's outgoing spigot has refilled the depleted coffers of the banks. But the velocity of money--a key indicator of economic growth--is slow. The velocity of money is a measure of how fast it circulates: too few hands touch it, then the economy doesn't benefit.

For instance, if a millionaire gets a refund check from the government, rather than spend it by putting it into circulation, they might let it languish in a deep, dark pool of capital where it won't see the light of day. This is like the sheikhs receiving huge petrodollar deposits: the agreement was that those dollars would stay out of the U.S. and therefore not contribute to inflation.

The Fed doesn't want the money to get out there. If for instance social security benefits were raised more people would get more, spend more. Wages would be more likely to go up as a result of more economic activity, demand.

Some inflation is a good thing. The Fed has said as much. Yet recently Bernanke did acknowledge that the persistent unemployment did constitute a failure. And of course much of the reason unemployment is high is because money isn't circulating in the economy--low velocity. Then there's the $2 trillion corporations have left in cash management accounts earning next to nothing.

The Fed is tasked with reducing inflation and maximizing employment, but in the current dilemma, it's uncertain if it can achieve one policy objective without hurting the other. If enough money--and there's a lot of money out there--circulates fast enough, inflation will grow rapidly. Increasing economic activity does stimulate inflation, but the opposite--too little growth--becomes a deflationary monster--as described by George Ure--eating up the increase in the money growth, which Ure cites to be over 30% per annum. Even with so much new money emerging--in digital form--if velocity is stagnant, the economy can't be stimulated through monetary growth.

One wonders if the Fed hasn't been tasked with a third objective: maintaining a rapidly growing pile of Federal debt. If the carrying cost of so much debt increases--by having to pay more interest--then the government's fiscal situation would deteriorate rapidly, consuming ever greater portion of the budget for interest payments.

Operation Twist may be mostly about buying Treasuries to keep the deficit-running fiscal operations going forward. By keeping money from (re-)circulation, at a low velocity, the Money Power does allow inflation and prices to grow less quickly despite what would be the typically result from wild government spending we see today.

For the Fed to act as buyer of first resort makes our monetary system a Ponzi, a means of sustaining government spending through the Fed's purchase of government debt. Theoretically, new money can be added to the system by buying Treasuries forever. But the Fed's actions don't incur in isolation; the more that the Fed buys, the more evident the scope of monetization (of the debt.) Eventually interest rates will rise, either because no one other than the Fed buys our Treasuries, or because of expectations of rising interest rates due to inflation. By reducing the interest rate to zero, savers get savaged, reducing further what they might earn, especially retirees dependent on income-producing investments, as this Marketoracle article by Dan Amerman explains.

Back to the lessons not learned from the the last crisis. There's the issue of accountability. Not only did not one CEO of the major banks lose their job, there's not been a single prosecution (although the SEC did make some rumblings about suing the TBTF banks recently.)

A lack of accountability will surely encourage more bad behavior, a psychological condition called moral hazard. Why would any of the banks change their ways? If the addition of more debt brought federal relief, why would the banks shy away from taking on too much debt. So the leverage monster is back on.

So despite all the prognostications of doom, the collapse didn't come to the world economic order, or at least hasn't yet. Markets bounced back, until recently where they've become especially volatile. If one were to examine charts of the Dow and Fortune 500 earnings, things might not seem too bad at all. So why hex it, you might ask?

Well, I need look no further than the huge--and mounting pile of debt derivatives--to say that the system is at dire risk. Not all banks have participated in the crazy derivatives shadow banking system, but all banks are clearly at risk of being damaged by another inevitable collapse of their loan portfolios. The reasoning simple: by piling one debt on another, and that atop even more, it only takes one little miscalculation at the bottom of the house of cards to bring the whole banking system (and monetary system on which it depends) down.

We can see how the collapse in residential mortgage securities valuations decimated the ability of the banks to lend. Without new mortgages, there's the secondary impact of declining home prices. If homes decline in value, the banks' greatest source of collateral--mortgages--declines and so too does the credit quality of the bank. Now if the banks hadn't been encouraged to lend as eagerly during the Bush years, they might not have such a vast inventory of unsold homes nowadays, but that's history. Likewise, if banks hadn't sold mortgages to other financial entities, and kept them, they might have taken more precautions with the creditworthiness of their borrowers. Instead the originating firms quickly sold the new mortgages away, which of course encouraged risk-taking with the quality of mortgage applicants, since the originating firm need not worry about whether the loans would eventually be repaid.

Enough of the history lesson...or not? Can we ignore what happened in the past? The shelf life of history lessons for most Americans can probably be counted in months, not years. So we're clearly primed for another crisis. And the careless way we approach the accumulation of debt means we're always deeper in debt than we care to acknowledge, meaning that we will face austerity measures like the Greeks, yet steadfastly refuse to acknowledge--perhaps due to our belief in American exceptionalism-- that we could be in trouble.

From personal experience I know it, that silent creeping of debt until it metastasizes. Once we "burn through our credit" we only two choices: to repay it or declare bankruptcy. With government however, there is a third option: print it away. If the government can continue to get the Federal Reserve to buy all its bonds, it will have an inextinguishable source of financing.

The Fed meanwhile will accumulate more and more our our nation's debt. For now, the American people don't have to deal with the immediate effects of so much borrowing. Because of the ridiculously low rates, the amount of our current budget devoted to interest payments is only around 7 %. And even if the amount we're higher, it'd simply be borrowed.

I'd make the case that until the average Americans is impacted by the scale of government borrowing they will remain blissfully ignorant about it. This is like a marriage where one partner is hiding the scope of their credit card borrowings from the other. Uncle Sam keeps getting new credit cards as he maxes them out. The US public--meanwhile--doesn't get the bill so they don't know just how bad it really is--until they--like the spouse-in-the-dark--discovers theircredit score has been violated and the debt load is not Uncle Sam's problem alone, but theirs as well.

The Federal Reserve is the enabler for the debt addict, which is our government. Fedgov has grown so bloated that it must have the Federal Reserve around to feed it, like some chronically obese fat man confined to a bed. Its weight keeps growing, and it demands more. Unfortunately, the only way to keep the status quo going is to disguise the scale of the addiction and thus perpetuate the state of denial until the enabler succeeds in letting the addict die from overeating.

Obviously government can't gorge themselves to death. So which form such a collapse might take is a topic for another day, but I'd highly recommend taking steps to prepare and mitigate the consequences of a collapse of purchasing power of our money, coupled with Depression-like economic circumstances unable to be remedied through quantitative easing in any quantity.

Creative destruction offers reset at great cost

2011-09-02T01:39:00.002-04:00

We're in a real bind now, as economic growth isn't terribly strong, yet the fiscal burdens of carrying so much debt forward will put further stress on our government's ability to stimulate the economy.

The problems we face are structural, meaning we can't expect improvement without attacking fundamental economic problems. One of these is confidence in our money. Another is the shift of industrial production overseas. Still another is real estate--as long as prices fall due to foreclosure (indicating too much house, too little income, or both) there persists too little potential for price appreciation, which was once the magic ticket for the Middle Class.

Another impediment is reestablishing trust in the stock markets--democratizing the stock market investing was a great plus during the Clinton years in particular. Now, with the average stock only being held for something like 12 seconds, the average investor is in the unfamiliar waters of predatory short-term trading. And dominance over Wall Street by hedge funds and TBTF/bonus-crazy banks mystifies the process of investing, turning it into an increasingly volatile casino with fewer and fewer players.

These structural impediments must be dealt with in order to reestablish real, sustained economic growth. Politicians can pretend changing this policy or tweaking that one will really make a difference. It can't. That's why the call them structural problems.

All the political haymaking can't amount to anything because Washington is itself the source of the problems. Look at Obama's performance, which has defied his pre-election positions on bailouts for the banks, Guantanamo, warrantless eavesdropping, Afghan escalation, to name a few.

Once a President makes it into office, their first goal is re-election, not meeting campaign promises. While making liberals happy is nice, the Clintonian effort to triangulate White House positions to appeal to the maximum wide demographic has made a reappearance. Call it neo-liberalism, the reshaping of political priorities based on profit-centered economic imperatives.

For Bush's second term, the targetted constituencies were NASCAR Dads and Soccer (security) Moms. The issue that was chosen was therefore national security, which of the two patriarchs (blue clan or red) makes you safer?

Tacking to the Right on security issues, Bush was able to succeed. Obama intends the same thing. Some disgruntled former supporters have called his Presidency Bush's third. And what are progressives supposed to do? Vote for the Republican candidate? There's no choice at all--Obama knows that--and progressive ideals are left by the side of the road, abandoned as simple smoke and mirrors meant to propel Obama into office, mangled half-truths and innuendo having served their purpose.

It's time Americans were less naive about the way their government works. We no longer have representation in Washington--it's a capital dominated by special interest groups and corporations. Money rules. The two-party duopoly and resulting lack of real choice means elections for national office are a simple veneer slapped over a non-choice between corporatist Dems and social conservatives.

Most Americans choose to not stay informed, nor participate. Apathy is no doubt a contributor. If your vote never seems to change things election after election, there's a good chance the past will repeat itself. Interminably. So many choose not to care.

With our monetary system, the price of ignorance will be quite high. People are already seeing price rises, portions shrink, or both. The number of Americans on food stamps is at a record high. Off-shoring has drained incomes and job security for the Middle Class. Boomer retirement savings are anemic. It's both sad and ironic that many from our nation's most productive and accomplished generation will be dependent on government handouts to meet minimal living standards in their old age.

It's like the final days of the Russian empire. When the USSR finally fell apart, it was the pensioners who were most hurt. Old people, retired government workers, apparatchik and the like felt the debasement of the ruble as prices in the newly formed Russian nation rose dramatically.

I'm anticipating a similar scenario like that in the future here, perhaps a situation like Argentina's about ten years ago. We certainly have ripe conditions for a radical devaluation of the dollar. Like Argentina, our government could be forced to "borrow" bank deposits in order to pay foreign creditors.

For now, the Federal Reserve is handling our government's fiscal crisis, meaning the fiscal crisis is being handled "in the family". Perhaps the Fed intends to keep on buying U.S. Treasuries indefinitely, using the dollars we let them lend back to us, with interest of course.

Now the Fed itself doesn't profit, despite the swollen balance sheet; its charter is elevated beyond the balance sheets and profit statements. It's instead the sheer volume of money that passes through their hands that presents the threat. The Fed allows our government to borrow so much--more than would be allowable without its limitless buying of Treasuries--that they've become an enabler, serving to saddle our Treasury with so much debt that we'll never be able to repay, at least not without debasing the dollar.

It's not a debt default or credit downgrade where the worst effects of dollar debasement will appear.

"The United States can pay any debt it has because we can always print money to do that," said Alan Greenspan on Meet The Press on August 7th. We can always repay--our Treasury can always print dollars up, at least --or create them electronically as only 3% of our money exists in physical form.

Inflation will be the problem. If it weren't for horrendous, unchecked unemployment--the product of the departure of so many jobs overseas--we'd be feeling it even worse. Instead prices remain lower--a lot lower--because overall demand has trailed off.

If the unemployment picture were to improve, wages and income would climb along with rising prices and demand for higher wages. These pressures would present the Fed with a threat to its mandate to reduce inflation. So the Powers That Be actually have a vested interest in seeing unemployment continue, whatever the human cost.

Now in the Fed's defense, they do have a mandate to maintain maximum employment, and this they've attempted to do by keeping interest rates low. That's what's known as a monetary policy. The Fed can try to influence interest rates but can't control them.

One reason monetary policy has limits is because of fiscal policy--control over how much our government spends--is so out of control.

As much as the budget brinkmanship failed to reign in spending in any meaningful way, I'd say it's inevitable that our currency weaken given the size of the apparently unending budget deficits. And if you think all the Republican posturing actually saved any money, you must've missed the huge savings of $7 billion in 2011 we can fawn over thanks to the Tea Party.

To make matters worse, the Republicans think we can have our cake and eat it too. Taxes have been vilified. Reduced to the lowest point in decades, Federal taxes are too low to pay our bills. The lack of tax receipts mean we must borrow. At some point even the Republicans will have to acknowledge the truth--that we're spending way beyond our means and despite all the rhetoric, they've been completely unable to reign in spending in Washington.

* * *

I wonder if capitalism is flawed. The Kondratieff cycle, named after a Russian economist, occurs every seventy years or so. Industries overuse capacity, the means of production have shifted to new countries, the means of production age and grow less efficient. Kondratieff thought that periodic busts helped restore capitalism's vitality, by forcing new creative solutions to problems plaguing the last economic cycle. Industry responds by forming modern processes that do more for less, enhancing productivity and starting off the beginning of another long cycle.

The price of gains in productivity and efficiency seem to be considerable economic pain. Maybe that's the only way a capitalist system can unburden itself of outdated and less efficient modalities. Creative destruction, so to speak.

The reality: technology makes it no longer practical to utilize as many people as we once did in manufacturing and agriculture. As an example, a few years ago Fortune 500 Company down the street put in a new, multi-million dollar machine in their factory. The total number of people needed to operate this machine: about 12.

Labor resources need to stay as nimble as possible to meet the elevated needs of high-tech manufacturing, where computer skills are vital. Paradoxically, a growing problem in American manufacturing appears to be the lack of adequately trained (technical degree or similar) working folk. This even as unemployment lines continue to grow.

Where capitalism should encourage retraining and redevelopment of resources, it seems more prone these days to reject outright those workers with dated skills. So merciless is the job environment that those unfortunate enough to be unemployed are actually being "delisted" on employment sites (see petition). Here's the e-mail fromchange.org, dated August 18th:
On Monster.com, employers are allowed to prevent anyone who is currently unemployed from applying for a job.
It's cruel to the millions of Americans out of work -- but you can put an end to it this week.
Kelly Wiedemer, who lost her job in 2008, has launched a campaign demanding that Monster.com ban these discriminatory ads. Please click here to sign Kelly's petition.
A nationwide backlash against the company, which treasures its reputation as a website that helps people find jobs, will force Monster.com to act.
Please sign the petition today asking Monster.com to stop discriminating against the unemployed.
Thanks for being a changemaker,
- Jess and the Change.org team
OK, so the message is clear: if you're out of work, you're on your own. The people who need jobs the most can be marginalized, like the homeless or mentally ill.

In the capitalist machinery, an individual is judged by the size of their bank account. The more you make, the more you can have. If for some reason you make less, it's because you deserve less. The message is an all-out assault on the ego: you're unemployed and deserve to be. How just like the treatment for a minority group that goes unaccepted by society. As minority group members know all too well, if you're not in the majority, your needs just aren't considered as valid. And if you fail at wage-earning, then our society judges you a failure. How binomial.

I'm disgusted by how people on the Right yearn for some mythical Ronald Reagan-esque time when all we have to do is for government to cut taxes and deregulate. Then everything will be fine once again. Well, it won't. We've burned through our credit--$14 trillion so far, with the present value of future liabilities like Medicare amounting to five times as much.

Now all that borrowing capacity has been compromised, we're left to turn to shady organized crime loansharks, otherwise known as bankers. The price of borrowing from them is that we must run our printing presses nonstop to churn out enough dollars to keep the Great American Money train rolling. This in economic terms is monetizing the debt, a process which leaves initial investors in dollar-denominated assets much poorer as newer, cheaper dollars are forced onto the economy, eventually making everything more expensive.

Hippie days here again?

Wanna cop out? Go the way of the hippies? Imagine a lifestyle today without the constant demeaning influence of things like jobs and money. I mean who needs that? What more noble ideal than to roll with the changes, liberated of concerns over superficial things--at least to the hippie--like jobs and money.

There was a real joy in touring with the Grateful Dead. I didn't see enough shows to qualify as a deadhead but did get to taste the life. Enduring the constant movement from venue to venue was really draining. Just a few concerts would drain you physically and emotionally.

I don't know how some people could continue day after day, show after show, city after city but it could be done! The lifestyle comes at quite a cost from constant indignities and logistical struggles. The reward actually comes in the little things denied this existence: peace, quiet, just stopping and smelling the roses becomes a luxury.

Perhaps freedom still waits on the open road. I've heard of a new breed of Americans who choose to live a nomadic lifestyle, searching for work from town-town. They use RVs as the modern equivalent of frontier wagons, except instead of settling westward, the "Workcampers" go in seemingly random directions in search of work.

See the alternet.org article by Michael Thornton here.

Workcampers might be an escape from the ordinary relationship between an employee and their place of work. The entire American suburb was a predecessor development even farther out of the city. Yet those migrations were matters of choice. The suburbs were more livable.

Perhaps the lifestyle of the Workcampers shows that economic necessity takes precedence in our lives. Like herds of migrating animals, they'll go wherever the work is.

This kind of lifestyle might be a free choice, like by retirees with sufficient income to survive this lifestyle. But the Workampers' state of constant motion depicted in Thornton's article work is more a matter of survival than choice.

Whatever criticisms that can be levelled at the migrant workforce, it's nothing new. During times of extreme economic stress, people from economically depressed states to move to states with brighter prospects. Gold rushes could motivate large blocks of people far into the hinterlands--all for riches. Today's modern-day equivalent is more like a travelling carny road show, and no pot of gold lies anywhere behind the rainbow just long, grueling hours for little pay.

Many 'Okkies' fled their home state of Oklahoma when the Dust Bowl of the Thirties hit. California took in many of them. If the economic equivalent of a Dust Bowl were to hit, people might pack up and move towards more appealing job localities, like lights at the end of the tunnel. Yet many of the jobs the Workampers get are of the minimum wage variety. And the more people who need lower, service-end jobs, the more challenging the hiring process and less well paying the offerings.

A community can't be built if neighbors are constantly coming and going. What of all the relationships people need to form? I guess as a Workcamper, you would make friends with those living a similar nomadic lifestyle.

Not sure how well the Workampers could reorient themselves to a particular community, much less be welcomed. As a Workamper visiting more sedentary friends, you could park your RV in the driveway like Cousin Eddie (played by Randy Quaid) in the Chevy Chase classic Christmas Vacation. (IMBD)

I've heard of rows of Rvs parking in California streets, next to the beach and so on. Something not so bad until it happens to you. It's easy to be progressive with where other people live if it's nowhere around you.

So the Workampers will always be a subgroup, with limited ties. In time, though, I guess recurring migrations could create bonds among the --literally--journeymen and women who make up their ranks. And at least it's a voluntary choice to not be bound by geography.

Some of us could probably benefit from a more mobile lifestyle. Loosen things up. Not to mention seeing more of our great nation. Best of all, by travelling we can see our surroundings a little differently, by expanding our minds.

Turning travel into a full-time lifestyle isn't easy. I guess photographers could do it. In the 19th century, newspaper publishers, for instance, would try out an area, printing as few as a single issue of their publication before moving on. Entertainers, traveling troupe might also be able to make it, though a great deal of talent might be needed to make a meager living from that career choice.

Of course there will always be the greats, who can market themselves at a premium. But they are few in number indeed.

Speed bump on the highway to hell

2011-08-02T14:58:00.003-04:00

I'm sure you've heard much about the budget crisis in Washington. A luxury it would be not to care.

"We've met the enemy and he is us." -Walt Kelly's "Pogo"

So much of our economy depends on government spending. We've become addicted to spending and can't admit it. So we pass a bandaid in order to get past the next election cycle.

You may have seen the now-famous Tea Party sign, "Government hands off my Medicare," illustrating the ignorance of Tea Partiers as to how deep their lives and futures are intertwined with the social programs they rattle on about.

Useless it would be to argue that the demographics are against their cause. The Tea Partiers have a point about too much spending too much per person, on government-paid medical expenses perhaps. It's not their organizational skills--or lack of them--that dooms the Tea Party.

It's their own success that dooms them. They've won elections, and been ushered into high places, but as they do, they must learn how to govern, and lose their positions as outsiders. Their electoral success brings popularity and with it vulnerability to corruption.

We can cut spending, yes, but it won't do any good without revenues. Imagine you're a family in debt. So much in debt, as a matter of fact, that you're falling behind, on the verge of missing payments. Would you--as one of the two responsible for managing your financial affairs--get more credit?

Our indebted couple might think to get an additional job unless one of the two wanted the other to stay home and raise the kids, or homeschool them. With only one spouse available to work, most people would reduce spending, but surely neither spouse would ignore the possibility of bringing in additional income from whatever source possible to pay off the debts.

Is the budget deal floating past the Senate going to cut spending anytime soon? The answer is probably not. Yesterday I saw an interview by Larry Kudlow of Senator John Cornyn (R-Texas), who confirmed that the initial savings were $7 billion for the first budget year. We're told to expect much more, through the new "supercommittee" which is to submit its recommendations this fall.

Well, $ 7 billion to come out next year but we're told to expect over two trillion in cuts over the decade. $7 billion! All this fiscal brinkmanship was over that tiny a sum? Heck, we're spending $2 billion + a week in Iraq and Afghanistan.

From the beginning, the "debt tax cut deal"--hardly much of a name I guess, but the PR is trailing the event, explaining the lack of polish--has been smoke and mirrors. We were told to expect real cuts. Weren't the Republicans adamant about stopping Washington's wasteful ways? That was the central tenet of the Tea Party. Unfortunately, whatever real virtue they offered has been compromised, replaced with a shell game.

The Tea Party can't be successful in Washington once it earns its spot at the table. Then it has its legacy to protect--its (mis)representation of the virtue of "shrinking government." Paradoxically, If it were to succeed in that mission, it'd lose its mantra, its raison d'etre. The Tea Party needs the big bad government as its Emmanuel Goldstein, to parade around during Hate Hour, just as Osama bin Laden was the boogeyman for not one but two preceding presidents 'til his usefulness elapsed.

So crass is our political system, and apparently naive our public, that saying that you are one thing is different from doing what you believe. Bush was a master of this Rovian-style approach. Obama is a fast student of this style of masquerading the public. The public--dumb, discounted or distracted--eat up all this drama. Or they ignore things: whatever happens happens. Baah.

If the people aren't willing to get informed and participate, nothing will change. There's enough ignorance about issues of great import like the impending collapse of our monetary system. I think it was Nicholas Biddle said, "If the American people only understood the rank injustice of our money and banking system - there would be a revolution before morning..."

Many good quotes can be found on this topic but here's one from Jefferson:
...this is the tendency of all human governments. A departure from principle in one instance becomes a precedent for a second, that second for a third, and so on 'til the bulk of society is reduced to mere automatons of misery, to have no sensibilities left but for sinning and suffering...and the forehorse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.

Jefferson tells us our nation is headed towards dystopia under these circumstances--"no sensibilities left but for sinning and suffering." Jefferson just assumes taxation will follow some episode of public debt, presumably through self-dealing, corruption, and hubris.

Another meme to follow is Jefferson's use of the word "tendency" towards an political sequence of events that have far-reaching socioeconomic implications. "Tendency" as I readit seems to be firmer an interpretation than the word "tendency" might provide in a more current reading of the word.

In the quote, Jefferson talks about a sequence of "departures," which I believe refers to progressive abandonment of Jeffersonian ideals of liberty and good administration. Going to war without just cause, for example, might be seen as a departure from the established balance of power established in the Constitution. Jefferson would definitely see Obama's use of predator drones as a "departure" as would be the continued imprisonment without trial of the Gitmo detainees.

The idea of our nation facing a string of "departure(s) from principle" is like negative momentum building up, bad karma we might call it today. Like Jefferson, we know the eventual outcome--monster strikes, killing in order the expendables first, then comic relief, up to the main protagonist(s)--but we don't know when it will start or end.

In the same way, the feeble non-resolution of our fiscal crisis is a departure despite the barking of the dogs. We keep borrowing and the passage of the most recent bill will do nothing to stop the trend. The debt is already there, and will continue to build. Combined with all the other "departures," we achieve greater and greater momentum away from the proper exercise of government.

The initial transgression, which could probably be traced to Ronald Reagan's time, was borrowing too much, or when we didn't really need it. Now if the Keynesians are right, we should retire debt during times of economic expansion and borrow only out of necessity.

We can't have our cake and eat it too. The only way out of a predicament of too much debt is to stop spending, yes, but an equal measure of taxation will be needed.

Fraud by another name

We should have discovered during this process that social security is broke. Otherwise why else would social security be vulnerable to cuts? If the assets in the Social Security Trust Fund were truly liquid, then they could be sold to meet fiscal obligations quite separately from whatever was going on with the budget.

Subjecting social security the vagaries and political whims of future funding battles has to be considered a victory for the Right. For years, they've been saying how social security was going broke. Thanks to this budget-cutting deal, the Republicans can now put social security on the cutting block through the rest of the decade.

I think the progressives have aided them in this task. First Robert Reich has every reason for people to believe that social security is solvent, as it was in his role as Treasury Secretary during the Clinton administration that the Social Security Trust Fund was raided, its assets stripped to help balance the budget and even run a surplus, as Reich is so fond of saying.

Over the years since the theft, liberals have repeatedly explained that social security is solvent and that Republicans simply assail its solvency in order to dismantle the "third rail" of American politics.

If Reich and Clinton hadn't raided the fund, then liberal prognostications of solvency would be well founded , and their expose of Republican motives justified. Instead, Social Security now has a vast pile of IOUs--not marketable Treasuries mind you--that it can't sell. So now it must stand in a long line of creditors owed money by the federal government and depend on the whims of Congress to get back what was taken from it.

Way out

The more depressing and confusing our budget problems appear, the more expedient it becomes to simply print money. Now in defense of the Federal Reserve, whatever our government spends must be listed as borrowing. Thus the total debt(listed at some $14 trillion although the future liabilities are far greater) does grow when the Fed buys government bonds. They now own more Treasuries than anyone else, surpassing the holdings of China and Japan.

When the Fed loans vast sums to fiscal entities through its various discount windows and lending programs, those amounts aren't included in our nation's debt. Now as banks borrow from the Fed, they beef up its balance sheet. Our Treasury meanwhile sells debt to the Fed to fund government operations. The Fed is of course benefitting from free money which it creates digitally. And in return, tax receipts are fed directly to the Federal Reserve, to pay for all the interest on the people's debt held by the Fed.

This loop explains why the Federal Reserve and IRS were created at the same time. Without any real revenue--taxes--coming in, Congress could spend to infinity and there'd be no consequences because it need not pay any interest at all. So through interest rates, the Federal Reserve assigns a value to money, to make it worth something. Without the interest function, our money would be much more vulnerable to inflation. And with Congress in sole authority of the issuance of our money, chances are they'd issue a lot.

This could be good in a severe recession like that which we face today. The Nazis actually issued their own money; this helped speed the German out of the Depression. Rather than let bankers--many of whom were Jewish--control their money supply, they made interest-free loans available to middle class Germans. The act of simply removing any interest obligation does wonders for stimulating the economy.

Well, I'm afraid our Congress isn't run sufficiently well to take over the issuance of our money. The COngress as it turns out, votes every year, to re-authorize the Federal Reserve;'s control over our money. It's a flawed system but it does restrict spending by making government pay an interest rate.

As interest rates rise, so too does the proportion of spending that must be devoted to the payment of interest. Right now interest rates are very low and the interest burden is something like 7% of our budget.

Clarification: I have been caught correcting myself on the actual amount that our government pays in interest every year. Originally, I had it pegged at around $250bn, then I gathered it to be around $400bn. If the average interest rate on outstanding debt is 3% or so, our $14 trillion translates into more than $400bn a year.

In the course of my research on this matter, I see that the amount varies between how much is "public debt" or debt held by the public: investors, foreign creditors, banks, etc..

US government debt held by agencies of the government and Social Security isn't counted as public debt. Therefore the interest on publicly held debt was under $200 billion in 2010. Add in debt held by governmental entities, with social security holding perhaps $2 trillion in IOUS and you have another $60 billion plus of non-public debt, still far less than $400 bn.

As interest rates rise, it's likely that Fedgov will find creative accounting ways to avoid paying the vast sum of interest it owes, particularly to inter-governmental agencies.

I apologize for the inability to get the numbers correct, but perhaps I can blame the way government collects its statistics--and they're reported in the media--for some of my problems tracking interest payments, which are really one of the few ways government is held accountable for what it spends.

Finding a way out of our predicament could involve the creation of state-level banking, an idea that has North Dakota as an example. But as long as the Congress and its puppet-masters in banking control our monetary policy, we will be at their mercy. Our money will necessarily devalue and those who continue to hold it will see it buy less and less. This fundamental truth explains why gold is setting records.

Not to give advice, but you could go the way of the gold bugs and win simply by virtue of the inescapability of our fiat money system, coupled with the inevitability of imperial decline. I doubt many of my readers will want to be locked into an asset class that pays no dividends. Nor does investing in gold/silver stimulate our general economy. So some portion of everyone's portfolio can't be in gold. Plus gold is quite volatile and the current Depression could leave commodity price lower than they otherwise might be. Until recently, the money supply has actually been shrinking despite QE2 (see Ellen Brown's article from May.)

QE3 is likely on the way, made more likely by virtue of slower growth in government spending (G). Yet it remains to be seen if a push (expansionary) monetary policy can stimulate, judging from the results of QE2. Like any commodity, the more of it there is, the less of it is worth. So it is with the dollar. That's why gold is nearly $1650/oz. today.

Additional Sources

Here's a translation of an article from the French paper Le Figaro.

It considers the Republican methods "blackmail." The idea is that by pushing the nation to the brink of default, Republicans can exert control over the legislative process. Obama can only demur to the Right, and tack towards their position, namely that Medicaid and Medicare need to be cut.

Obama has a track record of moving to the Right--if he wasn't there to begin with and just posing as a progressive during his campaign. Reviewing his positions before and after his election, there's a trend towards appeasing the Right, as he did with the Afghanistan "surge" as well as keeping Gitmo open and unresolved, and now by caving on "entitlements."

While we may be spending far too much on medical care, and there's definite room for improvement, I think it's the Right that's won the budget debate. The passage of the budget in the House garnered more support from Republicans than Democrats. Going into the negotiations, I know that progressives were upset by the prospect of keeping taxes as low as they are on the rich, while putting benefits for the middle and lower classes in jeopardy but it would seem as if Obama has taken the Left for granted. I'm predicting this will be a big mistake in 2012.

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Daily Bail. Great graphic summary of revenues and expenses. Fiscally sound antiwar perspective.

Center on Budget and Policy Priorities: Little dated but summarizes the situation with the now-failed Boehner about a week ago.

Previous defaults on US debts have occurred. See this article from blacklistednews.com

Lots of charts and data points here.

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Fiscal insanity ensures economic crisis

2011-07-05T21:45:00.010-04:00

American democracy is a new creation. We've had our share of growing pains. Most often it's economic crisis that offers us a real opportunity to change-not just to recover economically but build a better system.

We need to change. As consumers, most Americans spend too much. And we know a good percentage of spending can be traced back to consuming too much or,--to be more accurate--our inability to control our impulse to buy. Sure we don't admit that we cave to readily to these desires, crafted by marketers in our subconscious, waiting for external motivators to kick in. The average American views hundreds of thousands of commercial messages; can we say they don't affect us?

We have a political system that advocates Keynesian response--i.e. government as spender of last result. By spending, we create economic activity this is true. We can't however say some improvement in the inexact science of economics isn't needed, as Keynesianism is over 70 years old.

The sheer scale of borrowing justifies additional caution and concern, as well as a fundamental reassessment of government's ability to be truthful. Having been lied to about Iraq, we'd be fools to trust whatever our government tells us. I guess the relative youth of our system of government invites naivete; at the very least political participation is a requirement; without informed citizens it's our government that suffers and in turn our nation.

We need to identify ways to improve our political system. More and more, politics and economics seem intertwined. Any economic system so dependent on government spending--whether for wars, "entitlements," or other forms of spending--becomes politicized.

In our recent case, political power is converted into stimulus spending. Those with the most power and influence in Washington determine through their politicians of choice how federal money will be spent. Judging by the sheer volume of debt, and the inefficiency of government spending vis-a-vis private investment, the monetary system is subsidizing the fiscal spending, which is sustained only by the willingness of private bankers to accumulate Treasury debt to infinity. By lending they stand to make the interest owed them by the Treasury. Still, this process of monetizing the debt has already driven away foreign purchasers of our debt. How soon before they demand more interest to lend to us? Maybe the plan is to let the Federal Reserve replace other purchasers of our debt. This might keep Treasury prices higher than they'd otherwise be. Yet as the total amount of federal debt mounts, the credit quality we can offer and the value of our money itself will decline.

A sovereign debt downgrade may offer us the impetus to change our ways. Yet if borrowing gets more expensive, a contraction of spending will occur. The economy will tank as government spending shrinks in response to much needed austerity measures, not too different from what we're now seeing in Greece. I saw one estimate that put the total amount of government spending cut by the Greeks--if it were an economy the size of ours--at some $800bn already, with an additional austerity package up for debate which would cut some $400 billion more. Could we stomach such a cut?

Tackling our fiscal irresponsibility now involves understanding the impact of so much debt on our currency--the value of our money itself. This link is vital because it will become increasingly difficult to protect our assets. Denominated in dollars, they will decline in true worth even if they look better on paper.

Few Americans are really capable of understanding this impact. The suffering will fall disporportionally on the poor and working classes. Wealthier people meanwhile will enjoy the benefit of higher interest rates which will try to stem the inflationary tide. Unfortunately, cutting wages or even spending won't do enough to keep inflation in check. As it is, we're suffering an unemployment rate that's probably cut average salaries dramatically, if the government is willing to count these things accurately. We do know average wages are flat since 1980. And we also know the vast majority of increases in income since the last (acknowledged) Recession have gone to the corporations and wealthy.

Speaking of predictions, I called the market top a few months ago and the performance of the Dow has been sideways, excepting the last week or so's performance, which saw the major indexes going higher.

I don't give investment advice in this blog so I can't brag about my silver advocacy a few years ago or my more recent, fairly accurate sideways prediction on the stock market. There are valid reasons not to advise people about their wealth that go beyond misleading them. I do my best to bury anything remotely considered giving advice for two reasons; first, I'm wise enough to know I don't know enough to make highly accurate predictions. Second, making big bets on specific investments violates the doctrine of diversification.

Better the tortoise than the hare: better a balanced approach to one that bets too heavily on one truism, whatever its validity. For instance, if one were to think that the very expensive process of unifying Germany in 1990-1 would have been sufficient to devalue the German currency, the Deutschemark, one would have guessed wrong. The Deutschemark rose in anticipation of the medium term trend towards a much bigger and stronger Germany.

Personal experience matters. Those of us who experienced the dotcom boom and bust around 2000-2001 have since gained the benefit of experience in controlling impulsive stock-buying urges. Like lemmings, humans tend to imitate each other and chase hot stocks and high returns then just as eagerly panic-sell into the inevitable correction.

For a private client, I tracked mutual fund sales through that period and saw that investors got out about six weeks to nine months after fund performance declined (the time difference was attributable to the delay in reporting results, typically expressed in quarterly statements.) Once a sector tanks, the funds are forced to sell to meet redemptions, a deep-seated structural problem for mutual funds that can add to whatever losses the fund is experiencing.

