"In a time of universal deceit telling the truth is a revolutionary act." -George Orwell

Posts Tagged ‘International Banking Cartels’

Syrian “Intervention”: Making The World Safe For Banksters

In Uncategorized on September 10, 2013 at 1:20 pm

Oldspeak: “D’oh! U.S. Secretary of State John Kerry may have royally screwed the pooch on the war plan by saying”that Bashar al-Assad, the Syrian president, could avoid strikes by agreeing to give up his chemical weapons. “He could turn over every single bit of his chemical weapons to the international community in the next week — turn it over, all of it, without delay and allow the full and total accounting,” . He inadvertently gave the Syrians an out! The Russians, eager to protect one of their last remaining client states in the middle east, jumped on the opportunity to avoid regime change, by making the Syrians agree to give up their chemical weapons ASAP and the Syrians have “welcomed it”. So now the warmongers have to pump their brakes and possibly halt the escalation of their proxy war with the Russians. One has to wonder why the Nobel Peace Prize winner has been soooo hot to go to war on flimsy intelligence and amidst reports that both sides are guilty of war crimes? All for bombing, with detailed, documented, technically compliant & publicly available reports of atrocities committed by Syrian rebels, including releases of chemical weapons?! Why is bombing Syria an option after an alleged, unconfirmed and still being investigated Syrian government chemical weapons release, but not after a confirmed report of rebel chemical weapons release, known of since APRIL!? Greg Palast and Ellen Hodges Brown may have uncovered the answer:

Greg Palast posted evidence of a secret late-1990s plan devised by Wall Street and U.S. Treasury officials to open banking to the lucrative derivatives business. To pull this off required the relaxation of banking regulations not just in the US but globally. The vehicle to be used was the Financial Services Agreement of the World Trade Organization. The “end-game” would require not just coercing support among WTO members but taking down those countries refusing to join. Some key countries remained holdouts from the WTO, including Iraq, Libya, Iran and Syria. In these Islamic countries, banks are largely state-owned; and “usury” – charging rent for the “use” of money – is viewed as a sin, if not a crime. That puts them at odds with the Western model of rent extraction by private middlemen. Publicly-owned banks are also a threat to the mushrooming derivatives business, since governments with their own banks don’t need interest rate swaps, credit default swaps, or investment-grade ratings by private rating agencies in order to finance their operations….

Countries laboring under the yoke of an extractive private banking system are being forced into “structural adjustment” and austerity by their unrepayable debt. But some countries have managed to escape. In the Middle East, these are the targeted “rogue nations.” Their state-owned banks can issue the credit of the state on behalf of the state, leveraging public funds for public use without paying a massive tribute to private middlemen. Generous state funding allows them to provide generously for their people.

Like Libya and Iraq before they were embroiled in war, Syria provides free education at all levels and free medical care. It also provides subsidized housing for everyone (although some of this has been compromised by adoption of an IMF structural adjustment program in 2006 and the presence of about 2 million Iraqi and Palestinian refugees). Iran too provides nearly free higher education and primary health care.

Like Libya and Iraq before takedown, Syria and Iran have state-owned central banks that issue the national currency and are under government control. Whether these countries will succeed in maintaining their financial sovereignty in the face of enormous economic, political and military pressure remains to be seen.” –Ellen Hodges Brown

So no, this war is not about preventing the use of chemical weapons by the Syrian government. It’s about money. Specifically unregulated  and private gambling with other people’s money, then forcing them to pay when the gamble goes bad. It’s about aggressively continuing the relentless march of  Really Existing Capitalist Democracy around the world. Everything privatized. All under corprocratic control and surveillance. A globally controlled debt creation & extraction system, that no one can avoid paying tribute to; religion be damned. Oh, and securing Syria’s oil and routes for gas pipelines. -OSJ

By Ellen Hodges Brown @ Web Of Debt:

The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.

— Prof. Caroll Quigley, Georgetown University, Tragedy and Hope (1966)

Iraq and Libya have been taken out, and Iran has been heavily boycotted. Syria is now in the cross-hairs. Why? Here is one overlooked scenario. 

In an August 2013 article titled “Larry Summers and the Secret ‘End-game’ Memo,” Greg Palast posted evidence of a secret late-1990s plan devised by Wall Street and U.S. Treasury officials to open banking to the lucrative derivatives business. To pull this off required the relaxation of banking regulations not just in the US but globally. The vehicle to be used was the Financial Services Agreement of the World Trade Organization.

The “end-game” would require not just coercing support among WTO members but taking down those countries refusing to join. Some key countries remained holdouts from the WTO, including Iraq, Libya, Iran and Syria. In these Islamic countries, banks are largely state-owned; and “usury” – charging rent for the “use” of money – is viewed as a sin, if not a crime. That puts them at odds with the Western model of rent extraction by private middlemen. Publicly-owned banks are also a threat to the mushrooming derivatives business, since governments with their own banks don’t need interest rate swaps, credit default swaps, or investment-grade ratings by private rating agencies in order to finance their operations.

Bank deregulation proceeded according to plan, and the government-sanctioned and -nurtured derivatives business mushroomed into a $700-plus trillion pyramid scheme. Highly leveraged, completely unregulated, and dangerously unsustainable, it collapsed in 2008 when investment bank Lehman Brothers went bankrupt, taking a large segment of the global economy with it. The countries that managed to escape were those sustained by public banking models outside the international banking net.

