Plutonomy & The Precariat: On The History Of The U.S. Economy In Decline

Oldspeak:”We’re really regressing back to the dark ages. It’s not a joke.  And if that’s happening in the most powerful, richest country in history, then this catastrophe isn’t going to be averted — and in a generation or two, everything else we’re talking about won’t matter. Something has to be done about it very soon in a dedicated, sustained way.” -Dr. Noam Chomsky
Empires in decline follow the same general pattern. High debt, unsound economic policies, intransigent political corruption, perpetual war and increases in war funding to the detriment of all else , privatized military, environmental degradation, looting of resources from throughout the empire rather than producing  things, systems deplete their resource base beyond levels that are ultimately sustainable. All these conditions exist in the American Empire. Something has to be done about fundamentally changing these conditions before it’s too late.

By Tom Engelhardt & Noam Chomsky @ TomsDispatch:

By Tom Engelhardt:

If you had followed May Day protests in New York City in the mainstream media, you might hardly have noticed that they happened at all.  The stories were generally tucked away, minimalist, focused on a few arrests, and spoke of “hundreds” of protesters in the streets, or maybe, if a reporter was feeling especially generous, a vague “thousands.”  I did my own rough count on the largest of the Occupy protests that day. It left Union Square in the evening heading for the Wall Street area.  I walked through the march front to back, figuring a couple of thousand loosely packed protesters to a block, and came up with a conservative estimate of 15,000 people.  Maybe it wasn’t the biggest protest of all time, but sizeable enough given that Occupy, an organization without strong structures but once strongly located, had been (quite literally) pushed or even beaten out of its camps in Zuccotti Park and elsewhere across the country and toward oblivion.

It’s true that if you were checking out the Nation or Mother Jones, you would have gotten a more accurate sense of what was going on.  Still, didn’t the great protest movement of our American moment (on a planet still in upheaval) deserve better that day? And no matter what you read in the mainstream, here’s what you would have known nothing about: this country is increasingly an armed camp and those marchers, remarkably relaxed and peaceable, were heading out into a concentration of police that was staggering and should have been startling.

Cops on motor scooters patroled the edges of the march, which was hemmed in by the usual moveable metal barricades.  Police helicopters buzzed us at rooftop level.  The police managed to alter the actual path of the marchers partway along and the police turnout — I estimated up to 75 cops, three deep on some street corners doing nothing but collecting overtime — was little short of incomprehensible.

Though Occupy marchers used to chant, “Whose streets, our streets!” it was never so.  The streets belong to the police.  If this is the democracy and freedom to dissent that American officials constantly proclaim to the world as one of our core values, then pinch me.  If most of it is even legal, I’d be surprised.  But when it comes to legality, we’re past all that.  So any march on a sunny day is instantly imprisoned, and the protesters turned into a captive audience.  When young people break out of the barricades and the serried ranks of cops and head in unexpected directions, it has the unmistakable feel of a jailbreak.

The fact is that, in a country whose security forces are up-armored to the teeth from the Mexican border to Union Square, just behind any set of marchers, you can feel the unease of those in power, edging up to fear.  And no wonder.  We remain in a “recovery” that’s spinning on a dime.  Let the Eurozone falter and begin to fall, the Chinese housing bubble pop, or the Persian Gulf go up in flames, and hold onto your signs.  Like Bloomberg in the Big Apple, many mayors sent in their paramilitaries (with a helping hand from the Department of Homeland Security) to get rid of the “troublemakers.”  Only problem: their real problems run so much deeper and when the next “moment” comes, Occupy could look like a march in the park (which, in many inspirational ways, it largely was).  In the meantime, the streets increasingly belong to the weaponized.  Americans who protest blur into the “terrorists” who, since 9/11, have been the obsession of what passes for law enforcement.

If you want some sense of just what’s lurking under the surface of all the police drones and helicopters and tanks and even mini-drone submarines, what underpins our fragile, edgy moment, then check out this talk TomDispatch regular Noam Chomsky gave.  It’s excerpted from his new book Occupy, with special thanks to its publisher Zuccotti Park Press. Tom

By Noam Chomsky:

The Occupy movement has been an extremely exciting development. Unprecedented, in fact. There’s never been anything like it that I can think of.  If the bonds and associations it has established can be sustained through a long, dark period ahead — because victory won’t come quickly — it could prove a significant moment in American history.

The fact that the Occupy movement is unprecedented is quite appropriate. After all, it’s an unprecedented era and has been so since the 1970s, which marked a major turning point in American history. For centuries, since the country began, it had been a developing society, and not always in very pretty ways. That’s another story, but the general progress was toward wealth, industrialization, development, and hope. There was a pretty constant expectation that it was going to go on like this. That was true even in very dark times.

I’m just old enough to remember the Great Depression. After the first few years, by the mid-1930s — although the situation was objectively much harsher than it is today — nevertheless, the spirit was quite different. There was a sense that “we’re gonna get out of it,” even among unemployed people, including a lot of my relatives, a sense that “it will get better.”

There was militant labor union organizing going on, especially from the CIO (Congress of Industrial Organizations). It was getting to the point of sit-down strikes, which are frightening to the business world — you could see it in the business press at the time — because a sit-down strike is just a step before taking over the factory and running it yourself. The idea of worker takeovers is something which is, incidentally, very much on the agenda today, and we should keep it in mind. Also New Deal legislation was beginning to come in as a result of popular pressure. Despite the hard times, there was a sense that, somehow, “we’re gonna get out of it.”

It’s quite different now. For many people in the United States, there’s a pervasive sense of hopelessness, sometimes despair. I think it’s quite new in American history. And it has an objective basis.

On the Working Class

In the 1930s, unemployed working people could anticipate that their jobs would come back. If you’re a worker in manufacturing today — the current level of unemployment there is approximately like the Depression — and current tendencies persist, those jobs aren’t going to come back.

The change took place in the 1970s. There are a lot of reasons for it. One of the underlying factors, discussed mainly by economic historian Robert Brenner, was the falling rate of profit in manufacturing. There were other factors. It led to major changes in the economy — a reversal of several hundred years of progress towards industrialization and development that turned into a process of de-industrialization and de-development. Of course, manufacturing production continued overseas very profitably, but it’s no good for the work force.

Along with that came a significant shift of the economy from productive enterprise — producing things people need or could use — to financial manipulation. The financialization of the economy really took off at that time.

On Banks

Before the 1970s, banks were banks. They did what banks were supposed to do in a state capitalist economy: they took unused funds from your bank account, for example, and transferred them to some potentially useful purpose like helping a family buy a home or send a kid to college. That changed dramatically in the 1970s. Until then, there had been no financial crises since the Great Depression. The 1950s and 1960s had been a period of enormous growth, the highest in American history, maybe in economic history.

And it was egalitarian.  The lowest quintile did about as well as the highest quintile. Lots of people moved into reasonable lifestyles — what’s called the “middle class” here, the “working class” in other countries — but it was real.  And the 1960s accelerated it. The activism of those years, after a pretty dismal decade, really civilized the country in lots of ways that are permanent.

When the 1970s came along, there were sudden and sharp changes: de-industrialization, the off-shoring of production, and the shift to financial institutions, which grew enormously. I should say that, in the 1950s and 1960s, there was also the development of what several decades later became the high-tech economy: computers, the Internet, the IT Revolution developed substantially in the state sector.

The developments that took place during the 1970s set off a vicious cycle. It led to the concentration of wealth increasingly in the hands of the financial sector. This doesn’t benefit the economy — it probably harms it and society — but it did lead to a tremendous concentration of wealth.

On Politics and Money

Concentration of wealth yields concentration of political power. And concentration of political power gives rise to legislation that increases and accelerates the cycle. The legislation, essentially bipartisan, drives new fiscal policies and tax changes, as well as the rules of corporate governance and deregulation. Alongside this began a sharp rise in the costs of elections, which drove the political parties even deeper into the pockets of the corporate sector.

The parties dissolved in many ways. It used to be that if a person in Congress hoped for a position such as a committee chair, he or she got it mainly through seniority and service. Within a couple of years, they started having to put money into the party coffers in order to get ahead, a topic studied mainly by Tom Ferguson. That just drove the whole system even deeper into the pockets of the corporate sector (increasingly the financial sector).

This cycle resulted in a tremendous concentration of wealth, mainly in the top tenth of one percent of the population. Meanwhile, it opened a period of stagnation or even decline for the majority of the population. People got by, but by artificial means such as longer working hours, high rates of borrowing and debt, and reliance on asset inflation like the recent housing bubble. Pretty soon those working hours were much higher in the United States than in other industrial countries like Japan and various places in Europe. So there was a period of stagnation and decline for the majority alongside a period of sharp concentration of wealth. The political system began to dissolve.

There has always been a gap between public policy and public will, but it just grew astronomically. You can see it right now, in fact.  Take a look at the big topic in Washington that everyone concentrates on: the deficit. For the public, correctly, the deficit is not regarded as much of an issue. And it isn’t really much of an issue. The issue is joblessness. There’s a deficit commission but no joblessness commission. As far as the deficit is concerned, the public has opinions. Take a look at the polls. The public overwhelmingly supports higher taxes on the wealthy, which have declined sharply in this period of stagnation and decline, and the preservation of limited social benefits.

The outcome of the deficit commission is probably going to be the opposite. The Occupy movements could provide a mass base for trying to avert what amounts to a dagger pointed at the heart of the country.

Plutonomy and the Precariat

For the general population, the 99% in the imagery of the Occupy movement, it’s been pretty harsh — and it could get worse. This could be a period of irreversible decline. For the 1% and even less — the .1% — it’s just fine. They are richer than ever, more powerful than ever, controlling the political system, disregarding the public. And if it can continue, as far as they’re concerned, sure, why not?

Take, for example, Citigroup. For decades, Citigroup has been one of the most corrupt of the major investment banking corporations, repeatedly bailed out by the taxpayer, starting in the early Reagan years and now once again. I won’t run through the corruption, but it’s pretty astonishing.

In 2005, Citigroup came out with a brochure for investors called “Plutonomy: Buying Luxury, Explaining Global Imbalances.” It urged investors to put money into a “plutonomy index.” The brochure says, “The World is dividing into two blocs — the Plutonomy and the rest.”