Not to predict or anything, I'm anticipating a major market correction, one we know will be coming. It's not if but rather when the correction comes that is the question. Regrettably, I can't say to get out now because the opportunities of the market lie to some degree in weathering these storms. The secret: we can't predict when and therefore can't shun the market. So I guess rather than serve to warn, my advice services the crucial need to keep your money working as hard as possible.

With interest rates on savings at zero, there's no way to come out ahead of inflation. Inflation, I'd read, could be calculated as high as 10% if the same measuring criteria were used now as were used under Fed Chairman Volcker in the Seventies and early Eighties.

It doesn't take a genius to know an inflation rate of 4% (give or take where we could easily be today) requires a rate of return of 4% to stay even. [One important caveat to take into consideration with governmental statistics is its propensity to avoid paying out as much as it has to recipients of Social Security benefits, the so-called COLA (Cost of Living Adjustment.) Similarly, one wonders if Fedgov would acknowledge inflation if it meant it had to pay out more on its TIPS (Treasury Inflation Protected Security) bonds, which pay a rate of return determined by the government's statistics.]

Correction: I'd previously estimated the cost of servicing our nation's national debt at $300 billion in previous post. I just learned that the total cost was over $400 billion in 2010. That number is based on a rate of return of about 3% on holders of our government's debt. Future interest payments on our debt means a bigger percentage of our spending pie must go to service the debt.

Now if inflation infiltrates the system, governmental tax receipts will grow. Then again, everything--I mean everything--that government spends money on will grow more costly.

Rising labor costs have been a large component of inflation, and so government would be expected to pay more to attract and retain workers. Already the average Federal employee makes twice as much as the average private sector employee, according to the USA Today (link below.) I doubt Federal expenditures could shrink in that environment. The nastiest impact of inflation is of course the impact of rising costs. Try as it might to doctor the stats, Fedgov can't deny the epic increases in the cost of medical care, for instance.

There is one advantage to higher outlays: the cost of servicing the debt might grow in nominal terms but not as a percentage of total spending. If Fedgov can increase its tax receipts, it could glaze over inflation's nasty impact on the cost of borrowing, a consequence of interest rates rising in an effort to combat inflation.

Increases in Medicare and Medicaid expenses will be compounded by demographics--one of those "hard limits" I talk about here. No matter how self-important Washington may think itself, it can't hide from the demographic trend. Therefore, budget realists have turned to ways to shrink the cost of health care outlays. There, a mostly GOP-led effort to cut spending has been met by inevitable political resistance.

I'd hesitate to call the Democratic resistance to cuts in "entitlement" spending a hard limit, as the GOP has been able to push through controversial legislation despite Democratic resistance, particularly under Terror War doctrines and the effort to purge America of certain inalienable rights like that to privacy, and against unreasonable searches and seizures first diminished by the Drug War.

As George Carlin said, they ain't rights if they can be taken away. Wherever the legal reality sits, the direction of the Fedgov is towards more, not less, intervention in the lives of its citizens, alongside the accumulation of too much debt. We're in an where perception is reality, though, which makes it easy for politicians to play on the general sense of denial among Americans. Political reality is shaped not by these budget realities but rather the idea of self-interest: the classic Tea Party poster saying "government hands off my Medicare" comes to mind.

Political parties can be compromised. We saw it with the Tea Party. As I said, when they went under the GOP tent, apparently to change it, they ended up being compromised by hardcore social conservatives--long the bane of the free-thinking libertarian left. Gingrich, Bauchman, and Palin began speaking to Tea Party rallies, claiming to be "one of them." Real reform-minded headed for the door, relegated to chat rooms and lonely blogs far outside the mainstream.

So political movements are bound to compromise. And even if they experience some levelof success, they are bound to be co-opted. As I predicted, once those who claimed to being Tea Partiers made it to Washington, the capital would corrupt them. Nonetheless the speed of Mark Rubio of Florida 's conversion from Tea Partier to Establishment insider astounded me. Then again he had a glowing example of pre-/post-election duplicity in our President.

So politics can't be a real hard limit to the expansion of American empire. Laws can be. But we saw that laws can be perverted by legislative bodies who either offer loopholes in exchange for the right campaign contributor, or spew so many laws governing so many aspects of our lives that their enforceability comes into question. The law is only as good as its ability to be followed, which is a function of its utility and viability.

It's not the laws themselves that pose the threat to freedom, but rather the corrupt politicians who service the interest groups, PACs, and corporate lobbyists who dominate the Washington Establishment. As teh Obama and Rubio examples show, most politicians aspire to join the clique, permanently, and enshroud themselves in the many benefits of a system of cronyism and exclusivity, in a system largely devoid of any sense of moral virtue.

Capitals are always the centers of empires, and reflect the attitudes of the empire's elite. Our empire is no different from others in history, despite the rabid exceptionalism that haunts our nation, typically manifesting itself in extremist views on militarism and patriotism.

All empires believed themselves immune from hard limits. It's of course the hard limits that doom them. In our case, we've been borrowing too much--a hard limit. And we have a rapidly aging demographic, and the most politically active one, demanding government services.

The absence of integrity in the capital, and the lack of turnover has let the legal limits on imperial authority wane. Without new politicians able to keep their campaign promises, our leadership serves itself. Its time horizon never exceeds ore than two, four, or six years--the amount of time before the incumbent has to face their next election.

The Republicans have been holding the budget hostage, using the August deadline to force accountability on a system that they created. During the Bush years, spending exploded. Yet now we're to believe the Republicans are the party of fiscal discipline? If there's a hard limit in the ultra-tolerant receptivity of the generally naive American public, surely it must be tested by claims of fiscal responsibility by those responsible for the greatest overspending of any empire in history.

Perhaps the unreality of all these wars and gross mismanagement of the public's finances has spawned other non-realities, other anomalies in time and reason. Under the harsh light of fiscal limits, these minor indiscretions have morphed into outright lies, so entrenched and thick they've formed the underpinning of the relationship of Fedgov to those it governs.

The new fabric of lies advances the fringe of fiscal lunacy as sound reason. Fiscal brinkmanship threatens our ability to pay our bills, but our money has been under attack for some time. The Establishment has concluded it can create its own money machine in the form of quantitative easing, which is really a process wherein the government's debt is purchased in growing quantities by financial entities who know the original principal lent will never be repaid in entirety, what I called a de facto interest-only loan.

In my last post/diary, I advanced the hypothesis that hyperinflation could come here. If the American people remain as ignorant about financial issues, and as uninvolved politically as they've been, the fiscal deterioration will be utter and irrevocable.

Rather than see the coming financial crisis as a single event--an isolated spot on a timeline, like history class--I'd look at it more like a slow motion train wreck. Damage will not be uniform across all sectors of the economy. Some may recover and grow, while other languish indefinitely. Manufacturing springs to mind. I saw a good special on CNBC about China and its predominant role in exports and the future of global manufacturing. The indication is that China will continue to take jobs away from developed economies.

Absent any turn away from free trade, the manufacturing sector here will be decimated, much to the glee of the anti-union neoliberals who run economic policies in Washington. Already, we see the financial sector and service economies being promoted as replacements. We all know service economy jobs aren't enough to pay the bills.

And if you believe they are, please, pleeeaaasse, get out more. Here in the fly-over reaches of the Heartland, we're still in a severe Recession, to the point people come by looking for work just to meet their bills. Many of these people held factory jobs, and were displaced by a lack of forethought as to the impact of NAFTA, which did eliminate most of the American manufacturing sector.

Many libertarians are advocates of free trade, but I don't think they know Walmart is owned chiefly by the Chinese government, not exactly a poster child for individual rights and liberty they claim to be protecting. Likewise, I don't think $200/month sweat shop labor can be considered a victory in the advancement of individual economic success.

Instead we now see in America a crass consumerist lifestyle, one which depends not on hard work and saving but on borrowing. The mantra of spend more has led to an entitlement culture, one in which people demand that government provide for them, an unsustainable nanny state hardly the model independent-minded people should endeavor to attain.

The ideals of the Founders are gone forever. The idea that we can have our own space and freedom at the same time is no longer viable under the current government

We can see the impact of rampant consumerism on our climate. From fossil fuels burning in combustion engines, too much CO2 is being released into our atmosphere. We don't know definitively what portion of climate change is attributable to man-made emissions, but it's undeniable our climate is changing. Storms are stronger, droughts persist, hurricanes worsen.

The libertarian paradise has become a paradox, one where the rights of the individual need to be subordinated to those of the collective. If people aren't willing to learn more about how they can prosper, and assume all responsibility for their future, there's no outcome other than economic collapse.

Already, our ability to to save, and to get ahead have been undermined by our government. These are fundamental property rights. Without the ability to use alternative currencies, Americans will be forced to use fiat currencies with a constantly declining worth.

All the dour prophesies I'm introducing might detract from my premise that there are very reasonable, well established limits on the continuing growth of empire. But blind decisions made to further the accumulation of power by those at the top will be felt far down the ladder. As a matter of fact, it's the manifestation of poor economic planning and policies at the top that ultimately brings the established political order down, given enough popular opinion and political mobilization.

If you can't feed your family, for example, promises to help coming out of Washington don't matter. Then again, attributing the fact you're poorer to NAFTA, or Fedgov, is a far more elaborate intellectual exercise than most are capable of, I'm afraid.

The reaction of the people to the underlying truths presents a marked threat to the existing order. If the people wake up to the injustice of a pyramidal economic system that serves those at the top, they might well be able to change their fate.

This explains the emphasis on dumbing the population down, to control the flow of information just like the days of the old Soviet empire. Americans seem especially prone to believe what their government tells them, which could well make avoiding a reckoning impossible.

Information poses a threat, yes, but it's actually doing something that's necessary to affect change. And as I've said repeatedly, pulling a lever isn't enough. As it is, our two-party system consists of a very limited choice of candidates. The incumbents may get voted out, but as we saw in 2006, 2008, and 2010, they end up getting voted back in. Without any challenges to the two-party duopoly, the two parties end up just transferring power back and forth, in a charade of real choice that makes a mockery of the concepts of change and representation.

So the political system is incapable of providing an impetus for changes in the policies that are hurting us economically. Chief among these is free trade that make no allowances for displaced workers, the environment, or labor rights, which are ultimately political rights because they allow for unionization and an improvement in the quality of life through higher wages and more leisure time.

Millions of Chinese forced to endure atrocious working conditions is hardly a shining representation that American's model of hypercapitalism and over-consumption should offer to the world. Our spending needs to be done on things made by our countrymen, unless of course the ideal of spreading market fundamentalism justifies turning foreign laborers into "automatons of misery." I guess the plan is to further some political goal like exporting individualism or strengthening foreign economies through industrialization abroad--making things there then importing them here.

In time, the Chinese workers will ask for more. They might even explore their right to collective bargaining, and thereby open up new possibilities for the exercise of newfound democratic ideals created not by observing the status quo but by challenging it. A combination of individual dignity alongside economic opportunity can present real change to the political system if it reaches critical mass.

In this respect, globalization is more than an economic force. Yes, it is true that political empowerment is tied to economic conditions. As people are disenfranchised economically, they often become disaffected politically, which typically doesn't encourage further political involvement. Thus economic development does offer the potential for the people to change the course of political development, to refine and improve their system of government.

Outside the US, where living standards are rising, the power of labor can become a force for change. Market fundamentalists view unionization as a threat, but it may be the best method for reaching people excluded from political participation. Bringing all the people from developing nations into the pluralist, globalist worldview might not be that bad for America, as wealthier people are likely more receptive to democratic principles and ideals, once they've attained a certain level of economic security.

Rather than look at democratic forces as a negative, they can be a huge source of energy and possibility. Look no farther than the GlobalRev sweeping the Mideast for an idea of how much difference political participation can make. Rather than try and clamp down, governments might do better to roll with the changes, and cede certain inalienable rights to their people, rather than assume political participation presents a threat.

It'd be an awful shame if the U.S. lost its status as the embodiment of ideals but I'm afraid the current direction of the regime holding power in Washington is on a collision course with the will of the people, which is being underrepresented and underserved by the present system. While populist rallies like that which occurred in Madison, Wisconsin in March could save schools and encourage reform, this is unlikely to happen in Washington in time to save our nation from the monetary and fiscal disaster that is approaching.

Maybe it's only through "creative destruction," that real change can be wrought. At this point, public indifference and political apathy have made change on the scale needed impossible to avert tragedy. However perhaps on the state and local levels of government, fiscal ruin might encourage a new era of fiscal prudence, which might be shaped around the issuance of new currencies not controlled by a recklessly spending, distant capital.

The price of change is much higher the longer we wait because each day our fiscal situation deteriorates. So unlike previous crises, momentum is negative. It can only get worse 'til it gets better. Unfortunately, the time horizon for a monetary recovery might be well past 2025. If we hit bottom sooner, the date of real recovery, based on a new sound financial system will no doubt come sooner. If we dally, the destruction will no doubt be greater.

Like the Great Depression, things could get sufficiently bad to force Washington to take corrective action but by then there will be little Fedgov can do because of their dismal fiscal position. Their ability to borrow will be terminated, meaning they'll run the printing presses to pay their bills. The flow of that money will cause severe inflation and punish savers, diminishing the value of their property and decreasing inflation-adjusted returns on all dollar-denominated financial assets.

Sources
"Overworked America: 12 Charts that Make Your Blood Boil"
http://motherjones.com/politics/2011/06/speedup-americans-working-harder-charts
-See the blue line, Average overall wages, in the first chart, titled "You have nothing to lose but your gains"

"Inflation Actually Near 10% Using Older Measure"
http://www.cnbc.com/id/42551209

"Federal workers earning double their private counterparts"
http://www.usatoday.com/money/economy/income/2010-08-10-1Afedpay10_ST_N.htm

Add-on's (post-writing)
http://www.libertycoinservice.com/images/stories/lcsnewsletter/current/currentnews.pdf

http://theintelhub.com/2011/07/01/how-bankers-own-the-earth-and-then-some%E2%80%A6/

http://www.bloomberg.com/news/2011-07-05/the-sorrow-and-the-pity-of-another-liquidity-trap-brad-delong.html

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Is hyperinflation coming?

2011-06-02T15:11:00.003-04:00

Some say yes. Shadowstats.com has a March 2011 report titled "Hyperinflation Special Report." It states:

"GAAP-based (generally accepted accounting principles) accounting then showed total federal obligations at $50 trillion—more than four-times the level of U.S. GDP—that were increasing each year by GAAP-based annual deficits in the uncontainable four- to five-trillion dollar range. Those extreme operating shortfalls continue unabated, with total federal obligations at $76 trillion—more than five-times U.S. GDP—at the end of the 2010 fiscal year. Taxes cannot be raised enough to bring the GAAP-based deficit into balance, and the political will in Washington is lacking to cut government spending severely, particularly in terms of the necessary slashing of unfunded liabilities in government social programs such as Social Security and Medicare."

Even if our government taxed every penny of wealth of every citizen in the nation, it wouldn't meet this obligation, estimated at $70 trillion. And even if all Americans were willing to go to work for the government without getting paid, to pay off our national debt, we know this would just encourage further spending sprees by those in Congress.

I'd heard that even if the incomes of everyone in the United States making over $100,000 were seized, taxed at 100%, it still wouldn't cover the budget deficit for this year at $1.6 trillion.

Propping up the Ponzi

The vast amount of money owed isn't a problem if the Fed simply buys up the government's debt, using freshly minted (or created into existence digitally) dollars.

The Treasuries that the Federal Reserve buy allows Fedgov to keep on functioning, despite the huge gap between tax receipts and expenditures. The gap is growing as receipts decline, due to massive tax breaks, and expenditures increase due to unfunded wars and "entitlements."

The scheme does break down when interest rates go up, or a sovereign debt downgrade happens. In their debate Tuesday over extending the debt ceiling, some members of Congress actually cited the S&P's reports on the possibility of a reduction in our nation's credit ranking, an event which would overnight make borrowing much more expensive.

If a debtor, even the size of our government, has too much debt then its creditors will react. Most often lenders demand more interest income in exchange for accepting the higher risk level associated with government debt.

If interest rates for government debt go up, other forms of debt issued by the private sector must necessarily go up. The reason for this effect is simple: if the government can print money to pay back its creditors, there's no credit risk at all. In reality, no matter how much debt Fedgov sells, it can simply print up the cash when they mature. On the other hand private corporations and states must actually accumulate the revenue by which they pay back their bondholders.

The relationship between the Fed and the banks creates a negative status quo, allowing the US government to borrow far more than other debtors ever could, given the total amount owed and questionable ability to pay it back, except through printing it. The method that allows the borrowing to continue unabated is when bond proceeds are rolled over, reinvested in the new debt.

Purchasers of US government bonds often use maturing AAA Treasuries and agency debt to buy newly issued AAA government debt. This replenishment function allows the debtor to keep borrowing, and disguising to the creditor his dependency.

The creditor in this situation becomes co-dependent, nurturing the debtor's habit to the point they feel obligated to continue to invest in Treasuries, or else bad things can happen. Of course there's the possibility that a financial entity choosing to cash out could be "Lehman'ed" or denied the privilege of borrowing new money from the Federal Reserve. Keep funding government through purchases of its debt--whatever its attractiveness--and your place at the trough will remain assured.

Another risk inherent in cutting off the debt addict is the possibility that the entire debt could become worthless, a write-off. As it is, the tax receipts drawn through the government offer enough to pay off the interest. US government borrowing in this respect is an interest-only proposition, as the total amount of debt--revalued to net present value--exceeds the ability of the US to repay.

Bad debts considered good

One way to cope that a lender can cope with debts that can't be repaid is to deny it. The best example of this might be from Japan's banks. From the beginning of the so-called Lost Decade, Japanese banks steadfastly refused to write off bad debt they were owed, largely from established clients in with huge investments in soured commercial real estate.

Rather than cut off their clients, the banks opted to preserve relations--a euphemism for looking the other way. It was easier on the bank's strained balance sheets to maintain the presumption that the bad loans weren't bad. If the loans were revalued to their market value, the losses would impact the banks' profit and loss statements and their stock market performance.

In some cases the banks went so far as to actually make new loans to their existing clients no matter what their creditworthiness. Better to preserve the illusion that their biggest clients were the best than to put into question the quantity of debt they'd lent, an issue that would reflect very poorly on the bank.

Relationship banking, with a price

Why is the Japanese example so important? An image-conscious industry, banks in particular are prone to bury their losses and misrepresent the credit quality of their holdings when it helps them. This is especially true for mortgage-backed securities. If the houses can't be sold for anything near their stated value, the banks have to recognize massive losses. Instead, it's easier to hide the scope of mortgage credit quality decline, and far more prudent as home mortgages provide the bulk of a bank's collateral. To qualify for government assistance, banks need to make home loans. The more mortgages a bank has on its books, the more it can borrow, then lend.

Home loans made in the past--many with a lack of caution--need to be preserved on the banks' books or they lose their chief source of collateral that allows them to draw more capital from the Federal Reserve and federal lending programs. Naturally, when the values of the mortgages unwind, so too does the stability of the bank's overall portfolio, as it needs to maintain a certain percentage of its outstanding loans in cash, a task made hard-to-impossible when the banks' main source of capital--mortgages--are constantly losing value.

This fear of marking-to-market may explain why banks are content to keep mortgages locked down rather than offer them for resale at prices far lower than the original mortgage, a process that would require them to recognize their losses. And considering the capital that they draw on from each mortgage may be levered nine or ten times, the amount of outstanding loans are vulnerable to capital requirements. According to the federal lending scheme, once the collateral banks use to borrow--the mortgages they lend--drop in value, vast portions of a bank's lending portfolio must be reevaluated based on the risk once the underlying collateral dissipates.

Banks borrow. Without that ability, they couldn't make money, especially in a declining real estate market like ours today or Japan's in the recent past. So it's the mechanism--a scheme really--that allows banks to borrow using mortgages as collateral that continues to threaten the economy.

Any effort to stimulate spending by loaning more to the banks has actually done nothing to help the economic recovery. Quantitative easing has failed to produce real economic gains; it may however have stymied even worse outcomes than slow growth we're now seeing in the U.S..

One big reason for the failure of so much easing to stimulate the economy is that the stimulus isn't getting into the hands of spenders. Nor is it going in to the purchase of new homes--new home starts have declined, there are fewer buyers as well. Where did the money go? To balance the books of the banks. The need to recapitalize was based on a decline in the real value of their mortgage holdings. With mortgages worth so much less, banks could only absorb the cash to cover tightening loan loss provisions--requirements imposed on banks in times of a deteriorating credit environment.

Back in the roaring mid-00's, Freddie and Fannie had no problem pumping vast sums into the mortgage market through the banks. Housing values were climbing, demand was higher, as evidenced by the number of starts. People were working and able to buy more house (more than they could afford in many cases.)

That all changed when the housing market went bust. To make matters worse, the decline of the financial economy meant the real economy went with it. Housing, you see, isn't just another industry; it's a bell weather of the general economy. Look around you and see how many people worked in housing at the peak of the bubble. Many are currently unemployed--most seem to have left the new home construction business permanently.

Of course the damage to the real economy carried over to the banks, who saw profits on mortgage-backed securities turn sour, and even worse, many of these debt instruments were/are impossible to value and thus illiquid, at least until Bernanke and the Fed agreed to accept them in exchange for AAA Treasuries, in what was a outright transfer of risk from the private sector to the public.

Of course all that crap the banks pawned off on the Federal Reserve is toxic. Just like the commercial real estate debt that the Japanese banks carried, the MBSs were concealed from public view, where the public or bank shareholders might give pause to what they were told about their valuations.

And now the Federal Reserve has to keep buying government debt to manage the completely unsustainable deficit. The mortgage securities they bought at the height of the financial crisis languish deep in some Federal Reserve vault, unable to be sold and thus unable to be valued.

An asset of indeterminate value is worth far less than a low price, meaning that the Fed and everyone concerned would be better off--although not in the short run--to open their books to the world and create a market for all the MBSs where price levels can be determined. Otherwise the motive to obfuscate will continue, and weaken the Federal Reserve's fiscal condition.

Finding religion

One area where help could be bestowed on this process is through the nomination of Harvard professor Elizabeth Warren to a post of power, a move which the Republicans and Wall Street have vigorously resisted. By putting Warren in charge of at least some of the much-needed regulatory reform, a new precedent concerning transparency can be set.

Without creating a means to sell these depreciated securities, the assets on which they're based, the houses themselves, become illiquid. Foreclosures become questionable. Even the banks' own MERS computer system can't identify the paper trail establishing rightful legal ownership of property. Apparently during the boom years, everyone was in too much of a hurry to actually follow proper procedure, as determined as so many issuers of the original mortgages were to sell them off. So vast numbers of mortgages were bundled then sold to anyone who'd buy them.

Now, trying to reestablish who actually owns the properties has become uncertain in many cases. Besides, since the mortgages are bundled and distributed to different buyers, no single security holder can claim exclusive ownership of any single property. Legally trying to foreclose can therefore become a thorny issue.

All the while Fedgov has done all it can to insulate the banks from excessive risk-taking and borrowing during the boom years. Of course, handouts from the Federal Reserve (which found their way into the central bank of Libya no less) just encourage more risky behaviors. Rather than punish those who took too much risk, the consequences are mollified, undoubtedly encouraging more poor decisions by bankers and more systemic risk as all those bankers start swapping derivatives among themselves, thereby allowing new bubbles to be created for short-term profit--precisely the problem that got us into the 2008-9 mess.

How can it not happen again? How can the perfect storm come apart? It's possible to make our dollars stronger if enough of them are destroyed. If housing gets bad enough, and homes lose value, it's possible to shrink the money supply--a phenomena that just happened. Money--or, to be more accurate, bank credits--actually disappear, making the dollars out there worth more, a deflationary happening. Couple the drooping housing prices with broad unemployment and you have a recipe not for inflation but deflation.

The other side

Mike Shedlock, writing in The Market Oracle, makes a compelling case that hyperinflation isn't happening, nor will it any time soon in his article "Hyperinflation Nonsense Continues."

Among his many salient points, Shedlock explains that "Currencies are fungible" thus it doesn't matter what currency countries want to trade in. Dollars are worth in other currencies what they're worth and the dollars don't need to be actually held. With financial transactions occurring simultaneously the only consideration of whether to trade in dollars or not is the cost of exchanging them for local currency.

Hyperinflationists might add that if the US dollar is constantly losing value it doesn't make sense to hold a stash of dollars but rather use the dollar for the purpose of calculating cross-currency transactions only. In this regard, it doesn't matter what the dollar is worth persay, only what it's worth at any given time.

In this respect the dollar isn't so much an international reserve currency as a entry field on a calculator.

Mr. Shedlock goes on to quote monthly CPI using the government's figures--a proposition that got me going to shadowstats, above. The numbers appearing there are quite different than the government's on everything from unemployment to GDP. Shedlock criticizes high inflation expectations, while ignoring the fact that the government can avoid billions by understating CPI, due to the higher yields it'd be forced to pay on its TIPS, not to mention Social Security COLA increases. Evidence of motive to understate inflation isn't the same as understating inflation but it isn't a leap...

The real meat of the issue is whether economic activity slows enough to forestall the massive devaluation of our currency. If housing values collapse far enough, the total measure of money shrinks. We saw this on the upside in the housing market when money supply increased as housing supply increased. Home loans allowed the increase in values to increase the money supply. The same mechanism works in reverse: when housing bottoms, people own less, and they can't borrow. Capital dries up.

Shedlock makes the point that the loss of so much capital will "act as an economic drag for a long time." If for instance people are deeply enough in debt, without jobs, or with mortgages of declining value, neither an increase in available credit nor increased government borrowing/spending will be enough to cause hyperinflation.

Shedlock ascribes hyperinflation to political forces not economic ones. He may be right but I think the Austrian school is correct when it states that Washington, D.C. is increasingly the central focus of our economy. With the federal government hiring so many, increasingly the American people's economic future is tied to the efficacy of government borrowing operations. To finance the unsustainable, Fedgov turns to the Federal Reserve and banks.

Paradoxically, it's the bankers and overseas creditors who might force fiscal discipline on Washington. By forcing Fedgov to pay interest on what it borrow, the value of the dollar might be preserved and hyperinflation downgraded to mere inflation. The IRS taxing scheme was set up to allow the US to pay its debts off. Without taxes, a Lincoln-era greenback might become the money of the land, a currency issued directly by Congress that bears no interest. So the banking constituency provides a constraint on federal spending. The interest rate mechanism of course means the more Fedgov borrows, the more interest its lenders make. Yet without interest, the borrowing could go on ad nauseum, kind of like it does today, with near-zero interest rates propelling the spending spree.

Chances are, until interest rates rise and punish the borrowers, fiscal restraint is impossible. In this respect, financing federal spending through the private Federal Reserve cartel may yet offer some protection to the value of our money. Even so, I'd say that the shock created by spending cuts--"starving the beast"--will bring sufficient social turmoil capable of generating a political force capable of bringing rise to hyperinflation. Once the people realize Medicare and Social Security cuts are coming, they'll look for scapegoats. Above all, politicians will for political reasons avoid the backlash and spend freely, essentially bribing the voter.

Now as even Mr. Shedlock agrees, the economic damage create by political turbulence provides a more likely source of hyperinflation. At that time, it won't matter whether or not hyperinflation has begun. It will only matter if it's too late to salvage the empire's currency, once the empire has no more credit nor the political will to make the sacrifices necessary to stop spending too much. Printing money will simply become the great political expedient.

///

Recent comments at OpEdNews.com are here and here, with the latter being about the Executive branch power grab.

You can't intellectualize victory

2011-05-04T14:38:00.005-04:00

I had my article about the bin Laden death posted on OpEdNews. Some people have got to calling it a "satire." I doubt many have actually read what they criticize. Unlike those who died in the effort to bring Osama to justice, my critics have a chance to voice their opinions.

I wonder if their lack of delight in Osama's death speaks to our nation's shattered psyche. It's worth remembering--isn't it?--that Osama created an ideology that is apparently still at work and at a danger to us.

Perhaps it's too much for some people to accept that Bush was right about Osama: he was a mad dog who had to be put down at any cost.

If America has been divided into partisan camps, Osama's not the only one to blame. We, the American people, need to come to terms with our foe and its malignancy.

It's our nature to feel relieved by Osama's death--what's the good in not recognizing that feeling? We do it in competitive athletics all the time. To the chagrin of the intellectual, all we can do with our feelings is choose to recognize them or not.

Sophisticated types in societies like ours tend too heavily towards recrimination, and introspection. They rely on intellect to make deliberate and thoughtful decisions. Vengeance acts on a whole 'nother level, as I say in my article.

For the more intellectual among us, a death of a hated enemy might not register at all as an achievement. Plus the crass nature of dancing around the fire rejoicing in our enemy's death would see barbaric.

Too bad we can't kill the ideology Osama spawned entirely. To the ground. Osama's evil--or tree as I say in my article--had too much time to grow, unmolested. Therefore ridding ourselves of the archenemy won't end the battle. So the battle must wage on, without closure?

How much more cleansing needs to be done before we can say we've destroyed the source of so much evil? And if bin Laden wasn't the sole source of terror, then I guess the War on Terror can't end. Congratulations, doubters, you've managed to make bin Laden's death scarcely a rest stop on the endless road of terror.

Not celebrating bin Laden's death isn't equivalent to not supporting the war. But what has the anti-war movement done recently? Have their been protest sit-downs? Nary a hand has raised a single objection outside of a few antiwar rallies. Nothing has been done to stop the war.

Our soldiers have done everything to end this war. By killing the source of so much suffering, so much hate, the haters have lost their figurehead of their movement. It's a catch and victory greater than Hitler because Hitler had no nuclear weapons.

The ideology Hitler spawned may be around us, but so is Osama's. And Osama's is stronger. Why? Because of superior firepower? No. Because of more resources, or followers? No. It's because Osama captured religious fundamentalism in order to popularize his anti-American vitriol.

The terror threat is greater now because Osama's succeeded in spreading his brand of hate. People have succumbed to the idea of the long war and can't even decide whether it's been worth it, much less what could constitute victory. For years, I've blogged about the mistake of setting unclear goals; it's our military actually that suffers the consequences, by bearing the brunt of the War on Terror (or, to be more specific, of the inability of other people to end the war they've been ordered to fight...)

The inability of our democracy to agree that we've destroyed a modern Hitler shows how divided and therefore weak--to replay the Bush concept--that we've become. It's like The 300 in which Leonidas has to charge ahead without the support of the Greek nation. It's through his glorious sacrifice on the field of battle--yes, it ends badly--that the Greeks get their act together and meet the evil from the East. The 300 of course pay the price; the public can only be gradually cajoled--time that the villain Xerses will use to his advantage. Someone must stop them.

The Straussians have been proven exactly right: the Western democracies are too weak to stop the rise of a Hitler. As I say in my article at OpEdNews.com, Strauss warned his students at the University of Chicago that like the English and French in the 30's, democracies like the US wouldn't see the rise of a Hitler-its citizens and politicians would elect to do what's easy, to go on indifferent to the magnitude of the threat rising against them.

The reception of Osama's death has been met by such a tepid response despite the threat he posed. Democracies and their citizens are almost conditioned by failing to recognize a rising demagogue. This attitude makes us vulnerable to those who would do us harm.

Why do dictators ascend? We know Hitler was a master of propaganda, so we also know the forces of darkness are well skilled at hiding their agenda. Maybe its the "sheople" effect of a mass consumption society--the abstract threat is only that abstract, someone else's problem, something that doesn't exist until it crashes into our living room.

During the Bush years, an attempt to shatter this indifference was made through public rhetoric, such as the proverbial expression (wasted on Iraq) about the "mushroom cloud" jarring us from complacency too late.

Without Bush, it's unlikely we would have done enough to stop bin Laden. It's doubtful Osama could not have been stopped were it not for a undemocratically elected, recovering alcoholic wannabe Texan with a big chip on his shoulder; his sheriff's badge shining more brightly now with bin Laden slumped dead over the saddle, his political legacy reinvigorated.

Yes, there was plenty of collateral damage--and there will still likely be--but by killing Osama we've stopped the source of so much evil in our world. Isn't that enough? Or do we need to keep raging, hellbent on destroying everything that opposes us? Closure is needed because it turns things off. And we can't dwell on all the side issues once we've committed to war. There can be no resolution until we achieve victory but Osama's ideology will outlive him.

Web-based truths obligate us to prepare

2011-04-01T15:42:00.005-04:00

There seem to be two takes on the response to the fallout. One says that there's an ongoing leak and the risk must be acknowledged. Another, held by the docile Americans, holds that what the government tells us about fallout means we don't have to do anything to react.

Well, the question of fallout is an objective one: there either is or isn't a direct risk. Now if there's a direct risk, some could argue it may not require taking precautions, being that the risk is too low. That assessment of the risk should be the result of objective analysis of all relevant facts, and presume a worst case scenario.

In the Internet age, if government simply says there's no risk, people are bound to question authority. While there've been plenty of good reasons to distrust the mainstream media, this in itself is NOT proof that a conspiracy is afoot. The media may just be parroting what the government tells them.

Complaints have been lodged that there is a mainstream media blackout over the impact of the leak. One theory would have us believe that the media blackout (or tone-down) is a cooperative effort by GE, which owns NBC-MSNBC with Comcast. This concept has added weight considering the Fukushima plant was built by GE on a GE design.

Not so much now--with the Libya story asserting itself--but earlier, CNN and Anderson Cooper were far more involved in the radioactive leak story, going as far as to stand among Tokyo skyscrapers with a handheld radiation meter.

Since Libya, the mainstream media has been distracted away from Japan. The nuclear incident seems to have been buried with tsunami rubble--a tragedy but one that's ended, whose time is passed. I wonder sometimes if Libya isn't a synthetic controversy meant to distract the American public from the radiation over their heads.

Unfortunately we can't assume the danger is passed here in the U.S., despite what our leaders tell us. The real story is actually how little government will do.

This lack of information makes us vulnerable. More than in the past, I'm roused by the need to provide the missing information. This is a instinct, I guess, that motivates me to write specifically for the Web. People will find out the truth, which can lead them to do the right things, saving future suffering.

The need to take action should at some point exceed the need to get accurate information, a function provided through the Web better than through other media. Yet as valuable as the Web is, it doesn't do the work. Many take no action on what they learn on the Web although the numbers who rely on it are growing. The recent Fukushima event has many pondering the effects; those with access to the Web are typically more aware of the situation.

Like the poor people who took to the Gulf of Mexico after the Deepwater Horizon leaked, what you don't know can kill you. Corexit 9500 dispersant made swimming treacherous. I've read stories of swimmers and recreational water users contracting what appears to be chemical poisoning and burns. For more see my envirosite articles on the spill from last year.

Anyway, information is only so valuable. Taking action is the key to this disaster. Whereas people in the Gulf could move away, or stay off the water, we can't avoid downwind radiation. Now as small as the risk may be, it's the absence of information coming out of our government that rightfully scares us.

This post actually began as a comment on the U.S. government response to Fukushima at OpEdNews.com titled, "Only fact is we are on our own." I cross-posted a recent article there on the Fukushima leaks from my enviro-site (link below.)