These countries were not all Islamic. Forty percent of banks globally are publicly-owned. They are largely in the BRIC countries—Brazil, Russia, India and China—which house forty percent of the global population. They also escaped the 2008 credit crisis, but they at least made a show of conforming to Western banking rules. This was not true of the “rogue” Islamic nations, where usury was forbidden by Islamic teaching. To make the world safe for usury, these rogue states had to be silenced by other means. Having failed to succumb to economic coercion, they wound up in the crosshairs of the powerful US military.

Here is some data in support of that thesis.

The End-game Memo

In his August 22nd article, Greg Palast posted a screenshot of a 1997 memo from Timothy Geithner, then Assistant Secretary of International Affairs under Robert Rubin, to Larry Summers, then Deputy Secretary of the Treasury. Geithner referred in the memo to the “end-game of WTO financial services negotiations” and urged Summers to touch base with the CEOs of Goldman Sachs, Merrill Lynch, Bank of America, Citibank, and Chase Manhattan Bank, for whom private phone numbers were provided.

The game then in play was the deregulation of banks so that they could gamble in the lucrative new field of derivatives. To pull this off required, first, the repeal of Glass-Steagall, the 1933 Act that imposed a firewall between investment banking and depository banking in order to protect depositors’ funds from bank gambling. But the plan required more than just deregulating US banks. Banking controls had to be eliminated globally so that money would not flee to nations with safer banking laws. The “endgame” was to achieve this global deregulation through an obscure addendum to the international trade agreements policed by the World Trade Organization, called the Financial Services Agreement. Palast wrote:

Until the bankers began their play, the WTO agreements dealt simply with trade in goods–that is, my cars for your bananas.  The new rules ginned-up by Summers and the banks would force all nations to accept trade in “bads” – toxic assets like financial derivatives.

Until the bankers’ re-draft of the FSA, each nation controlled and chartered the banks within their own borders.  The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products.”

And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.

The job of turning the FSA into the bankers’ battering ram was given to Geithner, who was named Ambassador to the World Trade Organization.

WTO members were induced to sign the agreement by threatening their access to global markets if they refused; and they all did sign, except Brazil. Brazil was then threatened with an embargo; but its resistance paid off, since it alone among Western nations survived and thrived during the 2007-2009 crisis. As for the others:

The new FSA pulled the lid off the Pandora’s box of worldwide derivatives trade.  Among the notorious transactions legalized: Goldman Sachs (where Treasury Secretary Rubin had been Co-Chairman) worked a secret euro-derivatives swap with Greece which, ultimately, destroyed that nation.  Ecuador, its own banking sector de-regulated and demolished, exploded into riots.  Argentina had to sell off its oil companies (to the Spanish) and water systems (to Enron) while its teachers hunted for food in garbage cans.  Then, Bankers Gone Wild in the Eurozone dove head-first into derivatives pools without knowing how to swim–and the continent is now being sold off in tiny, cheap pieces to Germany.

The Holdouts

That was the fate of countries in the WTO, but Palast did not discuss those that were not in that organization at all, including Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran. These seven countries were named by U.S. General Wesley Clark (Ret.) in a 2007 “Democracy Now” interview as the new “rogue states” being targeted for take down after September 11, 2001. He said that about 10 days after 9-11, he was told by a general that the decision had been made to go to war with Iraq. Later, the same general said they planned to take out seven countries in five years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran.

What did these countries have in common? Besides being Islamic, they were not members either of the WTO or of the Bank for International Settlements (BIS). That left them outside the long regulatory arm of the central bankers’ central bank in Switzerland. Other countries later identified as “rogue states” that were also not members of the BIS included North Korea, Cuba, and Afghanistan.

The body regulating banks today is called the Financial Stability Board (FSB), and it is housed in the BIS in Switzerland. In 2009, the heads of the G20 nations agreed to be bound by rules imposed by the FSB, ostensibly to prevent another global banking crisis. Its regulations are not merely advisory but are binding, and they can make or break not just banks but whole nations. This was first demonstrated in 1989, when the Basel I Accord raised capital requirements a mere 2%, from 6% to 8%. The result was to force a drastic reduction in lending by major Japanese banks, which were then the world’s largest and most powerful creditors. They were undercapitalized, however, relative to other banks. The Japanese economy sank along with its banks and has yet to fully recover.

Among other game-changing regulations in play under the FSB are Basel III and the new bail-in rules. Basel III is slated to impose crippling capital requirements on public, cooperative and community banks, coercing their sale to large multinational banks.

The “bail-in” template was first tested in Cyprus and follows regulations imposed by the FSB in 2011. Too-big-to-fail banks are required to draft “living wills” setting forth how they will avoid insolvency in the absence of government bailouts. The FSB solution is to “bail in” creditors – including depositors – turning deposits into bank stock, effectively confiscating them.

The Public Bank Alternative

Countries laboring under the yoke of an extractive private banking system are being forced into “structural adjustment” and austerity by their unrepayable debt. But some countries have managed to escape. In the Middle East, these are the targeted “rogue nations.” Their state-owned banks can issue the credit of the state on behalf of the state, leveraging public funds for public use without paying a massive tribute to private middlemen. Generous state funding allows them to provide generously for their people.