Plutonomy refers to the rich, those who buy luxury goods and so on, and that’s where the action is. They claimed that their plutonomy index was way outperforming the stock market. As for the rest, we set them adrift. We don’t really care about them. We don’t really need them. They have to be around to provide a powerful state, which will protect us and bail us out when we get into trouble, but other than that they essentially have no function. These days they’re sometimes called the “precariat” — people who live a precarious existence at the periphery of society. Only it’s not the periphery anymore. It’s becoming a very substantial part of society in the United States and indeed elsewhere. And this is considered a good thing.

So, for example, Fed Chairman Alan Greenspan, at the time when he was still “Saint Alan” — hailed by the economics profession as one of the greatest economists of all time (this was before the crash for which he was substantially responsible) — was testifying to Congress in the Clinton years, and he explained the wonders of the great economy that he was supervising. He said a lot of its success was based substantially on what he called “growing worker insecurity.” If working people are insecure, if they’re part of the precariat, living precarious existences, they’re not going to make demands, they’re not going to try to get better wages, they won’t get improved benefits. We can kick ’em out, if we don’t need ’em. And that’s what’s called a “healthy” economy, technically speaking. And he was highly praised for this, greatly admired.

So the world is now indeed splitting into a plutonomy and a precariat — in the imagery of the Occupy movement, the 1% and the 99%. Not literal numbers, but the right picture. Now, the plutonomy is where the action is and it could continue like this.

If it does, the historic reversal that began in the 1970s could become irreversible. That’s where we’re heading. And the Occupy movement is the first real, major, popular reaction that could avert this. But it’s going to be necessary to face the fact that it’s a long, hard struggle. You don’t win victories tomorrow. You have to form the structures that will be sustained, that will go on through hard times and can win major victories. And there are a lot of things that can be done.

Toward Worker Takeover

I mentioned before that, in the 1930s, one of the most effective actions was the sit-down strike. And the reason is simple: that’s just a step before the takeover of an industry.

Through the 1970s, as the decline was setting in, there were some important events that took place.  In 1977, U.S. Steel decided to close one of its major facilities in Youngstown, Ohio. Instead of just walking away, the workforce and the community decided to get together and buy it from the company, hand it over to the work force, and turn it into a worker-run, worker-managed facility. They didn’t win. But with enough popular support, they could have won.  It’s a topic that Gar Alperovitz and Staughton Lynd, the lawyer for the workers and community, have discussed in detail.

It was a partial victory because, even though they lost, it set off other efforts. And now, throughout Ohio, and in other places, there’s a scattering of hundreds, maybe thousands, of sometimes not-so-small worker/community-owned industries that could become worker-managed. And that’s the basis for a real revolution. That’s how it takes place.

In one of the suburbs of Boston, about a year ago, something similar happened. A multinational decided to close down a profitable, functioning facility carrying out some high-tech manufacturing. Evidently, it just wasn’t profitable enough for them. The workforce and the union offered to buy it, take it over, and run it themselves. The multinational decided to close it down instead, probably for reasons of class-consciousness. I don’t think they want things like this to happen. If there had been enough popular support, if there had been something like the Occupy movement that could have gotten involved, they might have succeeded.

And there are other things going on like that. In fact, some of them are major. Not long ago, President Barack Obama took over the auto industry, which was basically owned by the public. And there were a number of things that could have been done. One was what was done: reconstitute it so that it could be handed back to the ownership, or very similar ownership, and continue on its traditional path.

The other possibility was to hand it over to the workforce — which owned it anyway — turn it into a worker-owned, worker-managed major industrial system that’s a big part of the economy, and have it produce things that people need. And there’s a lot that we need.

We all know or should know that the United States is extremely backward globally in high-speed transportation, and it’s very serious. It not only affects people’s lives, but the economy.  In that regard, here’s a personal story. I happened to be giving talks in France a couple of months ago and had to take a train from Avignon in southern France to Charles De Gaulle Airport in Paris, the same distance as from Washington, DC, to Boston. It took two hours.  I don’t know if you’ve ever taken the train from Washington to Boston, but it’s operating at about the same speed it was 60 years ago when my wife and I first took it. It’s a scandal.

It could be done here as it’s been done in Europe. They had the capacity to do it, the skilled work force. It would have taken a little popular support, but it could have made a major change in the economy.

Just to make it more surreal, while this option was being avoided, the Obama administration was sending its transportation secretary to Spain to get contracts for developing high-speed rail for the United States, which could have been done right in the rust belt, which is being closed down. There are no economic reasons why this can’t happen. These are class reasons, and reflect the lack of popular political mobilization. Things like this continue.

Climate Change and Nuclear Weapons

I’ve kept to domestic issues, but there are two dangerous developments in the international arena, which are a kind of shadow that hangs over everything we’ve discussed. There are, for the first time in human history, real threats to the decent survival of the species.

One has been hanging around since 1945. It’s kind of a miracle that we’ve escaped it. That’s the threat of nuclear war and nuclear weapons. Though it isn’t being much discussed, that threat is, in fact, being escalated by the policies of this administration and its allies. And something has to be done about that or we’re in real trouble.

The other, of course, is environmental catastrophe. Practically every country in the world is taking at least halting steps towards trying to do something about it. The United States is also taking steps, mainly to accelerate the threat.  It is the only major country that is not only not doing something constructive to protect the environment, it’s not even climbing on the train. In some ways, it’s pulling it backwards.

And this is connected to a huge propaganda system, proudly and openly declared by the business world, to try to convince people that climate change is just a liberal hoax. “Why pay attention to these scientists?”

We’re really regressing back to the dark ages. It’s not a joke.  And if that’s happening in the most powerful, richest country in history, then this catastrophe isn’t going to be averted — and in a generation or two, everything else we’re talking about won’t matter. Something has to be done about it very soon in a dedicated, sustained way.

It’s not going to be easy to proceed. There are going to be barriers, difficulties, hardships, failures.  It’s inevitable. But unless the spirit of the last year, here and elsewhere in the country and around the globe, continues to grow and becomes a major force in the social and political world, the chances for a decent future are not very high.

Noam Chomsky is Institute Professor Emeritus in the MIT Department of Linguistics and Philosophy.  A TomDispatch regular, he is the author of numerous best-selling political works, most recently, Hopes and Prospects, Making the Future, and Occupy, published by Zuccotti Park Press, from which this speech, given last October, is excerpted and adapted. His web site is www.chomsky.info.

The Spectacle Of Terrorism And Its Vested Interests

Oldspeak:”The “War On Terror” has been monetized. “It is important to note that we can no longer assume that the FBI and the CIA and the NSA work, first of all, for the safety of the American people; they also now represent a revolving door of government officials who become security industry lobbyists and manufacturers, which, in turn, get the multimillion-dollar contracts for tackling the very problems these stories appear to highlight.” -Naomi Wolf. In an inverted totalitarian kleptocracy, EVERYTHING is for sale, including terrorism, fear, safety, and security. Those words are used to sell us more shit we don’t need than we care to realize. They’re used to deprive us of our rights and liberties. They’re used to keep us in a perpetual state of shock & learned helplessness. And various vested interests are making trillions off of these words. All while, we’re less safe, less secure, and more fearful and creating more terrorists with ever death-dealing drone strike.” “War is Peace”, “Freedom is Slavery”, “Ignorance is Strength”.

By Naomi Wolf @ The U.K. Guardian:

The news stories, which quickly surface, long enough to cause scary headlines, then vanish before people can learn how often the cases are thrown out. These are stories about “bumbling fantasists”, hapless druggies, the aimless, even the virtually homeless and mentally ill, and other marginal characters with not the strongest grip on reality, who have been lured into discourses about violence against America only after assiduous courting, and in some cases outright payment, by undercover FBI or police informants.

They have become a litany in recent years. The terrifying 2003-2004 national news stories that a Detroit “sleeper cell” had sent Muslim terrorists to blow up Disneyland and other landmarks, including in Las Vegas, was later thrown out of court, with accusations of prosecutorial misconduct, to almost no press attention – the same cycle of hype and failed convictions that have characterized many such stories. The evidence had included a home video taken in Disneyland, “doodles”, and a guy with a credit card fraud problem, who had been pressured to diminish his own sentence by accusing his buddies.

But the tales of entrapment and terror hype continue apace – ten years after 9/11. Judith Miller, in Newsmax, writes that one recent case was so lame that even the FBI distanced itself from NYPD: “Despite FBI Doubts, NYPD Convinced Pipe Bomb Case Posed Real Danger”, noted the headline on her 28 November 2011 article. A 27-year-old Dominican immigrant, Jose Pimentel, aka Muhamad Yusuf, had been monitored by NYPD for two years. Last fall, Manhattan District Attorney Cyrus Vance Jr charged Pimentel with constructing pipe bombs to attack “police cars, post offices, veterans of Iraq and Afghanistan, and other targets”.

An email in the case, which purports to show that Pimentel was writing about violent jihad to the al-Qaida-supporting “glossy magazine” Inspire, was described to Judith Miller by anonymous “law enforcement officials”. Given Miller’s journalistic history, this sentence alone should raise eyebrows. But the alleged email is, she writes, “part of a vast investigative file containing over 400 hours of surveillance audio and video tapes, interviews, and other material amassed by the NYPD”. New York Police Commissioner Ray Kelly, in a flashy press conference, called the young man a “lone wolf” terrorist – a recent DHS soundbite. But the case was so shaky that the Federal Bureau of Investigation, as well as federal prosecutors, did not want to join the case: “Too many holes in the case”, other anonymous officials told Miller.

Pimentel was one of what has become an army of FBI- or NYPD-entrapped losers. He had no money, no job, and at key points lived with his mom. The New York Times noted that he may have been psychologically “unstable”, and that he had made threats after smoking pot. Officials say that in May 2010, he repeated loudly in Arabic that “America is my enemy.” This scary guy was a circuit city clerk in Schenectady, New York.

Additional evidence that Miller’s anonymous sources give for his being a terrorist? In 2010, he had $100. One witness told police “that he had flashed a $100 bill when he made some purchases.”Another? “Pimentel scraped the heads of some 750 matches, officials say.” The scenario that entrapped Pimentel involved a surround-sound of informants trying to entrap him in cyberspace and to lure him to incriminate himself in taped phone conversations. But the FBI dropped its involvement after they judged that the informant had been too active in helping: urging or arranging for Pimentel to start drilling into pipe pieces – the evidence that he intended to set off a bomb.