~start comment~
"I wrote on the radiation at OpEdNews before (here and here) agree there's a cover-up in play, and that the fallout posed a bigger threat than was being explained in the corporate media.

Just how bad is the radioactive fallout? We know there's some out there, but unless we have our own Geiger counter, how are we to know what's irradiating us?

This lack of information makes us vulnerable. As individuals, it would appear there is little we can do. Even most libertarians would accept that nuclear accidents are not solvable (nor preventable) by individuals but rather a responsibility of the state.

[To quote the author...]"Yet the administration has not provided us with a national supply of KI, or guidance for using it."

I agree with the urgency of the author's message. Nuclear accidents are a disaster that the people are very much forced to depend on government.

As those resources are stretched--and cuts in budgets add up--I think we owe it to our families to be better prepared.

If there was a silver lining to Katrina, it was to give Americans a preview of what to expect in the event of a widespread disaster. Inadequate responses are to be expected. We can complain rightfully, that gov't has a responsibility but if it lacks the capacity to react, the accident moves on to "disaster status."

I think the Deepwater Horizon typified this helplessness. Let the maintenance degrade, let the regulators get "captured" by Big Oil hookers and free drugs and a crisis is inevitable. Same with cutting banking regs.

The inadequacy of the Fedgov response is an opportunity for the private sector. Naomi Klein has called this "disaster capitalism."

I've heard that with nukes, power companies must make some safety shortcuts in order to be profitable. In other words, if they do everything they can to make nukes safe, then they'll lose money. That's hardly a bullish indicator for this industry.

While the Deepwater was doomed due to profit motive, I guesss Fukushima was destined to fail based on the proximity to the ocean."
~End Comment~

Just how quickly would the government response degrade? First, there's the sheer number of incidents to manage in a disaster. Communication problems abound. In 9-11, we saw a failure to coordinate radio frequency and provide the right equipment to emergency response personnel.

Then there are people who are completely unprepared. They may not anticipate a crisis nor its combined effect. Elderly loosing medicine, for instance. Or tourists and the such, who can't evacuate. For more on the "golden horde," see the survivalist perspective below.

Much of the deterioration in the response can be attributed to human error in making bad decisions. For instance, people might stay to try and weather a hurricane, then back out and request assistance.

Or it could be like hundreds of motorists stranded on Lake Shore Drive in a recent snowstorm. They were explicitly to stay off the road but used it anyway.

Like other recent tragedies, there's now a sustained pattern of government neglect. I'm not going as far as to say there's a conspiracy afoot, but the bankers' bailout in 2008 showed, that given the right level of political influence in Washington, the private sector could exploit any tragedy. Nuclear leaks may be too politically unattractive, compared to post-war reconstruction, for instance. There's nothing good created out of protection, little to show for the vast expenses.

I would argue that we the people have a right to know the threat posed by the leaks. If people don't prepare, then they choose to trust their government.

Cynicism is well-placed. By not trusting the Official Explanation (whatever the crisis), we're more prone towards self-sufficiency, which has become something of a lost art in America.

Many of us simply don't have the stamina to raise our own food, store enough properly, and handle the physical end of a homestead-type existence. So we've become dependent on our roads, our sewers, our way of life can't sustain itself without cheap fuel. We've grown accustomed to having anything we want available to buy. Without power, or our credit cards, we're made mostly powerless.

The corollary of being dependent is to put trust into government to provide for us what we can't for ourselves. In times of crisis, this faith is misplaced. As systems on which we've grown to rely break down, we're bound to find ourselves dealing with a new reality.

Of course a energy crisis alone can't end America, it can end American as we know it, what survivalists might call TEOTWAKI: the end of the world as we know it. Rather than a deconstruction, the lifestyle would shift towards a simpler existence, marked with hard physical work for many. Rather than base our existence on the automobile alone, we'd be drawn to more primitive forms of transportation. Economic might similarly depart from traditional definitions as mechanisms like barter and alternative currencies--like work-for-time credit--replace a fiat currency decimated by overspending.

Now many of us wouldn't choose a frontier lifestyle. Not of our own free will at least. People would more likely sit around and wait for someone else to serve their problems. Some things would change but remain. Commerce/trade would persist into what some might call the End Times, kind of like the movie Eli, which I reviewed here last year.

I think the Mad Max series of movies typifies the kind of societal breakdown that could occur. We'd go from a system of justice to a society that's at the mercy of its own fragility. At this first stage, police would find themselves outnumbered by gangs. We're seeing this along the Mexican American border--no one wants to oppose the gangs.

The next stage is a more thorough decapitation of society. Authority wouldn't flow from the top-down but rather by those with the most power, who use it to increase their strength and popularity largely at the expense of weaker groups and the disorganized. Small feudal groups grapple with each other for control of dwindling resources.

The we get to Mad Max Beyond Thunderdome, where a twisted form of order is established. In some ways we can see the seeds of our future self-destruction in the rudimentary reestablishment of that society. Fights are settled in an enclosed arena, where the bloodthirsty madness of the group turns even the mentally handicapped into objects of public sport.

Yes, we've regained some stability by that time, but the society is simply too warped to be worth saving, again, from self-destruction. What fell off the wall can't be put back together again. Or can it? Should it be saved, or will a better one come of the former's destruction? Popular support sides with optimism, for instance at the end of the movie Eli, where historians assemble knowledge lost during the apocalypse.

Whatever the final outcome, it's a scary thought to consider the enormous suffering that accompanies a End Times-like event. Mind you that I'm not saying we're in the End Times, but rather than apocryphal literature and perspectives created in popular fiction may turn out to be accurate in some respects. In our age, End Times fantasy offers relief, a form of entertainment.

Instead of ignoring any possibility of risk (and thereby justify the lazy approach to do nothing about it), it's better to prepare for something bad to happen. The alternative is to accept what happens to you, like the half million Japanese in refugee camps. And if it can happen there, it can happen anywhere. Sure, there may not be a fault line where you life, but nuclear plants can leak, even far away.

A big downside of preparing is dealing with those who haven't prepared. I find the survivalist perspective entertaining in this regard. Yes, it does dehumanize the golden horde--not unlike a zombie shooter--but I guess this is the price that must be paid to keep yourself safe...or so they believe.
The original article by Brian T. at survivalblog.com explains:

"Misconception number five: Needy hungry hordes will come from town. Not likely, when local resources (read: booze and junk food), and the aid from whatever governmental response is exhausted they will do nothing. By nothing I mean nothing that need concern you. They will sit in a refugee center or at home and pass the time playing cards, talking but essentially just waiting. Certainly the burning and looting that started seconds after the beginning of the event will increase until there is nothing left to burn or steal. When food and clean bedding all run out they are not likely to walk out of town any more then than before. They are weaker by that time and as out of shape as most of us. They have rarely walked any distance at all in their adult lives and are unlikely to start now. The biggest reason is that they are psychologically predisposed, brainwashed, to wait for rescue and will stay in town. It is easier to wait and thus easier to make hunger somebody else’s problem. With no gas and no desire to do any tiresome walking means you are not going to see many if any at your BOL(Bug Out Location.) Most will sit and if they move at all they will head for another urban area rumored to be better, particularly if they are being trucked there by the National Guard or other entity..."

I'm not a survivalist nor ascribe to this opinion, but with so many real life horror stories, who can afford to ignore this zombification theme? On the other hand, I've been reading that interpersonal relations will become more necessary during End Times. Your life could depend on that doctor you know, or your replenishing food supply, or just in making a mutual support society in order to deal with the many issues of that period.

At the very least, those who've put in the work required to protect themselves can enjoy the benefits. The unprepared meanwhile will be like locusts, hungry and desperate. I read the following from a recent article on a survivalist site:

"the "golden hoards" actually are...your friends, family and unprepared next door neighbors and theirs, and theirs, and theirs. They will be the ones at your doorstep, if they know you have food and other supplies.
Can you turn them away? Will you shoot them if they won't leave? Will you risk sacrificing the lives of your family by joining the rest of the lemmings in the G.O.O.D. traffic jam? These are the big questions that need to be dealt with by those who are conditioning their minds for the realities of such events."

We don't see this deterioration in Japan. Survivalists would argue that's only because the response can be sustained for so long and that government-provided resources will quickly run out in a real crisis.

I saw this comment by Pogue on a post about the tsunami which exposes the schadenfreude some preppers might feel when crisis hits the unprepared:
"I love watching people panic over nothing. Ever notice how bad people freak out over a winter storm? They get the survival french toast makings (eggs, milk, bread) and go nuts. And ever see how many people wait until the last minute to evacuate ahead of a hurricane they’ve known about for a week. A disaster in the US would see total chaos. Hell, when Homestead was flattened in 1993, the people there rioted when the USG didn’t rescue them within 24 hours."
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Decline of the Imperial economy inevitable

2011-03-03T03:36:00.005-05:00

Today I was watching CNBC's coverage of Bernanke's testimony when the anchor came on and went to commercial break. Turns out Ron Paul was next in line for questioning.

Is it a coincidence that CNBC breaks away before Ron Paul gets to ask Bernanke a question? Hardly. The moneyed elite represented by the network don't want a Paulian assault on the Federal Reserve. More specifically, the money power--to borrow the Depression Era phrase--works by deception. It's like the infamous quote in The Usual Suspects, that the devil's greatest trick was to convince the world that he doesn't exist.

In our age of smoke and mirrors, the idea is that no one in the public should know the scope of market manipulation, the free ride granted those with the most influence in Washington. Probably the most damning piece of evidence is manipulation of the Dow. I don't know who else noticed but from about mid-2010 on the Dow almost never really fell. I mean a few times, it went down, but ever since that anomaly where the Dow plunged some 1,000 points in just a few seconds, it appears that someone, somewhere is doing things. That someone of course, would be the Plunge Protection Team, a real life organization called the President's Working Group on the Capital Markets.

That group was created in the aftermath of the 1987 crash to prevent excess volatility in the financial markets. It may not be such a great leap to assume the Plunge Protection Team has expanded its mandate to further the illusion of market stability when in fact there is none. Making the PPT's job easier is the fact the 40% of the Dow Jones Industrial Average is based on two companies in the index: 3M and IBm I believe they are.

The point here isn't that the markets are being manipulated--they always have been, in some fashion, but rather whether investing in such a synthetic environment is such a good idea. I would say that any market which seeks to tame volatility is ultimately creating more of it, as pent up demand to sell grows. Better that these urges play out. Instead we have a government that seeks intervention continuously, in matters both near and far--like in Libya. Rather than let nature run its course, our arrogance is such that our leaders believe we need to garner some benefit from every event, turn every crisis into opportunity.

I'm going to take a risk and call the market. I don't know if it can plunge, with the Plunge Protection Team so active and diligent. Yet just like the Revolution we're seeing unfold across the Middle East, so too are unshakable forces gathering, storm clouds not on the horizon but directly overhead.

I'd look for a correction to begin soon. A foreign crisis would be a likely cause, being our profile is so utterly pronounced on the world stage. Wise it would be to assume we can't control everything. there are real limits to the projection of AMerican military and economic power. We will meet these limits and they will force us to change. We can only accept the fact that we've reached the boundaries of empire and begin the inevitable march back home.

All empires die. They wither, contract, they sputter to a final end-some not overnight, others in an instant reduced to a mere shadow of their former glory. The point isn't how long it takes an empire to die, but how painfully the empire acquiesces to its own demise.

In their death throes, the empire must choose between denial or reality, accepting or procrastinating the changes that must come. For years I've talked about hard limits imposed on American empire. Economic limits, military limits, diplomatic and legal hurdles and shortcomings that seal the ultimate fate: one of decline and death. Of course, exceptionalism feeds denial; an alcoholic is no different in saying he's not an addict than an empire feigning invincibility in its final days. Like Charlie Sheen, accepting reality may be too painful. Easier it is for the brain to presume that one is beyond the limits that affect us all, special. In his way Sheen was admitting the size of his ego when he said his mind couldn't be understood by normal brains. Isn't that the nature of greed...of celebrity? The exact same forces that compel greatness by confounding limits and convention end up distorting reality.

In achieving greatness we all too often lose our humility. We begin to believe it's different for us. In the case of empire, mass delusion exists, at one time both covering reality and distorting it, denying the real facts while producing myths and lies, the largest among them being the fantasy that American empire will never die.

Empires don't die off entirely, but the illusion that's central to the sustained lie does end and with it the empire's former majesty like some forgotten mythical beast. Even now, you can taste the former glory in places like Rome, and at the Parthenon in the heart of ancient Greece. Visit those places, shut your eyes, and you'll swear you can hear sandals on the cobblestone, subdued voices, smells, amid a swirling city now long dead, at least to the unimaginative. They can be remembered for their greatness in the imagination but not with open eyes.

Empires have risen and fallen with a regular cadence over the centuries. No matter how far they were separated--by seas, time, and continents--each empire possessed a common characteristic: they all thought they'd last forever. It's actually the hallmark of empires to believe they're invincible.

It's been central to the philosophy shared by its citizens from the days of Socrates forward that the chief criterion for membership in the empire is pride. Pride in the achievements of empire. They unite and define the people, contribute to the sense of national pride and buttress the duplicity of war by smothering it in militarism. Swallowing with pride, the armies of empires charge off blindly into the dust of conflagrations long forgotten.

Military power is the first obvious contradiction. In our present case, do we see a increase in outcomes from additional war? Or is the outcome highly questionable, yet phrased a victory, pyrrhic? Results do matter in military matters. If the result of intervention doesn't expand or strengthen the empire, it weakens it. And because of pride, nationalism, people don't want to accept the possibility of anything less than total victory. So they don't imagine anything less.

To rationalize the outpouring of useless effort and cost on military adventurism, all manners of excuses are given. Easier it is to just pretend this is what we wanted than accept we didn't know what all the fighting was meant to achieve. Do we have any sense of closure? Or instead do the wars just drag on endlessly?

One big reason is hard power--the inflicting of harm or intimidation by force of arms by one nation on another. The more hard power that's used, the less benefit it has. As long as the dictator can stay in power, the hard power assistance in the form of military aid complements the use of force. Eventually though we see the tables turn like they did in Tunisia, or Egypt or Libya. The people grow tired of the abuse of power, and react by storming the castle gates like here in 1776, or the Bastille in 1789.

Another area of denial is the economic shrinkage of empire. Empires of course have their expansionist phase, where all the revenue concentrating back to the capital makes the empire an attractive location to invest and trade. Over time, empires tend to overtax. We'll see this now in America, as an inevitable consequence of too much public debt. Borrowing for public works is becoming harder. Overseas credit is drying up. In my last post about the Romans, I noted emperors complaining about the cost of imports-the empire's gold heading eastward.

So bad it is that now the Federal Reserve owns more public debt than anyone else. This says that Federal debt is far less attractive to the rest of the world. When debt becomes less attractive, it correspondingly falls in value. The borrower--in this case, us--must offer more and more interest, a proposition made doubly difficult by increasing the quantities of debt that must be sold out.

With the Federal Reserve as the buyer of last resort, the government can get away with paying lower rates of interest. As long as the Fed can conjure money into existence, it can use it to buy the Treasury's debt. The ride can last until the money itself declines in value, a phenomena known as monetizing the debt. Again, the nature of money is that it must be finite to maintain its value. The more that gets printed, or spent by issuing debt, the less those dollars buy.

Now the velocity of spending may have slowed down dramatically. These are the brakes that so much unemployment offers to what would otherwise be a headlong drop into hyperinflation. By not working, and not earning, and therefore not spending, the unemployed are doing the rest of us a favor. Interest rates can stay low, for at least as long as a Depression-like malaise rules the economy as it does in many parts of the U.S.A..

Now if all those people were to work, they'd earn, and they'd spend. The economy would grow. This in itself isn't inflationary but the increased demand would put upward pressure on prices...too many dollars chasing too few goods. Production would increase to meet demand, and this would accelerate the use of money, the rate at which it circulates through the economy--what is known as velocity.

Right now, the supply of money--which is vast--isn't circulating freely. The banks have it, and they're reluctant to lend. They're reluctant to lend because of risks associated with a stagnant economy and, more importantly, because they're seeking to build up reserves, not only here but all over the world.

The credit crunch put sufficient fear of failure in the financial industry to foster greater self-reliance. This is because of the sheer size of the Mortgage Backed Securities market. Derivatives, exotic investment vehicles, allowed financial entities to make vast profits on leveraged debt. By converting streams of future payments into securities, bundling, then selling them, the risk could be transferred away and spread out. Then attaching a quasi-form of insurance called CDSs, the issuer of debt securities could claim to be offering risk free investments that could pay off if the issuer were to default.

Now none of this derivatives business is helping things. Instead, the giant risk pool has been shifted from private banks to the Federal Reserve. Even as Bernanke and Barney Frank were explaining how profitable TARP was, we see massive piles of mortgage-backed debt languishing on the balance sheets of Freddie and Fannie, the equivalent of nationalized zombie banks absorbing bad debt and offering good backed by none other than Treasury and your taxes.

I don't think we should be congratulating ourselves about how great the response was to the Credit Crisis. There's a singular reason for this: the Credit Crisis isn't over. All that debt still exists, albeit held by a different set of investors. The total notational value of all derivates exceeds the total supply of money (some 97% of which exists only in digital form) by several multiples. In other words, the sum total of all which is owed exceeds the total value of all financial assets on the earth. And the Fed-designed response to the sudden devaluation of all the debt back in 2008-9 has been to issue more debt.

Who benefits? Certainly not the people, who didn't have any say over repealing Glass-Steagall and reawakening the crazy Casino capitalist environment of the Roaring Twenties, which led to...drumroll...the Great Depression.

Now things may not look as bad as all that...to the believer. To the dispassionate outsider, the US market has little more than a facade of stability, a mockery of honest, steady growth that market mavens have prattled on that we have since the days of "green shoots." Eager has the financial media been to spotlight European crisis. It's not the time to point fingers, when our house is in such disarray. It's the time to respond rationally to the systemic problems that created an environment where the Credit Crisis could occur.

The Dodd Frank bill will reconstruct some of the regulatory element that served us so well for so long. Yet the underlying fiscal problems are there. Many of these are self-inflicted like the state budget crisis in Wisconsin, brought on by a series of corporate tax giveaways given by Governor Walker at the start of his tumultuous reign. Starve the beast, and the money isn't there to help Democratic causes. Starve the beast enough and some day the money won't be there for things like schools and Medicaid. Starve it even more of needed funds and infrastructure collapses, like a Banana Republic.

The pie is shrinking in our economy. We have two choices: accept our economic decline or not. If we choose to accept a problem, like the problem drinker, we've taken the first step forward towards recovery. If however we deny that we've hit an economic wall--largely brought on by spending too much on our military, and letting corporations control their own tax policy--then we're likely to recommit the sins of the past. These would mean giving financial corporations even more control over the political process, which can further foster policy changes favorable to corporate interest at the expense of the general public and our nation's fiscal health.

Rather than passively sit around and wait for their jobs to dry up, many Americans have chosen to begin protesting. Now personally I have little interest in protecting anyone from budget cuts. For one thing, I'm sufficiently unimpressed with the quality of public education. And even if parents are mostly to blame for declining achievement, we don't have to pay so much for so little back. I wouldn't confuse the necessity of offering public education--a public goal--with self-preservation. Now if my pension were on the line, I'd protest. Of course I would.

Collective bargaining has been a successful tool in promoting the financial welfare of the nation's middle classes, which have been the traditional root of our nation's financial strength and economic stability. As more and more wealth migrates to the top, we're seeing an America that has two sides. And just like what we see in places like Iceland, which has dumped their bankers, the people can through the sheer force of numbers dictate terms if they're persistent enough.

With no unions to balance against the power of corporate control over our government, these industrial complexes will be free to further their agenda. De-unionization has long been a central agenda of the right. Now we're seeing the revenue pie shrink because of reduced taxes posing as a "pro-business" political stance. Of course no one wants to pay taxes themselves, just like no one wants to lose income. The lower taxes group offsets those on the public till clamoring for everything they can get.

Limits are limits, and if revenues can't increase--typically due to willful intervention by politicians on behalf of cronies--then someone has to pay. Or not. But sooner or later they will, at least at the state level where they lack printing presses for their money. And even on the federal level, the hard limit is the cumulative impact over time of so many newly minted dollars being spent, in what is typically an inflationary event but in these days tempered by massive unemployment. Devaluing our money will impact prospect for long-term economic growth.

I'm not offering any financial advice, but the typical response to all my morbid predictions would be to reduce equity exposure now. As for metals, I see the possibility of forfeiture, a topic I hope to continue to research going forward. Problem with investing in metal is that they don't do anything, and incur higher transaction, storing, and transport costs. Besides, unless you hold the metal yourself, can you really say that you own it?

I've been reading that Comex silver supplies are less than the total amount of Comex contracts outstanding. If Comex can't fill orders with actual silver, then the value of the silver on the open market could be higher, at least for those who actually own it and can physically offer it for sale.

When the music stops, any investor in paper metals could sue the exchange for failing to meet its contractual obligations to provide silver. This legal action would restrict Comex's ability to make good on its deliveries to all its clients, being that all its silver would likely be tightly controlled by a court-appointed overseer. Physical metal prices could soar, but certainly not on an exchange that's oversold its holdings. Unsure of their eventual settlement, many investors would likely settle for pennies on the dollar, glad to get out of the Comex entirely. Of course in time the metal would regain its attractiveness but perhaps the whole idea of owning metal that exists in paper form only would fall from grace.

American model of empire bound by fate

2011-02-01T21:25:00.002-05:00

Prescient writers like the late Chalmers Johnson have spoken about the "boundaries of empire" which confound and constrain the expansion of empires. Is the U.S. model bound to historical precedent, or are we exempt--what's known as "exceptionalism"? As much as we may want to believe we're different, history says different.

Think about it: every empire in history has perished. In their heyday, all these empires impressed people worldwide. Look at the Romans: their feats were legend, imperial wealth unsurpassed, its military forces unbeatable, and engineering far ahead of it time.

I'm sure the Romans thought in their heyday that they were an exceptional, and wouldn't go the way of empires that had come and gone before them. Perhaps arrogance is an unavoidable characteristic of ascendant civilizations.

Then little things began to go wrong. Perhaps it wasn't a strategic defeat that set the Romans--or great empires in general--back. Empires tend to decline over time, to slowly squeeze their citizenry for more and more until eventually, inevitably, support for the empire evaporates.

The Romans did a lot to postpone the end. They incorporated many of the frontier tribes they conquered into their armies. Roman legions were the best trained in the western world. At what at the time was considered exceptionally tall--5 feet, ten inches--height requirements stood 'til the (Western) empire's final days (link).

Masters of diplomacy, the Romans lured many to their side to enjoy the many benefits of increased trade. The economic benefits of inclusion brought new luxuries to everyone within Roman borders. Unification was further encouraged by roads and aqueducts that stand to this day.

Why is the history of the Romans so important? Well, it's not so much the Romans per say, despite all the parallels drawn to present day imperial America. Instead it's the imperial model of governance that needs to be fully understood by anyone with an interest in the future since the factors precipitating a decline tend to be held in common by all empires.

All empires die. No matter how great their accomplishments, no matter how long they reign supreme, sooner or later they will fail. For the things that make empires great are often their greatest weakness. The luxuries, for instance, that flowed into Rome from the east cost the empire great sums. The Roman Emperor Pliny the Elder scolded Roman women for their costly silk imported from China (link).

As long as the Roman empire could maintain a transportation network necessary for trade, it offered those within the empire security and opportunity. But centralized power, essential to maintaining an empire of vast size, can become a vulnerability. If all decisions are made by a central authority, the empire is bound to good decisions as well as bad ones. Sometimes the empire's fixation on control can breed ludicrous results, like when the Soviet Union mandated all time zones to be on Moscow time. That'd be like starting one's day in Los Angeles at what is now 5 AM (or in Russia's case, 8 time zones east from Moscow wouldn't exist).

Like all empires, Rome had its share of bad rulers. It's actually a miracle the empire didn't collapse based on the quality of leadership, which strayed from pettiness and vulgarity into outright madness, typified by the Emperor Caligula. What we can draw today from Rome's past is the lesson that source of imperial authority lies not with the quality of the people who run it but rather the willingness of the masses to submit to the central authority. For the interest of peace and stability which were key to economic security, it made sense to be loyal to the empire. By mutual cooperation and sacrifice on the part of its citizens and slaves, the Roman empire was able to stay together.

Rome was a known. Anarchy and barbarism were also well known, and not much of an alternative. In the shadow of a strong military, Roman citizens (a privilege not extended to the many) could live in a lifestyle far more stable and predictable even than that of people living during the Middle Ages centuries later. As long as tribute kept flowing into Rome, and Roman armies stayed across the Rubicon (a symbol for avoiding civil war), Rome could flourish, with economic strength at the heart of its vitality. And with the size and stability came multiculturalism and other progressive values.

Remember the empire needs to be outward focused, to bring in new participants on its fringes. The inclusion of new markets keeps the empire growing. Stagnation signifies not the attainment of economic achievement but the beginning of decline. People are drawn to greatness--it's exceptionalism that sets empires apart from lesser forms of government. To be believe in the strength of empire, arrogance may be required, and a dose of denial as the empire weakens. One of the most obvious signs of decline is the strength of the empire's currency. In ancient times, the best measure of fiscal fortitude was the raw amount of silver or gold in the coins of the realm.

Over the centuries, things went wrong with the Roman denari. The costs of maintaining expensive fortifications and standing armies rose to unsustainable levels. As the empire ran into fiscal difficulties, it proceeded to water down the proportion of silver in its coins, then force the newer, less valuable replacement currency upon the people.

To collect the older coins, Roman authorities demanded, on penalty of death, that all citizens turn in their older, more valuable coins to the treasury. This autocratic measure allowed Roman rulers force people to acceptnew, intrinsically less valuable currency.

Had the old coins been retained in circulation, we'd have seen Gresham's Law, which states that older, more valuable coins disappear when newer, less valuable coins (in terms of their intrinsic value) are introduced. Of course, some of the older coins with higher silver content did disappear, but under these penalties few would dare use the coins as a medium of exchange within imperial boundaries. No doubt many more intrinsically valuable coins made their way to lands beyond the empire, where most were likely melted down (although apparently not all, as coin collectors would have nothing to collect.)

The value of the empire's money is a big deal because economics offer a clear indicator of the empire's wealth, and the stability of imperial model. A decline in the value of the empire's currency signifies pending decline not just of the empire's economy but its sociopolitical health.

Remember for purposes of analysis that it's not whether the empire is American, or Roman, or Greek that matters from an economic perspective. To work, the empire needs to be not perfect but a source of stability and opportunity.

And when the empire overextends itself, its financial circumstances worsen. And the overarching cause of imperial overextension is, as those in the Austrian school of economic know well, military adventurism. As an example during the Roman years, endless Punic wars brought no direct benefits to the empire, only financial drain. Perhaps earlier in the history of the empire, during its rise, the wars would have strengthened public support and developed self-confidence that the Roman empire was the right side to be on.

Odd how it is that history repeats itself. With oru country, today, we've reached this crescendo of military overextension that seems to do little to preserve our security or stabilize our economy. Instead, we've taken to the dangerous precedent of lashing out at those we perceive to be our enemies, with virtually nothing to show for it.

For the purposes of historical comparison, we need to factor out emotional bonds to the empire and decide in a purely objective fashion what is in our interest and what isn't. Of course there Romans, just like there were Austrians, or Russians, who knew their empires were pursuing needless wars of conquest that only drain the resources of the empire. And perhaps no one understand the perils of large standing armies than our Founders. They knew that constant meddling in the affairs of other nations would lead to wars, which in turn would damage the fiscal stability and economic prospects for our new country.

American model

Moving forward, we've created a distinct form of capitalism. We need to ask ourselves in this age whether our style of capitalism enjoys the popular consent it once did. Or is the US model thrust upon the people of the world, like it or not?

For decades, American multinational businesses have set the supreme example of capitalist achievement. We became the ideal. Our standard of living ranked as the envy of the world. No one can beat us on the battlefield. Like the Romans, perhaps our military supremacy parallels our economic ascendancy. If so, then from Vietnam forward we're on a mostly losing course. But about our economic power, there was no doubt: we were supreme.

Then came 2008. We know well all the turbulence that has followed. More than the economic damage, and eventual recovery, is the introduction of doubt into the capitalist model, or at least the American version which depends on consumer spending and borrowing. 2008-9's market collapse continues to impact the markets even as they've rallied in the aftermath.

From a budgetary perspective, the US is already doomed. Maybe analysts--this one included--have grown too bearish on the inevitability of failure. Bears do tend to dwell on negativity. Maybe what some consider an impending collapse in the value of the dollar is but a passing correction. After all, the dollar's value isn't that much weaker-in purchasing power vis-a-vis commodities perhaps, but so too have other currencies faltered so in relative terms neither has been devalued. It's an easy thing to run the printing presses: there are no older, more valuable coins to collect on penalty of death. Supplanting the older, more valuable currency with a newer, cheaper one is a far easier exchange.

Mass psychology depends on people drinking the Koolaid. Adherents to free market ideology are as likely to believe that "it's different this time" as those who believe in the infallibility of a long lost ancient empire. If enough people--not necessarily Americans but people who buy into our style of capitalism--lose faith in the system, it peaks. The culmination of economic ascendancy can spell maturity or perhaps something far darker--impending decline or even collapse. After all markets are built on popular perception; when confidence in the system drops, market participation falls. And individual investors have abandoned the US market--quite a contrast from the rip roaring 90's.

Of course this recent crisis isn't the first time that Americans have doubt in their capitalist system. Bankers have long been distrusted and blamed, with political forces coalescing in opposition to money interests since the days of Andrew Jackson, who disbanded a national bank, and before. And during the Depression, economic stress was so great as to bring into question the worthiness of capitalism itself: millions were drawn to communism, socialism, and other political ideologies that terrify those in power.

Even with a "jobless recovery" we can't say that doubt in the equity and sustainability of our economic system has been overcome, despite what the market fundamentalists constantly preach. People will see what they see and right now, persistent unemployment is draining confidence in the system. Young people in particular (like those demonstrating in the streets of Cairo) have the most to lose in a system that offers the uncertainty of low-paying jobs and rising taxes without a corresponding guarantee of security in old age.

Nowdays the young in America seem curiously unaffected by political mobilizations occurring in other parts of the world. Is it because they don't believe political movements can have an effect?

If Americans were better informed by the media--or their friends, or parents, or whatever the source--about what's really happening, popular opinion might be more likely to be galvanized against a cabal of wealthy who game the system as the most grow poorer. Maybe it's the inability of so many to think critically, a skill abandoned in our industrial-style education system. Or maybe it's just a lack of belief that the political unification of self-interest can actually lead to the betterment of all's interest. Then again, Obama's campaign did mobilize young people. Then again his post-election performance may have done more to engender cynicism in the process and politicians in general than was gained during the period of higher expectations that preceded his victory.

One hallmark of the rat race that our money-is-everything system is that everyone is in it for themselves. Concepts of steady, consistent efforts have been replaced with get-rich schemes created at the top of the system, largely centered on the mortgage industry. The role model of choice is Wall Street's Gordon Gecko, who said infamously that "greed is good." OK, so we tried that and many grew rich, but most simply grew poorer, culminating in 2008's correction.

The capitalists know they need to reestablish confidence in the system that continues to enrich them, even as the majority grow poorer. The Horatio Alger story--rags to riches--may not be enough to convince people that unregulated, debt-based hyperconsumption really works, at least in the long term. For many immigrants, the concept that one could get ahead by simply working hard was a shining beacon, bringing many to our shores.

If America doesn't present the opportunity to get ahead, then it's surely in decline. This shrinks the time frame between economic peak and decline. Social mobility--the chance you'll live better than your parents--is actually below Europe's. As much as government might try to redistribute wealth, the have's seem to always have more, while those with little lose even what little they have, a Biblical foretelling (Mark 4:25).

If this model is to last, it'll have to enlist the help of non-Americans. And what kind of message are we sending? Look no farther than 9-11 for the origins of much distrust by non-Americans. Our reaction to 9-11 revealed to the rest of the world how cruel we can be, and the fundamental disconnect between doing what is right and how we've treated our enemies. Torture became commonplace, alongside extrajudicial killings in Iraq. All the while we' pretended we were the good guys, and justified our actions as vital to our security. I'm sure the Romans were equally dismissive of the plight of their enemies, or the collateral damage that resulted from the wanton waging of war.

However much control over the mass media the elite have, they can't sell faerie tales and myths forever. The economy has peaked, and already Americans are turning to the war economy or public trough for their sustenance. Just look at the headlines: "Gov't to create jobs" or "spending to generate growth." Neither of these goals is the task of government. Once we concede control of the economy to the public sector, the private sector begins a slow death. This inevitability is rooted actually in public borrowing, which is deferred taxation, plus interest. Eventually the unsustainable won't be sustained, but in the meantime government will borrow, then tax all it can.

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Silver's climb evidence of the dollar's debasement

2011-01-03T22:08:00.005-05:00

Happy New Year!

I just reduced my position in silver. Having run up 200% in just a couple years, I figured I'd better not get too greedy.

I do understand that a media campaign against J.P. Morgan began over their vast short position in silver. The campaign alleges J.P. Morgan's position artificially suppresses the price of silver, in a quid pro quo agreement with the Federal Reserve meant to keep silver prices low, making the effect of so much money-printing less obvious. See Max Keiser explain the strategy in this article from the Guardian.

A group named GATA (Gold Anti-Trust Action Committee) was among the sponsors of the campaign. GATA was founded to counter what are thought to be routine manipulations by major market players like J.P. Morgan in the silver market. The organization's founder, the outspoken Bill Murphy, has for years explained that the gold and silver markets are subject to exploitation by banks and agents of the Federal Reserve, acting discreetly.

Now if indeed J.P. Morgan's short position is so large--3.3 billion ounces, according to the Guardian article--as to be affecting the upward price movement of silver prices, the campaign figures that it would only take ounce of silver bought by every single American to bankrupt the bank. By actually taking physical possession of the stuff, demand for silver would push prices higher and force J.P. Morgan to deliver on its contracts (by buying silver in physical form in vast quantities.)

As it is, rarely do financial entities take delivery of the commodity that they've bought so when the delivery date comes, physical delivery is postponed. The promise to deliver the metal is sold and foisted along in a never-ending parade of never-fulfilled futures contracts. This cascading pyramid is made possible by the use of derivatives, promises to pay like those use with Mortgage Backed Securities that are traded (swaps) and sold.

Unfortunately, if the campaign succeeds, and J.P. Morgan were thrust to bankruptcy by virtue of a successful campaign forcing it to cover its vast short position in silver, I guess we'd see yet another bailout occur since J.P. Morgan is considered part of the inner circle, designated Too Big To Fail.

Control over our money supply has been lost to the Geithner/Fed/Obama cluster in a silent coup. The value of our money itself has come under attack as a result. Preserving the value of our money--vital to the task of storing present wealth for future consumption--has been lost.

How much of this destruction of wealth is preprogrammed? We know that the periodic explosions of inflation and deflation in the past end up leaving more wealth in the hands of fewer, wealthier people and corporations. So can we say that our economic policies are democratically inspired, or do our policies really reflect the narrow interest of the Moneyed Elite, who grow richer by the day? Never in the history of our nation has so much been owned by so few.