Like Libya and Iraq before they were embroiled in war, Syria provides free education at all levels and free medical care. It also provides subsidized housing for everyone (although some of this has been compromised by adoption of an IMF structural adjustment program in 2006 and the presence of about 2 million Iraqi and Palestinian refugees). Iran too provides nearly free higher education and primary health care.

Like Libya and Iraq before takedown, Syria and Iran have state-owned central banks that issue the national currency and are under government control. Whether these countries will succeed in maintaining their financial sovereignty in the face of enormous economic, political and military pressure remains to be seen.

As for Larry Summers, after proceeding through the revolving door to head Citigroup, he became State Senator Barack Obama’s key campaign benefactor. He played a key role in the banking deregulation that brought on the current crisis, causing millions of US citizens to lose their jobs and their homes. Yet Summers is President Obama’s first choice to replace Ben Bernanke as Federal Reserve Chairman. Why? He has proven he can manipulate the system to make the world safe for Wall Street; and in an upside-down world in which bankers rule, that seems to be the name of the game.

Ellen Brown is an attorney in Los Angeles and the author of 11 books. In Web of Debt: The Shocking Truth about Our Money System and How We Can Break Free, she shows how a private banking cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Read other articles by Ellen, or visit Ellen’s website.

 

 

 

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The Struggle To Save Our Planet Heats Up

In Uncategorized on April 25, 2013 at 1:46 pm

Adapting to Climate ChangeOldspeak: “To get to the root of the issue, it becomes necessary to analyze the whole economic system of production and exchange of goods and services—that is, capitalism. Only by doing this can we hope to formulate an effective strategy to combat climate change and thereby recognize that ecological and social justice are inseparably connected to each other, via an organized, grassroots and global challenge to the capitalist social order…

One doesn’t need to be an anti-capitalist to take part in this struggle, but one does need to recognize that unless the pendulum of social power swings back toward the working people in the U.S. and around the world, and that limits and regulations are placed on the activities of corporate power, we have no hope of saving our world. This struggle is not really about technology or which renewable energy models should be deployed or whether this or that politician or this corporation or that CEO is more or less evil than the other. It’s not about things or people at all—it’s about relationships. It’s about democracy, which is itself about social power, and the relationships it presumes.

The power of the oceans, the power of scientific rationality, the power of the tides and hurricane-force winds are self-evidently not enough to persuade capitalists to act. The only force strong enough to do that is the organized force of the people. We must take the place of gravity to pull the pendulum of contending class forces—wrenched rightward by 30 years of neoliberalism—back toward our side.” –Chris Williams.

YES! The root of the issue is capitalism. We have to stop nibbling around the edges. We have to recognize that capitalism in its current globalized and unrestrained form is fundamentally at odds with Democracy, human and natural rights. We have to have an honest critical discussion about global capital and how it’s destroying our planet. We must reassert our sacred commitment, as our ancestors did for millennia, to be custodians of our earth mother, not her rapists. We must recognize that infinite growth is impossible on a finite planet. The global capitalist enterprise is collapsing and blowing up all around us, one need only look to texas and Bangladesh and the explosion in unemployment and poverty, the collapse of ecosystems, to see what’s happening.  We cannot keep dumping wasteful trillions into failing, obsolete, toxic, fossil and nuclear fuel based infrastructure that is destroying and poisoning our planet. We have to fundamentally rethink how we organize our civilization and economy. The systems we have are not working.

By Chris Williams @ Z Magazine:

Capitalism stands as a death sentinel over planetary life. Recent reports from institutions, such as the World Bank, detail how, as a result of human activity, we are on track for a 4° Celsius increase in average global temperatures. Should this come to pass, the Earth would be hotter than at any time in the last 30 million years; an absolutely devastating prognosis that will wipe out countless species as ecosystems destabilize and climate becomes a vortex of erratic, wild weather events.

Despite this Americans, suffered through an election campaign in which climate change literally wasn’t mentioned—at least until the final weeks, when a hurricane forced the presidential candidates to acknowledge it.

Even as the World Bank published its report—with the conclusion that avoiding a 4° temperature increase was “vital for the health and welfare of communities around the world”—bank officials were nevertheless still handing out loans to construct more than two dozen coal-fired power plants to the tune of $5 billion.

In direct contrast to politicians and the media, fully 80 percent of Americans believe that climate change will be a serious problem for the United States unless the government does something about it—with 57 percent saying the government should do a “great deal” or “quite a bit.”

Even for the 1 in 3 Americans who say they are wary of science and distrust scientists, 61 percent now agree that temperatures have risen over the last 100 years. Commenting on the new poll, Stanford University social psychologist and pollster Jon Crosskick wrote, “They don’t believe what the scientists say, they believe what the thermometers say…. Events are helping these people see what scientists thought they had been seeing all along.”

This background of overwhelming public concern helped situate the national demonstration in Washington, DC on February 17, against the building of the Keystone XL tar sands pipeline from Canada to Texas. If built, the pipeline will carry 800,000 barrels a day of highly-polluting tar sands oil, effectively dealing a death blow to hopes of preventing rampant climate change. The demonstration added significance as activists attempted to draw a line in the sand and pose the first big litmus test for the second term of Barack Obama.