Many other, much-ballyhooed cases of “homegrown terrorism” show this creaky, effortful, farcical quality of people who, left to their own devices by the FBI or NYPD, would have remained harmlessly playing video games in their childhood bedrooms, smoking their doobies, or babbling gently to themselves, on their anti-psychotic meds, about geopolitical forces.

The “Newburgh Four” is another such case, as Russia Today reported: four African-American Muslims were found guilty recently of a plot to place bombs in two Bronx synagogues and to shoot down military aircraft in Newburgh. Another flashy press conference in May 2009 showcased these four men as “the faces of homegrown terrorism”. The FBI had claimed that the men had planned to commit their acts of terrorism on the day that they were arrested. Joseph Demarest from the FBI called it “a terrifying plot”.

The men were low-income former convicts who could not read or write with literacy. They could not drive and had no passports. Shahid Hussain, a Pakistani immigrant who was an FBI employee, got them to say they were going to commit these crimes – paying them $100,000. Hussain presented the men with a fake stinger missile, and Hussain offered these poverty-stricken men cars and money in exchange for their promise to carry out the manufactured plot.

The men’s relatives accused the FBI of entrapment. “I do not think this is entrapment. I know it is. This is entrapment,” said Alicia McWilliams-McCollum, aunt of 29-year-old David Williams. As with many of these scenarios, one can easily imagine poor people with criminal records, offered large sums of money by a fake jihadist, trying to get the money and then trick the instigator. Also, as any AA or Al-Anon counsellor can tell you, if drugs or alcohol are in the mix, entrapment is a ridiculous premise, too: an addict will say anything, and make any ludicrous promise, to get a giant check. It doesn’t mean the addict has any intention of delivering on the supposed contract. David Williams’ aunt says that her nephew is in prison because of a pretend terror attack created by the FBI:

“They are creating scenarios; they are manufacturing crimes. That would not have occurred if you had not planted an unconstructive seed into a community.”

Attorney Steve Dowds, who tracks cases like the Newburgh Four, argues the US government is systematically employing preemptive prosecution:

“They are taking some down and out vulnerable individuals and not only planting the ideology of jihad on them, giving them all the things they need, all of the material. They are setting up the plan, giving them all the research and then grabbing them and claiming these were homegrown terrorists. It is just a fiction.”

Now we have another “underwear bomber” – declared by the Pentagon to have been about to launch a major attack via a US-bound plane, but who appears, reportedly, to have been a CIA-run double agent. What is the evidence that the “device”, which is supposedly so sophisticated that there is doubt as to whether existing surveillance technologies in US airports would have caught it, actually exists? As with so many of these stories, we have no independent verification – because reporters from the British Daily Telegraph, to Reuters, to the Huffington Post are simply taking dictation from New York Representative Peter King and from the Pentagon, and scarcely asking for backup evidence of their elaborate assertions.

It is important to note that we can no longer assume that the FBI and the CIA and the NSA work, first of all, for the safety of the American people; they also now represent a revolving door of government officials who become security industry lobbyists and manufacturers, which, in turn, get the multimillion-dollar contracts for tackling the very problems these stories appear to highlight. The stories about the first “underwear bomber” preceded the rollout of former DHS chief Michael Chertoff’s costly scanners; the press interviews for this round of mystery “underwear bomber” stories are practically a press release for some expensive technological upgrade – or yet more hellishly invasive and demeaning search technique. The sad truth is that we can no longer report and consume such stories as if there were no commercial vested interests involved in creating and sustaining such “terror theater”.

You know we have “terror theater” in the US because nations such as Israel, which are genuinely focussed on deterring terrorism, downplay risk and threats rather than trumpeting them, as DHS does. If the threat is real, they don’t reveal all the details of the latest “planned attack” to the news media – because they are busy investigating real planned attacks, rather than doing corporate PR and product placement. Instead of TSA groping, aviation security, from Britain to Israel, to Spain to Norway, uses much less invasive and more acute security processes, such as face-to-face, in-line interviewing. They do not sell commercial products that subvert recall surety issues, such as the various costly and vastly lucrative new “Global Entry Trusted Traveller Network”, an apparent government program that is not transparent or accountable. You can sign up for for a fee of $100 a year, after an interview. No TSA representative I interviewed knows who owns the initiative, which they said was private, not a government program; nor could they tell me where the money really goes.

Actual terrorism-fighting nations would never devolve such security concerns to private contractors or sell easier travel access for cash – because it is both dangerous and absurd to do so. In fact, what the FBI and CIA and the Pentagon are up against is that people – including Americans – are waking up to the fact that there would be no enemy if we weren’t manufacturing new terrorists by taking out civilians in Pakistan, Yemen and Afghanistan. An end to foreign wars (which are already costing us thousands of casualties a year) would be a much more effective counter-terror strategy than this hyped, synthetic threat to justify a corporate surveillance-and-security product gold rush. Instead, we are treated to a spectacle orchestrated by alarmist officials who keep holding frightening press conferences promoting the threat of dazed, poor, drugged-out “lone wolves”. The true, Orwellian agenda is to support a vast new crony-capitalist industry that uses terror theater to turn open democracies into surveillance societies.

Top Economists Agree: The U.S. Is In A Depression

Oldspeak:”You know it’s grim when the prevailing debate among economists and historians is whether the world economy faces the “Great” depression of the 1930s or the “Long” depression of the 1870s.” I like to call it a “Stealth Great Depression” The bread lines have been replaced with EBT cards, and the banks are too bigger to fail, but many of the other conditions that existed in the 1930′s and 1870′s exist today. Tent cities, high unemployment, high poverty, high homelessness, wage stagnation, high debt, mass bankruptcy etc, etc, etc… A profound difference between today’s depression and those of the past is the propaganda. It’s so exquisitely and insidiously crafted that people actually believe it over what it happening all around them in the real world. Meanwhile “Institutions (banks) that know how and why to prevent things from falling apart and which nonetheless sit back and do nothing. A global collapse is being engineered. We need a radically new way forward to avert catastrophe but all we’re being offered by our political classes is tried and false ways of the past that are clearly leading to catastrophe. A ‘sustainable future’ is being monetized. More and more people awakening to the reality that those old ways are no longer acceptable. Our civilization needs a new operating system. Or a crash is not a matter of if, but when. Greed will be our downfall.

By Washington’s Blog:

Paul Krugman released a new book yesterday called “End This Depression Now“. In the introduction, Krugman writes:

The best way to think about this continued slump, I’d argue, is to accept that we’re in a depression …. It’s nonetheless essentially the same kind of situation that John Maynard Keynes described in the 1930s: “a chronic condition of subnormal activity for a considerable period without any marked tendency either towards recovery or towards complete collapse.”

Robert Shiller said yesterday that the world is in a state of “late Great Depression”.

Many other top economists also say that were in a Depression.

We are stuck in a depression because the government has done all of the wrong things, and has failed to address the core problems.

For example:

• An economics professor says we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place”

• Fraud was one of the main causes of the Depression, but nothing has been done to rein in fraud today. Indeed, the only action the government is taking is to help cover up fraud

• All leading independent economists have said that the economy cannot recover until the big, insolvent banks are broken up, but the government has just helped them to get bigger

• Excessive leverage helped cause the Great Depression and the current crisis, but the government has encouraged more leverage

• The Federal Reserve caused the Great Depression and the current crisis, and has done nothing but help the fatcats at the expense of the little guy. And yet the government has given the Fed more power than ever.

• Government policies send manufacturing jobs and dollars abroad

• The government is doing everything else wrong. See this and this

This isn’t an issue of left versus right … it’s corruption and bad policies which help the top .1% but are causing a depression for the vast majority of the American people.

Financial ‘Reform’ Failure: Chase, Bank Of America, Citigroup, Wells Fargo, Goldman Sachs Now 30% Bigger; Control Assests Equal To 56% Of U.S. Economy

Oldspeak:“Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” & “prevent the further consolidation of our financial system” the nation’s largest banks are bigger than they were before the credit crisis. Five banks – JPMorgan Chase & Co. (JPM), Bank of America Corp., Citigroup Inc., Wells Fargo & Co., and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56% of the U.S. economy, according to the Federal Reserve.” Behold! The fruits of toothless, non-regulating financial ‘reform’! Financial oligarchs now control assets equal to a majority of the U.S. economy. They’ve gained complete control of the European economy, and many others around the world. The conditions have been created for a bigger and more devastating global economic crash, that will facilitate the continued consolidation of control over all assets by the International Banking Cartels, and the continued destruction of sovereign states. How long will the rape and pillage of our planet and societies go on? If the Banksters have their way, until there is nothing left.

By Washington’s Blog:

Size of Banks Killing Economy … But Giant Banks Have Only Gotten Bigger Since Financial “Reform” Enacted

For years, many high-level economists and financial experts have said that – unless we break up the giant banks – our economy will never recover, real reform will be blocked, and democracy and the rule of law will be corrupted.

So how did the government respond to the financial crisis which started in 2007?

Let the giant banks get even bigger.

As Bloomberg notes, the five banks that held assets equal to 43% of the US economy in 2007 before the financial crisis and the bank bailout now control assets that equal 56% of the US economy:

Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” the nation’s largest banks are bigger than they were before the credit crisis.

Five banks – JPMorgan Chase & Co. (JPM), Bank of America Corp., Citigroup Inc., Wells Fargo & Co., and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to the Federal Reserve.

Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy, sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did during the 2008 crunch.

“Market participants believe that nothing has changed, that too-big-to-fail is fully intact,” said Gary Stern, former president of the Federal Reserve Bank of Minneapolis.

That specter is eroding faith in Obama’s pledge that taxpayer-funded bailouts are a thing of the past. It is also exposing him to criticism from Federal Reserve officials, Republicans and Occupy Wall Street supporters, who see the concentration of bank power as a threat to economic stability.

***

The industry’s evolution defies the president’s January 2010 call to “prevent the further consolidation of our financial system.” Embracing new limits on banks’ trading operations, Obama said then that taxpayers wouldn’t be well “served by a financial system that comprises just a few massive firms.”

Simon Johnson, a former chief economist of the International Monetary Fund, blames a “lack of leadership at Treasury and the White House” for the failure to fulfill that promise. “It’d be safer to break them up,” he said.

***

Regulatory burden could promote further industry consolidation, according to Wilbur Ross, chairman of WL Ross & Co., a private-equity firm.