This state of affairs didn't occur from nothing, mere chance, or by natural market forces. Monetary policies have expanded the Federal Reserve's traditional role of monitoring banks and reducing unemployment. We're now told to expect "quantitative easing," meaning more government bonds will be sold. Every dollar spent on the Treasuries will generate interest for the bondholders, who tend to be the banks and their wealthy shareholders.

Buying Treasuries shouldn't be the purpose behind creating more money. A vibrant real economy is more interested in stability in the money markets, not the constant increase in money supply generated by spending. The value of the dollar is now subject to constant depreciation as the money supply grows. Have more of any commodity, and what happens? The commodity loses value (assuming the supply of money is constant.) Also, specific to the case of money, more interest is demanded in exchange for buying debt denominated in that currency--what investor wants to lose purchasing power of their money? Instead, potential investors in our government's bonds will require more interest to compensate them for our profligate ways.

Blow up the money supply and all of a sudden commodities look better. Commodities can't be as easily brought into existence as money, which needs only the printing press...or not even that nay more, as money can be magically conjured on a computer screen. The value of a commodity is tied to the effort required to produce it. Now if gold could be conjured into existence--as alchemists attempted in the Old World--all of a sudden it's scarcity would come into doubt. Same would be true if we were to discover easily mined sources of the commodity.

The infinite quantity of money that can be created makes finite things (especially real things) more attractive. Not only do the goods whose supply is constant not grow in abundance, but also the other commodity--money--on which the price of the commodity is based loses value. Investments in the commodity are likely to gain in value both because of too many dollars and limited supplies of the commodity.

This reasoning drove me to silver. However, I don't know if we can say all commodities will go up in value just because there's more money.

Purchasing gold and silver are a natural response to that pending insecurity. While I can't say that what I do in the market represents how the markets will do, I'd maintain supplies of real assets in order to be prepared. Small denomination silver coins, bought on a periodic basis, might be prudent about now. These can cover small costs in the event of a currency meltdown, or economic disturbance caused by something as simple as a power outage.

Real estate is so plentiful, and overdevelopment so common that deflation could keep prices down, with exceptions. In the opposite direction, higher costs for fuel is having an inflationary impact on food prices--just go to the store and see. A shortage of energy supplies could dramatically impact a specific region, so I'd have essentials and a source of backup energy like firewood available.

We can have both inflation and deflation. I'd say energy costs will climb, although petroleum demand might flatten out with slower growth.

On a macro level, worst of all economic scenarios might be what's called a hyperinflationary depression where economic activity shrinks even as huge quantities of new money flows into the economy. Declining housing prices might be symptomatic of this scenario. Unemployment and high inflation (stagflation) would be a hallmark of this slide.

Bernanke might be able to stave off inflation by keeping money on the sidelines. Actually if the money created by quantitative easing flows elsewhere, and isn't spent, then inflation need not occur. A former Princeton professor, Bernanke is a student of the Great Depression. He's keen on keeping the fiscal spigots flowing, to placate Obama and the spendthrift Congress' spending alive, to provide Keynesian stimulus.

As long as the new money flows, prevailing logic dictates that more might be spent, if not by consumers than by government. The whole logic between stimulus is flawed due to a key factor: debt. Debt, particularly housing debt which became the single most important factor in economic growth in the United States. Achieving higher home ownership rates became a prime political aim for the Bush administration in the leadup to '04.

Greenspan, then the chairman of the Fed, was charged to keep the spigots open, and feed low interest capital to the banks. The financial system responded, creating a complex scheme of derivatives to capitalize on debt securities, called Credit Default Swaps. We're paying the price now-not only with the casino capitalism bailout but also a vast pile of money (existing in digital form) sloshing around, threatening inflation. It's like the Federal Reserve--a private corporation--created a giant slush fund...with public money...to slather over its friends in the financial industry. And the Federal Reserve's backdoor loans far exceeded the initial TARP, a fact ignored in praise over the "profit" of the recent sale of Citigroup stock.

Why the history lesson? The problems haven't stopped. The liabilities haven't gone away; neither have the bad loans, which appeared to have been transferred to the public through the troubled GSEs. According to analyst Christofer Whalen, appearing on CNBC, Bank of America is paying less than a tenth of its theoretical "mortgage buyback" liability to Freddie and Fannie. Whalen has called Bank of America insolvent, so I was surprised to see him upgrade his rating on the stock.

I guess the Powers That Be decided that Bank of America only owed the taxpayer so much and that was that. Like the sullen response to BP's Gulf Spill disaster, the American public remains steadfast in its preoccupation with sports, celebrity, and consumptionism.

Now if the status quo favored by the Establishment determine something is true, we're all supposed to go along. Winning in Afghanistan? Sure. Just keep us there a few more years beyond the promised pull-out date. Economy recovering? Sure and we can believe that all's well. Just go out and buy something. (Maybe it is that easy but not if the money funnels overseas or out of the community.)

Fredrick Douglass said the power concedes nothing without a fight. So as long as the American people are content to let the Money Power own the monetary system, we're bound to become subservient to a monetary system run for the benefit of the elite and not the general economy. This means it's the needs and priorities of the bankers, not the people, that will shape what the value of our money. Savings will be destroyed, and obligations for TBTF bailouts past and future assigned to the people.

I can't help but think of another of Fredrick Douglass' great quotes:
"Find out what any people will quietly submit to and you have found out the exact measure of injustice and wrong that will be imposed on them."

Public resources have been plundered. In the present case huge sums of debt have been put on the Treasury through the sale of its bonds. Each of these future obligations represents the transfer of wealth from future American's possession to that of their government, and not a small chunk of interest due soon as well, a sum which will climb as interest rates and the overall debt burden rise.

I've heard taxes called legalized theft but not if the benefits of the taxation exceed the taxes they paid. I've also heard inflation called a hiddent tax--by producing money, or by cycling it through the Fed to fund "purchases of our bonds, the government devalues it. Looking at our "entitlement" programs, we can only imagine piles more debt to meet the government's future spending obligations.

This will come on top of all the past debt the Fed has created by buying our government's debt. Like Greece, it'll only be a matter of time before spending has to decline. This last minute orgy of debt is like a credit card junkie out on the town with a newly arrived credit card. Except unlike the individual debtor, our government will be face the prospect of default in lieu of bankruptcy. Like Argentina or some fiscally strapped nation, whose currency had been rapidly devalued, we'll end up submitting to the will of the Money Power, or face the total destruction of our currency.

These scenarios are more than a possibility. I think until people wake up and come together, the destruction of our currency is imminent.

///

American foreign policy, the tool of liars

2010-12-01T22:41:00.007-05:00

The content below I draw from a few comments I'd written in response to other articles, then realized they were too in-depth or elaborate. You can find many of my comments at OpEdNews.com.

The first comment is an article on the Wikileaks diplomatic communications. Its author, Robert Parry, exposed Iran Contra and can summarize the events leading to the 1980 October Surprise quite well. The article is here.

The giant leak of diplomatic cables is revealing our government's propensity to lie. Increasingly, the truth about how the US behaves--revealed in the exposed communiques--reflects a level of reality known only to select few. The elite have always sought to control the flow of the information, so the leaks present a serious uppityness from below that challenges the establishment and reveals surreptitious dealings with their underlings and our allies.

While restricting information is nothing new, the functioning of an entire bureaucracy based on nothing but lies and misinformation is taking Kafka-esque ineptitude into new dimensions, channeling something on a par with the old Soviet Union. Like Orwell's 1984, the Truth is a Lie and thus whatever spits out the Truth is in fact wholly composed of lies. So in time the totality of the life as explained by the bureaucracy creates a cushion of propaganda and misinformation meant to support old lies and inconsistencies which can't be tossed into the Memory Hole.

The facts were found to fit the policy, to quote the famous Downing Street memo, means two or more layers of lies shield Fedgov from its real policies: the first, a lie that Iraq (or Iran these days) posed a threat. The second, a series of controls over the flow of information, consists of efforts to obfuscate or deny any inconvenient facts or truths, what I call propaganda-by-omission. The absence of correcting information reinforces the initial lie.

By virtue of basing our policies on lies, our diplomatic corps forged layers of misinformation meant to support previous lies or bind enemies and allies to Washington's consensus, its version of the way things were and should be. Now, with the leaked communiques we see that the entirety of our government worked on the basis of lies.

We also see a common theme in the outward rejection and criminalization of the leak. Wikileaks founder Assante has been demonized, even leading one GOP Senator to demand that he be labelled a terrorist (Orwell's fictional Emmanuel Goldstein.) This is behavior typical of authoritarian regimes not democracies. Of course various governmental bodies begging him to stop or throwing rape accusations his way is completely unrelated to the content of the leaked communications, an intended distraction like gays in the military. This is a sign that the government seeks to keep its secrets hidden, a task easily assailed in the age of thumbnail drives and near-instant dumps to remote servers through high-speed connections.

It's as if Fedgov wanted to shut down the Internet. And it has, at least for any websites the government deems as supporting the ever-widening definition of terrorist supporters, or high speed file sharers (see link below.) No warrant or Court order is required; their domain names simply disappear-- poof--and disappear into the Memory Hole. Included in these targeted sites are any that carry content derived from major media networks (read large corporations.) All their content is site specific and the corporate entities controlling those rights will allow no dissemination beyond their sites.

For victims of the corporatist agenda to privatize the Internet, see this link on the Righthaven Victims. Fedgov will capitulate on the total ownership of content issue, meaning bloggers and anyone citing Web content must get permission from the copyright owner. Apparently offering a citation back to the source IS NOT sufficient for these people.

Leaks are a valuable source of information in holding government accountable and transparent. Without them, most Americans would be dependent on corporate media to tell them them the truth.

I guess Americans' willingness to be skeptical is in question. Americans are incredibly gullible about believing what their government tells them.

See more breaking stories on the communiques at The Guardian.

Democracies do need to hide their activities--a theme repeated in Jonah Goldberg's December 1st op-ed that it's a world full of bad people doing bad things. Since 9/11, this theme was asserted under Bush, given as a reason to torture and spy on people, to break the law, lest they destroy us or so the reasoning goes.

The idea of using Hitlerian tactics to stop the rise of Hitler came from the prominent neo-con Leo Strauss, who would go on to influence budding neo-cons like Perle and Wolfowitz at the University of Chicago. In escaping the Nazis, Strauss realized how weak and vulnerable democracies had been, and believed the Holocaust and Hitler's rise could have prevented had the "good guys" been willing to break the rules. We see this rationale fueling the anti-semitic treatment of the Palestinians by Israelis. And the paranoia that Israelis have is mentioned in at least one leaked communique as well, justifying pre-emptive strikes against Iran's theoretically viable nuclear sites.

Wikipedia explains this concept, referring to a 2003 article on pre-war intelligence, published in The New Yorker: "The journalist Seymour Hersh opined that Strauss endorsed 'noble lies': myths used by political leaders seeking to maintain a cohesive society."

Noble lies are another way of describing white lies or untruths meant to serve a broader good, like stopping a Hitler. I guess since Plato originated the term in ancient Greece, we've gone a lot farther, turning the simple and petty act of lying into an art form at the base of all our foreign policy, and how our nation interacts with the outside world, as well as how the lower layers of our government blindly follow the dictates of those above--a certain recipe for autocracy and the rationalization by the bureaucracy to simply "follow orders." Lesser lies (and government minions) are meant to serve the greater Lie, which escalated from a noble lie into a self-serving and endlessly self-perpetuating one once the organs of state and co-opted corporate media capitulate on the consensus formulated by the elite.

For evidence of this self-dealing cabal, look no farther than the press corps' sell-out on exposing the lies that led to the Iraq war. Instead Valerie Plame was exposed in retaliation for her husbands public dismantling of Bush's 19 words on uranium from Niger (a topic which I hope appears in the leaked material.) Long-time readers of this blog should also know that the consolidation of the media closed off independent voices-not coincidentally at the time FDIC ownership rules had been liberalized to allow moguls like Murdoch and GE/NBC Bush supporter Welch to own more media outlets.

Another characteristic of the leaks I've seen so far is the amount of lying. We can all assume lying is common but if you've ever known a chronic liar, you'll know they never tell the truth. If you, like me, have had the enlightening experience of having a compulsive liar for a roommate, you'll have learned the lesson that it's better to assume the chronic liar is lying about everything. That way if you're wrong and the liar is telling the truth, you'll be presently surprised rather than disappointed, not only in the lie but yourself, by the fact you trusted the liar yet again.

Judging from the cables, our diplomatic corps went from a defensible tactic (likely made in justify war on Iraq) to an obsession with obfuscation.

Since 9/11, the idea of democracies behaving badly has gone from acceptable but wrong to continually justifiable. What 9/11 justified, on a one-time basis, our government has institutionalized.

Have we become the bad guys? Is it so necessary for us to break the rules in order to save the world? I wonder if we're not destroying ourselves spiritually to save our selves. Plus, just how much of the risk of terror is synthesized by our own protectors. Clearly, any anti-terrorist agency needs to justify its existence or face funding cuts. Without plots like that recently exposed in Portland, Oregon, what results would our anti-terrorist agencies have to show? By the way, Portland is reconsidering its previous decision to not join the FBI's multi-city task force and now will be complying fully with all demands--I mean requests--from the FBI.

If you've seen the movie "Unthinkable" you were likely disgusted by all the torture used to get a terrorist to reveal the location of nuclear bombs, so much so you might have actually welcomed whatever retribution would come for it (not to mention an end to the tortured plot.) Samuel Jackson's character has the unenviable task of getting the terrorist to talk. Just how far should he go? The initial interrogations are marked by "harsh interrogation techniques" that go nowhere.

The point of Unthinkable is the necessity to strip morality from the actions of our protectors, to give them a clean moral slate for operations in whatever place, time, or way they may deem necessary to exert their authority and control and ostensibly save us (from a threat made real mostly by fear-peddling Hollywood and government patsies.) A hallmark of this fear salesmanship/power grab is the presentation of threats both near and far, the Goldstein of Orwell's 1984, the East Asia whom we are supposedly at war with.

Without an enemy, the state withers. This is because so much of the state's authority is based on the exertion of force. It seeks to maintain a monopoly over the use of force--look no farther than the rage exerted against those who dare shoot back. They are treated like terrorists simply because they don't submit to the power of the state.

Political Economy

Columnist Goldberg is a shrill for the Israel lobby who crooned for invasions of Israel's enemies, one of the crowd that held a mushroom cloud over our heads in the lead-in to Iraq. So for me to quote him, something must be horribly out of balance. Yet all too often I find myself siding with conservative critics of Obama. Or--to be clearer--I better tune into their conservative message rather than the neo-conservative one, a feat much easier if I disbelieve anything Goldberg and his neocon, Zionist friends might say about anyone or anything in the Mideast.

Obama is after all a neo-liberal. From time to time he'll espouse liberal ideologies, but his interpretation of the role of government is more typical of a laissez faire old school Republican, like a Blue Dog Senator Bayh (not Birch) or Bill Clinton. The idea, called the Chicago School, is that de-regulation will save the economy and that free trade benefits America unconditionally.

The predictable result has been a decrease in America manufacturing, long an aim of anti-unionist political forces masquerading as neoliberals. Kill American manufacturing through NAFTA and you kill the unions. Kill the unions and you increase profitability for the owners of the means of production--the wealthy--and you get to defang a political rival of the Right's.

Just how far will the American people let their government go? As I've commented, far too many are co-opted by the system and will fight change. Yet the whole nature of hyper-consumption is economically unsustainable. The government tapeworm will therefore chose other sources of sustenance as the host slowly dies. In plain English, the government will turn to monetizing the debt, printing and lending to itself the money it needs.

Already foreign creditors are limiting their dollar holdings, meaning people want more interest in exchange for holding the dollar. The recommendation would therefore mean reducing dollar holdings, and increasing non-dollar positions. With the Euro so weak right now, the dollar may be comparatively stronger.

Betting against the Deutschmark after the Wall fell in '93, I learned an important lesson in graduate school about not betting on foreign currencies. Despite the huge costs of reunification, the Deutschmark rose, nixing my prediction.

Sometimes hysteria and waves of unforeseeable strength crush and buoy foreign currencies, so I'd rely on a basket of foreign currencies rather than bet on one. Then again, I don't give financial advice. I can predict though what might well happen and that is that the unsound money policies will lead to an inevitable decrease in the purchasing power of the dollar. Farther afoot but not implausible is a downward spiral into hyperinflationary depression.

Economics

Had some reflections on economic concepts that I can't seem to let go of, so I've dumped them below. As much as I'd like to just pretend the decisions made by the Federal Reserve and our government don't affect me, sooner or later they will affect us all.

My comment below came from the New Arthurian Economics website here. The original comment there was referring to a Paul Krugman article. I wrote:

Commenting not so much on Krugman, but the statement at the site that "Anti-inflation policy reduces the quantity of money." I'd choose to say that a little differently. I'd say anti-inflation policies try to reduce inflation. The way they do this is to encourage people to save. If you're saving, you aren't spending.

As you know, raising rates will encourage saving. But what we have is a concerted effort to spend. Then there's QE2, what the blog author has called push inflation, or monetary inflation. In that case it's not so much demand that gets people spending but that abundance of dollars.

Now if you've been following the banks closely, you'll discover they CAN'T lend anymore. They've got so many bad debts that they HAVE to put new deposits in to stabilize their capital ratio (the amount of reserves expressed as a ratio of total deposits.)

Like Japan in the 90s, we know have a banking system that can't lend. It's not because they don't have the money--especially not with the Fed "pusher" making so much money available. Instead all that fresh money is going into the carry trade, at least according to one fund manager interview.

You also say "Pro-growth policy increases the level of spending."

I'd be hesitant to define "pro-growth policy." Of course, the phrase "being pro-business" is batted around in the political arena, like a race to the bottom to see which political party can pay lip service to the corporate interest.

If anything I'd say "pro-growth" is invariably pro-Middle Class. Heck, unemployment compensation is actually pro-growth yielding close to a 2x multiplier effect back into the economy. With neoliberal principles dominating the "pro-business mindset" in Congress, spending on the poor will be de-prioritized while spending on the massive defense establish--providing a far lower multiplier effect--will continue unconditionally until fiscal and economic collapse overtake the empire, a situation made far more likely and imminent by continuous spending on wars.

It's the defense trough that represents increasing inefficiency, as aircraft carriers and bombs don't bring much multiplier effect. Sure it's great if your town or job is supplying the War Machine, but the money has to come from somewhere. If the Chinese and Japanese aren't willing to send us back the dollars we send them, then we'll have nowhere to turn except printing up our money which will certainly devalue it.

If government spending is depriving the private sector of money through taxation (and not just deficits), increasing gov't spending actually SLOWS economic growth. Privately owned resources are forcibly pulled from productive use and spent by the State. Spending by tax/gov't is far less efficient than spending by private individuals. Taxes also deny the economy a source of private investment (G instead of I.) Now if the taxes are deferred we (or rather the beneficiaries of G) receive the benefit and defer the loss of gainful income to future generations, although that bill could come due sooner than expected if it leads to a monetization of debt and rapid decline in the purchasing power of the dollar.

End comment. For now. As you'd likely guess, I could post more of my thoughts on Art's blog and make poor Art read them. Instead I guess I'll have to save it for my dad, who fortunately for me is a good listener.

Inevitable collapse offers real change

2010-11-02T17:05:00.009-04:00

Election results to come in tonight! I've heard the Republicans will retake the House and possibly the Senate. I confess that I don't believe that a non-choice between two substantially similar parties will make a difference in the long run. While I have more in common with Democratic candidates than Republican, I've lost faith in the American political process.

The problems we face are systematic and unlikely to be resolved by ballot alone. We need real change and not just false prophets selling campaign messages. Political dialogue in this country has become dominated by hot air and froth.

I'm aware that my position might be considered heresy by most political analysts, who make their living from presenting a false choice of candidates and parties neither of which can govern without serving some corporate interest or wealthy constituency. If apathy were the desired outcome, our two party system has hit its goals.

Many of our problems are internal, despite the tendency to find threats abroad which should unite us, although they haven't. Trends evolving out of our present day political climate include:
1) Corporatization: he who has gold makes the rules, or so Machiavelli said. Corporations feed at the federal trough in a quid pro quo exchange of campaign financing for politicians, made legal by Citizens v. United.
2) Privatization: services formerly provided by government become run by for-profit entities. Look no farther than Goldman Sachs' buy-out of Chicago street parking meters--Indianapolis has done the same, albeit for 10-year periods not Chicago's 75.
3) Militarization (the classic Military Industial Complex.) Ongoing wars serve a bloated and inefficient war economy that drains from the productive sector. Politicians too afraid to question military spending.
4) Abuse of power (cataloging since 2001.) The War on Terror is a gateway to abuses like the Plame outing and fake terror warnings timed for political motives, like those framed by Olbermann's Nexus of Politics and Terror.
5) Police state/surveillance society. Give up your rights to fight an fabricated terror threat. Government violates citizens' privacy and legal rights with impunity.
6) De-democratization. Black box voting allows corporations to manipulate voting results. Two corporate parties present illusion of choice: twiddleedee and twiddleedum both lead nation downward.
7) Prisonization. Prison industrial complex now warehousing some two million Americans, due to failed (but not for its financial beneficiaries) drug war.

I could continue but the list can depress the reader. Wouldn't want to depress anyone now. This was never my intent, though making an emotional impact on the reader is a fundamental goal of most forms of expression.

I've never meant this blog to depress anyone but how else will Americans become informed? If they're so fearful of being depressed--or is it change they so fear?--then the public doesn't deserve to know. The status quo, as I've been warning, is sending us off a cliff--if the sheople are lemmings and go over the cliff, at least I can say I tried to warn them.

I'd be reluctant dismiss the trends I've outlined above, whatever the emotional price. Many of my previous predictions have been accurate, about Obama and the designed-to-fail war strategy, just to name a few. But this blog wasn't created as testimony to my skills as an analyst, or to blast the co-opted mass media, but rather to influence others who might spread the word.

If you know anything by now, and judging from your visit to this blog you already know this, the mainstream media is not the place for the truth. The Web isn't necessarily a hotbed of intellectual truth, but it isn't a bunch of sanitized hogwash either. In my case and yours too I hope, I'll take honesty over untruth any day, substance over style, no matter how messy and ugly the truth.

The mass media isn't the only party at fault. Raising public awareness is a worthy purpose, but it's a task only achievable if the public gets involved. Today many won't vote today, believing their vote will only go to unsympathetic posers who care nothing for no one but themselves, despite the elaborate effort to pretend they offer real change, or constructive leadership.

The facts speak for themselves. Our present situation has come about in part due to the lack of political participation in our nation by its citizens. The corporate takeover hasn't come overnight but rather has been brought about by a series of gradual encroachments on our liberties and quality of life. The process hasn't ended and thus might still be abridged, but not if all the political candidates--the so-called "choice"--are controlled by campaign donations and the same corporate interests.

Going forward--in reverse

Our society may not be advancing just because our technology has. Some Web media tend to isolate individuals within a pantheon of largely consumption-oriented choices. Like basketball, connect with others who do. Consume something? Well, most everyone's brand has space on the Web. Like a particular celebrity? No shortage of that.

Most of the growth in Internet's popularity can be attributed to hyper-consumerism and celebrity worship rather than lofty intellectual goals. People may need real news, but they don't want it. Like a child, most Americans tune out the world, and our recent wars epitomize the individual's inattentiveness, their cultivation into consumers of the highest order.

Yet people can produce and grow by sharing their interests with others. Truth-sharing becomes a much more prolific endeavor when friends meet. People don't take kindly to bad news, and believe me when I say most of the news is bad (another lesson drawn from years of intensive news gathering.)

Rather than focus on truth and substance, style and image are massaged to give media viewers a perception of political candidates and corporations in their most beneficial light. This process is fundamentally dehumanizing--how can you alone have a relationship with a celebrity who will never know you? This obsession in entertainment is idolatry in its smoothest package offered to date.

People don't want the truth. To quote Jack Nicholson in A Few Good Men: "we can't handle the truth!" So we're offered a mostly mindless smorgasbord of meaningless media consumption chocies. Then we pretend we're different from others because our choices of consumption differ.

While geographically unlimited, and pentrating broadly, the Web hasn't reached its potential as a medium of communication, although twitter and social networking has utilized the Web in profound ways.

We've all heard about the perils of the Internet. Given the anonymity granted by the Web, our children are coached not to trust strangers. The speed and quantity of data can overwhelm--these are the negatives.

Positives of the Web include rapid dissemination of data, and the ability to circumvent conventional mass media. It's also a vehicle for content, allowing artists to work within the digital media and present to anyone with a Web connection and a computer.

The Web's a part of us now, tied to our collective conscious. When the Web works, we connect; our organic tapestry comes together. Web users have all known the feeling of friendship created online. People have been married, hired, murdered through it. Yes, that's right: the Web can be used for sinister purposes by people of ill intent, reflecting whom we are as a people whether saint or sinner.

At the same time, the Web is limited. We are bound by the proposition that into which we put our endeavors should come a corresponding reward, advancement, or personal gain. We can measure what we've accomplished with our lives only in others. Who will sing of our praises or even remember us if not for what we've done for them?

Many of the "things" (oh, yes, how many things) you think you cherished, you'll realized don't matter. Therefore it's a tragedy to see so many labor so hard to create not art but generate an attic full of things.

Our inner psyches would likely collapse if we had to face down all the petty obsessions (fixations, the Dalai Lama calls them) that drain our better selves. We settle for less because we believe that's all that we can have. Maybe a simpler and more agrarian lifestyle could slow us down. The hard work might set us free from the constantly accelerating world, one that surely spinning out of control.

I guess my time to look more towards myself and spend less time on others will come. But in some ways, I guess it's when we contract into ourselves that we begin to die not physically (although it can often manifest this way) but spiritually. Better to continue to keep an open mind, and connect with others, rather than lose that path on a road to individualism, a very American concept that may not serve us well into the 21st Century.

Bound by economic realities

I've focused on issues in the economy and financial system for the better of four years. Numbers matter, as do details like the ugly fact our government now has an unpayable quantity of debt. Yet the Federal Reserve threatens to churn out even more debt in the form of quantitative easing (QE 2).

Remember that every dollar that comes into existence brings with it debt-someone must be owed in order to spend any newly created money. Not by coincidence, that someone is a bank, who can borrow for free these days. The debt-based economy requires debt to grow. Eventually the quantity of debt (which is money!) will grow so large that the initial investors/lenders can't be repaid. In criminal law it's called a Ponzi. In our financial system, it's legalized fraud. The scam works fine until people don't pay enough in taxes (put new money into the Ponzi), then the debt begins to debase the currency itself.

The exertion of corporate influence over government policies brings very real risks to the financial system. Like Greece or Argentina, a sovereign debt downgrade could wreak havoc on financial markets. The risk premium paid to non-government issuances could further hamper corporate borrowing and economic activity. Like a Third World nation, Americans would have to turn to foreign sources of borrowing, and submit to the will of international bankers once public debt becomes unmanageable.

By the way, I am watching the mortgage mess, which is more accurately described as lender fraud PLUS misrepresentation (a term with criminal implications in the field of securities litigation.) The banks misrepresented the mortgages that they sold to investors, being that the banks didn't observe the proper chain of custody over the documentation required to transfer ownership. The robo-signatures on fraudulent foreclosures are therefore only a part of the much larger problem of identifying who holds legal title to the properties, and thus defining exactly how much control investors in the mortgage securities retain vis a vis the banks who sold them.

Banks aren't lending. They're risk averse, like anyone whose got something to gain from the status quo; or anything to lose by change. The federal trough runs so deep the pigs' snouts are buried in it, lapping up the future tax debts while ignoring the public interest or any sense of morality. Of course the best example are the consultants quite literally ringing the capital city who make a living from the war machine and corporate contracts belching forth from our capital.

Hands off my gov't paycheck

There might be more hope if not for the fact so many have been dumbed down. I live in a town that once had jobs for plenty. Economically, I'm surrounded by people who know not what will come tomorrow nor have they prepared for it. The lack of education carries most of the blame, or to be more accurate the lack of respect for the power of learning. Like poverty, this attitude gets passed on down generations, boosted perhaps by disdain for the better educated elite.

First to go must be the presumption that a public high school degree will cut it in the 21st Century economy. The public school process does institutionalize stupidity by not challenging younger Americans. High school graduates simply aren't competitive in the global economy. I'm shocked by how deficient many Americans' writing skills are--most read at a middle school level.

Many here have parents who worked steady Industrial Era jobs, and have been able to live a reasonable quality of life...'til recently. Yet the future is going to be much more dependent on self-starters, with good communication and money management skills.

There will of course be people still working the trades and other occupations who might not think they need anything like that. But who among them doesn't have debts to pay, or investments to build and track? If we are indeed in a "YOYO" Economy (Your On Your Own), then shouldn't people be taking more responsibility over their retirement?

Don't think for a second that Social Security will be enough, or that Medicare benefits will continue in their present form. The money is running out. And a Republican victory will mean more cutting of social services, especially considering they're too weak to cut war spending (perhaps because that requires acknowledgement of its ineffectiveness?). And even if they can lower taxes--inherently good--the Republicans will simply be delaying and worsening the eventual fiscal reckoning.

We all need to come together, first to inform one another and acknowledge the problem, then take action. It begins with each of us, and the desire to become informed about issues that effect us. Without the assertion of self-responsibility, I don't see how our society can advance, much less not fall backward if for no other reason than how it--if taught, monitored and enforced--can benefit the collective good--a term I seldom here any more.

Our society has become boomers on steroids. We want to get as much for ourselves as we can, before the clock runs out. The only question is whether Earth's clock will run out before, or who will seize control of the world's last resources?

Yes, it really comes down to the rat race and humankind's descent to it. Does any empire have the chance to outlast time? In the waning days of every Empire, the periphery weakens as resources are plundered and profits repatriated to the capital. Imperial power may erupt from the inside out but economic decline begins on the outside and works its way in.

American-style consumption of Earth's resources simply won't continue. Already, we've got such huge trade deficits, and we're exporting so little that we can only offer more shiny pieces of paper to overseas creditors, who export things upon which we've come to rely.

Just how safe is it to presume our way of life will be forever there for us? Economic turmoil could easily create an intense transition overnight.

Prepping

I'm taking the steps toward being prepared. No, I don't plan to hole up in some bunker somewhere. Survivalists and preppers are two distinctly different breeds.

As my movie reviews a few months ago showed, so much of our present day preoccupation with the Apocalpyse is based on dominating others. The message: be strong or a victim. A true crisis could actually be better met by cooperation and communication among the affected. For everyone to hunker down may be a necessity but for a short time. Human contact will be restored. Violence is really the antithesis of this approach--killing people probably won't bond you to others. So don't fight, I say, unless your being attacked. I wouldn't raise a weapon in defense unless I were forced. And, yes, while they're times when you might be forced to protect yourself, your property, or others, those encounters are far less likely to happen if you're prepared.

While using firearms may sound good, and self-defense is necessary, I'd argue firearms have no place at the communal fire except when the group is threatened by outsiders. Take the Swiss, for example, who require military service from everyone, not to secure some corporate goal or spending trough, but for the collective defense. I can't buy into this Lone Ranger, John Wayne-type concept of holding out against the vampires like Charles Heston in The Omega Man.

No economy operates in isolation. People will adapt to changing economic opportunities and limitations. Our future will be shaped by who you know and key skills. Survival requires partnerships with people, trust, and sharing resources. Trade and immigration won't stop; they'll simply shift from place to place. Taking one threat--ecological changes--back in human history and you'll see astounding distances that were travelled. We're an adaptable species, of that we can have no doubt.

We are bound by our physical needs. As nice it is to cater to intellectual pursuits, at some point we must consider our circumstances. Just think of what it'd be like without fully stocked supermarkets, or gas stations. I don't want to fearmonger but rather deprogram you. We Americans assume that our elaborate distribution systems will be there for us 24/7. They won't. Sooner or later, the corner store won't be open, store shelves will empty, or the opposite: prices could shoot up.

My wise readers need to contemplate what to do under various scenarios, so as to not be caught totally unprepared. Have a supply of water, a water filter, and enough canned food to last a month or two. Better yet, look to create renewable sources for food and energy.

Prepping has both logistical implications but also a softer side: the aspects that make community agriculture, barter, and re-localization viable. Until people are willing to rely/trust/use local sources, chances are they'll be inadequately developed. Self-sufficiency is an action-oriented goal--people in your town need to do specific things to get results. If they simply rely on the present situation, they'll be at the mercy of food conglomerates and monetary systems beyond their control.

The key is to start. Small is OK. Do something to prepare for the possibility of a crisis. Don't horde costly you may never use. What's more you want a sustainable path; once everyone begins to hoard, stocks will be depleted to the point buying large quantities from retailers in the future won't be possible. Another reason not to horde is that much of what is bought won't be used. Purchases should be limited to things you'll consume anyway.

While planning for a worst case scenario can be good, if for instance #2 below happens and you live west of the Mississippi and can't fly out, you're done anyway, so why care? Better it is to assume something less than total destruction. Perhaps an intense but brief economic crisis is something most easily prepared for. Food supplies might shrink but in a few months could be restored. A fuel embargo--not on the list--could aggravate and lengthen a crisis, but in time it would end, like most all the causes listed below.

Many kinds of future crisis may be short-lived. Others could be entrenched and lasting, like the devaluation of the dollar. Here are my big seven:
1) Coronal Mass Ejection (CME). Been researching this one. Could wipe the Web, digi-comms, etc..
2) Earthquake. Could be Yellowstone caldera like the movie 2012 or something in New Madrid or California.
3) Tornado. Probably localized.
4) Nuclear accident. I've written on the fallibility of the nuclear power from sourcing to use and disposal. [Potassium Iodate is recommended.]
5) Civil disorder. If enough people get unhappy enough, they could loot and pillage.
6) Flooding. Likelier due to unconstrained sprawl and deforestation plus more erratic rainfall/bursts.
7) War/Terror strike. Any terror strike will justify the state's monoply on use of force, seizure of liberties, etc.. More than a hassle issue if you happen to be a targeted subgroup, or caught on the transport grid away from home.

Lastly, don't be worried about everything that could happen--it's a waste of energy. Simply consider the implications of various events for the purpose of prepardeness. One result of the planning process could be the gradual accumulation of silver or other physical stores of durable value, as inflation might be the most likely. Don't spend too much as a crisis might never happen, then you'd look like a jackass.

Provisioning Lifeboats

Agrarian societies may play well into a resurgence of lifeboats, places where people can come together in communal self-support and live a sustainable lifestyle in a barter-oriented economy.

The idea is that should some crisis arise, people could transport themselves to another area where they've already established a network of CSA's (Community- Supported Agriculture) hubs. If people can generate agricultural goods, they can build for themselves a level of food security not possible in an economy built around Big Boxes and long-distance (and thereby fuel intensive) delivery. By acquainting themselves with the products peculiar to their region, people can support each other while reducing dependence on imports. If money is spent outside the community, it will only benefit outsiders.