Given that an overwhelming majority of Americans, and even most people hostile to climate science, are in favor of action, why is it that the overwhelming majority of politicians—who presumably are subject to the same weather as the rest of us—can’t seem to see the need? Why aren’t our elected representatives proposing serious measures to prevent it from getting worse?

How one answers this question is not one of semantics. Rather, it is of decisive importance because it determines how one should fight and with whom one should forge alliances. Unfortunately, it is a question that Bill McKibben, cofounder of 350.org and a key organizer of the February 17 demonstration, has struggled with, but not conclusively resolved. His confusion is evidenced by the title of an article he wrote in January: “Our Protest Must Short-Circuit the Fossil Fuel Interests Blocking Barack Obama”—implying that Obama would do something if he could.

The momentum generated from this demonstration may serve as the launching pad for a sustained campaign that begins to stitch together the myriad forces fighting locally around the country, transforming previously isolated or single-issue initiatives and groups into a broad united front for climate justice that draws in other forces, such as unions.

This was the position of Big Green groups like the Sierra Club. Even as it pledged for the first time to take part in civil disobedience, its executive director, Michael Brune, declared that the new strategy was part of “a larger plan to support the president in realizing his vision and make sure his ambition meets the scale of the challenge.”

The first thing Obama and his new Secretary of State John Kerry could do is say no to the construction of the Keystone XL pipeline. That would be inordinately easy, as Obama has the final say and doesn’t require Congress’ support to shut it down. After 53 senators from both parties signed a letter urging him to green-light the pipeline, Obama is running out of ways to further delay his decision.

In spite of the rhetoric of his inaugural address, the pivotal question remains: Is Barack Obama—or any Democratic leader, for that matter—really on our side? Is it just a question of persuading a reluctant friend, hamstrung by a right-wing, dysfunctional Congress and stymied by powerful corporate interests, to act by demonstrating outside his house to let him know we’re there for him? Or should we be surrounding his house, knowing full well that he won’t give in to our demands without a social movement that acts independently of his wishes and control.

To understand the reasons for Obama’s “lack of desire” to address climate change—a microcosm of the larger inability of global leaders and institutions to do likewise amid two decades of futile climate negotiations—it’s necessary to go beneath the surface appearance of things; to examine the structure and ideology of the system of capitalism.

Systemic Causes

When their financial system was threatened by the crisis that began in 2008, political leaders didn’t sit around for 20 years arguing that they had to wait until all the facts were in and attempting to reach consensus on a solution. No, in a heartbeat, they threw trillions of dollars at the banks.

But when a far larger crisis, one that threatens the basic stability of the planetary biosphere, unfurls as a result of the same policies of reckless growth, waste and warfare, they spend their time trashing scientists and ignoring the unraveling weather outside their windows. Therefore, to get to the root of the issue, it becomes necessary to analyze the whole economic system of production and exchange of goods and services—that is, capitalism. Only by doing this can we hope to formulate an effective strategy to combat climate change and thereby recognize that ecological and social justice are inseparably connected to each other, via an organized, grassroots and global challenge to the capitalist social order.

One doesn’t need to be an anti-capitalist to take part in this struggle, but one does need to recognize that unless the pendulum of social power swings back toward the working people in the U.S. and around the world, and that limits and regulations are placed on the activities of corporate power, we have no hope of saving our world. This struggle is not really about technology or which renewable energy models should be deployed or whether this or that politician or this corporation or that CEO is more or less evil than the other. It’s not about things or people at all—it’s about relationships. It’s about democracy, which is itself about social power, and the relationships it presumes.

The power of the oceans, the power of scientific rationality, the power of the tides and hurricane-force winds are self-evidently not enough to persuade capitalists to act. The only force strong enough to do that is the organized force of the people. We must take the place of gravity to pull the pendulum of contending class forces—wrenched rightward by 30 years of neoliberalism—back toward our side.

Ultimately, as a socialist, I would argue that we need to live in a world where there are no classes with diametrically opposed interests, in perpetual conflict over social and political power. Only in such a socially just and ecologically sustainable world will there be any long-term hope for humanity to live in peace with itself, other species, and the planet on which we depend. The stepping-stones of the revolutionary road are the acts of struggle needed to create it.

In contrast to his inaugural speech, Obama’s first press conference after re-election gave a more accurate insight into the priorities of his second term. Unlike four out of five Americans who want the government to do something to address climate change, Obama made it clear that this wouldn’t be a priority for his administration: “Understandably, I think the American people right now have been so focused and will continue to be focused on our economy and jobs and growth that, you know, if the message is somehow we’re going to ignore jobs and growth simply to address climate change, I don’t think anybody’s going to go for that. I won’t go for that.”

With two mentions of the need for “growth” in a single sentence, Obama faithfully echoed the declaration of the Earth Summit, Rio+20, held in June 2012, where the representatives of 190 countries, while dismally avoiding any commitment to new targets or limits on greenhouse gas emissions, did commit—16 times in all—to “sustained growth,” a phrase taken to be synonymous, rather than in fundamental conflict, with another term: “sustainability.”

The obligation to promote growth underlines why the root of the climate problem is systemic. If capitalism is not growing, it is in crisis. Growth must occur continuously and in all sectors. If the sector in question is highly profitable, it will grow even faster, regardless of any social considerations.