“We think the little tiny banks, the 90-odd percent of banks that are under $1.5 billion in deposits, are pretty much an obsolete phenomenon,” he told Bloomberg Television on March 14. “We think they’ll all have to merge with each other, be acquired by bigger banks or something.”

***

In 2011, funding costs for banks with more than $10 billion in assets were about one-third less than for the smallest banks, according to the FDIC.

Some presidents of regional Federal Reserve banks have lambasted too big to fail. As Bloomberg notes:

In recent weeks, at least four current Fed presidents — Esther George of Kansas City, Charles Plosser of Philadelphia, Jeffrey Lacker of Richmond and Richard Fisher of Dallas — have voiced similar worries about the risk of a renewed crisis.

But the most powerful Fed bank – the New York Fed – and Bernanke’s Federal Open Market Committee, as well as Tim Geithner’s Treasury Department, have done everything possible to ensure that the the giant banks become too bigger to fail.

Finance Experts: Speculators At Wall Street ‘Casinos’ Continue To Manipulate Prices At The Pump

Oldspeak: “No, high gas prices have NOTHING to do with President Obama. The debate in Washington over cutting oil subsidies is another manufactured issue, diverting attention from the true cause of rising oil and commodities prices; unregulated, unchecked financial speculation and derivatives trading. Coincidentally the cause of the recent crash of the global economic system. Recently passed “financial reform” did nothing to reform this fatally flawed financial system. A simple and totally correctable (stricter regulation) flaw; corporate media, corporate economists,  no one is talking about it. “no one wants to talk about, because so many powerful people armed with legions of lawyers want unquestioning allegiance, and will sue you into silence.”- Danny Schechter. The other Ginormous elephant in the room. We’re running out of oil. Tar sands, offshore drilling
its all an indication that the easy to get to oil is gone. The oil we’re consuming now is infinitely harder to process and produce. Speculators are doing what they do best: profiting handsomely from scarcity. Disaster capitalists are having a field day as the people suffer. This is what oligarchy looks like.

Related Stories:

Finance Expert Says Speculators Are Behind High Oil and Gasoline Prices

Unchecked Financial Speculation Drives Oil Price Hikes; Is There A Scam Behind The Rise In Oil And Food Prices?

By Anna Staver @ The Huffington Post: 

Americans are paying for $4-a-gallon gasoline because Wall Street “casinos” have blocked regulators from cracking down on rampant oil speculation, finance experts argued on Capitol Hill Wednesday.

In an effort to counter Republican claims that gas prices are high because the Obama administration does not allow enough drilling, House Democratic leaders staged a hearing featuring former Reagan and Clinton administration oil and trading analysts who blame the surge on speculation.

And the vast profits from that speculation do not go into developing more oil or creating jobs, the analysts argued.

“Your constituents should know that every time they break their heart by buying $4 and maybe soon $5 gasoline, that money isn’t going into production,” said University of Maryland professor Michael Greenberger, who served as director of the division of trading and markets for the Commodity Futures Trading Commission in the Clinton administration. “It’s going into homebuilding in the Hamptons and yacht building.”

And the big finance firms are working overtime to ensure that the speculative commodity keeps flowing, he said.

“They’ve got hundreds of millions of dollars that they are using in lobbying on the Hill” or the Commodity Futures Trading Commission, Greenberger told HuffPost after the session. “Now they are bringing all these lawsuits; they are stopping the action that has already been asked for by Congress to stop the speculation.”

He was referring to suits that seek to limit certain Dodd-Frank financial reforms that, among other things, grant the commission the power to crack down on excessive oil speculation.

Greenberger told the Democratic Steering and Policy Committee that curtailing the speculation — some of which he said was necessary — would cost nothing and would not stop any markets from functioning.

“What are you stopping here? Are you stopping money from going into production? Are you stopping money from [reaching] people creating jobs?” Greenberger asked. “Unless you think casinos — which come to us with names like Goldman Sachs and Morgan Stanley — are job creators, you’re stopping betting. If we’re wrong about this — if everything we’re telling you is incorrect — what will you have done except close a couple of casinos?”

Rep. Xavier Becerra (D-Calif.) pressed Greenberger if there was contradictory evidence when it comes to figuring out whether high gas prices could be cured through increased drilling and domestic oil production.

Greenberger conceded that one or two experts in the country would hold that opinion but said the vast majority in his field believe that Wall Street sets the price of oil.

“Many would like you to believe that this is a supply-demand problem. It’s not,” Greenberger said. “It is excessive speculation, which is a fancy way of saying that gamblers wearing Wall Street suits have taken over and created investment vehicles designed to drive the price of oil up.”

He cited testimony by Goldman Sachs earlier this year asserting that speculation drives up the cost of a barrel of oil by as much as $23.39.

Gene Guildford, a former president of the Maine Oil Dealers Association and a Reagan administration Commerce Department official, estimated that speculation translates into roughly a dollar added to the price of each gallon of gasoline bought by the U.S. consumer. “Instead of spending four dollars, you should have been spending something closer to three dollars for your gallon of gasoline,” he said.

The extra cost to America’s drivers is staggering, Guildford said. “At 11 billion gallons a month that Americans consume, Americans today are paying $10 billion more a month for gasoline today than they did in December.”

Both men urged the committee to fully fund the Commodity Futures Trading Commission and propose legislation in the House aimed at cutting oil speculation to what is required to keep the markets liquid.

Otherwise, it’s just making millionaires richer and middle-class Americans poorer, they and Democrats argued.

“Wall Street speculators are artificially driving up the price at the pump and causing pain to millions of American consumers,” said House Minority Leader Nancy Pelosi (D-Calif.).

Toward A Creditor State: 1 in 7 Americans Pursued By Debt Collectors

Oldspeak:“Money As Debt” “One of the characteristics of the new social contract ushered in by both George W. Bush and Barack Obama is the increasing power of creditors to govern outright, from tax farming by banks to the use of credit checks to access employment opportunities. There are now thousands of people legally jailed because they aren’t paying their bills, ie. debtor’s prisons have returned.  Occasionally elites let it slip that this is not an accident, but is their goal – former Comptroller General David Walker has wistfully pined for debtor’s prisons” -Matt Stoller. “A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who, even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved and who necessarily, by very reason of their own limitations, chill and check and destroy genuine economic freedom. This is the greatest question of all, and to this statesmen must address themselves with an earnest determination to serve the long future and the true liberties of men -U.S. President Woodrow Wilson

Related Video:

Money As Debt

By Matt Stoller @ Naked Capitalism:

I went through the Federal Reserve’s Quarterly Release on Household Debt and Credit released today, and there were two notable trends.  One is that the amount of consumer debt is declining, but that delinquency rates are stabilizing above what they were before the crisis.  And the second is in this graph below, which is that the number of people subject to third party collections has doubled since 2000, from a little less than 7% to a little over 14% of consumers.  Ten years ago, one in fourteen American consumers were pursued by debt collectors.  Today it’s one in seven.

The experience of debt collection can be chilling, as this 2007 ABC News report suggests.

Consumers around the country have taped threatening phone calls from collectors who have called in the middle of the night, used abusive language and have threatened to have people fired from work or thrown in jail.  All of these tactics are illegal under federal law.

One of the characteristics of the new social contract ushered in by both George W. Bush and Barack Obama is the increasing power of creditors to govern outright, from tax farming by banks to the use of credit checks to access employment opportunities.

There are now thousands of people legally jailed because they aren’t paying their bills, ie. debtor’s prisons have returned.  Occasionally elites let it slip that this is not an accident, but is their goal – former Comptroller General David Walker has wistfully pined for debtor’s prisons overtly (on CNBC, no less).

This may be somewhat mediated by government action, as the CFPB is beginning to make noise around debt collection and credit ratings, and Illinois Attorney General Lisa Madigan is working to stop debt-related arrest warrants.  But only somewhat, only where the government can protect you and only when there is the political will to do so.  Increasingly, creditors are coming to set up the institutional structures for financial surveillance, state-sponsored enforcement of their claims through tightened bankruptcy laws and the selective use of jail, and the denial of economic opportunity based on one’s interaction with the financial system.

This is part of the new social contract.  The sheer percentage of consumers with third party collections in pursuit is striking.  Additionally, the uptrend through both Bush boom and Obama bust years of the percentage of people being tracked down by third party collection agencies suggests we live in a different country than we did just ten years ago.

Again, ten years ago, one in fourteen Americans were pursued by debt collectors.  Today it’s one in seven.  I suspect this number will keep going up.  And though debt collection is a highly competitive field, it’s also a growth industry.

Matt Stoller is the former senior policy adviser to Rep. Alan Grayson and a fellow at the Roosevelt Institute. He blogs frequently for Naked Capitalism. Follow him on Twitter at @matthewstoller.

 

 

FBI Quietly Releases Plans For ‘Social Media Application’ To Continuously Monitor Facebook, Twitter, You Tube, Flickr & Other Social Networks Worldwide

Oldspeak:’ Social networks are about connecting people with other people – if one person is the target of police monitoring, there will be a dragnet effect in which dozens, even hundreds, of innocent users also come under surveillance. It is not necessarily the case that the more information law enforcement officers have, the safer we will be.’ -Gus Hosein, Privacy International  Following the lead of the U.S. Federal Reserve Bank, & The Pentagon, the FBI will be monitoring all social networks for ‘bad actors’ & ‘emerging threats’, and locating them via Google and Yahoo Maps. The power of social networking to foment and facilitate protest and dissent has been demonstrated the world over. Tools are being created to dilute, counteract & co-opt that power. Left unanswered, who will be designated as a ‘bad actor’ or ‘threat’, in the minds of people who are trained to view protestors and dissenters as low-level terrorists. It will be interesting to see as more and more freedoms are eliminated, and more and more people are viewed as “domestic terrorists” for protesting unconstitutional laws, who will be labeled “terrorists” or “enemy combatants” in the future. Intellectutals? Journalists? Activists? Bloggers? You?

Related Stories:

FBI’s Counterterrorism Operations Scrutinizing Political Activists

Spying on U.S Citizens — Uncle Sam turns his multi-billion dollar espionage network on U.S Citizens

By Common Dreams:

The FBI’s Strategic Information and Operations Center (SOIC) posted a ‘Request for Information (RFI)’ online last week seeking companies to build a social network monitoring system for the FBI. The 12-page document (.pdf) spells out what the bureau wants from such a system and invites potential contractors to reply by February 10, 2012.

It says the application should provide information about possible domestic and global threats superimposed onto maps “using mash-up technology”.