It could take a good amount of time to establish a lifeboat. Included in such a scenario would be the following:
1) Educational system: avoid forced Big Pharma vaccine programs and the threat of autism.
2) Water. Hopefully devoid of Pharma run-off as many prescription drugs don't break down in the body.
3) Food. Not knowing what's used to grow what you eat can be dangerous. Better you grow it or face frankenfoods (about which government will do nothing to protect you from Big Agra and their toxins.)
4) Energy. Will need affordable and sustainable sources. Biodiesel has a lot of appeal; solar/wind will be huge.
5) Permaculture. Make renewal a key functional goal of community farming. this way, don't need as many petrochemicals/fertilizers.

Note to readers

Always like writing on the 1st of the month. Gives me a chance to be first. You may have noticed I've cut back on my blog frequency to about once a month.

Writing is art. So I've enjoyed my artistic allotment here, which has been no small thing in time and effort. Continuity in writing over extended periods with no pay is challenging. Yet I consider the effort well worth the reward. By writing, I can expose my observations then create as part of my artistic complement through the written word.

Economics might be seen by many as too dry a topic to be art, but remember science has its place in any display of art. No art form can exist outside its medium, no statute lean at such a tilt as to defy gravity, nor no painting recreate the sound of a horse's clicks on cobblestone.

Art is bound. Forces constrict it. No amount of creativity can overcome objective rules and limits. Compromise is a necessity as is awareness of one's limits in trying to explain things, which I see as a fundamental purpose of expository writing.

Like the Indiana painter T.C. Steele, I like to see nature around me. Whereas he caught his subjects with pen and brush, I seek to capture many of the same landscape scenes he did through photography. I don't know how well I'll be able to achieve that task but its a goal I'll savor.

I'll be working more on my photography in the coming years, as well as archival work on others' pictures.

While I doubt I touched on many lives, I know I did change the way some people see their world. And the exercise of blogging provided distinctly personal benefits; it's quite an accomplishment to stick with any challenging task over the long haul.

If the mission is therefore to inform, this blog has done that well. Whether you paint, or write, or express yourself in any form, you'll come to experience art as a very personal, inward journey, whether broadcast across the Web or sealed forever in personal diaries.

You'll know you're coming to the end of an artistic adventure, assuming you've applied yourself fully. The end to the inquiry could come years after you set out on your journey. When you get back, no matter how many lives you've contacted, you'll find that it about you that you've learned the most--about your limits, aspirations, and priorities.

As I learn more about the ways of the world, I desire to shrink from it, to get closer in touch with the environment-Earth. We all need to forge a relationship with our Maker, I believe. Our origin is found in Nature, so to know one's self, one needs to come into close contact with their natural world.

I've said we need to come closer to our physical environment for some time now. Fortunately we have a path towards sustainably on the North American continent offered by its Native Peoples. The Iroquois revere the Snake, as they say its a holy creature because it spends its time next to the Earth. Their Snake Dance pays homage to the Snake and Mother Earth, forces they see as unshakable.

I don't think society can shrug away the passage of time, like the Amish, whose numbers are actually growing. Luddites seek to shun the technology that the passage of time brings. They see the expenditure of energy on things modern better be directed elsewhere, like into the Earth. Maybe their escapism should be seen not as a step backward but the realization that the passage of time and adoption of technology don't improve us, or make us any better people.

///

Debt-addicted economy on life support

2010-10-02T18:30:00.004-04:00

{Newsflash: The FBI just raided the homes of antiwar activists in the upper Midwest and elsewhere. The lengthening shadows of tyranny cross our land. See the bottom for a warning to bloggers.}

In this atmosphere of hate and distrust, we've got plenty of reasons to be cautious about the economy. It's like our economy is the body and we're trying to pour more debt on the fire. Like an alcoholic, our body--the economy--reels with an overdose of alcohol. We crave the booze but it doesn't help the body to be an addict. Drinking more only postpones the Day of Reckoning when the alcoholic--like the economy--bottoms out.

It'll take a catastrophe most likely to break us out of denial. Americans are in denial that our country has so much debt. Look also at the frightful hypocrisy of the Republicans, who through the Tea Party are claiming fiscal conservatism. Imposters! We all know the GOP, with some Democratic help, launched the trillion dollar Pentagon budget. So how can they represent fiscal discipline?

With our head--the American body politic--confused and in such denial, it's a wonder our bodies haven't simply collapsed into the gutter like small town drunks. I won't get into how the mass media struggles to tell the grand lie of the Establishment--that thing are getting better. Don't look, but behind the facade of change is business as usual, all the way through the political and economic spheres.

So we'll have the crisis; the reason behind the last one are equally valid today. As long as the Federal trough keeps sucking enough blood off the host, we'll be getting weaker economically. More and more productive resources will be diverted to government coffers. And the price of maintaining so much debt grows, encouraging more money to be created out of thin air.

The Financial Complex controls our monetary policy. The real economy has succumbed to a shadow banking and derivatives scheme that uses fractional reserve banking and access to cheap money. The derivatives are still out there and the housing stock that serves as their asset base has further to depreciate. Can a crisis not occur?

Peter Schiff has been saying that CrisisTwo will occur. Judging from the movies I've reviewed, you can pretty much guess what I think. I wouldn't hold Peter to any precise prediction on when this event will occur. Nor would I discount his prediction simply because it hasn't occurred yet.

In economics (hardy a precise science despite the analytics), it's the direction that matters. Like the study of any science--which seeks to discover truth--the facts are vital to the truth. Judging by your willingness to come to the Web, to explore the facts free of interference, myths and lies.

The key to making predictions is making preparations clear. The Chinese have a character in their language which combines the concept of crisis with opportunity.

Now there's the whole gold thing. Gold's been up without inflation. As much as gold bugs like to talk of gold as a safe haven, the facts are that gold fell dramatically with the credit crisis. As asset values fall, they're worth less and the dollar is actually worth more by virtue of being able to buy more. It's a deflationary trend that offsets inflation, which is the opposite of dollar being worth more through a crash in asset values. I'd say it was the pre-crash market environment that was inflationary, and oil was zooming.

If you'd been reading me, you might have chosen silver like me. It's otuperformed gold this year and has been about the best thing out there. So it's been a good call. But I've been examining the rising prices of gold and silver with uncertainty. Yes, there's the potential for inflation. If inflation really were showing up--it isn't--then gold/silver would likely be higher. Oil isn't moving like in 2008, so an asset bubble rebuild (and likely burst) may not be forthcoming.

I hold silver but at $22/ounce, I'm beginning to wonder if the run is sustainable. Probably, in the short-term. (Not the answer you wanted to hear, I'm guessing.) Translation: I'd look to take some profits on it soon. Wait for a correction to buy? Certainly. But now? I don't know. I also don't know if my reticence to buy at these levels is the same as wanting to sell it.

Well it isn't my job to speculate but rather gather and present the facts so you, my reader, can choose what to do. Besides, I wouldn't recommend any security without understanding your specific financial situation. Most cookie cutter approaches to investment management are flawed. And recommendations that appear in millions of newspapers and magazines are hardly discoveries: by the time they make through production, everyone knows what they like and don't.

So where do you start? Well, not to give too much information, I'd make sure the insurance levels are good and accumulate a emergency fund of 3-6 months worth of living expenses. Why's that so important? Because you might lose your job. Things happen beyond your control. Appliances break and need to be replaced. Relatives need help from time to time too.

The key to investing is time horizon--the length of time you hold your investment. So why should the emergency fund matter? Well, chances are if you need money, let's say in the next three to five years, you'll end up cashing out too soon. Imagine having to dump a stock back in 2008, for instance. If you'd stuck around, kept your money in the market another 6-12 months, chances are you'd recovered nicely. Maybe you would have recovered not all your losses perhaps but a good chunk of them.

Be suspicious by the fact most people selling you financial products DON'T check your general financial welfare before they recommend something. Honestly, the lack of an emergency fund isn't a problem for the entity selling you a commissioned product on which they must earn a profit.

With loaded products, selling generates a commission as well, so the impatient investor gets not only insufficient time to let their investment recover but is also gouged by the broker for selling.

Commission costs do add up. Now those with discount brokerage accounts might disagree. Trades for under $10 may make a lot of sense, but evidence supports the idea that you do better if you have someone helping you make decisions (see search term "performance load versus no load".)

Yes, you have to pay for it and all, but over the long-term commissioned products tend to do almost as well as no-loads. The reason: the problem is you. Cocooning in your little world, you the investor might get the idea that you are the next Gordon Gekko, the next day trader extraordinary. This inflated ego typically strikes after you made your first big profit. Trust me when I say the the superior performance and the feeling of invincibility will end.

Now the stock market is more than a casino. It represents investment in America. Potential returns can allow people of moderate income to become wealthy. Making money and being rich are distinctly different, as the book Millionaire Next Door attested.

Of course increased risk comes with increased reward. The two are inseparable, unless of course you're a Goldman Sachs able to conduct millions of High Frequency Trades, or a Federal Reserve able to create money out of nothing. For those entities there's little risk, although the crash in 2008 seemed to put even the vampire squid in peril. Unlike the problem being your ego, the problem with them I see as their greed and egos.

The reason for the Lehman Brothers failure isn't that different from why you might fail (although Lehman was allowed to fail and the presumption is you might not fall down like that, or let you collapse like Paulson did that company.) If you've been following my analysis of how the money machine works, you know that turning off the debt spigot (new dollars into the Ponzi) will keep a financial services firm from lending. Lending, as it turns out, is the raison d'etre which these same financial entities turn to when justifying their bailout (another term for allowing them to borrow instead of fail.)

Lehman lost its ability to tap low interest loans which are at the heart of investment banking post-Glass Steagall. Treasuries were used to balance the deteriorating balance sheets and companies like Lehman who weren't selected for termination. The Fed took in Mortgage-Backed Securities of questionable quality and unquantifiable value in exchange for solid AAA (for now) Treasuries: our debt.

That's right, the Fed burdened our grandchildren with billions to bail out the bankers' failed derivative schemes. (I just read that Ireland will spend $41 billion to bail out its Anglo Irish Bank.) The transfer of billions in private sector liabilities to the vaults of the Fed puts the taxpayer on the hook for whatever decline in values those MBSs might have in the future. Our bonds, meanwhile, safely in the vaults of for-profit banks, are backed by the full faith and assurance of the US government--meaning taxes will be raised if necessary to cover them--and generate interest all the while, which further weakens the fiscal strength of our nation.

All banks, like Lehman, are at the mercy of the Fed, its rules, and cheap money. This may have been the message sent by allowing Lehman to fail: get too greedy, overcapitalize and speculate (on real things) with all the funny money we let you have and your firm might be purged.

The banks, who were quick to claim their irreplaceable value during the crisis, have chosen not to lend but to flow their new dollars back into Treasuries, or spend them to acquire smaller regional banks. The Fed can't be too happy with the lack of lending, but being comprised of the larger banks exclusively, must see TARP and the Fed Reserve spigot as benefitting their member banks, who get to borrow at subsidized rates.

Debt as money theory

We can't have a monetary system that constantly inflates. But at the same time our economy is dependent on new money, which requires new dollars to be lent. And each dollar represents debt, so more growth=more debt. More dollars and those out there are worth less (unless of course there's some deflationary blow-up, or high unemployment to depress--as in Depression--asset values.)

The dollars (or FRNs to be more accurate) out there decrease in value in proportion to how much new money comes in. Bernanke's recent push towards Quantitative Easing attempts to increase consumption by making dollars available to lend.

The money itself isn't the problem. According to the blog The New Arthurian, it's the extension of too much credit that created the conditions necessary for a collapse. This might explain why inflation hasn't struck. There's not too much money, in fact there may be too little to pay existing debt.

The lack of new money entering the real economy explains why we're experiencing such slow growth, what some would claim is a Depression.

I have a theory that the credit crash helped forestall what would have been mammoth price inflation back in 2008. If the bubble of easy money (monetary inflation) hadn't burst, speculation by large financial companies likely would have driven commodity prices even higher. I can't say for sure that the crisis was engineered though it was clearly predictable and predicted.

As we know, lending is the fundamental basis for the pyramid scheme known as the Federal Reserve Note, or FRN for short. FRNs, you see, aren't an asset but a liability. You are working for someone else's debt. When you make money, they pass you an IOU. Rather than come directly from the Treasury our money goes through a central bank middleman. This middleman is a banking cartel, the private, for-profit Federal Reserve. who has an exclusive monopoly over the distribution of our money or our FRNs.

Fortunately, we're not to the point we have a single world currency. No nation would let its money supply be so controlled (although the Euro's survivability attests to the willingness and ability of some nations to work together on this.)

Bretton Woods chartered a unipolar financial order after World War II that has come apart. The Chinese economy, destined to be the world's largest, will control its own money. So the order will be changed, whatever the Anglo-American axis used to think about the supremacy of the dollar and pound.

Following is a cross-post from activistpost.

The dollar won't get rolled in with currencies outside the Western Hemisphere. The Amero is destined to be created with the next big dollar devaluation. (Called crisis or disaster capitalism, this system of cronyism is already in place.)

The Amero will be introduced as a way to stabilize a money-based crisis, such as the resolution of a sovereign debt devaluation.

Evidence of a move to the Amero has been out a while. It would be a Canadian Dollar/US dollar/Peso mix. New debt would be issued in Ameros by all three governments.

Now Canada does have a large natural resource base which could solidify the Amero's standing. Essentially this means it has the power to tax extractive enterprises.

Meanwhile the US has comparatively less to offer due to its balance of trade and huge liabilities. Mexico I presume would offer its people.

I wouldn't say the dollar will be worthless. it'll just be worth less. But this could encourage the move to the Amero--if Americans lose faith in the purchasing power of the dollar.

Another heads up: I don't know if we can predict these events. There's been end times talk for centuries. It's better to prepare. Start now. Have enough water, food, firewood, and silver (maybe 100 ounces.) I'd recommend the 90% Kennedy or Franklin Half-Dollar. Or you could convert some cash into gold: more portable but subject to forfeiture...

Also, you need to know people to barter, an alternate to money. Connections will be key. No Mad Maxs or Elis can survive. Sooner you're prepared, the less you have to worry.

Remember also that crisis won't last forever. There'll be better times, so maintaining morale is vital, like any survival situation.
/END COMMENT

LINKS
Signs of crisis:

http://www.alternet.org/economy/148295/20_signs_that_the_economic_collapse_is_already_upon_us/

http://www.opednews.com/Diary/19-Statistics-Indicate-Cor-by-William-Cormier-100929-161.html

www.survivalblog.com

PART II
Me and Money

Investing has been an area of interest for me since graduate school. My family always used to call me "money bags." Not because I won at Monopoly, mind you, although I often did but rather because money's always interested me.

I went to graduate school relatively soon after college: an exercise that taught me the importance of taking responsibility for one's financial future. Had my father not invested in blue chip stocks in the Seventies--at their bottom--I'd never been able to go.

After school, I worked in the financial services industry for several years. This combined my knowledge of investing garnered in school with sales and practical experience with how money works out in the real world.

Any client proposition involving investment, insurance, and money is likely a psychological battle more than one involving reason. I learned people are easily put on the defensive when it comes to their understanding and use of money. Most people clam up and stop listening when you talk about the principles of good financial stewardship. It's as if they been pre-programmed not to grasp the fundamentals but rather chase unrealistic returns like those seen during the dotcom bubble. (The financial industry's fixation on transactions encourages this.) The prospect of a twenty percent return or more sells so much more easily than talk of having a rainy day fund, or sufficient insurance, although long-term success in investing requires the latter.

Thanks to the bull market of the Nineties, I was able to work part-time despite the fact I only earned commissions, and very little at that as my sales skills--I would eventually discover--weren't that great. Thanks to my investments, I was able to devote a good deal of time to learning the art of money management. As a technical-type person, I was always fascinated in the details about investing, particularly mutual funds and the field of asset allocation, which built on my education in economics.

Coupled with a solid self-education in investing, sales experience has been invaluable going forward. It's amazing how much you can learn when you have to teach others about money. Rather than isolate myself to learn as much as I could, sales forced me to be more outgoing, to engage the world rather than shy away from it as was my tendency. As an introvert, I had to talk to people to try and earn a living. While I wasn't able to make a career with sales, I learned what I wasn't good at, which is a big part of learning what you could be good at.

I found I was motivated by my desire to learn. Offering an endless bounty of details, the investing business intrigues me. It's too bad that most everyone who goes into financial sales is first a salesperson and second an investor because I think the investing is much more fun. Now you of course do need some money to invest (others' if not yours), but I learned it doesn't take much to get started.

You do need a firm grasp over your compulsions to buy, which in a commercial-saturated world like ours are hard to override. Blown out of proportion by consumerism, every little want becomes a need and if you give in to the little things, chances are you'll be buying too much of what you don't need. That's where the concept of opportunity cost is so important to understand. If you reward yourself now--either through spending or, worse, borrowing--your denying your future you a reward. If you spend now, you can't spend later. I know these are obvious concepts, but it's so easy to want for yourself now what you'll need in the future.

A major reason to defer gratification is also the return that investments provide. I believe the lack of understanding about how investment returns compound is a major reason why people don't invest enough. Einstein called compound interest the Seventh Wonder of the World. Given time, an income-producing investment will rapidly multiply.

A great many poor people needn't be poor. If they understood how quickly even small investments can grow--even at relatively low rates of interest--they'd have a way out of poverty. Perhaps the process might take some time-not in a few years time, no, nor even in their lifetimes. Yet what are the only options available to the poor other than investing? In this economy, I'm not sure if a solid education--the other way out of poverty--can provide an equally likely chance of building wealth. Plus the costs are simply too high and burden of paying off the student debt too steep.

That said, I'm of course a big fan of education but if you look around you'll see college graduates who aren't really worth what they think they're worth. And a lot of people acquire skills in college that may be available through real world experience on the job. Ask yourself: how much of what you learn in school do you remember? Or worse, how much of what you learned did you apply? Well, we go to school for more than empirical knowledge unless of course you can transition to a technical job after graduation; for that, the graduate has been trained more than educated.

So there's a place for a pure liberal arts education. Yet few employers in the world seem to understand that. Plus, it can take years for a liberal arts graduate to catch up with his more technically trained peer. Yet unlike the student who spend four or more years training, the liberal arts graduate has skills that will make him a better person. This may sound trite but trust me, you don't want to be surrounded by one-dimensional people. It grows tiresome.

So educate yourself. And the process never ends, which is what a well educated person (versus someone trained for industry) knows--you never stop learning. In a wildly gyrating economy, this is a key lesson. Even many of those who've trained for a specific career will find themselves changing fields. So I'd say try and learn for learning's sake, not just because you think that's where the money is. No, not all that you'll learn will be measured in physical capital--money--but rather social capital or goodwill.

Not all of man's achievements can be captured on a balance sheet. Chrisitianity espouses the concept of a divine list of sins and good deeds, which will be read when we die. Developing people skills--which is what the Dupont(TM) ad calls Hu, the human element. (BTW I need to enclose the TM--Trademark symbol because some corporations have begun suing bloggers over the use of alleged copyright violations. The legal firm is called Righthaven. See more on these insidious, politically motivated tactics in the blog DailyPaul.

Protect your right to free speech! Don't let FBI raids intimidate peace activism. They will get away with everything we let them get away with.

As a blogger you are not alone. It's good to know that there are real Americans standing up for their rights.

WARNING TO FELLOW BLOGGERS
I received this e-mail from TheDailyPaul on September 30th.:

Righthaven Lawsuit Update

As some of you may know, the Daily Paul (i.e., me) is being sued by the copyright trolling firm Righthaven, which at last count has sued 144 bloggers - many of them small time operators who don't make any profit (and often have very few visitors).

I found out about this about a month ago from Las Vegas Sun reporter Steve Green. I have since spoken with 5 different lawyers (the first hour is free :), and have been studying the situation thoroughly.

I've been advised by all of the lawyers to keep my mouth shut while the lawsuit is under way. I'm sorry I can't share more about my case, but I deeply appreciate everyone who has offered moral support. It has been a tremendous learning experience for me, and not an entirely pleasant one!

I was heartened to learn that the Electronic Frontier Foundation is fighting back on behalf of the Democratic Underground in a case that is very similar to mine. Not only is the EFF defending the DU, they've filed a counter suit to put an end to all of them. This is a very important case, as it goes to the very heart of defining the legality of the internet, including fair use and First Amendment rights, as we know it.

I have been following Steve Green's reporting on the topic daily at his Las Vegas Sun archive, and if you are interested in this case, I urge you to do the same. More information can be found at the Righthaven Victims site at: http://righthavenvictims.blogspot.com/.

If you are a blogger, or know others who are...

I urge you to check this guide and take steps to avoid being sued! If you have so much as a few paragraphs of an article from the LVRJ.com on your site (the Democratic Underground is being sued for 4 paragraphs!), you are at risk! And it doesn't matter if you have only a few visitors, you are still at risk.
/End excerpt

PART III
End of the world?

I've come across a few articles that explain all the signs (links above.) Like ancient times, people these days seem to want to see signs. (As a sidenote, the Bible cautions that people don't demand signs from God, which are deemed disrespectful and evidence of a lack of belief in God's existence.)

Of course I have to mention the Bible. It's the Word of God to some and many here in the U.S. believe what is written within to be written by God Himself.
We couldn't discuss crisis in America without discussing God. Religion plays a continuing role in education and politics.

This is because crisis is a matter of personal choice. Its boundaries are subject to personal interpretation. For thousands of year, this group and that group have foretold of the end of civilization. Some were nut jobs, of course, but many mostly rational people used numerology to determine end dates.

I happen to think sitting around and anticipating the Apocalypse brings it on.

Unlike the discreet nature of faith, the exercise of end times belief involves other people. To be in the end times, all that is needed is for enough people to believe we're in the end times. If enough people believe the end times have arrived, they'll most likely change their behavior--distrust, suspicion, etc.--to the point that the bonds between people begin to break down.

In this respect, the apocalypse represents an abandonment of Christian values, although some might be inclined to be compassionate, in the spirit of an all-giving Christ.

You could say the victims of Nazi death camps who gave away their food were the greatest examples of how to endure suffering. Of course they were the first to die, but I believe it was Victor Frankl who wrote about how important it was for these people to preserve their dignity, and if it required giving away their life-saving rations, so be it.

So self-sacrifice does have a role in how believers behave in the end times. We can't assume everyone--especially those with strong religious beliefs--will simply be whisked away. Nor will those Left Behind resort to evil, although by that interpretation those Left behind will be the unsaved, and thus given over to sin. The Earth then would become the Hell.

Exercising belief in the apocalypse is no simple prayer exercise. Dancing the apocalyptic masquerade doesn't require divine intervention. It accepts the world as it is, and defines our times as meeting the conditions necessary to qualify as the End Times

Some believers may succumb to the concept that their personages might go up to heaven with the end time, is as thought to happen in some interpretations of the Book of Revelation.

Now that book has been open to a variety of interpretations, at least outside those who take the Bible literally cover-to-cover. I know of one researcher who claims that John--who ostensibly wrote Revelation--was talking about events that occurred long ago, during the destruction of Jerusalem. According to that timeframe, the period when Earth has been under the rule of Satan is coming to an end.

I don't claim to have any knowledge of the scripture that can offer insights or interpretations, but I am open to opinions and not all are. Most would rather have popular fiction determine when the Apocalypse has arrived. (I use that word interchangeably with "end times," although the two may not even be the same. Armaggedon is another word, which is actually a physical place in northeastern Israel.

In the most broadly accepted cultural definition, the end times= Armageddon= Apocalypse, though these words may not be confused in their usage. It's easy for our imaginations to run wild when consider the concept linking these terms to an exercise in mass hysteria and fear. Movies and books reinforce the end times mythos. You can run the gambit from Mad Max to "extinction-level events" caused by seismic or celestial forces. Wherever the imagination can go, so too can we imagine this or that bad thing happening. So firm is this notion of an apocalypse seeded that we actually see it as inevitable. This is where the impact of manmade climate change roars its head: it's because we've screwed the Earth up that we're to be punished. Mystics and superstitious witch doctors blame various evil spirits for every predicament we've ever faced.

///

Is the Tea Party an alien waiting to burst inside the GOP?

2010-09-17T23:55:00.002-04:00

[This post was originally published at OpEdNews.com.]

Tea Party candidates emerged victorious in many of their primary races. Come General Election, Republican ballots will reflect the Tea Party tilt. I'm not sure if they're any Democratic Tea Party candidates. As a matter of fact, I'm not sure if Tea Party candidates are Republican candidates, or that the Tea and Republican Parties can exist under the same roof.

The beauty of the Tea Party is that any and all can claim membership. Like a snake's skin, people can cast off essentially meaningless party affiliations and become TP'ers. Breaking the shackles of conformity to a two-party system is most definitely needed in an era of very limited choice yet the Tea Partiers seem intent on change the GOP from within, a radical transformative process that appears to be working as TPers win nominations.

Being new, the Tea Party is subject to interpretation by the descriptor. We can't say Tea Party candidates all behave the same, which raises the issue of how firmly Party members should conform.

TPers do seem to want to return to some utopian ideals not that different from religious colonies in America early in our history. To a purer and more fundamental existence, not an unappealing offering in times of great fear and uncertainty in a backdrop of great, rapid change.

Early Protestant missionairies built on the idea of a "citte upon a hill," a place where people could live free of government intolerance and practice religion in any form they see fit, away from all the tired old rivalries of Old Europe and the persistent oppression. America was founded on this premise, the premise of freedom.

For now the Tea Party offers an open tent--a populist style of tolerance typically ascribed to the Democratic Party. As the Party's non-existent platform takes shape, the tent will shrink as the party platform hardens.

Compromise is vital in politics. We all agree to disagree for the benefit of shared political goals. A willingness to bend is required for compromise. Like amateur politicians, TP candidates may be too committed to their ideals to be open to compromise. They may see where they stand on issues as immutable, closed to discussion. This is a mistake as the firmness of one's position needs to be tempered by the practical limitations imposed by politics. Getting it done isn't as simple as "git-r-done" although the latter does seem simpler and easier to achieve.

Real government requires compromise, attention to detail, and nuanced reflection. The whole point of the Tea Party is that they're un-sanitized. They're a messy, pickup-driving, trash-talking, sitcom-watching bunch with no goal higher than letting you be you within that big sticky mess, the cotton ball of candy they call a party but is really nothing more than a collective of tax-hating, Constitution- and Gun-loving reactionaries.

If government is no longer on the people's side, principles which the Tea Party purport to represent do represent a welcome change. For example, if our fiscal imbalances are leading to the destruction of our nation, then the TP principle to cut spending is undeniably vital. Yet how could that be accomplished?

On spending, at some point there needs to be a hard either/or choice between military priorities and domestic ones. Faced with a nasty recession, tax revenues will be quite limited. Of course we all hope TPers can impose some fiscal restraint, but I don't see how they can be re-elected as Tea Partiers--and the party retain any credibility--unless its candidates in office vote no to military spending, which must challenge the cherished faith in the US military held so religiously by most Right wingers.

Calling the kettle black

The Tea Party can't change the Establishment from within as it is likely to be corrupted by it.
All politicians have a tendency to end up being compromised in Washington. Washington, D.C. has a myriad of delights from which to draw any number of scandals. Insert new politician, drunk with power, Tea Partier or not, into that environment and you'll make the humble proud and the pure unpure. It's the New Rome and all delight in her pleasures.

By succeeding, the Tea Party un-succeeds. By triumphing over Establishment candidates, they become the Establishment. In time, absolute power corrupts absolutely, whatever the candidate claimed as a candidate. As a matter of fact, the more audacious and anti-establishmentarian the message, the MORE likely and total the compromise, as the Obama case showed.

On one hand, the TP victories have brought new candidates, outsiders. They intend to bring change and oppose the Establishment. In a campaign, messaging takes precedence, though, and if the American people want to believe in hope and change, they deserve to be lied to, so recently as Barack Obama's "Vote for me and get change." The real message might go: "Vote for me on the promise of hope!" Translation: if I do all the things I say I'll do, there will be change. But first you must vote for me.

Image

In the media spotlight, the presentation of a balanced image is critical, polish is a plus, and professionalism key. Tea Partiers seem lacking experience in these areas. They do have the benefit of being outsiders in a period of great anti-incumbency sentiments.

Campaigning is a brand statement. Political races are run no differently from corporate sponsorships or marketing campaigns. In age of constant media bombardment, consistency in messaging is vital, as brand marketers know. A big chunk of the message attempts to get viewers (voters) to identify with the candidate.

Barack Obama's campaign of 2008 heralded grand new visions of change and hope as their cornerstones. What we get at the end of the long campaign road may not be what is promised. Then again the product--the candidate--is only bought every four years. Voters may be more apt to forgive flaws and cracks in their purchase--little inconsistencies they may be able to overlook when next it comes to time to buy.

Nowhere did we see this more clearly than the devolution of Barack Obama the Campaigner to Barack Obama the President. In the first, we have someone we want to believe in, a source of hope. In the President Obama, we have a cold tactician willing to compromise anything, with anyone. Barack the Campaigner was likable, a celebrity, someone you could see yourself drawn to. Barack the President is "the decider," a Byzantine clositered emperor who negotiates with men of power to get things done, Chicago-style. Untouchable, distant, impersonal. Sanitized.

Unlike a free market where consumers are free to buy any number of products, we in the American political process are limited to a choice of two. Or possibly three, if you include the Tea Party, which is supposedly a choice within one of the two. "Cream or sugar?" the marketers might ask. "Sugar," the purchaser might answer. "Nutra-low or regular?" the server might inquire and we'd answer.

In the same way, the Tea Party presents itself as just another flavor within the existing political grid. It's not changing the system by itself, simply trying to alter the political dynamic to reflect an under-served constituency.

The tactic of trying to dumb-down one's image and impressions to connect to Whites isn't the same as the general population. For one, the states with large Latino voters--key to winning for the GOP--might not like Tea Party support for Arizona's anti-illegal immigration law, which they saw as racist.

The only guarantee in a system like ours is that talk is cheap. I don't know if perception is reality, no matter how many times the impression of a candidate is made in our message-weary minds. And the two parties really aren't all that different. Sure one comes in and another out, but the more things change, the more they stay the same, as the French say.

Impacts going forward

Tea Party candidate numbers will be insufficient to accomplish change yet they could be a catalyzer--enough to redirect policy changes. Congress--the only avenue open to Tea Partiers at the present--requires building constituencies through compromise in order to pass meaningful legislation.

The Tea Party aims to do great things but won't constitute anywhere near a majority for several more election cycles. The intervening period offers plenty of opportunities to fall from their principles. Also, sustaining a political organization requires iron-like discipline, a gang of Karl Roves who relentlessly attack the talk shows, radio, the Web, on a nightly basis, then get up at first light to fax out talking points to party activists, media figures, and sympathizers. It's precisely because maintaining a consistent political message requires organization that organizational hierarchies, authority, and control overshadow whatever individual positions candidates hold.

And I guess the first goal of every Tea Partier elected will be, you guessed it, re-election. Once made insiders, how can they preserve their outsider status--linchpin of their popularity--two or six years from now (the time span until the next election for Federal office)?

While an overabundance of popularity may get candidates elected, it's infinitely harder to keep voter interest over periods which may span several years. It's easy to get and stay excited about a candidate when an election's just a few months away; far harder it is for the public to like them--or much less care--months into office, especially if things aren't going too well for them.

Primaries wins by TPers have limited choices to Tea Party versus Democrat in the General Election (GE). Demographics for the GE are really quite different from primaries in most states. Whereas single issue voters can shape primary wins, the GE is more about where candidates stand on a broad number of issues.

This presents a new dynamic to manage and a cadre of highly trained professionals to sell a different message. It won't be enough to overpower Establishment candidates within the GOP. Cowboy boots and country roots may not be enough to win. And on this issue race could greatly smear the Tea Party as its extremist elements advocate greater freedom for the States in their fight against illegal immigration.

The American population has been racially diversifying for years now, to the point Hispanics, African Americans, and Asian--largely a group that votes Democratic--now combine to more than 40% of our population. This demographic change sets a largely non-White audience against some messages which were designed to woo GOP voters.

Any candidate seeks to identify with the broadest possible audience. To avoid alienating as many people as possible, Establishment candidates need to be careful not to denigrate the TPers for whatever principles they have. Nor should their opposition--which appears at present to be solely Democrats.

Some have said that the placement of Tea Party candidates within the GOP could help the sole plausible alternative in virtually every district: the Democrats. Yet it's hard to believe Democrats have much credibility left when it comes to the bringing change mythology, so I don't think TP success means the GOP suffers. It's also possible that the GOP can latch on to some constituencies their previous eight years in power alienated: the anti-Bush, the anti-interventionist crowd who hate the GOP establishment passionately.

Some GOPers defeated in the primary will run as independents. A three-way race could get quite interesting. A third party candidate won't likely be viable in a three-way Presidential race, especially if the support for the Tea Party candidate comes mostly from within the likely pool of GOP voters anyway. Still, the Tea Party's Open Tent might be a draw for people who don't typically vote. Barack Obama was able to bring many of these people into his camp in 2008, especially first-time voters.

How many more disaffected persons are lingering out in the fringes we can't know. I just can't expect their numbers to be so high as to radically change the election results, which means TPers will need independents to go Republican, which after Bush and the unpopular wars he started isn't likely to happen but could, as more Americans now consider themselves independent than either Democratic or Republican. A vote for the TP candidate could be considered a protest vote, which considering how poorly we're being led, may be inherently a good thing yet yield to disastrous results. Still I admit I'd get a good dose of schadenfreude seeing the Demos get beat up. It's just the notion of what could come after that scares me.

For real change, the Tea Party really needs to be independent of the two parties, I believe. To try and assume their party can exist within the GOP is stretching the fundamental purpose of creating a Tea Party, which must be to bring real change. Now infiltrating the GOP might be easier than going the independent route yet there is a threat that GOP moderates could turn away, scared by TP rhetoric and populism.

Maybe if the GOP splits up, the Democrats could, too. We could use a progressive party. The Establishment Democrats aren't getting it done and their leader, Barack the President, has abandoned a progressive agenda in favor of more war, corporate favoritism, and relentless spending.

///

Pointing the finger first at ourselves

2010-09-02T18:22:00.007-04:00

We're living in a world that we've created and we have no one but ourselves to blame. Our politics, economy and environment are all suffering from a lack of collective goodwill. Committed to ourselves instead of others, we've become a mob. The planet's suffering grows increasingly urgent and obvious with every passing day.

We all want the freedom that comes from democracy but no one wants to do the work. Jefferson said eternal vigilance was the price of liberty.

Our nation has always heralded individual rights and we all firmly believe what is right, in our Bill of Rights. Today, those who claim to support the rule of law are referred to as Constitutionalists, who are relegated to representation not in either major party but the Tea Party.

The Establishment should heed the will of the populace, which increasingly goes ignored. I guess if we were a pure democracy, our nation's policies and actions of our government would reflect the popular will. In framing the Constitution, the Founders feared government run solely by popular opinion, as this could easily fall prey to hysteria and hatred.