Like, for example, the fossil-fuel sector. Oil production, rather than declining, as is desperately needed to stop climate change, is predicted to increase from the current 93 million barrels per day to 110 million by 2020—with some of the biggest increases worldwide occurring in the U.S. The Holy Grail of all administrations since Richard Nixon —energy independence—is being made possible by the policies of the Obama administration, as the New York Times reported in a special feature: “National oil production, which declined steadily to 4.95 million barrels a day in 2008 from 9.6 million in 1970, has risen over the last four years to nearly 5.7 million barrels a day. The Energy Department projects that daily output could reach nearly 7 million barrels by 2020. Some experts think it could eventually hit 10 million barrels—which would put the United States in the same league as Saudi Arabia.”

As the climate blogger and former Clinton administration official Joseph Romm put it, Obama is “basically pushing a moderate Republican agenda. It’s just that there aren’t any moderate Republicans left, much as we don’t have any ‘below average temperature’ years any more.”

Again, if we examine the roots of the issue, we find that the pathetic response of an administration purporting to be concerned with environmental questions has much less to do with individual personnel than with the dynamics of capitalism.

In 1992, when George H.W. Bush flew to Rio for the first Earth Summit, all things seemed possible. The “evil empire”—as Ronald Reagan liked to call the tyrannical dictatorships of the USSR and Eastern Europe, which operated falsely in the name of socialism—had collapsed under the weight of its own economic, social, and ecological contradictions. Politicians in the West were euphoric. They had seen off what they perceived to be an existential threat to their system.

In today’s world of enforced austerity, it’s difficult to recapture the sense of optimism that pervaded Western ruling class circles in the early 1990s. The atmosphere of triumphalism was so great even Republican presidents like Bush could make promises about protecting the environment. A few years later, when the 1997 Kyoto Protocol was written, Western governments were still willing to pledge that they would do the heavy lifting with regard to reducing emissions, while developing countries would be free from such limits.

Hence, the seeming “lack of will” at Rio+20 last year can be much better explained by the onset of a huge structural crisis of capitalism, rather than the “lack of vision” of individual politicians.

Instead of optimism about acting on climate change, the real optimism these days among capitalists is about the profits they can make from the oil and gas bonanza. Oil giant and planet-wrecker par excellence BP is predicting that by 2030, the entire Western Hemisphere will be energy independent, due to the expansion of new techniques for oil and gas exploration, such as fracking in shale deposits and horizontal and deep-water drilling. Fossil fuels are expected to remain at 81 percent of the energy mix in an energy economy that will be 39 percent larger than today.

Naturally, oil executives such as Scott D. Sheffield, chief executive of Texas-based Pioneer Natural Resources—headquartered in an area of the world that received only two inches of rain for the whole of 2011 and spent most of the year with large parts of the state on fire—are nevertheless overjoyed: “To not be concerned with where our oil is going to come from is probably the biggest home run for the country in a hundred years… It sort of reminds me of the industrial revolution in coal, which allowed us to have some of the cheapest energy in the world and drove our economy in the late 1800s and 1900s.”

Depending on who you are, the outlook for natural gas is even rosier. The International Energy Agency recently released a report that asked in its title “Are We Entering a Golden Age of Gas?” The answer was a resounding “yes,” due to the North American shale gas boom and a “strong post-crisis recovery.”

The other side to this “golden age,” as the report makes clear, is that future economic expansion based on natural gas “alone will not put the world on a carbon emissions path consistent with an average global temperature rise of no more than 2° Celsius,” but on a “trajectory consistent with stabilizing the concentration of greenhouse gases in the atmosphere at around 650 parts per million CO2 equivalent, suggesting a long-term temperature rise of over 3.5°  Celsius.”

Insane Logic

In the insane capitalist “logic” of the 21st century, short-term profit-taking must be maximized at all costs. In a little-reported phenomenon, the energy companies have figured out that they can find oil in shale deposits previously considered marginal in the same way that they “frack” for natural gas. With the price of oil over $80 a barrel, it’s profitable to seek oil in this way, regardless of the environmental cost.

Hence, not only is there a natural gas boom in the U.S., but there’s also an enormous, though much less publicized, oil boom. In fact, the oil boom from previously untapped shale deposits is so large that its effects can be seen from space. The Bakken Field in North Dakota, all 15,000 square miles of it, is one of the largest contiguous oil fields in the world, with output doubling every 18 months. In Texas, production from the Eagle Field increased 30-fold between 2010 and 2012. The reason that the remote and sparsely populated Bakken Field rivals Chicago in light pollution, making it visible to orbiting satellites, is because the natural gas that comes up with the oil, rather than being collected and sold, is set on fire in a process called “flaring.” This senseless act of vandalism and waste is the result of the fact that companies are in a rush to make money from oil that they can’t be bothered to develop the infrastructure necessary to cope with associated natural gas.

As Stanford University academic Adam Brandt, who analyzes greenhouse gas emissions from fossil fuels, explains: “Companies are in a race with their competitors to develop the resource, which means there is little incentive to delay production to reduce flaring.” In Texas, the natural gas flared in 2012 could have provided electricity to 400,000 homes.