It says the application should collect “open source” information and have the ability to:

• Provide an automated search and scrape capability of social networks including Facebook and Twitter.
• Allow users to create new keyword searches.
• Display different levels of threats as alerts on maps, possibly using color coding to distinguish priority. Google Maps 3D and Yahoo Maps are listed among the “preferred” mapping options.
• Plot a wide range of domestic and global terror data.
• Immediately translate foreign language tweets into English.

It notes that agents need to “locate bad actors…and analyze their movements, vulnerabilities, limitations, and possible adverse actions”. It also states that the bureau will use social media to create “pattern-of-life matrices” — presumably logs of targets’ daily routines — that will aid law enforcement in planning operations.

* * *

New Scientist magazine reports today:

“These tools that mine open source data and presumably store it for a very long time, do away with that kind of privacy. I worry about the effect of that on free speech in the US” — Jennifer Lynch of the Electronic Frontier FoundationThe US Federal Bureau of Investigation has quietly released details of plans to continuously monitor the global output of Facebook, Twitter and other social networks, offering a rare glimpse into an activity that the FBI and other government agencies are reluctant to discuss publicly. The plans show that the bureau believes it can use information pulled from social media sites to better respond to crises, and maybe even to foresee them. [...]

The use of the term “publicly available” suggests that Facebook and Twitter may be able to exempt themselves from the monitoring by making their posts private. But the desire of the US government to watch everyone may still have an unwelcome impact, warns Jennifer Lynch at the Electronic Frontier Foundation, a San Francisco-based advocacy group.

Lynch says that many people post to social media in the expectation that only their friends and followers are reading, which gives them “the sense of freedom to say what they want without worrying too much about recourse,” says Lynch. “But these tools that mine open source data and presumably store it for a very long time, do away with that kind of privacy. I worry about the effect of that on free speech in the US”.

* * *

The BBC reports:

“Social networks are about connecting people with other people – if one person is the target of police monitoring, there will be a dragnet effect in which dozens, even hundreds, of innocent users also come under surveillance” — Gus Hosein, Privacy InternationalThe FBI issued the request three weeks after the US Department of Homeland Security released a separate report into the privacy implications of monitoring social media websites.

It justified the principle of using information that users have provided and not opted to make private.

“Information posted to social media websites is publicly accessible and voluntarily generated. Thus the opportunity not to provide information exists prior to the informational post by the user,” it says.[...]

The London-based campaign group, Privacy International, said it was worried about the consequences of such activities.

“Social networks are about connecting people with other people – if one person is the target of police monitoring, there will be a dragnet effect in which dozens, even hundreds, of innocent users also come under surveillance,” said Gus Hosein, the group’s executive director.

“It is not necessarily the case that the more information law enforcement officers have, the safer we will be.

“Police may well find themselves overwhelmed by a flood of personal information, information that is precious to those it concerns but useless for the purposes of crime prevention.”

* * *

The Fierce Government website reports on ‘refining raw social media into intelligence gold’:

The notion that the future can be predicted by trends expressed in collective social media output is one that has gained increased currency in academic writing. A January analysis (.pdf) published by the Rand Corp. of tweets using the #IranElection hashtag during 2009 and early 2010 found a correlation between appearance of swear words and protests. The study also found a shift that indicated the protest movement was losing momentum when swearing shifted from curses at the Iranian President Mahmoud Ahmadinejad to curses at an opposition figure.

A March 2011 paper published in the Journal of Computational Science (abstract) also posited that movements of the Dow Jones Industrial Average could be predicted to an accuracy of 86.7 percent by changes of national mood reflected in Tweets. According to The Economist, British hedge fund Derwent Capital Markets has licensed the algorithm to guide the investments of a $41 million fund.

Obama’s Faux Populism Sounds Like Bill Clinton’s Faux Populism

Oldspeak:” ‘I’ll admit it: Listening to Barack Obama, I am ready to enlist in his campaign against the feed-the-rich Republicans … until I recall that I once responded in the same way to Bill Clinton’s faux populism. And then I get angry because betrayal by the “good guys” for whom I have ended up voting has become the norm.’ A Corporatist Democrat recycling the same high-flown but ultimately hollow rhetoric of corporate democrat of the past. A brilliant deconstruction of Obama’s faux populist oratory. Obama has mastered the essential political skill of words not matching deeds to devastating effect for many of us. America’s decline began under a Republican, and is currently being shepherded along by a Democrat. Party ‘in power’ changes periodically but the status quo never does. When will people wake up to the reality that their political class has been co-opted via a financial coup d’etat engineered by agents of the transnational corporate network? How many well-paying jobs have to be replaced with poverty wage jobs? How many inalienable rights have to be abrogated? How many small businesses have to be driven out of business? How many people have to be rendered homeless?  How much of our environment has to be destroyed before we see that our social and economic systems are unsustainable and on the brink of collapse?

Related Story

Staring At Empty Pages

By Robert Sheer @ Truthdig:

I’ll admit it: Listening to Barack Obama, I am ready to enlist in his campaign against the feed-the-rich Republicans … until I recall that I once responded in the same way to Bill Clinton’s faux populism. And then I get angry because betrayal by the “good guys” for whom I have ended up voting has become the norm.

Yes, betrayal, because if Obama meant what he said in Tuesday’s State of the Union address about holding the financial industry responsible for its scams, why did he appoint the old Clinton crowd that had legalized those scams to the top economic posts in his administration? Why did he hire Timothy Geithner, who has turned the Treasury Department into a concierge service for Wall Street tycoons?

Why hasn’t he pushed for a restoration of the Glass-Steagall Act, which Clinton’s deregulation reversed? Does the president really believe that the Dodd-Frank slap-on-the-wrist sellout represents “new rules to hold Wall Street accountable, so a crisis like this never happens again”? Can he name one single too-big-to-fail banking monstrosity that has been reduced in size on his watch instead of encouraged to grow ever larger by Treasury and Fed bailouts and interest-free money?

When Obama declared Tuesday evening “no American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas,” wasn’t he aware that Jeffrey Immelt, the man he appointed to head his jobs council, is the most egregious offender? Immelt, the CEO of GE, heads a company with most of its workers employed in foreign countries, a corporation that makes 82 percent of its profit abroad and has paid no U.S. taxes in the past three years.

It was also a bit bizarre for Obama to celebrate Steve Jobs as a model entrepreneur when the manufacturing jobs that the late Apple CEO created are in the same China that elsewhere in his speech the president sought to scapegoat for America’s problems. Apple, in its latest report on the subject, takes pride in attempting to limit the company’s overseas suppliers to a maximum workweek of 60 hours for their horribly exploited employees. Isn’t it weird to be chauvinistically China baiting when that country carries much of our debt?

 

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I’m also getting tired of the exhortations to improve the nation’s schools, certainly a worthy endeavor, but this economic crisis is the result not of high school dropouts as Obama suggested, but rather the corruption of the best and brightest graduates of our elite academies. As Obama well knows from his own trajectory in the meritocracy, which took him from one of the most privileged schools in otherwise educationally depressed Hawaii to Harvard Law, the folks who concocted the mathematical formulas and wrote the laws justifying fraudulent collateralized debt obligations and credit default swaps were his overachieving professors and classmates.

If he doesn’t know that, he should check out the record of Lawrence Summers, the man he picked to guide his economic program and who had been rewarded with the presidency of Harvard after having engineered Clinton’s deregulatory deal with Wall Street.

That is the real legacy of the Clinton years, and it is no surprise that GOP presidential contender Newt Gingrich has been campaigning on his rightful share of it. The international trade agreements that exported good U.S. jobs, the radical financial deregulation that unleashed Wall Street greed, and the free market zealotry of then-Fed Chairman Alan Greenspan, who was reappointed by Clinton, were all part of a deal Clinton made with Gingrich, House speaker at that time.

As Gingrich put it in the first Republican debate in South Carolina: “As speaker … working with President Bill Clinton, we passed a very Reagan-like program, less regulation, lower taxes.” Even the 15 percent tax break that Mitt Romney exploited for his carryover private equity income was a result of the unholy Clinton-Gingrich alliance. Both principals of that alliance were pimps for the financial industry, and that includes Freddie Mac, the for-profit stock-traded housing agency that Clinton coddled while it stoked the Ponzi scheme in housing and that rewarded the former speaker with $1.6 million to $1.8 million in consulting fees.

There were, finally, some bold words in Obama’s speech about helping beleaguered homeowners, but they ring hollow given this administration’s efforts to broker a sweetheart deal between the leading banks and the state attorneys general that would see the banks fined only a pittance for their responsibility in the mortgage meltdown. Obama could have had success demanding mortgage relief if he had made that a condition for bailing out the banks. Now the banksters know he’s firing blanks, and they are placing their bets on their more reliable Republican allies to prevent any significant demand for helping homeowners with their underwater mortgages.

Of course, Romney, Obama’s most likely opponent in the general election, will never challenge the Wall Street hold on Washington, since he is the personification of the vulture capitalism that is the true cause of America’s decline. Obama should shine in comparison with his Republican challenger, but there is little in his State of the Union speech to suggest he will chart a much-needed new course in his second term.

 

How Private For-Profit Online Learning Corporations, Wall Street & “Education Philanthropists” Bought America’s Pubic Schools

Oldspeak:” The hostile take over of Public Education is full swing. Your kids education is the next “bubble”. Children’s education is being viewed as a cash cow to be milked dry by wall street investment bankers and computer magnates via their “Educational Philanthropies”.  America’s Public School system is being outsourced to private profit-driven “education” corporations, with the financial backing of wall street titans like Goldman Sachs & Merrill Lynch, and computer titans Microsoft & Dell. In a trend that is great for business and terrible for children, teachers are being replaced with computers.  And in this age of austerity, with dwindling educations budgets,  less money to pay high-quality and well-trained flesh and blood teachers, teacher  are being fired and ‘e-learning’ is being held up as a viable option for the existential task of  effectively educating our children. Nevermind the fact that the “education” provided by cyberschool companies is nowhere near as effective as that provided in traditional schools with people. And much like what was done during the sub-prime morgage lending bubble, poor people and communities are being exploited. Subsidies slated for free public education are being diverted to private, for-profit “education”. High-powered lobbyists are being employed to push “education reform” legislation that is in benfits everyone but children. Left unasked are other important questions – Where will children learn their social skills? Their respect for elders and authority figures? How to work and play well with others?  Social Atomization is being institutionalized. Divide and conquer has gone digital.. “Profit Is Paramount” “Ignorance Is Strength”

Related Story:

Why Is Public Education Being Outsourced to Online Charter Schools?