There are a few persistent violations of our Constitutional rights looming today. Our privacy is routinely violated. Corporations rule. The legal premise that all men are created equal should mean something. Corporations can't be people. Only people can be people.

We're being challenged in a number of ways, with our individual rights and freedoms under attack. We were told in the beginning of the age of Terror that our way of life made us a target, and to this day we're instructed to give up freedoms for security.

A nation of laws abides by the law but recent examples have shown that those with the money make the rules, a belief held by Macchiavelli, a great mind who lived in an age of greed and deceit not too different from today's.

We can blame culture for much of our self-inflicted misery. In our society, the prevailing attitude puts "me" above "we. Cocooned in an tapestry rich with marketing messages, individualism has devolved into unrepentant hyper-consumption.

The Boomer generation's lifestyle obsesses over luxury, and shopping, which brings only transient happiness. Spending makes one feel good but a lack of savings mean few will be prepared for retirement. We all know how easy it is to defer tomorrow's problems until tomorrow. I worry sometimes that the generations that follow the Boomers--a group to which I belong--has been tainted by so much crass consumerism. These days, movements towards self-reliance and re-localization are resurgent though.

Hard economic limits have emerged out of unchecked consumption, when the crash of 2008-9 dried out access to credit. Maybe the change, shock therapy though it may be, isn't such a bad thing after all. Simple as it may sound, we need to not spend to spend.

Yet the financial pain will continue, particularly for the middle classes decimated by falling real estate values, outsourcing, and high unemployment. Dependent on consumption-oriented financing, our economy now flails, drained of its chief source of sustenance, more debt. Our spendthrift, high-borrowing ways are repeated by our government. Like a borrower, our government spends money we don't have.

The burden of repayment--plus interest--falls to future taxpayers. Also, our government's excessive borrowing has led investor funds away from other worthy investments. In economic terms, this is called crowding out, a process whereby investors avoid riskier forms of debt (corporate, municipal) and instead go into bonds issued by our government.

For our government and private individuals, overspending--and its twin, over-borrowing--have forged an unsustainable path. We know things will get worse but how much worse will things have to get before they change? Until we stop the misbehaviors that have led us into the predicament we all share, the problems will only worsen, though their impacts might be delayed.

Another trend we've seen is that of neglect. Too much in our nation has been deferred. We've neglected our responsibility to leave future Americans a country in as good a shape as the nation we inherited.

Any society or person who puts off what can be done in the present is prone to ignore the effects of its procrastination. In our always-on, 24/7/365 world we do have good reasons for neglecting the future in favor of the immediacy of the present. There's so much to do, so much we think we need but really only want.

Environmental health and economic growth

The environment has been neglected, and we've seen this in the Gulf of Mexico, as well as in the ravaged mountains of Appalachia which have succumbed to mountaintop removal. We've been told by our representatives that regulation is bad, even if the companies they really represent systematically plunder the earth and deplete resources at unsustainable rates.

For a long time, economic growth has been posed as an either/or to economic growth. Judging by the massive BP oil spill, most of the damage is economic in nature. The millions of people whose businesses have suffered are the victims, right alongside the Gulf region and its wildlife. So the price of environmental neglect and pollution is economic more than anything, which makes assumptions about economic growth vs. the environment obsolete.

To keep economic growth, a new paradigm is emerging: sustainable growth. The extractive industries like mining and drilling need to practice sustainability or be force to practice it. Otherwise companies like BP will take unacceptable risks and damage the rights of others to utilize the seas, which are a shared resource, not the exclusive property of any one corporation.

A reckoning might not be that far off. Global warming could shorten vastly the time between what we do to the Earth and the consequences. With the combustion engine spewing out so much CO2, it's only a matter of time before the impact of too much CO2--heating--is felt in the environment.

Another one goes in the Gulf

Recent events are an indication that more environmental destruction is on the way. I just saw today that another well had blown up in the Gulf of Mexico. Reports are sketchy at the present, but I believe we'll see a pattern of regulatory violations--coupled with inadequate enforcement by Fedgov--that preceded that event.

We've all heard that Gulf oil drilling goes deeper and deeper, and all the risks associated with that, but the Norwegians don't seem to lose their deep water wells like we do, at a rate of 2/year or more.

How much of the ecological damage could have been prevented by adequate enforcement? I'm not going to guess. I will tell you that I don't dwell on "could" scenarios. It's pointless speculation. I'd rather dwell in certainties and try to limit timeframes. It is certain global warming is occurring. We see the effects what I call Global Climate Radicalization frequently.

We can hardly decide on what to call it--it being this odd potpourri of droughts, floods, storms, and forest fires. The "climate change" label is more accurate than calling it "warming" as we can anticipate heat but not the effects of heat. You just get a sense that something bad is out there. {For readers of my review of the movie The Road, we get a sense of some troubles out the window, where The Man (played by Mortensen) is illuminated by fires burning outside and shuts the window.

To give a good example, the link between mismanagement of forests and flooding is strongly established. Cut down the trees upstream and, surprise, you get more flooding downstream. Until a big rain comes--an event more likely with climate change--people can ignore the loss of vegetation. It's only when flooding worsens to apocalyptic levels that people can guess the a major compounding contributor: deforestation.

Apparently the horrible situation in Pakistan was made possible not by too much rain (as likely as that is in the New Normal) but by clandestine cutting of forests. If the environmental axiom that fewer tree=more flooding holds, then the failure to protect Pakistan's forests is a big deal. Now, and only now, with so many homeless, can the people and government address the need to protect their forests. This new direction will clearly face reactionary forces which exploit the corruptibility of officials in the Third World.

How soon before they forget? Or, to be blunt, how bad does it have to get before people start taking environmental protection seriously? Well, if the politicians aren't accountable, they might choose to ignore illegal deforestation, which makes future flooding not only worse but entirely preventable.

Another area where decay is evident is our infrastructure. I've seen no mention of bridge repair despite the horrific collapse of a major bridge in Minneapolis three years ago. The problem might not be that things are going wrong, but rather no one seems to be taking responsibility with preventing tragedies. All our politicians want to pose as if they're helping once the disaster strikes, but where is the leadership (and media spotlight) when it comes to the little but vital improvements that need to be continually made?

Our image-conscious politicians don't see much gain in infrastructure. The American people seem unwilling to make repair of our nation's crumbling infrastructure a top priority. Yes, you could blame people in "high places" for not "being the ones who start...to mold a new reality...closer to the heart," to borrow the song by Rush. But ultimately we must take individual responsibility regardless of what we've become as a people. Failing to maintain an infrastructure is a collective failure but it's people, not their leaders, who will bear the consequences.

We all know it's true: pollute one area too much and the land show it, toxins kill off crops, the vitality of the land diminishes and remediation becomes necessary, like all those SuperFund sites littering the U.S.. The timeframe between cause and effect appears to be shortening, courtesy of climate change. Years of pollution and inadequate management of resources makes the time of reckoning that much sooner. It's like the Lakota Sioux medicine man, Floyds Looks For Buffalo, who speak of a revenge by Mother Nature who's been so abused by man (Part 4 on youtube here.)

Like Floyd, I believe I have a responsibility to tell people of a coming event. I guess you could call it the medicine man in me. I think many people like me have been labelled tree-huggers, or conspiracy theorists, in an effort to diminish not our credibility but the validity of the truths we present. It's simply easier for a society that wants convenience to ignore the inconvenient, to marginalize those who would dare tell it it's wrong, or facing doom.

I can tell you for sure that we're facing economic consequences for over-consumption, this is true. I can also tell you that things will get worse, far worse, if we don't change. I guess the effectiveness of my message depends on how badly as a people want to hear what it is I'm saying.

Back by popular demand: the post-apocalypse

Looking at the movies I reviewed last month, it doesn't really matter whether people were warned of a coming apocalypse. No mention is made in the movies Book of Eli and The Road of what caused things to go bad. Once the bombs fall and food runs out, I guess who or what started it really doesn't matter much.

The popularity of movies in this genre today suggests people intuitively assume we're due to receive some really nasty rebuke from God. People may just assume this. Heck, it's nothing new, people have been drawn to tales of earthly destruction since the first storyteller spoke in front of the fire, telling tales of unimaginable horror and mayhem, capturing spellbound his audience and cementing the place of the apocalyptic story in human history forever.

If it's true that we are all linked to one another, it would therefore hold that we share our misery and our pleasure. As much as we'd like to build castles for ourselves, man is a social animal. We really can't excel without other people, and as big of a pain as others may often be, I guess we all need to get along. Mother Nature plays a vital role in linking us not only to each other but to the space we all share. In limiting us to one physical place, we are forced to examine the metaphysical and spiritual dimensions of our existence.

No such evaluation of where we stand as a society can ignore the importance of preserving our common humanity. I guess these apocalyptic movies serve an important purpose to transcend whatever horrors we face, and show how we can emerge from the apocalypse changed but perhaps wiser for it.

In The Book of Eli, they destroy the Bible, blaming it as a source of problems. I don't know if this act of destruction creates a new order, although the villain thinks rediscovering the Bible will. And Eli eventually reaches a place where a restoration of pre-apocalyptic technology and civilization appear inevitable.

In The Road, a new life awaits at the end of the road. We can see what's happened to the earth, cannibalism, etc., and it may frighten us but simultaneously the idea of a new start gives us hope. And hope is the light that can steer us out of the darkness. Unfortunately mankind just seems destined to screw things up, causing the apocalypse. We seem almost destined to self-destruct. But slowly, these stories tell us, we can laugh again, and live once more in a world that gives us a second chance despite our failings.

///

Movie Review: The Road and Book of Eli

2010-08-16T23:32:00.003-04:00

Warning: This post contains plot spoilers for these movies

These two movies depict a future America a state phrased by survivalblog.com as TETWAWKI, The End of the World as We Know it.

I was struck by the dreary, stunning yet foreboding imagery of The Road. The Road stars Viggo Mortensen, who reduces his weight precipitously to play the role. He escorts his son along a road to some hopefully better place.

In one scene, Mortensen's character swims out into the sea to scavenge a cracked up old rusty freighter. The blue-gray (always gray) waters are rough, surprisingly so for a completely naked Mortensen to swim to in a real world way. His low body weight must've made the scene hard to shoot, and dangerous.

We're not exactly sure what's caused the apocalyptic North America in The Road. Earthquakes and forest fires create a scorched out landscape, which is caught in Director John Hillcoat's cameras as a gray, soggy existence. Food isn't found; nothing is growing, nothing alive at least. (A beetle emerges in a later scene, an indicator that perhaps the Earth is recovering.) The only breathing things appear to be the humans themselves, who are scurrying around the wasteland looking to feed on anything whose path they cross.

As the pair go down the road to some undefined location, they encounter all sorts of unpleasantries--foremost among them, cannibalism. Starvation on an epic scale justifies the smorgasbord of human flesh.

In The Road, a heavily disguised Robers Duvall plays a small role as an almost Kurosawa-type/Taoist old-man-walking-alone role. Blind, of course, Duvall's character can see into the past and future like some itinerant sage. He represents both what the world was, and what it will be. I guess Mortensen and his son are striving to escape Duvall's fate but need to embrace the old man, to learn from the past mistakes of humankind, to not go back, or along The road. They leave it and its many dangers soon after.

In Denzel Washington's Book of Eli, America is a far different kind of place, though in both movies, cannibalism and lawlessness rule, although Gary Oldman, playing the evil Carnegie, does organize a town providing water, security, and barter.

Barter becomes the chief means of trading, just like we saw in Mel Gibson's Mad Max series, which has become the granddaddy of this expanding genre. The first stage in all these dystopia/post-apocalyptic movies is a breakdown of order--what I call Mad Max Level One--then the rise of gangs, graduating through to reestablishment of order, the rebirth of small towns like the aptly named Bartertown. In Eli, Carnegie takes the place of Tina Turner's Aunty Entity ruling over his private domain.

Eli's style contrasts with Mortensen's. Eli is a hardy adventurer-turned-crusader/guardian of The Book. At some previous point, Eli had received a message from the Holy Spirit that he was to take the Holy Book to the west, and his enemies would part before him, or something like that, clearing the route for Eli down the road to salvation and rebirth.

An atmosphere of fear plagues The Road, while Denzel rises above it like some superhero invulnerable to the many evildoers plaguing the post-apocalyptic world. Mortensen is anything but the hero, hiding and scampering and only reluctantly killing. He retains his humanity--perhaps because of his son--even as he slowly dies from injury and starvation. Eli never dips below his moral principles, which have come to him in a supernatural (believers would call it "divinely inspired") way.

Mortensen's character seems more possessed with simple survival, scampering away even from a stocked shelter out of fear when he hears scampering above. Which survival methodology is more probable? Well, Mortensen's is realistic, while Denzel's is pure Hollywood.

I was struck by similarities in The Book of Eli's world and the popular computer game series Fallout. Both have nuclear war as the force majeure causing TETWAWKI. In scorched out flatlands we see craters caused by nuclear warheads pockmarking the ground.

Radiation doesn't seem to plague the survivors much in Denzel's world, which is one where the Holy Bible has becomes a much-treasured item sought by Oldman's dark hero Carnegie to control minds and exert power. The Bible, you see, is blamed for much of the destruction, and every last copy burned by survivors of the Holocaust. Implausible though it might seem, the Bible that Eli (Denzel) carries is the last in the world. {Personally I found this premise unlikely considering 1), the number of Bibles in use today, and 2) the value of the Bible as a source of spiritual strength, which would be more in demand after than before the apocalypse.}

The Road is scary because we don't know how much time passes between the beginning of the crisis, which begins softly, as Mortensen draws the blinds against a nighttime sky lit red with fire, and the time he and his son leave on the road. In The Book of Eli, a whole new generation comes of age, referring to Eli and Carnegie as "old timers," who are a shrinking group.

The Road makes the impending trip a scary but unavoidable tragedy-simply for lack of food they must travel the dangerous road. Some time into the calamity, the wife of the man--we don't learn the name of Mortensen's character, nor hers--played by the beautiful Charlize Theron can't handle the gloom and wanders off into it.

The Road is the darker of the two. You leave the film in a bit of a downer. I guess it's the cannibalism, or to be more accurate, the dark symbolic imagery of cannibalism, the skulls on stakes here, the human captives locked in the basement, the cold callousness of tortured calls felt as much as heard when Mortensen and his son wait out in the dark, nearly becoming captives themselves.

It hit me after the film that it's cannibalism rising in such a world that bothers you. In Book of Eli, cannibalism is brought up slyly, with dark humor: a couple invites Eli and Solara into their house, serving them tea in a shaking-like-a-leaf-if-there-were-any- left way, which is apparently a symptom of some disease I'd never heard of before where you eat too much lean, red meat. I guess if the cannibals could only devour hungry humans, their meal items would likely be starving as well as provide a food source lacking much fat.

In the Book of Eli, Eli is checked for shaking hands by a guard at the entrance to Carnegie's town, demonstrating that cannibalism was reviled even by the robbers and rapists who frequented the town. In this regard, Hughes' world reconciles itself to ours a little more; the instincts of the townspeople are still humanist at their core, despite all the inherent post-apocalyspe divisiveness and individualist nature of survivalism.

Hope, the greatest treasure

If the sole purpose of these movies were to warn, they'd have done that excellently, at perhaps the price of a depressive experience for the reader/viewer. Instead Hillcoat and Eli's Hughes push a ray of optimism into the inherently dark backdrop--if not for the characters trudging through the wasteland, then their offspring and followers (in the case of Book of Eli, it's the pretty yet overly-self-confident-for-such-a-time-and-place Solara, played by Mila Kunis.)

Both movies do cradle hope at their core.Like any dystopia movies, expressed vividly are the uglinesses of the post-apocalyptic world. More subtle, yet beckoning, are the little glimpses into a future less stained by violence and destruction, a world where reconciliation is possible.

In The Book of Eli, the Bible ends up getting delivered to Alcatraz Island, where a small but committed team of re-constructionists attempt to assemble the knowledge lost from the pre-apocalyptic world. It's an effort at re-humanization we can all appreciate.

I saw on a Discovery special not too long ago about what would happen during times of starvation. Apparently people have been documented traveling vast distances as they starve. Often spiritual leaders arise who promise to lead "their people" to a "promised land." We know also that extreme hunger can cause delirium, hallucinations, and the like. So the notion of a long-distance march may be quite plausible in a dystopic environment, especially one driven by mystical or religious experience.

Some inner motor must lead us on, blindly during these times of starvation. In that sense the Exodus-like wanderings are a demonstration of faith, the inner experience of belief in hope. Instead of confined to the spiritual world, our physical longings are brought to reality through the unifying event, the Apocalypse, and all the woes it spawns--including of course hope in the infallibility of Nature and faith in our fellow man.

Dark future fantasies

I've always been a fan of movies like The Omega Man with Charlton Heston. In that movie, Heston is the sole surviving human immune from a virus, at least he thinks so until discovering others like him. One aspect of these kinds of movies are the circumstances under which these scenarios which could occur, and how the concordant dystopia would unfold, or society unravel: "how did we get there." We think of these thinks mostly to prevent them, I guess, or perhaps better cope with them should they happen, though how someone will react is anyone's guess.

Trying to determine a time that TETWAWKI occurs has become can be a bit of a challenge. I guess when law and order break down, and laws can no longer be enforced, we've entered Mad Max Level One. Gangs will rise in such an environment. Interestingly, we don't need an apocalypse to cause TETWAWKI; nor do we need a nuclear winter nor zombie/vampire takeover to start the dystopia ball rolling. TETWAWKI is a subjective experience: a child leaving their home could mean and an end to all their expectation of the world outside--if it's limited to that. We've had plenty hells on earth; they need not require much space at all--heck a serial killer's basement could provide the setting.

Once started, the dystopia ball gets rolling, and further acts of depravity increase as civilization breaks down. This is the lesson of both movies, the dark specter of fear that colors the stories in each. We cringe at the the thought of losing what we hold dear: it's a threatening notion that strikes us on a personal level. It's not so much the actual apocalypse that gets us, and provides a compelling story line, but the shocking realities that ensue. We enter these movies not as voluntary Mary Poppins-style wanderers down the Yellow Brick Road of endless smiles but instead are pulled, dragged...unwilling prisoners to the dark side of our nature.

The idea of dystopia makes for good entertainment precisely because we want to see--deep down inside of some repressed part of ourselves--Nature exact some vengeance. George Carlin sums it upped magnificently in his video clip (from 3m15sec on), Saving the Planet as well as in his HBO special, Life Worth Losing, unavailable on youtube at the moment. People are drawn to natural disasters because they want to experience their mortality, or to contradict the arrogant notion that people are masters of their universe. Floods and calamities are Nature's way of getting back, or so Carlin iterated.

Deep down inside, we may all dread yet almost expect calamity to strike. Disaster films have grown more popular with scenarios of global warming, asteroid collisions, and similar issues, some of which humanity can endure. It's the purpose of a movie to entertain, so rare it is to see a movie where all the humans die off...I can't think of any titles. The Road comes close to killing all hope as you develop a personal attachment to the survivors. It's hard to wish anyone dead, but dying is a typical condition in a post-apocalyptic world. The movie 2012, which I saw recently as well, echoes the theme of worldwide calamity, yet even there Africa survives even if America doesn't.

The 70s saw a jolt of these movies: Airport7_, The Poseidon Adventure, etc. (see a list of here, about halfway down.) The idea of getting wiped out en masse has been central to entertainment for some time.

Perhaps there's some auto-response in our brains that let's us accept death, should it come through some wild event affecting us all simultaneously. Maybe the shock of the attack releases a surge of serotinin or some naturally biological response takes over, kind of like what's thought to happen to animals killed and eaten alive on the African savannah. Observing these victims in their death throes, the animals often seem quite docile despite what must be an immense desire to flail and kick.

Internet Movie Database (imdb.com) References:

The Book of Eli

The Road

The Omega Man

Complete synopses for the movies are available at all links.

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Myths and lies guide U.S. policies

2010-08-02T01:28:00.003-04:00

We're seeing the culmination of BP's Gulf oil spill PR campaign. In the mainstream press, the event has been characterized as "winding down." Surface oil has become harder to see, or so they report. Also, the media consensus--not entirely supported in fact--is that the oil no longer poses the threat it did. Fishing grounds have been reopened.

The other looming issue is whether the well can be closed. BP has been saying that the wellhead has been secured, but other leaks and seepage in the area raise doubts whether the well--and not just the wellhead--is really sealed. This week a "Top Kill" effort to inject cement and mud from above and below (through the relief well) will occur.

The use of toxic dispersants is the real backstory the media doesn't want you to hear about. The dispersants have created a new problem: airborne oil. The oil is in tiny globules which can be lifted into the rain clouds that form over sea, which then blow inland and deposit the oil, along with whatever chemicals and fumes are associated with the spill.

We'll see, unreported in the mainstream media naturally, reports of acidic, strange-smelling rain, of chemical burns in vegetation, as well as a telltale oil sheen in the rainwater as it flows into gutters. The scope of contamination could move quite far north. Whatever the chemical composition of the rain, it's safe to say it's something people want to avoid.

We've traded one problem, the oil, for a couple more: surface oil for more sub-surface oil PLUS the dispersants. BP's logic for using dispersants has been clear from the beginning: to hide the scale of the disaster by eliminating as much surface oil as possible.

BP has sought to avoid transparency in regard to how much oil it's collected from the leaking well so it'd be keeping with the trend to oversell the well's possible closure, while claiming the amount of oil at the surface--and hence below as well--are dissipating.

The PR perception game limits public admission of realities that contradict BP's "it's over" theme. BP seeks to claim "it's over" as a way to limit its ongoing responsibilities in the matter. The media will simply echo what BP and the Coast Guard say, enshrining the company's PR with government-granted credibility.

Denying victims their legal rights

On the legal front, BP is demanding that those who receive compensation from BP sign away their right to sue. We saw this before in the management of compensation for the families of 9/11 victims. New York attorney Feinberg managed both BP's and Fedgov's system of 9/11 payouts. He's got experience in damage control which is likely why he was chosen.

If BP's $20 billion is handled anything like compensation for 9/11 first responders, we're in trouble. Recently a bill compensating first responders was killed, enraging Congressman Weiner of Brooklyn on the House floor. Weiner rightfully berated Congressman King of New York for his non-support of the bill offering payments for the responders, many of whom have died as a direct result of their intervention into the asbestos-laden smoke of the fallen towers in the first hours after the calamity. See the video at HuffPo.

Not paying the sick responders is truly callous. Fedgov views us "small people" as expendable and our legal rights as dispensable. Our government has become so tolerant of corporate polluters (and their lobbyists) that oversight and punishment are mild, even for as egregious and criminal a spill as the Deepwater Horizon, or Massey Energy's coal mine explosion.

Without the ability to hold BP to account through the Courts, it's unlikely the victims will ever receive their just due. Already Feinberg has told all the fisherman and boaters who've helped lay boom that whatever pay they'd receive would be deducted from any cash awarded them by BP.

Let me get this straight. BP, by its negligence, eliminates an entire way of life for thousands along the Gulf, spews toxins into the Gulf air, destroys vast reaches of key spawning habitat, and the survivors and responders are forced to sign away their right to sue? How convenient for BP. Is it just? No more than it would be for a criminal to control how much restitution he's willing to make, whatever the extent of damages to the victim. This Feinberg-administered fund looks like a pre-emptive maneuver on BP's behalf more than a real effort at restitution although it will likely be framed as one.

US on a path to fascism

It's worth noting that extralegal exceptions and preferential legal treatment are typical of fascist systems through which corporations gain undue control over the legal system. The best examples are probably South American juntas from the 70s, where an elite ruling class cavorts with corporate cronies, and foregoes unpleasant and unprofitable inconveniences like victim rights and pollution controls. Such a system is great for those in power, and certain favored business interests but not so great for the little people.

How similar is our new system from a fascist one? Not that far divorced in my opinion. As long as corporate money controls the elections, and the corporate media keeps the public uninformed, and gullible, the subversion of our democracy, which requires an informed and participating public, will continue. Until the people see it as their responsibility to control their government, they will likely be controlled by it, and face higher taxes, longer wars, more police state tactics, and repression.

Rather than see our democracy as a fait accompli in our country we need to see it as a work in progress. Mary Parker Follett explains:
"Democracy is not a goal, it is a path; it is not attainment, but a process ... When we grasp this and begin to live democracy, then only shall we have democracy."

The presumption that we've attained democracy that we don't need to question authority is a highly dangerous proposition. Jefferson admonished us to stay "eternally vigilant" as the price of democracy; Franklin said we'd have "a republic if we can keep it." No one wants to imagine American democracy as broken down and in need of repair yet I've warned of this, particularly since 9-11 and the rise of the National Security State, a bureacracy inherently incompatible with American democracy (our form of government may be alien or lost history to many Americans.)

Maybe we've never had as pure a form of representative democracy as we think. There have periods in the American past where a Gilded Age of robber barons and industrialists set policies. Yet a big difference between then and now is global competitiveness. Carnegie and J.P. Morgan came from the Industrial Age, where American industry dominated. Producing real things meant real exports, and a rising standard of living for all tiers of Americans, except perhaps the rural poor. It's the Chinese who are now industrializing and grow their middle class.

In contrast, the American economy of our time suffers from too much debt, and foreign competition. Now free trade has been sold to the public as a good thing since the days of the neoliberal Clinton, but it hasn't been fair. Labor rights and environmental protections have been so weakened in nations thought to be reliable trading partners like Columbia, where labor organizers were murdered on the shop floor of a Coca Cola distributing plant.

Meanwhile, here in the US, Coca Cola is treated as a venerable, benevolent icon, so revered it's even got its own CNBC special. No one mentions the effect of Coca Cola's rabid theft of ground water in India, a problem so severe it's led farmers to commit suicide as their crops failed for lack of water.

Unfairness is at the center of our trade policy because those in power look the other way. Presuming that corruption exists here in America is a healthy exercise. Dissent has been curtailed despite its valuable role in keeping the powerful in check, and encouraging the media to be more aggressive. Common sense dissipates in the face of militarism, patriotism, and hysteria.

Mass media, pied piper to the willfully ignorant

The media has played a big role in the failure of our democracy. Myths that emerge out of the media echo chamber fall on unquestioning ears. People hear what they want to hear.

We now know how hard it has been for our government to turn off the hate and propaganda. We're being lied to on a daily basis. The American people may have their suspicions about why we're fighting, and the chances of success, but they're reticent to share them openly, lest they be considered unpatriotic. Real qualified thought--facts, the truth--have been sacrificed so people don't have to question their faith in our government and the wars it wages.

The Wikileaks reports provide plenty of reasons to explain why our government lies all the time. Crystal clear it is that the way we're conducting ourselves makes extracting ourselves from Afghanistan nearly impossible. Few people seem willing to accept that our policies have intentionally led us into a quagmire. Then again, who wakes up and likes to question all their assumptions? Most people want life as simple as possible and Americans, judging from their lack of knowledge about geography and world events, can't possibly decide what's the best course of action to take. They've been fed the lie that we can win, that victory is inevitable against the enemy. All the while the real enemy--those that participated in and enabled 9/11--lies in our midst, claiming to know how best to respond to the event.

We can't distinguish between the Taliban and alQaeda because we've been told to believe the two are the same while in fact al Qaeda is a construct of the Western intelligence agencies, a leftover of Charlie WIlson's War. The Taliban are simply fundamentalists who want to be left alone. Now they may be into some evil crap but that's no reason alone to enter into permanent war with them.

The truth has had a hard time gathering enough supporters to lead to any meaningful change in policies, whether in trade, financial regulation, or land wars in Asia. On that last one, didn't we learn our lesson in Vietnam? Americans want to believe that we can win; I smirk at the idea of trying to destroy the Taliban. Why? We simply can't. And there's the troubling inconsistency that twice the Taliban offered Osama bin Laden to the CIA. Both times the US failed to act. Negligence? Perhaps...or an agenda to keep the boogeyman alive. The periodically released tapes said to be the work of bin Laden are little more than feeble efforts to keep Americans scared, where they can be more easily manipulated by our leadership, and less likely to question the official explanation for 9/11, the ultimate rationale for fighting open-ended land wars in Asia without clear exit goals.

9/11 response based on myths and lies

9/11 really did open the floodgates to Hell. The desire to exact revenge has missed the fundamental point, which was who really did 9/11, and why? As I've said in the past, I don't accept the Official Explanation, if for no other reason than the duration of the fires under the WTC buildings. I guess whatever my reasons for skepticism, they've in no way been weakened over the years. And like other 9/11 truthers, I feel increasingly isolated from the official narrative which has us continuing to occupy Afghanistan for their presumed connection to al Qaeda, despite the fact none of the hijackers were Afghans, nor were the plans designed there (in Hamburg) nor did they train there for the attacks (here instead.)

I could provide citations for all the reasons I disbelieve in the O.E., but before any case is made, it's vital to see how 9/11 has shaped American foreign policy.

The desired outcome has been to engage the US in long-term military actions against Israel's enemies, designed according to a 1996 plan called Clean Break.

Whatever your belief on 9/11, who did, or why, it's clear the US has been sucked into a war based on a weak justification, cherry-picked by intelligence contractors to fit the policy (to invade). So should we now be so surprised that our cause is lame, and progress so elusive? I mean if we'd found the real hijackers and bombers, wouldn't we--the mightiest country on the face of the planet--have been able to prosecute someone more significant that Osama's limo driver?

I mean I guess I'm not the only one who feels that the failure to try the terrorists who allegedly attacked us means that perhaps they didn't really do it? I mean all that torture did was to force the apprehended to talk, like the Gestapo. Now of course there are a plethora of excuses given why we haven't prosecuted the terrorists, but none of these explain how the premise for the 9/11 reaction--that acting alone, al Qaeda did it--could be wrong, set up to convince Americans of something that isn't true.

In the eyes of the elites governing this country, 9-11 is over--perhaps not too different from the way the BP spill is over, or the financial crisis is over. Just how stupid are the American people? I guess those in power are counting on the ignorance of the population, or its blind fury, or its ignorance, or its willingness to believe unquestioningly what our leaders say.

I'm not as easily swayed by the popularity of our response to 9/11. The reason for my disbelief is the wholly inadequate explanation given the nation for the attacks. Far too much about them is simply assumed, taken for granted for no other reason than that our government and the media tell us so. And the other red flag should be how the War Party has taken over and killed our budget. I can't believe that so much money directed into such unproductive uses happened spontaneously post-9/11. The goal of filling the coffers of the Military Industrial Complex is simply too large a potential motive to take off the table.

We need to understand that our occupation can't end without addressing 9/11. As long as we don't know who was really behind the attacks, our reaction will be misguided and inherently ineffectual. Meanwhile the main beneficiaries of our 9/11 response are the corporations serving the military (and receiving 40% of the Pentagon's now-$1 trillion budget), and Israel. We the American people pay the price or, to be more accurate, leave the debt to generation unborn. Responsibility just isn't guiding what we do anymore; we're simply adrift. So when our anti-teror policies seem incapable of stopping terrorists, and those involved in 9/11 aren't brought to justice, the situation will only worsen.

We've become our own worst enemy by blithely assuming everything the media and Fedgov tells us are the truth. We can't break this passivity, it would seem; it'll probably take some form of collapse--likely economic--to force Americans out of their slumber. Many are afraid-of this there can be no doubt. Yet very few are willing to consider that their future quality of life is being undermined by endless occupations overseas, and the conversion of the Treasury into a dispensary of corporate aid. I mean who wants to wake up and assume that our nation could be so foolish and gullible? The far easier course is to believe that the Afghan war is just, and that Americans fighting there are on the side of the good guys, despite easily obtained facts that would indicate the opposite.

Everyone seems so preoccupied with trying to survive that few bother to care. The conflicts and crises that seem to be emerging more and more often perhaps aren't simple coincidences: the fact is we're not doing what's right, and having problems "winning" over there. Now if we knew who'd really participated in 9/11, the American people might turn elsewhere, and look for answers to unanswered questions rather than assuming that our response is adequate and just.

I'll make this prediction: for as long as the United States fails to address what really happened on 9/11, we'll have an ongoing state of decline. The obvious signs are economic, which in turn come from the specter of higher taxes to pay for wars without end, and a growing surveillance society that needs enemies both internal and external to justify the bloated bureaucracy. The decline is more than materialistic: I think we're suffering from a corruption of the moral fabric that unites our country. I don't think we'll have a civil war, but there exists the possibility that we could have a breakdown in our energy grid, power shortage, or some major environmental catastrophe which so overwhelms Fedgov that Americans realize they really are on their own. Or, instead of some big bang it's possible that the US could rumble forward purely on its own momentum, even as our infrastructure decays, taxes rise, public services decline, and more and more become poor and dependent on government handouts.

In a situation where the need for change is paramount, pretending nothing's wrong is far worse than absorbing the shocks necessary to illustrate that change is necessary. Now as long as we're ignoring our recent past, and content to continue our wars without end, it's likely that policymakers will abuse our blind trust and cause even more problems for the little people. Some victims may come to realize that their situation is not the product of random incidents but rather than inevitable and much deserved recompense for abandoning reason and the facts in favor of hate and militarism.

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The terror lurking below

2010-07-16T02:22:00.005-04:00

BP claims to have sealed the well, but it's likely that the wellhead has been damaged to the point it can't contain potential leaks. The pressure at the new well cap may fall within tolerable thresholds because it's coming out somewhere else. The absence of information about what's happening on or around the wellhead on the sea floor makes the extent of secondary leaks unknown by anyone outside the BP/Fedgov response team.

I'm guessing that this story is far from over. In part I do this based on the apparent ease with which this gusher has been stopped. I wish I could say I was wrong, but the evidence of a far worse and perhaps worsening problem is compelling.
BP wants to mask the worst case scenarios out of self-interest. It could be removed from the crisis response team and lose control over the PR effort that is attempting to minimize the political costs and fines associated with the spill.

Wait a second! We've got BP still in control of the clean-up despite the fact that they're facing a fine per barrel of oil leaked. This means the company has every incentive to disguise the scale of the disaster. And that motive has likely guided the choice of dispersants.

An EPA study deemed that Corexit 9500 is safe based on a 96-hour testing timeframe using shrimp larvae and river fish. The tests are also conducted at temperatures far below the Gulf's. With all that oil in the Gulf, it's possible Corexit could have far more toxic effects. A petition to stop the use of solvents (Corexit 9500 can be classified as this) is circulating on the Web here: Stop Using Solvents In Our Oceans Petition.

As I've said before, the Corexit reduces the size of the oil molecules to that which can be airborne, meaning oil can be carried in the rain. See YouTube - Breaking: BP Gulf Oil Spill Toxic Rain Falls on Cars, Ground, Central Texas; I also saw some disturbing videos from the Miami area, where evidence of chemical burns appears on vegetation. It could be the oil, or the dispersant, or some chemicals emitted by ruptures on the sea floor.

Another nasty potentiality is a hurricane strengthened by the higher water temperatures created by the abundance of oil in the water. We don't know how much warmer the Gulf is but we can be certain a hurricane would be strengthened.