So while one set of capitalists is fracking for natural gas on the East Coast—thanks to political leaders like Governor Andrew Cuomo in New York, who appears to be ready to open up the state to fracking—in other parts of the country, a different set of capitalists is setting fire to the exact same gas because it’s a nuisance that slows down production of the different fossil fuel they’re after.

Nothing could exemplify the utter waste and anarchic insanity of capitalism than this fact. One of the government regulatory bodies supposedly in charge of overseeing the oil corporations, North Dakota’s Industrial Commission, gave their logic for refusing to take action against this senselessness: “If we restricted oil production to reduce flaring, we would reduce the cash flow from oil wells fivefold…. As well as cutting waste, we are mandated to increase production, which we would not be doing.”

As for the third and dirtiest arm of the triumvirate of fossil fuels, the world is predicted to be burning 1.2 billion tons more coal per year in 2017. Coal has actually declined in use in the U.S. due to companies switching electricity production to cheaper natural gas, which has reduced U.S. carbon emissions.

One might think this is a good thing. However, capitalism is a global system, so any coal not sold here finds a market overseas. The Chinese population is literally choking to death on grotesque amounts of air pollution in cities such as Beijing. And who’s to blame? The U.S. government says China is building too many coal plants, but increasing amounts of the coal in Asia is coming from mines in the U.S. According to a report in ClimateWire: “Although Chinese coal is largely sourced from domestic mines, EIA figures show that U.S. coal shipments to China have dramatically risen in recent years, punctuated by a 107 percent jump from 2011 to 2012. Chinese imports of U.S. coal surged from 4 million tons in 2011 to 8.3 million tons last year.”

This brings us to the international dimension—and the economic and military competition between countries that makes it impossible for effective international agreements on climate change and emissions reduction to be negotiated. If Barack Obama really wanted to do something about reducing energy consumption in America—and killing a lot fewer people around the world—he could start with a massive reduction in military spending. The U.S. military is the single biggest user of energy in the United States, with the Department of Defense responsible for 80 percent of government energy requirements. Just the cost of the war in Iraq would have paid, from now until 2030, for all the investment in renewable energies necessary to stay below 2° Celsius of warming.

These examples illustrate two things. First, we are in a do-or-die battle with the economic system because capitalism is in fundamental conflict with the biosphere. And second, only a committed alliance of social and ecological justice activists that is clear about the nature of the enemy and prepared to confront the political and economic architects of the crisis stands a hope of winning.

This is why fighting the XL pipeline is about much more than stopping a single pipeline or the first test of Obama’s second term. It’s about building a movement for social and ecological justice and making it clear that we are going to organize to prevent any more infrastructure being built that will drive us over the ecological cliff.

As energy analyst Chris Nelder has put it, we face a choice between keeping the old fossil-fuel based infrastructure that is burning up the planet, and adding to it at an annual cost of $1.6 trillion just to keep it running—or transitioning, at much lower economic, let alone environmental, cost, to a new energy paradigm. His figures and argument are worthy of a lengthy quote: “Instead of incremental spending on an effectively dead transportation regime, we should be thinking about one that can survive the challenges ahead, and deliver more economic benefits than costs. We should be setting an ambitious target, like replacing all commercial passenger air flights with high speed rail for trips under 1,000 miles, replacing 90 percent of our city street traffic with light rail, and moving all long-haul freight traffic to rail. Even if the cost of all that rail infrastructure were in the range of $3 trillion, it would be a fantastic investment.

“Against $6 trillion (minimum) in sunk costs and $1.6 trillion per year in maintenance, the $1.2 trillion per year, plus building the high speed rail network at a generous estimate of $1 trillion, looks very reasonable.

“Put another way: Would you rather spend another $32 trillion over the next 20 years just to maintain a outmoded, unscaleable, aged, unhealthy system, plus another $2.8 trillion in lost productivity due to delays and gridlock, only to wind up out of gas? Or would you rather spend $25 trillion to repair our infrastructure, transition transportation to rail, transition the power grid to renewables, upgrade the entire grid, and solve the carbon problem, to have free fuel forever.”

Of course, whether we travel that road or not—and whether we leave a world to our descendants as beautiful as the one we were born into—will depend on our own independent, organized self-activity to wrench control away from a ruling elite that is quite happy to continue making money from a system that must be overturned.

Chris Williams is an environmental activist, professor of physics and chemistry at Pace University, and the author of Ecology and Socialism.

Money-Laundering Banks Still Get a Pass From U.S. Justice System

In Uncategorized on April 1, 2013 at 7:16 pm

https://i1.wp.com/www.cfoinnovation.com/system/files/cfo/money_laundering.jpgOldspeak: “Look North Korea is threatening us! Look! Rush Limbaugh said something about President Obama! Look! A D.A. got shot in Texas. Look! We need gun control now! Meanwhile those fortunate enough to be in America’s 1st tier of justice flout the law,  profit from downturns, war and the illegal drug trade. Their punishment? Earnest protestations and little else from Law Enforcement: “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy.” –Attorney General Eric Holder  “Yes, well, that could explain it. When the banks hold a gun to the head of the economy, it is no longer the relationship between regulator and regulated, but a hostage relationship. A relationship made even more complex, no doubt, by the fact that the hostage-taker is also the principal corporate funder of the bosses of the putative hostage negotiators.” –Mike Lofgren This class based application of justice is not sustainable. These banksters who are holding our financial, political and justice systems hostage are subverting liberty and justice for all. They’re subverting democracy, and government by the people. It cannot continue.