By Lee Fang @ The Nation:

If the national movement to “reform” public education through vouchers, charters and privatization has a laboratory, it is Florida. It was one of the first states to undertake a program of “virtual schools”—charters operated online, with teachers instructing students over the Internet—as well as one of the first to use vouchers to channel taxpayer money to charter schools run by for-profits.

But as recently as last year, the radical change envisioned by school reformers still seemed far off, even there. With some of the movement’s cherished ideas on the table, Florida Republicans, once known for championing extreme education laws, seemed to recoil from the fight. SB 2262, a bill to allow the creation of private virtual charters, vastly expanding the Florida Virtual School program, languished and died in committee. Charlie Crist, then the Republican governor, vetoed a bill to eliminate teacher tenure. The move, seen as a political offering to the teachers unions, disheartened privatization reform advocates. At one point, the GOP’s budget proposal even suggested a cut for state aid going to virtual school programs.

Lamenting this series of defeats, Patricia Levesque, a top adviser to former Governor Jeb Bush, spoke to fellow reformers at a retreat in October 2010. Levesque noted that reform efforts had failed because the opposition had time to organize. Next year, Levesque advised, reformers should “spread” the unions thin “by playing offense” with decoy legislation. Levesque said she planned to sponsor a series of statewide reforms, like allowing taxpayer dollars to go to religious schools by overturning the so-called Blaine Amendment, “even if it doesn’t pass…to keep them busy on that front.” She also advised paycheck protection, a unionbusting scheme, as well as a state-provided insurance program to encourage teachers to leave the union and a transparency law to force teachers unions to show additional information to the public. Needling the labor unions with all these bills, Levesque said, allows certain charter bills to fly “under the radar.”

If Levesque’s blunt advice sounds like that of a veteran lobbyist, that’s because she is one. Levesque runs a Tallahassee-based firm called Meridian Strategies LLC, which lobbies on behalf of a number of education-technology companies. She is a leader of a coalition of government officials, academics and virtual school sector companies pushing new education laws that could benefit them.

But Levesque wasn’t delivering her hardball advice to her lobbying clients. She was giving it to a group of education philanthropists at a conference sponsored by notable charities like the Bill and Melinda Gates Foundation and the Michael and Susan Dell Foundation. Indeed, Levesque serves at the helm of two education charities, the Foundation for Excellence in Education, a national organization, and the Foundation for Florida’s Future, a state-specific nonprofit, both of which are chaired by Jeb Bush. A press release from her national group says that it fights to “advance policies that will create a high quality digital learning environment.”

Despite the clear conflict of interest between her lobbying clients and her philanthropic goals, Levesque and her team have led a quiet but astonishing national transformation. Lobbyists like Levesque have made 2011 the year of virtual education reform, at last achieving sweeping legislative success by combining the financial firepower of their corporate clients with the seeming legitimacy of privatization-minded school-reform think tanks and foundations. Thanks to this synergistic pairing, policies designed to boost the bottom lines of education-technology companies are cast as mere attempts to improve education through technological enhancements, prompting little public debate or opposition. In addition to Florida, twelve states have expanded virtual school programs or online course requirements this year. This legislative juggernaut has coincided with a gold rush of investors clamoring to get a piece of the K-12 education market. It’s big business, and getting bigger: One study estimated that revenues from the K-12 online learning industry will grow by 43 percent between 2010 and 2015, with revenues reaching $24.4 billion.

In Florida, only fourteen months after Crist handed a major victory to teachers unions, a new governor, Rick Scott, signed a radical bill that could have the effect of replacing hundreds of teachers with computer avatars. Scott, a favorite of the Tea Party, appointed Levesque as one of his education advisers. His education law expanded the Florida Virtual School to grades K-5, authorized the spending of public funds on new for-profit virtual schools and created a requirement that all high school students take at least one online course before graduation.

“I’ve never seen it like this in ten years,” remarked Ron Packard, CEO of virtual education powerhouse K12 Inc., on a conference call in February. “It’s almost like someone flipped a switch overnight and so many states now are considering either allowing us to open private virtual schools” or lifting the cap on the number of students who can use vouchers to attend K12 Inc.’s schools. Listening to a K12 Inc. investor call, one could mistake it for a presidential campaign strategy session, as excited analysts read down a list of states and predict future victories.

Good for Business; Kids Not So Much

While most education reform advocates cloak their goals in the rhetoric of “putting children first,” the conceit was less evident at a conference in Scottsdale, Arizona, earlier this year.

Standing at the lectern of Arizona State University’s SkySong conference center in April, investment banker Michael Moe exuded confidence as he kicked off his second annual confab of education startup companies and venture capitalists. A press packet cited reports that rapid changes in education could unlock “immense potential for entrepreneurs.” “This education issue,” Moe declared, “there’s not a bigger problem or bigger opportunity in my estimation.”

Moe has worked for almost fifteen years at converting the K-12 education system into a cash cow for Wall Street. A veteran of Lehman Brothers and Merrill Lynch, he now leads an investment group that specializes in raising money for businesses looking to tap into more than $1 trillion in taxpayer money spent annually on primary education. His consortium of wealth management and consulting firms, called Global Silicon Valley Partners, helped K12 Inc. go public and has advised a number of other education companies in finding capital.

Moe’s conference marked a watershed moment in school privatization. His first “Education Innovation Summit,” held last year, attracted about 370 people and fifty-five presenting companies. This year, his conference hosted more than 560 people and 100 companies, and featured luminaries like former DC Mayor Adrian Fenty and former New York City schools chancellor Joel Klein, now an education executive at News Corporation, a recent high-powered entrant into the for-profit education field. Klein is just one of many former school officials to cash out. Fenty now consults for Rosetta Stone, a language company seeking to expand into the growing K-12 market.

As Moe ticked through the various reasons education is the next big “undercapitalized” sector of the economy, like healthcare in the 1990s, he also read through a list of notable venture investment firms that recently completed deals relating to the education-technology sector, including Sequoia and Benchmark Capital. Kleiner Perkins, a major venture capital firm and one of the first to back Amazon.com and Google, is now investing in education technology, Moe noted.

The press release for Moe’s education summit promised attendees a chance to meet a set of experts who have “cracked the code” in overcoming “systemic resistance to change.” Fenty, still recovering from his loss in the DC Democratic primary, urged attendees to stand up to the teachers union “bully.” Jonathan Hage, CEO of Charter Schools USA, likened the conflict to war, according to a summary posted on the conference website. “There’s an air game,” said Hage, “but there’s also a ground game going on.” “Investors are going to have to support” candidates and “push back against the pushback.” Carlos Watson, a former cable news host now working as an investment banker for Goldman Sachs specializing in for-profit education, guided a conversation dedicated simply to the politics of reform.

Sponsors of the event ranged from various education reform groups funded by hedge-fund managers, like the nonprofit Education Reform Now, to ABS Capital, a private equity firm with a stake in education-technology companies like Teachscape. At smaller breakout sessions, education enterprises made their pitches to potential investors.

Another sponsor, a group called School Choice Week, was launched last year as a public relations gimmick to take advantage of the opportunity for rapid education reforms. Although it is billed as a network of students and parents, School Choice Week is one of the many corporate-funded tactics to press virtual school reforms. The first School Choice Week campaign push earlier this year featured highly produced press packets, sample letters to the editor, a sign in Times Square and rallies for virtual and charter schools organized with help from the Koch brothers’ Americans for Prosperity. The blitz got positive press coverage, providing “grassroots” cover for newly elected politicians who made school privatization their first priority.

A combination of factors has made this year what Moe calls an “inflection point” in the march toward public school privatization. For one thing, recession-induced fiscal crises and austerity have pressured states to cut spending. In some cases, as in Florida, where educating students at the Florida Virtual School costs nearly $2,500 less than at traditional schools, such reform has been sold as a budget fix. At the same time, the privatization push has gone hand in hand with the ratcheting up of attacks on teachers unions by partisan groups, like Karl Rove’s American Crossroads and Americans for Prosperity, seeking to weaken the union-backed Democrats in the 2012 election. All of this has set the stage for education industry lobbyists to achieve an unprecedented expansion in for-profit elementary through high school education.

From Idaho to Indiana to Florida, recently passed laws will radically reshape the face of education in America, shifting the responsibility of teaching generations of Americans to online education businesses, many of which have poor or nonexistent track records. The rush to privatize education will also turn tens of thousands of students into guinea pigs in a national experiment in virtual learning—a relatively new idea that allows for-profit companies to administer public schools completely online, with no brick-and-mortar classrooms or traditional teachers.

* * *

Like many “education entrepreneurs,” Moe remains a player in the education reform movement, pushing policies that have the potential to benefit his clients. In addition to advising prominent politicians like Senator John McCain, Moe is a board member of the Center for Education Reform, a pro-privatization think tank that issues policy papers and ads to influence the debate. Earlier this year, the group dropped $70,000 on an ad campaign in Pennsylvania comparing those who oppose a new measure to expand vouchers to segregationist Alabama Governor George Wallace, who blocked African-American children from entering white schools.

Moe isn’t the only member of the Center for Education Reform with a profound conflict of interest. CER president Jeanne Allen doubles as the head of TAC Public Affairs, a government relations firm that has represented several top education for-profits. Allen, whose clients have included Kaplan Education and Charter Schools USA, served as transition adviser to Pennsylvania Governor Tom Corbett on education reform.

Corbett, a Republican who rode the Tea Party election wave in 2010, supports a major voucher expansion that is working its way through the state legislature. The expansion would be a windfall for companies like K12 Inc., which currently operates one Pennsylvania school under the limited charter law on the books. According to disclosures reported in Business Week, Pennsylvania’s Agora Cyber Charter School—K12 Inc.’s online school, which allows students to take all their courses at home using a computer—generated $31.6 million for K12 Inc. in the past academic year.

Thirteen other states have enacted laws to expand or initiate so-called school choice programs this year. Indiana Governor Mitch Daniels has pushed the hardest, enacting a law that removes the cap on the number of charter schools in his state, authorizes all universities to register charters and expands an existing voucher program in the state for students to attend private and charter schools (in some cases managed by for-profit companies). Critics note that Daniels’s law allows public money to flow to religious institutions as well. Twenty-seven other states, in addition to Pennsylvania, have voucher expansion laws pending. And states like Florida are embracing tech-friendly education reform to require that students take online courses to graduate. In Idaho this November, the state board of education approved a controversial plan to require at least two online courses for graduation.