There are rumors that the Coast Guard is actually spraying bleach on beaches to cover up the oil there. We do know that extensive efforts to cut off public access to beaches have been made. Reporters and media people appear to be singled out for special treatment and arrest. Just what is it that has BP and the authorities so concerned? Possibly it's the images of stricken wildlife like these that could sufficiently enrage the population. Perhaps if enough people get angry enough, the current response would appear inadequate and new more drastic actions taken.

Now BP and the powers-that-be do have a reason to keep beach-goers away due to the toxicity of the oil. Amazing it is to me that anyone would go near the oil. This isn't refined crude! The oil is toxic and corrosive. Additionally volatile and caustic effects on boat hulls and skin have been recorded. If the oil can eat through a boat's hull, your accidental tourists should hardly let the kids play in it.

Then there are the toxic gases emerging alongside the oil. Industry expert Matt Simmons has been interviewed in a number of media outlets (a six-part interview on Christian radio is here; Simmons was on Dylan Ratigan show briefly yesterday (link here.) [Ratigan has a great rant against the financial industry--I'll link to it in a future post perhaps.]

Benzene is one of the major threats, alongside methane. The possibility that a giant methane gas bubble is building has many people scared. Should the methane deep under the ocean floor melt (it's currently locked into solid form), the sea floor could rise, bulge and erupt. Methane, when brought to the surface, would make all surface ships sink due to a loss of buoyancy. It's suspected in Bermuda Triangle disappearances.

A leak large enough could doom the whole world to a Permian-type event, at least according to one article in The Guardian. Methane is a greenhouse gas that heats the atmosphere; I read that the Gulf spill has put more methane gas in the atmosphere than any other documented event in the modern era.

Then there's the possible tsunami created by a massive undersea displacement of seawater as the methane bursts forth. I'd consider this possibility narrow, but utterly catastrophic due to the size of the tsunami, which could be large enough to cross Florida.

A hurricane could accomplish the same type of damage, albeit on a more limited area of effect. All the toxins associated with the leaking oil could be blasted deep into the interior where they could pollute inland lakes and waterways. Not an appealing prospect.

Finally, I wanted to link to a comment I made at OpEdNews concerning the Gulf oil spill. I come down a little hard on the article author, who's genuinely concerned about the pattern of ecological abuse inflicted on people in the Gulf region. As much as I want to be sympathetic, at this point I believe that:

the effectiveness of their message can be diluted by worthy but irrelevant social justice and green energy issues. The Gulf tragedy is best messaged as an economic event, because that's what our capitalism-based political system recognizes and will respond to, not the plight of the "small people." Call it realpolitick, or whatever, but the top priority needs to be getting the spill stopped.

In no way do I want to distract the public from the gravity of the threat, and as important as the longer-term trends are, the blogosphere has a much more urgent priority in watchdogging this tragedy and its response.

7-18 Addendum
Keith Olbermann continues to assert threats posed to First Responder safety. See this video episode from MSNBC.

He brings up the toxicity of the dispersants and offers the link, www.BPmakesmesick.com

Olbermann's guest, Marylee Orr of the Lousisiana Environmental Action Network, says that over 7 million gallons of dispersants have been used, a jump over the "hundreds of thousands" of gallons claimed in the intro part of the video segment.

The fact we don't know how much has been used exposes the ulterior motive of BP to disguise the toxicity of its response. BP's unwillingness to let clean up workers wear masks show they're hypersensitive to bad PR which could emerge once facts about the scale of the disaster and the health dangers caused by BP's response are exposed.

The severity and frequency of First Responder sickness should be a source of concern for regulators and government but isn't. Halfway down this page is an older Olbermann video from June on this major health threat called T.I.L.T. Toxicant-Induced Lost Tolerance.

Can we trust BP? And Fedgov delegates oversight to the company, can we trust FedGov? If you're a clean-up worker, I'd hire a good lawyer for the class actions that will come. I guess we could see a replay of the 9/11 First Responder tragedy, where no one is willing to help with the medical costs. Meanwhile responders must choose between wearing masks or feeding their families. Like the 9/11 First Responders, many will die--their sacrifice on our behalf remembered only by their families.

Like Nixon and Watergate, it's the coverup and lying that provides evidence of an underlying crime.

I'm going to take a contrarian viewpoint here and predict that the well is still leaking (although perhaps not at the top). Would BP tell us that the capping process can't seal the multiple subsurface leakS, if they've expanded across the sea floor? I suspect that BP will use the capping procedure as a legal defense to claim the other leaks aren't its fault. The story about all those other capped, abandoned wells strewn about the Gulf could support that lie.

Sources (more recent first):
1) Dispersant facts
2) ah, mephistophelis.: More Dispersant Used Than Oil Spilled In Any Previous Accident
3) Oil Spill - BP Trying To Hide Toxic Oil with Corexit Chemical Dispersant Agent?
4)BP Looks to Profit from Oil Salvaged from Gushing Well | CommonDreams.org
5) Underwater Oil Plumes In Gulf EXPOSED By ABC News (VIDEO)
6) Gulf oil spill: BP has a long record of legal, ethical violations - More News - MiamiHerald.com

Resources:
Gulf Oil Spill Tracker

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A new struggle for Independence begins

2010-07-01T22:02:00.002-04:00

I'm afraid America's fallen off track, perhaps irrevocably so. Humpty Dumpty fell off the wall kind of stuff. We're getting beat by the Chinese, who are working for less. Our leaders have abandoned domestic employment for offshoring and outsourcing. Worst of all, there appears to be no end in sight to the draining of the American economy.

Now for quite some time wages have been falling in real terms. "Real" is defined in economic terms as the true purchasing power of the dollars that we earn. If prices go up, and our wages go up a corresponding amount, then income gains are cancelled out.

Most Americans are woefully ignorant about the present value of money--the concept that our money loses value over time. Instead, prices are said to be going up while in fact it's the dollar that's going down. Nowhere has this been clearer than with the price of gold. Speculation drives prices up, yes, but it's ultimately the weakening purchasing power of the dollar that makes commodity prices rise.

If Americans really knew how the current banking system was set up to devalue their currency, they'd grab their pitchforks and storm the castle. Ignorance therefore plays a vital role in perpetuating the myth that the dollar is a store of value when it's really designed to lose value, 96% of it as a matter of fact since the inception of the Federal Reserve.

So if you had bought dollars in 1913, put them in your mattress and pulled them out, they'd be worth four cents in today's money (excepting of course the value of the physical currency to collectors.) Perhaps a better example would be the penny. So devalued has the penny become that Congress actually had to pass a law to prevent pennies from being melted down for scrap--the copper in them is worth more than one cent. Eventually our currency will be so devalued that a penny might only be worth a quarter of a cent, an eighth, and so on until its copper value becomes too expensive to justify its use in the coin. Perhaps you've seen the cheap foreign currencies made from aluminum.

So the penny is a proxy for our weakening currency. Yet most Americans ignore the constant devaluation of their currency. I say "their" because it is the people's money. Their representatives in Congress--at least they should be "theirs" according to the Constitution--have the exclusive right to control the issuance of money. Every year, Congress grants the Federal Reserve the right to distribute money. Not surprisingly, every year the Federal Reserve brings into existence more money, meaning the money out there is worth less.

Say the Federal Reserve expands the money supply by 100%. Instead of, let's say, $5 trillion in circulation, there's $10 trillion. Imagine if a corporation did that with their stock, doubling the amount issued every year. What would happen to the poor saps who bought last year's stock? Where would the price go? Well unless the company had a banner year, the stock price would likely fall, perhaps by half. Why? The ownership shares which the company issues in the form of its stock get diluted. More shares: existing shares worth less.

Now the same is true with your money. The government upon which people depend to preserve the value of their savings is actually working against them. It's diluting the value of existing dollars by printing or distributing more of them.

Now of course the Treasury and the banks that constitute the Federal Reserve have their little tricks...well, ok, maybe not so little...to conceal the massive increases in money supply. First, they abandoned tracking the amount of money in circulation a few years back. A valuable statistic called M3 was no longer made public. As a result of the change, following the real quantity of dollars out there became more challenging, subject to more subjective analysis, and therefore harder to pinpoint.

Why did the government abandon tracking? Well, you could say they have something to hide. Something called shadow banking. Shadow banking is a system of loans and securitization of debts that allows banks to create money in the present from debts payable in the future. By lending amongst themselves, banks can convert a stream of future payments--a mortgage payout, let's say--into what's called a "present value". The present value is of course dependent on how certain the debt is to be repaid. As we saw in the mortgage crisis, the level of debt repayment uncertainty rises, so too does the risk premium, or amount that lenders charge borrowers, goes up. Perhaps way up, to the point the funds from investors simply aren't available, except at usurious rates.

Now the problem with securitization of all those mortgages--securitization means the process of converting future payments into a present day value--is that assumptions have been built into the value of the debt, assumptions that may not be true, or subject to changing conditions.

As the uncertainty of mortgage borrowers ability to repay climbs, the appetite for risk among the banks declines. You end up with a situation a lot like you see today, where lenders are hesitant to lend, or at least stop lending cheaply.

Now the purpose of my explanation here is not to review the reasons for the mortgage crisis. Instead, I wanted to offer as full an explanation of why the US economy is about to experience a second meltdown.

History often repeats itself. If the causes for the meltdown in 2008 (and the decline in stocks through 2009) still exist today, then the probability of a reoccurrence remains. And the magnitude of the correction could be even larger if the causes of the past meltdown haven't been reduced or eliminated.

I could go over the conduct of companies which had a key role in the mortgage meltdown--either profiting from it, or exploiting it and/or the subsequent bailout, but that's not relevant really for a couple of reasons. All that really matters is the system that allowed the mortgage crisis to occur still remains.

If you've read anything that I've been saying over the past four years, you'll surely know that I'm predicting a major crisis at this point. And it won't be an economic cause. Whatever our nations struggle with international competition, the reality is that our financial system is completely demolished. The regulatory bodies failed the American people in 2008 haven't been repaired. The so-called financial reform, as far as I can tell, doesn't go far enough in preventing the kind of abuses that made the 2008 crisis possible.

Former bank regulator Bill Black has blamed the collapse on mortgage fraud. Fraud is an important word. It essentially means to employ deceit or trickery. The truth represents a threat to the fraudsters; they operate using a opaque screen to cover their misdeeds. And our government, which should be regulating the financial entities, has been compromised utterly by their political influence.

We've reached a point of no going back. The relationship between cronies within/into/out of government, and corporation and government have become too strong. The democratic will of people--as established in the vital preamble to the Constitution--has been violated. As a result, I can go on no longer in placing my faith in the operation of government, or its role in regulating the currency.

In my opinion, the lack of regulatory enforcement is a window into the murky cross-relationship between those with money and those in power. The only way to end such a relationship is to let the economy go where it must--where the pain of going as as we do exceeds the pain of change.

Of course the ramifications of no change will continue to grow, and manifest themselves in the state of our economy, and in other troubling ways. Catherine Austin Fitts has labelled the system built around making profit from misery a tapeworm economy. The Military Industrial Complex and the Banking Establishment have grown so powerful that they now control our nation's policies at the highest level, no matter their popularity or acceptance. And the two-party system avoids accountability, by exchanging twiddleedee with twiddleedum every so often, in periods long enough to capitalize on the American public seeming mystifying inability to remember.

Why do I write this? Not to depress you, the reader, but rather to warn you of the need to take action. Protect yourself from the constant devaluation of the currency. And unfortunately I must recommend you divest yourself of the American stock market until such time as the Republic--and its controls over the corporate sphere--have been reestablished.

I'm not expecting miracles overnight. It will take a great deal of courage and strength to contest the status quo. Absent resistance to the order, it's likely the economy will slide into ever worsening stagnancy, with constant devaluation of our savings and lethargy in the stock market or worse. The need for real lasting political change overshadows now whatever confidence remains in the system, a system so corrupt and rotten it can only be removed in entirety. Pull the root, and don't hack at its branches.

Obama spins BP spill, and we get to pay

2010-06-16T19:49:00.004-04:00

Below is a crosspost from my health and environmental blog, where I post infrequently.

I did see Obama's speech last night, and found it wholly inadequate. He failed to mention that BP was denying responders the use of respirators. Apparently people along the coast are experience dizziness, headaches, and other issues from the leak and, quite possibly, the toxic dispersants as well.

Last night, Obama said nothing of BP's chronic understatement of the size of the leak. The number I've been able to translate from gallons (yes, the size of the leak is being obfuscated by the use of barrels instead of gallons) is about 50,000 barrels a day (calculated from 42 gallons/barrel and an estimated 2 million gallons/day.) A far cry from the 5,000 we were told were leaking by BP for months. The discrepancy speaks legions about BP's credibility, and Obama's as well.

As I say in the article below, I guess it was the size of BP's surface tankers collecting the oil that gave away the true size of the spill. Nothing was volunteered. And now we can only guess at the size of undersea plumes, whose existence BP has denied.

Now today, after negotiating with BP for four hours, Obama said a $20 billion fund will be set up. He neglected to mention when. It was only by digging through the details later that I saw this in an AP article:

"Svanberg announced the company would not pay dividends to shareholders for the rest of the year, including one scheduled for June 21 totaling about $2.6 billion. The company will make initial payments into the escrow fund of $3 billion this summer and $2 billion in the fall, followed by $1.25 billion per quarter until the $20 billion figure is reached."

Excuse me? Where's the beef? The first installment hasn't yet arrived. And what are the poor people on the Gulf going to do should BP go bankrupt? With government serving the corporate interest (above even its own?) we really are on our own.

Begin post:

I'm writing this before President Obama goes before a nationwide audience this evening. I'm not sure if he'll characterize the response to the Deepwater spill as "his own." No one, it would seem, wants to take ownership of the response. The spill is an economic, environmental, and political liability. It may now be such a huge political problem, now that it hasn't been dealt with in a forthright manner.

BP has been actively trying to cover up the disaster. Obviously, they have the most to lose by admitting that the spill is out of control. For weeks, they refused to consider that the leak was anything more than 5,000 barrels. Fedgov has--and is, depending on what Obama will actually do differently--demurred control over the clean-up to BP, a questionable act considering how BP's failure to follow safety rules and regulations led to the crisis.

We've only recently been able to guess at the size of the leak. BP's damage control efforts have been more about controlling public relations and the release of negative information than stopping the leak. The FAA has obliged by preventing overflights of the spill area by media personnel. Just as perception management overshadows the political leadership, so too does BP try and obfuscate damaging press and deflect criticism to prop up its sagging public image (limiting lawsuits is another goal.)

As hard as Obama might try to sound tonight, it's a safe bet what he does won't be anywhere as aggressive. It's a recurring theme: talk tough and do little to nothing. How much more bad leadership can America take? As a defender of the environment, I guess I might take some consolidation in the carbon taxes he'll likely try to sell. In my opinion, trying to take advantage of the spill is grossly immoral, even if it points the country in a different direction.

Fact is, the buck stops at the President's desk. If for whatever reason he can't get BP to stop the leak(s ?), he needs to do it himself. Yet he's said he lacks the resources to stop it. Can we honestly believe that? With all those trillions spent on our war machine, I can't believe we can't put anything out there on the water. During an oil spill off Saudi Arabia, huge tankers vacuumed up the oily water. Why can't we at least try to do something like that? Deepwater will likely do more damage to the US--economically--than any terror strike could have. Yet we haven't anticipated it, and now must depend on the polluter's capability to respond, which so far now eight weeks later, has been...surprise...inadequate.

We could talk forever about how the spill could have been better dealt with. We could also talk in volumes about how the spill could have been avoided. I'm sure the mainstream media will cover these valuable issues, judging from the scale of the disaster. So in this respect, don't expect me to repeat what's regurgitated but rather spotlight the less published secrets and schemes meant to mislead the public and cover up the extensive relationship between policymakers and Washington and BP.

Now Obama might say anything tonight. And some people will believe him, no matter what he says. It's often easier to believe that something will be done than see it done. Obama's time in office can be characterized as lip service to the ideal, and doing the complete opposite.

I could list many examples of what Obama said on the campaign trail he didn't do in office. The glowing one, of course, is the failure to draw down U.S. forces in Iraq according to the promised timeframe. Escalating the Afghan war is something Obama never said he would not do, however.

As a side note, I found it amusing that a report just came out indicating Afghanistan had $1 trillion in minerals and natural resources. Of course, this bounty is the reason our occupation has lasted so long--a point I made on my blog years ago. If we won, we'd get to go home. A trillion dollars is a pretty good motive to find terrorists behind every bush, and press an unworkable plan into an unwinnable occupation. And meanwhile the Military Security Complex fattens itself on the blood of innocents and young Americans caste into the fray.

* * *

According to the Los Angeles Times, Rahm Emmanuel, Obama's chief of staff, was staying for five years in a Washington, D.C. townhouse owned by a BP adviser. Emmanuel has been known to say that no disaster should go to waste. This fits exactly with Naomi's Klein's concept of disaster capitalism, where corporation profit from inadequate enforcement except, of course, instead of greedy corporations it's crass political opportunism.

Money rules the Washington establishment, and the consensus in Washington is that corporations pay better than serving the public interest, at least as long as illusion that the public is being represented can be preserved. This is why the art form of perception management has latched onto the Washington establishment--feeding the myth that politicians are still serving their constituencies.

Maybe the unholy alliance between the corporate and political worlds has been at work for longer than we've realized. Wherever we now stand in the historical cycle--whether at some new low point or somewhere along a slippery, downward slope--it's obvious deft management of the media is seen as more than valuable than actual leadership. Preserving the impression that something is being done ameliorates the public's rightful skepticism. Meanwhile, deals in the back rooms and corridors of power allow the wealthy and corporations to avoid accountability.

Regulations are much criticized despite the fact they were greatly eviscerated prior to the financial crisis (see the testimony of Texas professor James Galbraith here.) Rather than presenting an obstacle to growth, regulations--if enforced--protect the markets. The trillions of equity (I've heard $10 trillion real estate and another $10 trillion in equity values) that disappeared didn't have to vanish. Yet the companies who kept pushing risky bets in the Wall Street casino gained the most from short-sighted speculation, exactly the thing Glass-Steagal tried to prevent prior to its dismantling by Congress.

So now, with all that oil bursting from the busted, under-maintained well in the Gulf, it's clear that a lack of enforcement is to blame. Self-regulation, a term that came into existence during the get-rich 1980s, simply doesn't work. The forces of greed are simply too strong in the corporate enterprise. Profit-taking is simply too short-term an approach to consider longer term consequences, even if they include self-destruction. British Petroleum stands now on that precipice. And if it'd go under, many investors and stakeholders would pay the price.

Those that profit the most in the short-term aren't likely to hang around once their mistakes impact the companies they once led. The executives who should have monitored the company's compliance will jet away and land in exclusive retirement retreats on golden parachutes.

We could blame greed for this--or the structure of corporate governance. All too often corporate boards rubber stamp the decisions of upper management. Shareholders rarely question the ethics or morality of board decisions, especially in regard to compensation committees. All too easy it is for board members to consent to huge stock options packages for executives, based on quarterly performance, rather than measure performance against longer term objectives.

The environment is a stakeholder in all corporations. Rather than look at the earth as a passive backdrop, a source of raw materials, to be plundered 'til exhaustion, all corporations must look at sustainability. Implementing sustainable practices requires full commitment by shareholders and corporate Board members who perform the invaluable function of holding executive management to account.

Like auditors, independent outsiders need to observe corporate practices and report on them. Most importantly, regulatory lapses must be corrected. If government regulators have recurring issues with a company, or its methods, the shareholders and directors need to take action. The BP case clearly shows the consequences of non-monitoring. And preventable are the effects if the causes are obvious for all to see (except perhaps the executives who are trying to squeeze maximum profit out of their operations by undercutting safety.)

Well, if BP should go under, I think the environment will have its say. Again, BP's misconduct wasn't isolated or random but rather sustained and serious. The company had been put on probation--which I said in my last post is an utterly meaningless proposition that obviously did nothing to push the company in to compliance.

Another huge lesson is for government. When regulators fail their job--as Galbraith's testimony linked above explains--everyone loses. Not only the offending company--the Enron, the Worldcomm, the BP--but so many people who had done nothing wrong. The lesson lies in government doing its job, and walls being put between the regulators and regulated.

Enough said. At this time we don't need lessons, we need to prevent the tragedy from worsening. Now isn't the time for opportunism, or even recriminations. It's time to stop the spill. If Obama can't do that, he'll almost certainly be tossed aside in 2012.

Obama appears to be having a hard time getting BP to pay all its claims. This shouldn't be a surprise. If you read my post on blogspot last month, you'd have been reminded of how long it took Exxon to pay the fisherman in Prince William Sound, and how inadequate their compensatory damages had been as awarded by a corporate-friendly Supreme Court some twenty years later.

Now if Obama can only spend our money--or our children's children's to be more accurate, as it's all borrowed--to clean up the spill, I'd say fedgov has become utterly toothless or so wholly beholden to BP that it socializes the costs of the companies pollution. Either alternative is unacceptable. We do know the taxes on oil drilling will go up, presumably to pay for future spills. Guess who gets to pay for the taxes? You. So because fedgov (especially the notorious M.M.S.) failed to regulate, and BP didn't self-regulate, you pay.

Unless of course you live on the Gulf, the largest impact will be higher energy costs. If Obama chooses to exploit the disaster by urging a carbon tax scheme, it'll provide a dark motive for not handling the response, or letting BP bungle it. Another impact: shipping into and out of the Port of New Orleans will be more expensive, and delayed, resulting in higher prices for some kinds of imports throughout the country, and lower prices for exports like grains from the Midwest which go through New Orleans, typically via barge down the Mississippi.

Under-regulated, BP pollutes. The corporate state capitalizes on the failure. And we get to pay, higher prices for gas and energy, as well as some imports. The scheme encourages wrong-doing and punishes the innocent unless of course BP really does go under, or the Supreme Court reverses its corporate-friendly bias and uncaps damage limits. Neither scenario--really the same issue, liability--is likely to occur. BP will be allowed to go on, and the costs in some way limited in order to protect the corporation.

~End post

Gulf spill shows scope of corporate control

2010-06-02T23:37:00.002-04:00

BP manages its own leak with minimal interference from Washington. In a strained news conference--his first in 10 months--Obama did assert control but it just made the disaster seem to be less under control. The lack of an assertive federal response has really exposed just how much control corporations have over our government. Conspiracy theories will abound, as they have since 9/11.

The money connection is at the root of our government's subservience to industry. The corruption floats to the top. As we saw in the mortgage crisis, the worst culprit in the Deepwater fiasco is the company with the most influence in the White House. BP gave more money to Barry Soetoro--now known as Mr. President--than any other oil concern. Goldman Sachs was the biggest donor among financial entities--look at the preferential treatment they received.

And now with the Gulf spill, we see the payback, just like the response to the mortgage crisis.

As I've been saying for years, campaign contributions yield reciprocal benefits, a quid pro quo in which corporations influence and even set policy. This special treatment is most evident in times of crisis, which seem these days to regularly emerge from a lack of enforcement.

We're starting to see inconsistencies in the way the Deepwater spill is being managed. In Washington, the head of a government agency a thousand miles from the disaster recently claimed, alongside BP executives, that there were no plumes of oil beneath the surface. Evidence of a cover-up? Perhaps. See this ABC News video on a visit to a federal research boat that exposed the oil plumes here.

There's more to plume denial than trying to massage public perception about the scale of the disaster. There's the very strong motive of minimizing the scale of the disaster in an effort to protect the President's inadequate response. The agenda--make the response seem less bungled if the unfixed problems are...well...disappeared.

Then there's use of the toxic dispersants. Apparently huge quantities of less toxic dispersants were waiting dockside, ready to be used weeks ago. One possible motive for the dispersants is to mask the size of the spill by keeping it beneath the surface. Apparently the dispersants do keep the oil from rising to the top. In a technical process I can't fully explain, dispersants reduce the size of oil globs to tiny proportions, almost atomizing them. Unable to combine with gases, they tend to float suspended below the surface until, slowly, very slowly they eventually come up.

The whole bungling of the choice of dispersants sends echoes of Katrina, in which the government's response was too late and mismanaged. Rather than facilitate the best possible deployment of relief and rescue resources, FEMA charged in and assumed control. Boats and rescue teams like that sent from the State of Florida were forced to wait hours before getting the go-ahead. Salvation Army trucks were stopped. The list of mistakes seems so vast and incompetent that conspiracy theories about FEMA's real intentions can't help but arise. If we really in an age of conspiracies, the Deepwater leak will undoubtedly spawn endless theories about why our government did--or didn't do--what it should have.

I guess if the oil doesn't come up as quickly, the American people will be less concerned about the failure to more aggressively interdict the spill. If on the other hand, all the oil were to gush into the gulf current, then go up the Keys and east coast of Florida, we'll then there'd be a panicked call for stopping all drilling. Instead we saw approval for a new well head coming this week, despite Obama's hollow moratorium on new drilling. It's like a Bush-era redux: say one thing in public and do the exact opposite in private.

Another serious complication in the effort to stop the gusher is BP's likely intent to continue to extract oil from the well. This is a goal that the mainstream media hasn't advanced; re-starting the well, or at least drawing as much oil from the leak is likely seen as a small win for the company's bottom line, especially if there are millions of barrels still down there. Sure, BP would just as well have the leak stop, if for no other reason than the clean-up costs (delayed and minimized by the legal process as they likely will be.) Then again, a company that's participated in criminal behaviors will likely see the environmental cost as part of doing business.

At this time, BP was actually on probation for its failure to maintain a Texas refinery where numerous safety violations were reported prior to an explosion in 2005 that killed fifteen. It's also responsible for numerous violations and leaks at its Prudhoe Bay operations in Alaska. [Sorry Supreme Court, I guess the concept of putting a corporate person on probation doesn't quite work out here, unless of course the probation will land the poor corporate person in bigger trouble for Deepwater than they would have otherwise faced, an unlikely event.]

Now as for the Obama regime, the goal is to Cover-Its-Ass. I think passing the buck like it did is only a signal of weakness, and subservience to the corporate interest. The inadequate response speaks legions to the millions of people who trusted Obama to run government more efficiently. In addition to being a disappointment, I'm thinking the regime will be gone in 2012. Republicans might win big, but in our duopoly, this means that rather than bring change, the Republicans will screw things up, albeit in a different way.

Fertile ground for conspiracy theories

In my conspiratorial mindset, who benefits (qui bono) is a powerful means of connecting the motive with the end result. Like the Exxon Valdez, it's likely that BP will delay and fiddle on paying claims (of course they say that all claims will be honored etc. but nothing is in writing.) Good luck getting those years of wages back like the fisherman in Prince William Sound. So BP wants to reduce the perception that the disaster is as big as it really is, a point echoed in the somewhat dismissive comments about the leak by BP CEO Tony Hayward early on.

Obama's administration has responded poorly to the crisis. Not one to pass up the chance at a conspiracy behind the ineptitude, I'll venture that the inadequate response is somehow designed to achieve some policy goal for the administration. With cap and trade legislation before Congress, one can't help but wonder if the globs of oil which will be washing up are simply the product of error. Just like 9-11, we're caught guessing at motives behind the inadequate response.

The animated series South Park explained the conspiratorial inclinations of Americans quite well in an episode several years back. The idea that 9-11 occurred as an intentional plan makes the shock and horror of the incident easier to understand, the story line went. So stunned we're we the American public, that we had to believe that our government must have known. So self-confident are we that our government can prevent an attack of that magnitude, that we collectively assume our government must have known, as it surely could have stopped it.

As much as I like the reasoning, and as reasonable as the logic behind dismissing 9-11 conspiracy theories might sound, I'm simply not convinced. Maybe I'm too confident in our government's ability to sniff out the terror plot. Or maybe there are facts which I can't dismiss, and that lingering doubts about the Official Explanation make me prone to conspiracy theories.

Role of a corporate media

Without the oil spill, or mortgage crisis, the public is less aware of how tightly government and corporate interests are intertwined, due largely to a corporatized media. It takes a Deepwater, or a coal mine disaster, to prove just how total this corruption is, and how absolute.

The masses are also conditioned by the feeble corporate media establishment. BP advertises on many of these networks. We know media consolation brought down many investigatory responsibilities traditionally assigned to media companies. As Rupert Murdoch bought network after network, independent journalism declined and has been replaced by a heavily commercialized, bland, celebrity-centric version with dumbed-down content.

Newspapers and magazines are more about selling books and promoting movies than challenging prevailing assumptions. Without a diligent media devoted to unbiased coverage, we've actually lost the ability to monitor the actions of corporations. No where was the message elevated over content more than during Barack Obama's presidential campaign. The people were sold on hope and possibility. The reality was different. The night after his election, before even assuming office, Barack Obama instructed then-Secretary of the Treasury Hank Paulson to give Citigroup a $308 billion loan, according to Matt Taibbi.

Gullible people are prone to be surprised when the truth gets out--if it gets out. Most of the time, Americans are too distracted and consumed by the rigors of everyday life to devout much time to news, and the invariably dull but precious process of guarding our democracy. Our corporate media spares them the inconvenience. Easy it is for most people to assume there's nothing they can do, that they must accept what their government tells them to accept. As we saw in Hitler's Germany, even reasonable and generally good-natured peoples can be easily manipulated.

In the Nazi regime, there was this important tool devised to manage the masses. Hitler said that if people were inclined to disbelieve that their government would do something so obviously against the people, they'd disbelieve anything, so the more outlandish the conduct, the better the disguise. In proud nations, no one wants to think that their sense of nationalism is misplaced. So in some form of mass hypnosis we simply deprogram our minds to the possibility that our government could be behind something truly evil.

I've commented that the US is lucky no Hitler has risen to exploit the ignorance of the masses. Hitler used blind faith in nationalism and militarism to convince Germans of the dangers posed by internal and external enemies. With our military overcommitted in two open-ended wars, and our budget bursting with tax receipts dropping, the low road to stirring nationalist ideals is a bust, a weed-covered, muddy morass.

So the next trigger that the government will turn to will likely be the need to protect our shores, not from corporation who pose great danger, but from dissidents and anti-government types--whoever poses a threat not to Amerika but the Establishment.

Public fatigue in the terror war has already set in. Perhaps the fear button won't be enough to induce the public into a frenzy. Just like the boy who called wolf, our anti-terror policies have devolved to the point we call any of our enemies al Qaeda. Our drones rain down missiles on Pakistanis.

I've been hammering on the government's propaganda in Iraq and Afghanistan and I won't stop now. As long as the corporate news is content to regurgitate official news releases as original reporting, the quality of the content will be abysmal. I guess we can't blame the American public, as so few have the time or energy to do research on the war, or see if the government's previous goals were reached.

Can our current military achieve the goals set by the politicians? One of the biggest blame-getters for the Vietnam failure were the politicians. Nixon shouldn't have been selecting bombing targets. One important lesson Vietnam gave, and has been forgotten, is that war's are ultimately political exercises. The North Vietnamese may have lost virtually all its engagements against American firepower, but the impact of the perpetual stream of casualties on the domestic population kept growing. After a certain point, no one wanted it to be their child sacrificed in a war without end.

Afghanistan is heating up. We're facing a determined foe in the "graveyard of empires." Fighting an insurgency is a time-consuming and expensive endeavor. As long as we can avoid a draft, and casualties come from volunteers alone, the domestic political impact might be minimized. Still, in time, we'll see stiffening antiwar resistance.

It's just that the impact--especially the fiscal one--is severely delayed. It wasn't until 1971 or so that Nixon abandoned the gold standard. Any student of economic history knows what happened in the Seventies.

Tough sailing ahead

We'll people, that's where we're headed: back to the 70's and stagflation. Slow growth (once inflation is factored out) is a certainty. We're seeing declining tax receipts, which means government spending will become increasingly monetized--printed out of thin air. The Federal Reserve banks are destined to profit as the interest on the national debt--which the Treasury must market through the Fed--grows. Interest rates will rise into the double digits.

Our nation's economy is in a state of decline. The only way we can recuperate appears to be by our government's borrowing money, then spending it on census workers. As people like Peter Schiff have been saying, the government's spending has supplanted private sector growth, and is in fact delaying and weakening a potential recovery.

Our problems are also demographic. Baby Boomers dominate the agenda. Aging, they're inclined to amass as much personal wealth as possible in the time they have left. This doesn't bode well for future government outlays on medical care and social security.

As much respect I have for Baby Boomer's devotion to work, I believe the time has come to replace them yet they are obviously irreplaceable. Still, to build an economy beyond the Boomer years, we'll need to invest massively into younger people, something that really isn't happening as education spending falls. With there vast skills, Baby Boomers mentoring younger people in the workforce is not only crucial, but increasingly urgent.

Down on dollar

As you can suspect, all this doesn't bode well for the value of the dollar. I've been watching the increasingly propagandized, Larry Kudlow-dominated CNBC rant on about "troubles in Europe." What a crock! Greece compromises a tiny portion of the European economy. The Euro is down somewhat but this is hardly a contagion. And of course American traders love to introduce the idea that the US dollar is the safer bet.

I'm not predicting that Europe will be a haven of fiscal discipline, or that their currency will maintain its value-after all it's a fiat currency like the dollar. the whole point of the whole dollar vs. Euro exercise is to obfuscate the face that our spending is completely out of control. And the biggest reason for overspending--and the easiest way to rectify the fiscal deficit--is to stop spending on senseless wars. Yet we can't and won't. And I think the Afghans, like the Vietnamese, have something to do with that. Better that we leave now than blow our wad. If we are in fact competing with Europe...and Asia for that matter...we need to realize that those governments don't have such a unnecessary burden of military spending to deal with. So if any currency is destined to collapse, it'll be the dollar first.

I'm not an investment adviser. I have nothing invested in dollars at the present. I like the Norwegian krone, and Singapore dollar. Swiss francs interest me as well--I know there's an ETF called FXF tracking that currency and it's down.

I wouldn't expect these foreign markets to do especially well if our economy tanks. Nor would Europe's. However, it's my opinion that the relative strengths of those currencies, and their sounder fiscal practices, will make them attractive compared to the over-militarized policies which will invariably drain the value of the dollar.

///

Republic has succumbed to corporate rule

2010-05-16T16:06:00.003-04:00

News on the Gulf oil spill comes and goes. BP, the company which operated the rig, claims about 5,000 barrels a day are leaking. BP, alongside Transocean, is part of the Deepwater Horizon Incident Response Team. Being that the oil company's negligence contributed to the disaster, allowing them to play a leading role in the response may be making the disaster worse.
The company clearly has a financial incentive to understate the scale of the disaster. That way when the lawsuits come rolling in, they can say it wasn't (or isn't considering how long the oil will be around) as bad as the plaintiff's attorneys claim.

I just saw on CNN that Gulf fisherman were lining up to receive checks for working on spill containment efforts. Rather than compensate Gulf fisherman for their catastrophic financial losses, the powers that be are content to throw a few scraps out to the displaced, hiring a few of them (the CNN report said 10% of those lining up) to work the oil containment--the only work available to them.

I've lived near the Gulf of Mexico and can tell you that these fisherman are people you don't want to screw with. It's not that they're psychotic or anything, it's just that they're the kind of people who won't forgive or forget. And unlike the poor, huddled masses deported out of New Orleans in the Katrina tragedy, some of the fisherman have deep pockets. Nonetheless, it's unlikely many of them will be able to continue in their chosen profession with the waters polluted for decades.