By Simon Johnson @ Bloomberg News:

Money laundering by large international banks has reached epidemic proportions, and U.S. authorities are supposedly looking into Citigroup Inc. (C) and JPMorgan Chase & Co.

Governor Jerome Powell, on behalf of the Board of Governors of the Federal Reserve System, recently testified to Congress on the issue, and he sounded serious. But international criminals and terrorists needn’t worry. This is window dressing: Complicit bankers have nothing to fear from the U.S. justice system.

To be on the safe side, though, miscreants should be sure to use a really large global bank for all their money-laundering needs.

There may be fines, but the largest financial companies are unlikely to face criminal actions or meaningful sanctions. The Department of Justice has decided that these banks are too big to prosecute to the full extent of the law, though why this also gets employees and executives off the hook remains a mystery. And the Federal Reserve refuses to rescind bank licenses, undermining the credibility, legitimacy and stability of the financial system.

To see this perverse incentive program in action, consider the recent case of a big money-laundering bank that violated a deferred prosecution agreement with the Justice Department, openly broke U.S. securities law and stuck its finger in the eye of the Fed. This is what John Peace, the chairman of Standard Chartered Plc (STAN), and his colleagues managed to get away with March 5. The meaningful consequences for him or his company are precisely zero.

Chairman’s Statement

At one level, this is farce. Standard Chartered has long conceded that it broke U.S. money-laundering laws in spectacular and prolonged fashion. In late 2012, it entered into a deferred prosecution agreement with the Justice Department, agreeing to pay a fine that amounts to little more than a slap on the wrist (in any case, such penalties are paid by shareholders, not management).

Then, on a March 5 conference call with investors, Peace denied that his bank and its employees had willfully broken U.S. law with their money-laundering activities. This statement was a clear breach of the deferred prosecution agreement (see paragraph 12 on page 10, where the bank agreed that none of its officers should make “any public statement contradicting the acceptance of responsibility by SCB set forth above or the facts described in the Factual Statement”). Any such statement constitutes a willful and material breach of the agreement.

This is where the theater of the absurd begins. For some reason, it took the bank 11 business days, not the required five, to issue a retraction. No doubt a number of people, in the private and public sectors, were asleep at the switch. (The Justice Department and Standard Chartered rebuffed my requests for details on the timeline.)

The implications of the affair are twofold. First, with his eventual retraction, Peace admitted that he misled investors. It also was an implicit admission that he had failed to issue a timely correction. Waiting 11 days to correct a material factual error is a serious breach of U.S. securities law for any nonfinancial company. Wake me when the Securities and Exchange Commission brings a case against Standard Chartered.

Of course, it’s possible that Peace didn’t deliberately violate the deferred prosecution agreement because he hadn’t read it, or at least not all the way to page 10. Peace is an accomplished professional with a long and distinguished track record. Everyone can have a forgetful moment. That still doesn’t explain why the bank took so long to correct the facts.

Leadership Matters

Tone at the top matters, as reporting around JPMorgan Chase and its relationship with regulators makes clear. Will Chief Executive Officer Jamie Dimon be more cooperative than he was, for example, in August 2011 when he refused to provide detailed information on the goings-on in his investment bank?

Why hasn’t Standard Chartered’s board, which is made up of talented and experienced individuals, forced out Peace as a result of this bungling? (I called for his resignation on my blog last week.)

The only possible explanation is that the board thinks Peace did nothing wrong. They may even regard U.S. laws as onerous and the Department of Justice as heavy-handed.

They would be entitled to their opinions, of course. But if they would like their bank to do business in the U.S., the rules are (supposedly) the rules. If used appropriately, permission to operate a bank in the U.S. grants the opportunity to earn a great deal of profit.

At a recent congressional hearing, Senator Elizabeth Warren of Massachusetts asked what it would take for a company to lose its U.S. banking license. Specifically, “How many billions of dollars do you have to launder for drug lords?”

Powell, the Fed governor, replied that pulling a bank’s license may be “appropriate when there’s a criminal conviction.”

I have failed to find any cases of the Fed ordering the termination of banking activities in the U.S. for a foreign bank after a criminal conviction for money laundering. Nor, for that matter, has the Fed taken action to shut down a bank that signed a deferred prosecution agreement, which, in the case of Standard Chartered (STAN), was an acknowledgment of criminal wrongdoing. Nor has it taken action when such an agreement was violated.

To see what the Fed is empowered to do under the International Banking Act, and working with state authorities, look at the case of Daiwa Bank, which received an Order to Terminate United States Banking Activities in 1995. Note to big banks: Don’t allow illegal trading in the U.S. Treasury market; on this, we may still have standards. By the way, in the case of Daiwa, there was no criminal conviction.

Cleaning House

Last summer, when Barclays’s Chief Executive Officer Robert Diamond was less than fully cooperative with the Bank of England in providing details of the Libor scandal, he was gone within 24 hours. Any bank supervisor has the right and the obligation to force out a manager who impedes the proper functioning of the financial system.