“We think that’s so important because every student, regardless of what they do after high school, they’ll be learning online,” said Tom Vander Ark, a prominent online education advocate, on a recently distributed video urging the adoption of online course requirements. Vander Ark, a former executive director of education at the influential Bill and Melinda Gates Foundation, now lobbies all over the country for the online course requirement. Like Moe, he keeps one foot in the philanthropic world and another in business. He sits on the board of advisors of Democrats for Education Reform and is partner to an education-tech venture capital company, Learn Capital. Learn Capital counts AdvancePath Academics, which offers online coursework for students at risk of dropping out, as part of its investment portfolio. When Vander Ark touts online course requirements, it is difficult to discern whether he is selling a product that could benefit his investments or genuinely believes in the virtue of the idea.

To be sure, some online programs have potential and are necessary in areas where traditional resources aren’t available. For instance, online AP classes serve rural communities without access to qualified teachers, and there are promising efforts to create programs that adapt to the needs of students with special learning requirements. But by and large, there is no evidence that these technological innovations merit the public resources flowing their way. Indeed, many such programs appear to be failing the students they serve.

A recent study of virtual schools in Pennsylvania conducted by the Center for Research on Education Outcomes at Stanford University revealed that students in online schools performed significantly worse than their traditional counterparts. Another study, from the University of Colorado in December 2010, found that only 30 percent of virtual schools run by for-profit organizations met the minimum progress standards outlined by No Child Left Behind, compared with 54.9 percent of brick-and-mortar schools. For White Hat Management, the politically connected Ohio for-profit operating both traditional and virtual charter schools, the success rate under NCLB was a mere 2 percent, while for schools run by K12 Inc., it was 25 percent. A major review by the Education Department found that policy reforms embracing online courses “lack scientific evidence” of their effectiveness.

“Why are our legislators rushing to jump off the cliff of cyber charter schools when the best available evidence produced by independent analysts show that such schools will be unsuccessful?” asked Ed Fuller, an education researcher at Pennsylvania State University, on his blog.

The frenzy to privatize America’s K-12 education system, under the banner of high-tech progress and cost-saving efficiency, speaks to the stunning success of a public relations and lobbying campaign by industry, particularly tech companies. Because of their campaign spending, education-tech interests are major players in elections. In 2010, K12 Inc. spent lavishly in key races across the country, including a last-minute donation of $25,000 to Idahoans for Choice in Education, a political action committee supporting Tom Luna, a self-styled Tea Party school superintendent running for re-election. Since 2004, K12 Inc. alone has spent nearly $500,000 in state-level direct campaign contributions, according to the National Institute on Money in State Politics. David Brennan, Chairman of White Hat Management, became the second-biggest Ohio GOP donor, with more than $4.2 million in contributions in the past decade.

The Alliance for School Choice, a national education reform group, set up PACs in several states to elect state lawmakers. According to Wisconsin Democracy Campaign, American Federation for Children spent $500,000 in media in the lead-up to Wisconsin’s recall elections. AFC shares leaders, donors, and a street address with ASC. Bill Oberndorf, one of the main donors to the group, had been associated with Voyager Learning, an online education company, for years. A few months ago, Cambium Learning, the parent company of Voyager, paid Oberndorf’s investment firm $4.9 million to buy back Oberndorf’s stock. Cambium currently offers a fleet of supplemental education tools for school districts. With the recent acquisition of Class.com, a smaller online learning business, the company announced its entry into the virtual charter school and online course market.

Allies of the Right

Lobbyists for virtual school companies have also embedded themselves in the conservative infrastructure. The International Association for Online Learning (iNACOL), the trade association for EdisonLearning, Connections Academy, K12 Inc., American Virtual Academy, Apex Learning and other leading virtual education companies, is a case in point. A former Bush appointee at the Education Department, iNACOL president Susan Patrick traverses right-leaning think tanks spreading the gospel of virtual schools. In the past year, she has addressed the Atlas Economic Research Foundation, a group dedicated to setting up laissez-faire nonprofits all over the world, as well as the American Enterprise Institute in Washington.

Two pivotal conservative organizations have helped Patrick in her campaigns for virtual schools: the American Legislative Exchange Council and the State Policy Network. SPN nurtures and establishes state-based policy and communication nonprofits with a right-wing bent. ALEC, the thirty-eight-year-old conservative nonprofit, similarly coordinates a fifty-state strategy for right-wing policy. Special task forces composed of corporate lobbyists and state lawmakers write “template” legislation [see John Nichols, “ALEC Exposed,” August 1/8]. Since 2005, ALEC has offered a template law called “The Virtual Public Schools Act” to introduce online education. Mickey Revenaugh, an executive at virtual-school powerhouse Connections Learning, co-chairs the education policy–writing department of ALEC.

At SPN’s annual conference in Cleveland last year, held two months before the midterm elections, the think tank network adopted a new push for education reform, specifically embracing online technology and expanding vouchers. Patrick opened the event and led a session about virtual schools with Anthony Kim, president of the virtual-school business Education Elements.

SPN has faced accusations before that it is little more than a coin-operated front for corporations. For instance, SPN and its affiliates receive money from polluters, including infamous petrochemical giant Koch Industries, allegedly in exchange for aggressive promotion of climate denial theories. But SPN’s conference had less to do with policy than with tactics. Kyle Olson, a Republican operative infamous in Michigan and other states for his confrontational attacks on unionized teachers, gave a presentation on labor reform in K-12 education. Stanford Swim, heir to a Utah-based investment fortune and head of a traditional-values foundation, ran a workshop at the conference on creating viral videos to advance the cause. He said policy papers wouldn’t work. Tell your scholars, “Sorry, this isn’t a white paper,” Swim advised. “You gotta go there,” he continued, “and it’s because that’s where the audience is.” “If it’s vulgar, so what?” he added.

Since the conference, SPN’s state affiliates have taken a lead role in pushing virtual schools. Several of its state-based affiliates, like the Buckeye Institute in Ohio, set up websites claiming that unions—the only real opposition to ending collective bargaining and the expansion of charter school reforms—led to overpaid teachers and budget deficits. In Wisconsin, the MacIver Institute’s “news crew” laid the groundwork for Governor Walker’s assault on collective bargaining by creating news reports denouncing protesters and promoting the governor. In March, while busting the teachers unions in his state, Walker lifted the cap on virtual schools and removed the program’s income requirements.

State Representative Robin Vos, the Wisconsin state chair for ALEC, sponsored the bill codifying Walker’s radical expansion of online, for-profit schools. Vos’s bill not only lifts the cap but also makes new, for-profit virtual charters easier to establish. As the Center for Media and Democracy, a Madison-based liberal watchdog, notes, the bill closely resembles legislative templates put forward by ALEC.

Although SPN’s unique contribution to the debate has been clever web videos and online smear sites, the group’s affiliates have also continued the traditional approach of policy papers. In Washington State, the Freedom Foundation published “Online Learning 101: A Guide to Virtual Public Education in Washington”; Nebraska’s Platte Institute released “The Vital Need for Virtual Schools in Nebraska”; and the Sutherland Institute, a Utah-based SPN affiliate, equipped lawmakers with a guide called “Thinking Outside the Building: Online Education.” SPN think tanks in Maine, Maryland and other states have pressed virtual school reforms. Patrick visited SPN state groups and gave pep talks about how to sell the issue to lawmakers.

Meanwhile, ALEC has continued to slip laws written by education-tech lobbyists onto the books. In Tennessee, Republican State Representative Harry Brooks didn’t even bother changing the name of ALEC’s Virtual Public Schools Act before introducing it as his own legislation. Asked by the Knoxville News Sentinel’s Tom Humphrey where he got the idea for the bill, Brooks readily admitted that a K12 Inc. lobbyist helped him draft it. Governor Bill Haslam signed Brooks’s bill into law in May. The statute allows parents to apply nearly every dollar the state typically spends per pupil, almost $6,000 in most areas, to virtual charter schools, as long as they are authorized by the state.

SPN’s fall 2010 conference featured the man perhaps happiest with the explosion in virtual education: Jeb Bush. “I have a confession to make,” he said with grin. “I am a real policy geek, and this is like the epicenter of geekdom.” Bush shared his experiences initiating some of the nation’s first for-profit and virtual charter school reforms as the governor of Florida, acknowledging his policy ideas came from some in the room. (The local SPN affiliate in Tallahassee is the James Madison Institute.)

Bush: Man Behind the Virtual Curtain

Jeb Bush campaigned vigorously in 2010 to expand such reforms, with tremendous success. About a month after the election, he unveiled his road map for implementing a far-reaching ten-point agenda for virtual schools and online coursework. Former West Virginia Governor Bob Wise, a Democrat, has barnstormed the country to encourage lawmakers to adopt Bush’s plan, which calls for the permanent financing of education-technology reforms, among other changes. In one promotional video, Wise says it is “not only about the content” of the online courses but the “process” of students becoming acquainted with learning on the Internet.

The key pillar of Bush’s plan is to make sure virtual education isn’t just a new option for taxpayer money but a requirement. And several states, like Florida, have already adopted online course requirements. As Idaho Republicans faced a public referendum on their online course requirement rule last summer, Bush arrived in the state to show his support. “Implemented right, you’re going to see rising student achievement,” said Bush, praising Idaho Governor Butch Otter and school superintendent Tom Luna, who was elected with campaign donations from the online-education industry. Bush also claimed that making high school students take online classes would “put Idaho on the map” as a “digital revolution takes hold.” Bush was in Michigan in June to testify for Governor Rick Snyder’s suite of education reform ideas, which include uncapped expansion of virtual schools, and he was back in the state in July to continue to press for reforms.

In August, at ALEC’s annual conference in New Orleans, the education task force officially adopted Bush’s ten elements agenda. Mickey Revenaugh, the virtual school executive overseeing the committee, presided over the vote endorsing the measure. But when does Bush’s advocacy, typically reported in the press as the work of a former governor with education experience advising the new crop of Republicans, cross the threshold into corporate lobbying?