While BP has said it would honor all legitimate claims, the cap on its liability may be a paltry $75 million. While Sen Menendez of New Jersey has called for an upping of this statutory limit on damages, President Obama has been less forceful about upping compensation for the affected, blaming instead the finger-pointing between BP, Transocean, and Halliburton.
As outraged as the President may appear, relief appears far from coming. Instead, it appears the damages will be limited by courts far away, and representatives of a two-party duopoly beholden to Big Oil. As the campaign donations from Big Oil swell, so too does the amount of influence they can wield in the White House and Capitol Hill. Considering the true scope of the leak--a fact the BP will never readily acknowledge--damages are already in the hundreds of millions. But true to their sponsors are our Congresscritters and the recipients of campaign donations who purport to represent us.

The Deepwater incident was completely preventable. The "blowout preventer" was faulty and inadequately inspected. The federal agency responsible for oversight of Gulf wells, the Mining and Mineral Service (MMS) has a thick record of open fraternization with the companies they're supposed to oversee. We saw a similar situation with the SEC and Bernie Madoff, who's daughter married an auditor from the government agency. And undoubtedly the Federal Reserve and Treasury engage in a give'n'take behind closed doors that benefits the banksters while defrauding the public and placing our nation in perpetual debt servitude.

The point of the Deepwater disaster is this: our federal government has become ruled by corporate interests. The needs of we the people aren't as important as those who contract for government services and offer kickbacks in the form of campaign donations. We the people can vote, so the politicians offer us lip service, but the tools of manipulation are obvious to see when preventable, man-made disasters like Deepwater occur.

And what can we do about it? We're offered a choice of twiddlee-dee and twiddlee-dum, corporate candidates both. Party One is Party Two, at least once they get into office and the campaign rhetoric stops. Look at Obama. We have a man who got into office by lying. he claimed we'd have a drawdown in Iraq--instead our boys languish there. And for what? The political climate there has degenerated along sectarian lines, Shia versus Sunni. Civil war remains a possibility. I've heard it said that we've broken Iraq beyond repair.

What good is our government if it can't win in the wars it launches? The AP headline came out nationally last week acknowledging what anyone with a brain knows: the War on Drugs has been a utter failure. But does that change our policy? No, the federal government blindly forges ahead with its losing strategies not because it seeks to win the wars it fights, but because key corporate constituencies benefit from these ongoing wars. With the War on Drugs, it's the prisons, Homeland Security, and a myriad of law enforcement bodies. With the War on Terror, it's the bloated Military Industrial Complex, the one Eisenhower warned us about.

It's probably the war machine that'll finish off American empire. There's no way we can endlessly spend on war of no productive value to our society. I mean, yeah sure, they're are jobs here and there that can be sustained by military spending, but the overall benefit to the economy shrinks over time. The corporations that benefit the most financially from the war spending grow increasingly inefficient as competitive bidding shrinks. War contracts tend to get costlier and costlier, and funneled to companies which become wholly dependent on the government's easy money. Eventually, all competition is bled out of the system and left behind are the companies with the most political influence entrenched at the trough, hardly much of a real economy at all.

Already the government trough is crowded, with the big players consuming ever larger chunks of government spending, leaving less for other needs like enforcement of drilling regulations in the Gulf. The same thing happened with Katrina: the Army Corps of Engineers, charged with maintaining New Orleans' levees shifted funding overseas to meet needs in Iraq. Result: insufficient levee maintenance. And for those who understand the levees, they understand that they're constantly sinking and if they're not constantly increased, the outcome could be tragic.

As America gets peppered time and time again by man-made, preventable tragedies, who's to stop it? Certainly not our two-party system, with its rule-by-corporate-sponsorship. So bad has the situation become that there's no way any candidate can make it to the top of a national ticket without being thoroughly vetted by powerful corporations. Obama was "star-chambered" at some point in his rise to the top. We don't know exactly when he was co-opted, but his constant obedience to corporate rule has shown through most of his time in office. Could he be salvaged? Unlikely, being that the key groups who back him must have some leverage or means to control the President, with money being the most likely culprit.

We saw preferential treatment for Goldman Sachs; they'd given him close to a million dollars. BP I believe was Obama's biggest single corporate donor, at least within the oil industry. Why? I mean why would these companies give so much? Well, they obviously felt they would get something in return. For Goldman Sachs, it's been record bonuses and profits while squeezing the Federal Reserve and Treasury for an bailout of AIG, who owed them over $10 billion. The benefits for BP aren't so clear yet, but as more and more oil washes up on Gulf beaches and the scope of the tragedy comes clear--alongside the lax enforcement that allowed it to happen, we'll likely see Obama or his agents find a way to limit BP's losses.

Serving those corporations comes at a great risk to the President. He faces a Katrina moment in his administration's handling of the Deepwater spill. And if the estimates of the true size of the leak become true, oil could be coming up for years, a easily documented political liability for incumbents which could utterly destroy Obama's chances of winning Florida. If the GOP were to put on its 2012 ticket a candidate with a decent environmental track record, it could easily win over enviromentalists, who might otherwise vote for Obama out of fear of what GOP leadership (read deregulation) could do.

Again, we the American people are left with a choice of lesser evils that seems to be eating away at the core of our representative democracy. The two-party system, rather than giving voters a means of holding politicians accountable is simply a revolving door through which corporate interest groups thrust substantially similar candidates at periodic intervals.

Subverting candidate choice here

I read that Congressman Hostettler has been appointed to run for "retiring" Senator Bayh's seat. Hostettler is strongly pro-life and pro-all new terrain I-69. The new I-69 would benefit construction companies who were top donors to the Hostettler's campaign. It would cost $2 billion in order to save 10 minutes of driving time from Terre Haute to Evansville.

Here in Indiana, Democrats were cheated out of a primary process by the timing of Evan Bayh's decision not to run. I found a good article on this in bloomingtonalternative.com. Steven Higgs writes:

One of two things happened here. Either Bayh did just reach a decision, in which case he's an impulsive quitter. Or, he knew all along and deliberately chose to circumvent state Democratic Primary voters.
The National Republican Senatorial Committee (NRSC) believes it was the latter. "It raises serious questions whether he purposefully timed his announcement to deny Hoosiers a voice in the political process," NRSC spokesman Brian Walsh said in a Feb. 17 news release.

Opednews editor Rob Kall has some similar thoughts on the matter in his poll here, where I commented twice. Kall's article on this perversion of the demoncratic process is here. Kall explains, "I don't think this was an accident. It was planned-- a conspiracy to take the Democratic process away from Indiana Democrats."

This whole subversion of democracy thing means that the Republic has been lost, I'm afraid. The choice of candidates has been stripped from Indiana voters and assigned to out-of-state political strategists. It's worth remembering that many of these Beltway consultants-for-hire were blamed for mismanaging many Democratic campaigns in 2004.

Enviromy Note

As you might suspect from reading this blog, I'm completely bearish on the US stock market. While I don't give investment advice, I have told you that I've invested exclusively in silver. Well, recently I've grown a little more bullish on alternative energy. Rather than just short our domestic market, I've put some of my very limited resources into a solar power concern.
Look at the tragedy in the Gulf, I think alternative energies are the ethical choice. As I've noted in the past over at my enviro-blog, coal and nuclear are very dirty and destructive, from the extractive phase all the way to disposal.

Duke Power is trying to build a massive coal plant not too far from Terre Haute, in Edwardsport, one which isn't needed to meet demand in the area. It will spew something like 2 million tons of CO2 into the atmosphere annually. Mercury will run in our streams. This doesn't include all the slurry dams that will break, mountaintops that will be removed, and miners who will die as a result of inadequate safety.

I guess the lesson here is that they'll get away with everything we let them get away with. I'll close with this Fredrick Douglass quote:
"Find out what any people will quietly submit to and you have found out the exact measure of injustice and wrong that will be imposed on them."

Ho binh.
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Deepwater disaster could have been prevented

2010-05-02T22:17:00.005-04:00

As I write a river of oil blows towards the Gulf coast. Details of the precipitating event have emerged. Blame is squarely on BP, British Petroleum.

Victims of the tragedy include fisherman--recreational and commercial. I'm sure the economic impact of the Deepwater Horizon oil rig-turned gusher will be far worse than predicted.

The worst part of this tragedy is that the well continues to leak. Huge amounts of oil remain unseen, under the surface. Considering the well's depth, at some 5,000 feet, an emergency operation remains challenging and an easy fix elusive. The wellhead is on the ocean's floor and spewing out an indeterminate amount of oil.

Part of the crisis response effort has been to bring as many parties as possible on board. BP's chief of operations said any help from anyone would be accepted. This methodology leaves me wondering if the response has been as dynamic and robust as needed--shouldn't BP be more specific than accepting all help? I mean, I would hope BP has a planned response more detailed than just throwing more resources at it, like the miles of boon that have been laid in a feeble attempt to stem the tide.

Looking back at Katrina, the Deepwater disaster sends echoes of government inaction. All the parties involved in the response undoubtedly don't want to appear to be doing nothing. So official news briefings and perception management try to appear responsive and robust, whether or not they actually are. The result is that the parties responsible for the response try to offer counter-directional spin in the mainstream media--that they're doing something, which is evidence of an agenda other than to tell the public the unbiased, whole truth, no matter how ugly.

Oddly, many news networks devoted constant air time to a serious but failed car bomb attack at Time Square. Conspiracists will no doubt be quickly guessing that the one had something to do with the other. In this sense the Internet hosts in hyper-time huge numbers of doubters of the Official Explanation: a growing crowd of wired non-conformists eager to confront media myths, spin, and blackouts.

Coordination between the Coast Guard, Department of Homeland Security, and Department of the Interior involves massive layers of government bureaucracy. All three organs have their own heads, and while interagency communication protocols may make coordination easier, there are simply too many decision-makers to react quickly enough to a tragedy of this size.

We don't know if a single head of the operation would be better or not. Right now a Coast Guard admiral is at the head of a multi-pronged response that also includes BP and Transocean, the rig operator.

Issues of whether or not the response is adequate or expeditious can certainly wait. In the meantime we have a New Orleans Katrina-type environment evolving. The poor, mostly black people stuck in the Superdome and New Orleans Convention Center have been caught on television, demanding rescue. Expect this time instead of people, there are birds who stand to be coated in oil--an event which will certainly remind Americans of the Exxon Valdez tragedy in 1989.

In that episode, thousands of Alaskan salmon fisherman were made unemployed for years. The case reached the Supreme Court only a few years ago. Over the years, the Court had turned largely sympathetic to the interests of Big Oil and ruled against any punitive damages. The legal case did foretell a sequence of what might be called "pro-business" rulings, the latest of which has been to give corporations legal standing as corporations--a completely ridiculous notion that I attack on the second page of my last article at OpEdNews.com.

However unsatisfying the final ruling on the Exxon Valdez judgement, the Courts also took too long to resolve the case. The delay came as a direct result of Exxon's massive legal effort to delay a settlement, based on the premise that the interest on the settlement was more valuable to the company than a final adjudication. So the case went on, with no side but rather the lawyers winning.

I pity the poor fisherman and their families in the Gulf who rely on clean waters for their livelihood. The tragedy will expand geometrically if the oil flow isn't curtailed, which appears to be a difficult and time-consuming task. Estimates for the size of the oil deposit vary. If something isn't done to stop the flow, we could be facing one of the worst environmental tragedies to hit our country.

The emerging economic impact will be two-fold. First, there will be the loss of jobs in fisheries, and other professions dependent on the seas. And the loss of income will reverberate through the communities that live the Gulf. We might see a wave of environmental refugees forced northward, unemployed and miserable, bearing little money and down on their luck. This would be like the days after Katrina, where an exodus out of the city left natives of New Orleans marooned far from their city.

Then there will be a drop in tourism due to the fouled beaches. The tourist impact will be the largest fiscal cost. I heard on CNN that Walton County, Florida is projecting to experience as much as a $1 billion loss in economic activity. If one county faces that kind of loss, the entire region--which compromises some of the nicest beaches in America, could face economic devastation.

The impact of this tragedy will last for years. For as long as oil plagues the water, the ecosystem will suffer and the business that depend on it, too. Despite modern technology, and frequent urging to "drill, baby, drill", the economic benefits of domestic drilling will be overshadowed by the consequences of potential spills.

If domestic drilling were a solution to our energy dependency--a notion with which I disagree--then the Deepwater incident should be cause for real alarm. Incidentally, it's not the blow to oil production that a moratorium on drilling presents, but rather the potential impact of spills on affected businesses and consumers. Calculated into the drill-at-all cost "solution" must be the direct costs of pollution and spills, which will easily eclipse the value of the oil itself.

For BP, the cleanup appears to be at this point simply be the "cost of doing business." This sounds a lot like Massey's energy recent mine explosion, which came as the result of numerous safety violations.

If BP, like Massey, was simply ignoring the infractions to save money on correcting the underlying problems, then this tragedy could have been prevented. If regulations were not enforced, then our government bears much responsibility.

No matter what the eventual court settlement, or how long it takes, BP will likely avoid many of the damages due to sympathetic judges on the Supreme Court. As long as rulings like that which granted corporate personage continue to emanate forth from On High, it's unlikely that polluters will face the full fiscal ramifications of their regulatory non-compliance.

You can see a clear pattern developing where the government fails to enforce regulations, which may in the short term benefit corporate constituents. The Massey and BP incidents show--alongside the far-bigger financial bailout--just how close government and the corporate interest have conjoined. Ironically, the Deepwater incident will reveal the real economic cost of not complying with safety standards and regulatory compliance.

Without a viable third estate--an unbiased and unafraid media--it's unlikely corporations will be held accountable. Worse, the lack of investigative journalism--for fear of alienating advertisers--will cultivate an attitude of defiance among the regulated. The lack of negative consequences will encourage potential polluters and companies intent on exploiting their influence and the lack of regulatory enforcement. Maybe the hot to BP's stock price will be sufficient incentive to avoid safety errors of this magnitude. Or perhaps not, particularly if BP has the benefit of sympathetic courts.

In its Texas refinery fire a few months back, BP showed itself to be the kind of company that shirks its regulatory responsibilities. In the Deepwater incident, it's joined by Transocean, a company about which I know little, and the infamous Halliburton, a company formerly led by Dick Cheney, who held approximately two million shares of company stock while serving as Vice President. Halliburton, by the way, had its stock price climb over 200% as a result of the decision to invade and occupy Iraq. It's been accused of shoddy construction, illicit deals, and a myriad of other ethical violations in Iraq.

So should we be surprised that a corruption of the public interest precedes a environmental catastrophe? Of course not. As much as the Republicans bang away against regulation, a major cause for the worst economic events of the recent past can be directly traced to inadequate enforcement by federal agencies.

The Minerals Mining Services is a branch of the Department of the Interior that was caught accepting hookers and drugs in exchange for favorable treatment of businesses signing leases with the federal government. M.M.S. has offered bargain-basement leasing terms in sweetheart deals to extractive industries. So bad were some of these contracts that they were actually renegotiated after the scandal broke. See this article at propublica.org for more.

All this collusion between big business and the federal government really does show how badly corrupt both have become. The businesses spend to wine and dine in Washington through trade associations and industry groups. Meanwhile, politicians eagerly dispense reciprocal favors, resulting in a perversion of the enforcement scheme, not too unlike the Madoff case. Madoff's daughter actually married a SEC auditor!

One common hallmark of manmade disasters is that the corruption and regulatory breakdown lead to even bigger disasters. Without enforcing the rules on the books--a task which can only fall to government--scandals and disasters will be both worse and more frequent, as were seeing in our society today.

///

Goldman indictment chopping at branches

2010-04-16T16:37:00.003-04:00

Woke today to the news that Goldman Sachs had been indicted. Needless to say, with all my writing about Goldman Sachs, all of it critical, I'd felt somewhat vindicated. Yet at the time of this writing, I can't be sure whether the indictment will expose wrong-doing at the top rungs at Goldman, kind of like how the prosecution of a few "bad apples" at Abu Ghraib did little to expose "harsh interrogations" authorized at the top of the military's chain of command--namely by Rumsfeld and Dick Cheney.

Currently a single employee--a Goldman Vice President stands under indictment for fraud, misrepresenting a basket of securities he was hawking. This rogue trader kind of stuff reminds me of the $7 billion fraud allegedly perpetrated by Jerome Kerviel at Societe Generale, who'd been arrested in January 2008.

What's so interesting about both cases is how a corporate with a pattern of fraud offers up a scapegoat for massive losses brought on by mismanagement and greed. Far easier it is to blame a single rogue trader than a slew of traders, or the actions of an individual despite the orders and permissions he'd been granted by his superiors. For an idea on how broadly fraud was being perpetrated, I'd recommend Peter Schiff's 2006 address to southern California mortgage brokers and a recent lecture by white collar criminologist and former bank regulator William Black.

In the minds of investors and clients--who are the most likely to react in an adverse way to Goldman's indictment, it's easy to dismiss what are company- and perhaps industry-wide examples of malfeasance by attributing them to a bad apple. The bad apple--in Societe's example, a young computer programmer--could redirect distrust away from the company who'd created the circumstances through which fraud on an unprecedented scale (at least by a single individual) could be committed.

Another benefit to scapegoating is to mollify the size of losses that occurred because of bad decisions by the financial entity. Societe had lost billions on dubious derivatives, not coincidentally the same type of product hawked by the indicted Goldman executive. Derivatives are essentially debt instruments whose present value reflects a large degree of future uncertainty about the credit-worthiness of borrowers and value of the underlying collateral.

Misrepresenting the sale of an orange is one thing. It's a tangible, physical object. Not so with the derivative, a financial project based on little more than the promise to be repaid. So shaky were CDOs (Collateralized Debt Obligations) that
many were sold with insurance attached--the infamous CDSs (Credit Defaults Swaps.)

What's so interesting about the CDS--which Buffett has labelled "insurance fraud"--is the fact they were created to insure the purchaser against the risk of loss. This would be like saying, "Hey, wanna buy some super-risky asset?"
"No," the client might retort. "Well, then what if add--for an additional cost--a clause that will compensate you in the event of loss?"

The client might bite at the possibility of a higher return. This was--after all--the age when hedge funds were making easy millions by borrowing cheap and earning big returns. This Wall Street attitude was part of the culture of greed, a Gordon Gecko-type construct where making more was naturally assumed to be a healthy, constructive attitude. Bush was in charge and the money-grab was on. Ethics were secondary, or irrelevant.

I digress. Back to our story of the day, which is how Goldman Sachs is facing legal charges for its misconduct. I'd said I'd felt vindicated, but I do possess some doubts about the effectiveness of the charges. Purely civil, they don't incur any criminal penalties.

A case could be made that the prosecution of a single employee could relieve pressure on the company for its participation in other forms of wrong-doing, a virtual laundry list assembled on blogs like mine and by investigative journalists like Matt Taibbi.

I hope that investors and clients will wake up to the reality that they've been betrayed by Wall Street in this most recent fraud. More importantly, investors need to understand that they've been intentionally defrauded, as part of a pattern of abuses by investment banks.

It's worth noting these same banks have crossed the threshold into positions of greater control and authority as a result of emergency reforms passed after the Lehman Brothers collapse. In what could be deemed a sweetheart deal, or example of disaster capitalism, Goldman and other investment banks were converted into bank holding companies, which greatly reduced their cost of capital. So excuse me for being somewhat cynical about the government's ability to reign in its close partners on Wall Street through a single indictment.

Now as long as Glass-Steagall remains de-constructed, I'd argue that the same risky behaviors and outright criminal deceptions related to the sale of derivatives will continue. And rather than interrupt the practices that led to the collapse of the credit bubble in 2008, a lack of criminal prosecutions for securities fraud will not only allow the practices to continue but actually foster greater acceptance for illegal conduct based on misrepresentation.

Wall Street, and not just the banks, should be particularly concerned about a loss of trust by the investing public. Any time a pattern of fraud emerges in any industry, it's credibility rightfully diminishes. And as a bursting of the credit bubble showed, it's not the initial losses that cause the most financial damage. Instead, it's the broader sell-off that occurs due to a loss of trust: the foundation of all relationships.

Sensitive to this PR damage, Wall Street responded by hiring the greatest of frontmen--Barack Obama. It funded our President's campaign to the tune of over $200 million and the pay-off has been large, with the first installment on the Obama investment a $308 billion loan to Citigroup (beyond TARP), made as the administration's first action, before even it'd taken office.

Don't blame the President exclusively. Congress has done its part to make sure Wall Street gains from the reaction to the crisis, or at least isn't hurt as badly as it would were the forces of non-intervention allowed to work their invisible hand on the marketplace. Instead we have a lame excuse for socializing the banks' losses--what Nouriel Roubini calls "lemon socialism."

It wasn't so long ago that everyone was acknowledging the importance of broad participation in stock market investing through mutual funds and IRAs in the 1990s. The investing public won, as did the brokerages, by increasing the pool of investment capital. Middle class Americans were investing, and we were all getting ahead.

Now we could say that the bursting of the 2008 credit bubble was different from past crises, but many of the conditions leading to it were easily preventable, predictable and predicted.

The end of the 90's bull market in equities came with the Dot Com Bust in 2000-1. What's far less widely known is that the SEC was in the process of investigating Wall Street for its role in fraudulently talking up Dot Com stocks. The investigations came to an abrupt halt on September 11th, 2001.

Numerous brokerages were being investigated by the SEC in 2001. The evidence ended up being stored in the SEC offices in--you can probably guess this--vaults of WTC 7, the third building at the complex to be destroyed on September 11th. Remember WTC 7 was the building whose collapse had been predicted twenty minutes beforehand, by BBC.

Add to that stupendous timing the fact that WTC 7 wasn't directly hit by any of the aircraft. WTC 7 also housed the operations command for the initial response--the Mayor's Office of Emergency Management. One witness, Barry Jennings, of the NYC Housing Authority actually stated that he'd heard bombs in the building. See his interview on his traumatic near-death experience at 911review.og. {Mr. Jennings was consistent with his testimony in the years after 9-11. He has since died. See the blog http://barryjenningsmystery.blogspot.com/ for more on his story}

Whatever you understanding of what went on 9-11, or your reaction to government reports on 9-11, it appears as if Wall Street has been unregulated and under-investigated for years. In the past two stock market corrections, we see the consequences of inadequate regulatory enforcement. Paradoxically, the financial damage from a loss of public confidence far exceeds the benefits granted to those who bent the rules to chase record profits like those at Goldman Sachs.

As I've written about, the company has so much influence with the White House, that a real investigation--one which expose criminal actions at the highest level--would be undermined or prevented. Therefore like the Valerie Plame investigation, we will see little more than a sacrificial lamb being offered for what are thoroughly illegal and criminal behaviors perpetrated at the highest levels. The result of the limited investigation will instill the attitude among Wall Street players that they are above the law, and therefore go on to commit additional illegal actions under the assumption they will never be held accountable.

For more, see wtc7.net

"Debunking NIST conclusions about WTC7..."
http://georgewashington2.blogspot.com/2008/08/debunking-nists-conclusions-about-wtc-7.html

"9/11 and the Greenberg Familia" by Jerry Mazza
http://onlinejournal.com/artman/publish/article_1261.shtml

"SoGen reels from record $7 bln rogue trade fraud"
http://www.reuters.com/article/idUSL2422020620080124

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Picking a path to recovery

2010-04-01T19:46:00.002-04:00

Millions of Americans struggle with surviving. If they're unemployed, they're contending with the lower standard of living, and likely suffering longer. The poor--whose ranks grow-- can't assemble the resources to do much economically; they can't invest. Instead some 60% of Americans are surviving paycheck-to-paycheck.

Jobs are the core of our nation's economy. Piles of paper can be pushed around, and huge sums of aid distributed, but if people aren't working, the whole engine slows. Not in perceptible ways at first, mind you, but eventually the lack of jobs reflects back on our society as a whole.

Unregulated hyper capitalism has run its course. We've seen the nasty consequences: the wealthy have grown wealthier, the middle classes have shrunk, victims of the decline of manufacturing due to off-shoring and imports. On an inflation-adjusted basis workforce pay hasn't improved for decades despite productivity rises.

The American economy is built on its middle class. In a vibrant economy, middle class workers invest into their companies' stock through IRAs and other mass distribution vehicles. Long-term returns on the stock market are far superior to any other investment class, including government bonds, To sustain growth, we'll need a middle America with improved earning power and that takes jobs.

Where to turn if the middle class has shrunk? Servicing the needs of the wealthy. It'd be easier for rich Americans to spend and invest more than it would be to subsist on a service economy. We still need a way to restore America, and one way out invokes getting the rich to spend.

We can't tax our way out. George H.W. Bush (the Elder) in office from 1989 to 1993, offers an example of why not to tax.

Bush had raised taxes on yachts, believing the rich could pay for their luxurious lifestyle by paying more in taxes on the yachts. So the yacht tax became law and many yacht buyers decided to buy their yachts from outside the US.

As the demand for yachts left American shores, so too did many of the yacht-building revenue. Because the rich had likely jetted off to places like the French Riviera to buy their comparatively cheaper European-made yachts, they weren't around in New England...to spend money.

Yachts purchased outside New England would likely stay in Europe or the Caribbean. Many new yachts might not even make the trip up to New England. Therefore piers would empty, denying yacht clubs docking and membership dues, and their employees--mostly middle class--would have to find other work.

In New England, millions are employed by the yacht industry, in those occupations that maintain, build, and service the yachts. At the time, a majority of these employees were solidly middle class.While only a few sold the yachts, many others worked in small businesses tied to the yachts.

The point isn't that imposing a tax was bad in principle. The principle that the rich should pay more is inherently fair. It's the lack of forethought about the impact of taxes on those who aren't rich that makes taxing the rich dangerous. In other words, taxes meant to help the middle classes can hurt them dearly, in ways unforeseen.

The American population looked at the yacht tax as an example of a bad tax, one the shouldn't have been imposed not because it targeted the rich but because it ended up hurting the middle class.As it turns out, some huge number of jobs were indirectly tied to the yachting industry. The whole New England economy sank with the tax. After losing his 1992 re-eection bid, Bush later admitted to his mistake; the yacht industry recovered when the tax was repealed.

The real point here is that the middle classes need to get the rich spending freely, here, on things made in America in order for average Americans to prosper. For the middle class, economic benefits often come in the ways the wealthy spend their money. Taxation could never do the job of re-allocating wealth as well as the free enterprise system. People tend to work harder for themselves, and spend more wisely than government. Plus, the more dependent people grow on government subsidies and the longer they are on them, the less independent economically they will be.

Wal-mart here. Ford there. Take your pick, America.

At lower levels, in stores like Wal-mart, huge sums are spent but they don't seem to be contributing to domestic economic growth. In this regard employing millions more might not bring a recovery.

In talking to the employees at Wal-mart, one gets a sense that they're the opposite of what Henry Ford had envisaged for America, which was more than affordable cars for the masses--it was masses of potential buyers.

Ford was adamant about selling his cars for a price of one year of an average worker's salary. He knew the best chance for success at selling his cars laid not in a few rich people, but a middle class. And no doubt Ford was better off in the days when the middle class was thriving.

Comparing Wal-mart and Ford, you can see two disparate models. One business offers lowest prices, which in many product lines is tantamount to selling imports from China. Rightfully, Wal-mart prides itself on its distribution model--it's an example of low-cost efficiency. If you wanted to distribute products--sell things--you could take Wal-mart's model.

Or you could take Ford's business model. Ford's company might not benefit directly when he spends more on his employees. But he does build a market for his cars. Employee loyalty and all that.

I happened to talk to a Wal-mart employee wearing a white butcher's apron in the retailer's meat department a while back. When I asked for her recommendation on what to buy, she told me, in no uncertain terms, that she didn't know what was the best herself because she couldn't afford it.

Turns out, she wasn't a butcher at all, but rather a store employee who just happened to work in the meat department. The universal butcher's outfit--the white apron--was merely window-dressing, marketing smoke'n'mirrors intended to add realism to the shopping experience.

Wla-mart's corporate scheme devalues employees. As explained in the documentary, "The High Cost Of Doing Business...", Wal-mart decimates indigenous retailers, including Mom'n'Pop stores which can't compete on the basis of price alone. Studies show that 10-20% of Wal-mart's retail competition will fold within two years after Wal-mart enters a community. This kind of marker over-reach might delight Chinese stock-holders, but it ends up hurting companies that treat their employees better.

Ford's genius was that he saw the potential in the American workforce not only to be consumers, but to create a better standard of living for themselves.

Trends: spending limits and unemployment

Over seventy percent of the American economy is based on consumer spending. Yet our ability to predict future behaviors based on quantitative analysis alone is quite weak. The limitations of statistic become clear in times like now: when we want to figure out why things aren't happening economically.

Rather than treat economics as a numerical science, it should be considered more organic, a living and breathing, more touchy-feeling thing built around sentiments and relationships not just between people and their money but people and other people.

Studying purchasing behaviors can't be so effective without a baseline understanding of why consumers make the decisions they do. And few consumers can articulate their situations financially well enough, but somehow most do change their shopping habits when they are forced to, allowing economists to see the impact of various trends on consumers spending.

Joblessness and a lack of access to credit are two of the key trends emerging in America. The job markets are directly impacted by trade policy, and the huge flow of imports belies an underlying structural problem. Over time, when a trade deficit runs as long as it does, there must be a corresponding financial outflow somewhere.

In the case of trade, banks of the exporters are flush with dollars. The more dollars they accumulate, the less attractive they become. So many foreign banks have reduced their exposure to the dollar. Another viable way to reduce their dollar horde is to invest it in American businesses. This is what's known as "I"--investment--in the formula to calculate production. The second component is "G"--government spending, which is the amount of money governments spend.

It's easier to channel investment than it is to redistribute wealth through taxation and "G"--read: directed out of Washington, likely to benefit those companies with the most political influence.

Now our GDP now has grown not because consumers spend but because of government spending. Consumer spending has been flat until very recently. In order to create more economic activity, we need to encourage consumers to spend. Yet as our government debt shows, over the long-term borrowing can't continue. Consumers are tapped out, but unlike government can't print up the money they want, then lend it back to themselves through the Federal Reserve.

As is the case with personal "consumers" (a loaded term in that only the people's spending capacity is measured), the amount of debt is subject to limits. In the government's case, the change begins when the cost of borrowing goes up prohibitively. While federal deficits aren't so bad as to overburden the budget now, by the end of the decade, carrying so much accumulated debt will mean the US government can't spend enough to stimulate growth.

So it will come down to us, the lowly consumer, to save the American economy. And if we can't continuously borrow, it will be up to us to save, which entails spending less than we make. Then and only then can we create a sustainable recovery.

So the concept of a jobless recovery doesn't hold. Our country needs its people to be working. Now the poor can't stimulate an economy, so increased spending will have to come from the rich. Taxes are a far less efficient method of injecting money into the economy.

I'm not one of these people opposed to taxes on principle. To the contrary, I believe Americans need to pay taxes they owe in exchange for what they have or will derive in benefit from their tax spending.

As cruel as it sounds, inflation has been stymied by the massive levels of unemployment. Take ten to twenty percent of the workforce out of the economy and you can forestall a lot of inflation, which can be expressed as demand in excess of available goods. Now, the response to inflation may be equally unfavorable to the middle class, on a par with what we saw in the early eighties, with double digit interest rates meant to keep money from being spent.

Maybe inflation is more than just a quantitative expression of overspending. After all, it's not the supply of money growing--yes, ours has done that--that creates inflation. If all this new money were not spent, it needn't cause all prices to go up. We'd probably rather have a wealthy class spending more than too many people out there spending too much.

With growing unemployment, the question is now how long Americans will be out of work, and if we can have a jobless recovery. There are really only a few ways back to sustainable growth, and it's important the economists agree that government can do little to help without creating inflation down the road, considering the size of its current borrowing and impending obligations, estimated at over $70 trillion for Social Security and Medicare. Short of taxing people, the government can only borrow. At some point the cost of carrying so much debt will make additional borrowing that much harder.

Trade

I'm also ambivalent about putting up barriers to trade. But I've increasingly grown to believe that trade policy is disproportionately impacting middle class Americans. The wealthy, on the other hand, seem to becoming even wealthier. Rather than looking at the as a source of taxation, I thing they need to be encourage to buy things. And those things really need to be domestically made.

Yes, plenty of middle class jobs depend on imports. The Maserati salespeople and the mechanics that serve those vehicles probably aren't rich. So imports do create jobs, but not in all categories. Importing top-end foreign-made products isn't in itself bad. We produce plenty of luxury items here in the United States that end up being exported. As a matter of fact, the US excels at top-end production. Even here in backwoods Indiana we have extremely talented craftsmen custom-designing engines from scratch! The American workforce is quite skilled and can easily compete with the world's best.

Yet our government seems incapable of turning these resources into export-driving opportunities. Perhaps we leave too much of the financing of new business opportunities to the private sector. Perhaps it's wise not to put too much faith into government policies, but then again other nations do support their business' competitive advantage, so why can't we?

Now we'll need to tread carefully, to avoid other countries retaliating at what they see as an unfair advantage for our exporters. We'll also need to be creative in finding ways to get our money back from foreigners. Visitors to U.S. shores spend freely; I do see growing intrusions by TSA, particularly in the form of body scanners now being adopted. No one wants harassment at the border simply because of their race or ethnicity. As popular as the War on Terror might be with some domestically, police state tactics are really the anathema of open trade and tourism policies. If the worst that an absence of body scanning can do is a shoe- or crotch-bomber every 5 or so years, maybe that's a price we can live with.

Still, no one wants a trade war. If we were to slap tariffs on luxury imports, we'd likely face retaliation on ours. And to complicate matters, if we were to reduce Chinese exports, the Chinese could retaliate by selling off US government debt, driving up the costs of borrowing. (Maybe doing that might help impose some fiscal discipline on Washington, as they clearly can't impose it on themselves.)

Maybe there is a zero sum game at work, but I like to think we can have globalization that benefits all. Looking at trade statistics, the world in general has benefitted greatly by trade; living standards have increased for many though poverty persists.

Trade isn't the only way to enhance economies, and it alone can't eliminate poverty. As we see in extractive industries like energy companies destroying mountains in Appalachia or the tar sands in Alberta, unrestricted trade can cause severe damage to ecosystems and indigenous peoples. So free trade needs to be tempered by fairness, where the long-term impacts are considered and crass opportunism by multinational corporations curtailed by regulations and firm enforcement (which are all too-often lacking in many localities.)

Rather than look purely at the numbers, economics needs to look at the qualitative impacts of new trade patterns, and try to reduce unemployment created by trade, ideally by moving displaced workers into.

Placed at the center of the intent of any study of the American economy should be the betterment of the American economy. Everything else is meant to pursue grant money or commercial revenue, like Coke versus Pepsi. Improving the quality of life for Americans may invite bias but we need to place America first in understanding and analyzing how changes in the world economy affect us. To let these changes consume our middle class is a tragic and ultimately avoidable path towards self-destruction.

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