The nonprofit behind this digital push, Bush’s Foundation for Excellence in Education, is funded by online learning companies: K12 Inc., Pearson (which recently bought Connections Education), Apex Learning (a for-profit online education company launched by Microsoft co-founder Paul Allen), Microsoft and McGraw-Hill Education among others. The advisory board for Bush’s ten digital elements agenda reads like a Who’s Who of education-technology executives, reformers, bureaucrats and lobbyists, including Michael Stanton, senior vice president for corporate affairs at Blackboard; Karen Cator, director of technology for the Education Department; Jaime Casap, a Google executive in charge of business development for the company’s K-12 division; Shafeen Charania, who until recently served as marketing director of Microsoft’s education products department; and Bob Moore, a Dell executive in charge of “facilitating growth” of the computer company’s K-12 education practice.

Like other digital reform advocates, the Bush nonprofit is also supported by Microsoft founder Bill Gates’s foundation. The fact that a nonprofit that receives funding from both the Gates Foundation and Microsoft pressures states to adopt for-profit education reforms may raise red flags with some in the philanthropy community, as Microsoft, too, has moved into the education field. The company has tapped into the K-12 privatization expansion by supplying a range of products, from traditional Windows programs to servers and online coursework platforms. It also contracts with Florida Virtual School to provide cloud computer solutions. Similarly, Dell is seeking new opportunities in the K-12 market for its range of desktop products, while the Michael and Susan Dell Foundation, the charitable nonprofit founded by Dell’s CEO, promotes neoliberal education reforms.

Through Bush, education-technology companies have found a shortcut to encourage states to adopt e-learning reforms. Take his yearly National Summit on Education Reform, sponsored by the Foundation for Excellence in Education.

At the most recent summit, held in San Francisco in mid-October, a group of more than 200 state legislators and state education department officials huddled in a ballroom over education-technology strategy. Rich Crandall, a state senator from Arizona, said to hearty applause that he had developed a local think tank to support the virtual school reforms he helped usher into law. Toward the end of the discussion, Vander Ark, acting as an emcee, walked around the room acknowledging lawmakers who had recently passed pro–education tech laws this year. He handed the microphone to Kelli Stargel, a state representative from Florida, who stood up and boasted of creating “virtual charter schools, so we can have innovation in our state.”

Throughout the day, lawmakers mingled with education-technology lobbyists from leading firms, like Apex Learning and K12 Inc. Some of the distance learning reforms were taught in breakout sessions, like one called “Don’t Let a Financial Crisis Go to Waste,” an hourlong event that encouraged lawmakers to use virtual schools as a budget-cutting measure. Mandy Clark, a staffer with Bush’s foundation, walked around handing out business cards, offering to e-mail sample legislation to legislators.

The lobbying was evident to anyone there. But for some of those present, Bush didn’t go far enough. David Byer, a senior manager with Apple in charge of developing education business for the company, groaned and leaned over to another attendee sitting at the edge of the room after a lunch session. “You have this many people together, why can’t you say, ‘Here are the ten elements, here are some sample bills’?” said Byer to David Stevenson, who nodded in agreement. Stevenson is a vice president of News Corporation’s education subsidiary, Wireless Generation, an education-technology firm that specializes in assessment tools. It was just a year ago that News Corp. announced its intention to enter the for-profit K-12 education industry, which Rupert Murdoch called “a $500 billion sector in the US alone that is waiting desperately to be transformed.”

As attendees stood up to leave the hall, the phalanx of lobbyists surrounding the room converged, buttonholing legislators and school officials. On a floor above the main hall, an expo center had been set up, with companies like McGraw-Hill, Connections Academy, K12 Inc., proud sponsors of the event, providing information on how to work with politicians to make education technology a reality.

Patricia Levesque, a Bush staffer speaking at the summit and the former governor’s right hand when it comes to education reform, does not draw a direct salary from Bush’s nonprofit despite the fact that she is listed as its executive director, and tax disclosures show that she spends about fifty hours a week at the organization. Instead, her lobbying firm, Meridian Strategies, supplies her income. The Foundation for Florida’s Future, another Bush nonprofit, contracts with Meridian, as do online technology companies like IQ-ity Innovation, which paid her up to $20,000 for lobbying services at the beginning of this year. The unorthodox arrangement allows donors to Bush’s group to avoid registering actual lobbyists while using operatives like Levesque to influence legislators and governors on education technology.

Levesque’s contract with IQ-ity raises questions about Bush’s foundation work. As Mother Jones recently reported, the founder of IQ-ity, William Lager, also founded an education company with a poor track record. Lager’s other education firm, Electronic Classroom of Tomorrow, is the largest provider of virtual schools in Ohio. ECOT schools have consistently underperformed; though the company serves more than 10,000 children, its graduation rate has never broken 40 percent. The company was fined for billing the state to serve more than 2,000 students in one month, when only seven children logged on during the same time period. Nevertheless, after Levesque spent at least two years as a registered lobbyist for Lager’s firm, Bush traveled to Ohio to give the commencement speech for ECOT. “ECOT proves a glimpse into what’s possible,” Bush said with pride, “by harnessing the power of technology.”

* * *

Levesque is no ordinary lobbyist. She is credited with encouraging the type of bare-knuckle politics now common in the wider education-reform movement. In an audio file obtained by The Nation, she and infamous anti-union consultant Richard Berman outlined a strategy in October 2010 for sweeping the nation with education reforms. The two spoke at the Philanthropy Roundtable, a get-together of major right-wing foundations. Lori Fey, a representative of the Michael Dell Foundation, moderated the panel discussion.

Rather than “intellectualize ourselves into the [education reform] debate…is there a way that we can get into it at an emotional level?” Berman asked. “Emotions will stay with people longer than concepts.” He then answered his own question: “We need to hit on fear and anger. Because fear and anger stays with people longer. And how you get the fear and anger is by reframing the problem.” Berman’s glossy ads, which have run in Washington, DC, and New Jersey, portray teachers unions as schoolyard bullies. One spot even seems to compare teachers to child abusers. Although Berman does not reveal his donors, he made clear in his talk that the foundations in the room were supporting his campaign.

Levesque ended the strategy discussion with a larger strategic question. She pointed to the example of Facebook founder Mark Zuckerberg donating $100 million to Newark schools. She then asked the crowd to imagine instead raising $100 million for political races where we “could sway a couple of seats to have more education reform.” “Just shifting a little bit of your focus,” she added, noting that new politicians could have a greater impact.

Levesque’s ask has become reality. According to author Steven Brill, ex–DC school chancellor Michelle Rhee’s new group, StudentsFirst, raised $100 million within a few months of Levesque’s remarks. Rhee’s donors include Rupert Murdoch, philanthropist Eli Broad and Home Depot founder Ken Langone. Rhee’s group has pledged to spend more than $1 billion to bring for-profit schools, including virtual education, to the entire country by electing reform-friendly candidates and hiring top-notch state lobbyists.

A day before he opened his education reform conference to the media recently, Bush hosted another education meeting. This event, a private affair in the Palace Hotel, was a reconvening of investors and strategists to plan the next leg of the privatization campaign. Michael Moe, Susan Patrick, Tom Vander Ark and other major players were invited. I waited outside the event, trying to get what information I could. I asked Mayor Fenty how I could get in. “Just crash in, come on in,” he laughed, adding, “so what company are you with?” When he learned that I was a reporter, he shook his head. “Oh, nah, you’re not welcome, then.”

An invitation had billed the exclusive gathering as a chance for “philanthropists and venture capitalists” to figure out how to “leverage each other’s strengths”—a concise way to describe how for-profit virtual school companies are using philanthropy as a Trojan horse.

Obama’s New Chief Of Staff Jack Lew Is Former Citigroup COO; Heaviliy Invested & Made Millions On Bets Housing Market Would Collapse

Oldspeak: “Another Clinton-era retread and Wall Street acolyte hired by Obama. Oh and he made millions off of millions of Americans being rendered homeless. It’s no wonder there’s been no significant regulation imposed on Wall Street since the last global economic meltdown it contributed to. Pro-deregulation, de-facto Wall Street lobbyists surround the President and are writing ‘financial regulation’ legislation on Capitol Hill. The conditions for yet another meltdown exist right now, as Wall Street and it’s consorts around the world are hitting the casinos that double as our economies HARD. If you think the last meltdown was bad, The next one’s gonna be a DOOSY.” “Profit Is Paramount”

 

By Truthdig:

Jack Lew is a liberal who worked for Speaker Tip O’Neill and studied under beloved progressive Sen. Paul Wellstone, but he was also the chief operating officer of a Citigroup unit and doesn’t fault deregulation for the shoddy economy.

The president says Lew was chosen by his predecessor, William Daley, who offered a surprise resignation after one year on the job.

Shahien Nasiripour of The Huffington Post reported in 2010 that Lew testified to the Senate that he did not believe deregulation caused the financial meltdown:

Lew, a former OMB chief for President Bill Clinton, told the panel that “the problems in the financial industry preceded deregulation,” and after discussing those issues, added that he didn’t “personally know the extent to which deregulation drove it, but I don’t believe that deregulation was the proximate cause.”

Lew, who headed President Clinton’s Office of Management and Budget during the period when Clinton signed off on the major deregulation of Wall Street and the telecommunications industry, made a fortune while at Citi. That same Huffington Post report notes that his 2009 bonus alone amounted to nearly a million dollars.

When he announced his new chief of staff, Obama declared, “Jack’s economic advice has been invaluable and he has my complete trust, both because of his mastery of the numbers, but because of the values behind those numbers.”

William Daley Resigns As White House Chief of Staff

By Democracy Now:

In a major shakeup inside the Obama administration, White House chief of staff William Daley announced his resignation Monday just over a year after taking the position. He will be replaced by Jack Lew, head of the Office of Management and Budget. President Obama praised Jack Lew’s public service.

President Obama: “Jack’s economic advice has been invaluable and he has my complete trust. Both because of his mastery of the numbers, but because of the values behind those numbers, ever since he began his career in public service as a top aide to Speaker Tip O’Neil, Jack has fought an America were hard work and responsibility pay off. A place where everybody gets a fair shot, everybody does their fair share, and everybody plays by the same rules. And that belief is reflected in every decision that Jack makes.”

After serving as budget director in the Clinton administration, Lew became chief operating officer of Citigroup Alternative Investments in 2008. The Progressive Change Campaign Committee criticized Obama for selecting Lew because his unit at Citigroup heavily invested in a hedge fund that bet on the housing market to collapse.