The new CEO of Barclays (BARC) is trying to clean house. The obstreperous approach of the previous management set the tone for the entire organization, creating a mess of macroeconomic proportions.

Will any senior executives at Standard Chartered be forced out? Could the bank lose its ability to operate in the U.S.? Based on what we have seen so far, neither seems plausible.

If Standard Chartered violates its cease-and-desist order with the Fed, would it then lose its license? Not according to what Powell said in his congressional testimony. The Fed has no teeth whatsoever, at least when it comes to global megabanks, hence the continuing pattern of defiance from JPMorgan (JPM) and Dimon.

If you or I tried to launder money, even on a small scale, we would probably go to jail. But when the employees of a very big bank do so — on a grand scale and over many years — there are no meaningful consequences.

(Simon Johnson, a professor at the MIT Sloan School of Management as well as a senior fellow at the Peterson Institute for International Economics, is co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.” The opinions expressed are his own.)

To contact the writer of this article: Simon Johnson at .

To contact the editor responsible for this article: Max Berley at mberley@bloomberg.net.

 

Betray Your Bank Before Your Bank Betrays You

In Uncategorized on April 1, 2013 at 3:06 pm

Oldspeak: “It seems a lot of customers were oblivious to the banks’ deteriorating health, or were confident they would be cared for by somebody else.” -Jonathan WeilHmmm… Sounds familiar. With U.S. megabanks engaging in the same rampant illegality, fraud, & reckless bad bets that triggered the last global economic collapse and holding more derivatives (the same toxic synthetic derivatives that crashed the global economic system last time) than that the entire global GDP, it’s not a matter of if your bank will betray you, but when. Yet, most, are oblivious.  Since the 2008, the United States economy has been like a ticking time bomb with the unregulated activities of the banks the fuse that is slowly burning. The U.S. banking system is basically insolvent.  The U.S. treasury is printing billions upon billions in increasingly devalued funny money while the Fed (a privately owned bank controlled by U.S. megabanks) is buying billions in toxic assets and securities from the insolvent megabanks to keep them in business and give the appearance of solvency. The accrued power of these giant criminal enterprises is threatening the globe again. The theft of depositors money in Cyprus is the tip of the iceberg. This will be replicated in other countries, including the U.S. and U.K.   Don’t remain oblivious to your banks deteriorating health. You would be wise to move your money to a locally oriented bank or credit union. Before it is confiscated to enrich well-appointed thieves.

Move Your Money Project

By Johnathan Weil @ Bloomberg News:

What’s a Slovenian with several hundred thousand euros in the bank supposed to do? Spread it out among at least a few different banks, that’s what. Or move the money out of the country, while it’s still possible.

Imagine what must be on the minds of any savvy depositors still left at Nova Kreditna Banka Maribor d.d., now 79 percent- owned by Slovenia’s government. It was one of only four lenders in October that failed the European Banking Authority’s latest capital-adequacy test, a ritual best known for how lax its standards are. One that flunked was Bank of Cyprus Pcl, where uninsured depositors face 40 percent losses as part of the country’s bailout terms. Another was Cyprus Popular Bank Pcl, also known as Laiki Bank, where uninsured deposits will fare far worse and the bank is being shut.

Cypriot banks’ customers were complacent after uninsured deposits went unscathed in Ireland, Greece, Spain and Portugal, the first euro-area countries to seek international rescues. Slovenians won’t have that excuse should their country be next.

The former Yugoslav republic needs about 3 billion euros ($3.8 billion) of funding this year, while its struggling banks need 1 billion euros of fresh capital, the International Monetary Fund said last week. Slovenia’s central bank this week urged the country’s new government to quickly carry out a plan to recapitalize ailing lenders. It’s a familiar pattern.

Oblivious Customers

The Central Bank of Cyprus warned months ago that the country’s banks needed an infusion of 10 billion euros — which is more than half the size of the nation’s economy — largely because of heavy losses on Greek sovereign debt held by Laiki and Bank of Cyprus. It seems a lot of customers were oblivious to the banks’ deteriorating health, or were confident they would be cared for by somebody else. The country is getting a 10 billion-euro bailout, nine months after it first asked for aid, except none of the money will go to the banks.

Suddenly it should be dawning on a lot of Europeans that deposit-guarantee limits matter. In Slovenia, the maximum is 100,000 euros per depositor, the same as in Cyprus. (Deposit- insurance programs vary among the 17 countries that use the euro.) For a few days last week, it looked as if customers at Laiki and Bank of Cyprus would lose even some of their insured deposits, which would have been a sacrilege.

That plan was scrapped, but could resurface elsewhere for all we know should some genius at the German Finance Ministry insist upon it. The one constant among bailouts of euro-area countries is that there is no rhyme or reason, much less fairness, in the way many details get worked out.

Cypriots may bemoan the inequities of their rough treatment, as might a bunch of wealthy Russians who mistook the island for a reliable financial center and failed to yank their money when they could. For the rest of Europe, the implications should be obvious. Anyone who leaves uninsured deposits in a euro-area bank is on notice that their money can and will be taken from them, if that is what’s demanded by the troika of the IMF, the European Commission and the European Central Bank.

Uninsured deposits aren’t riskless. Nor should they be. Still, it’s unclear why the euro area’s central planners sought to create a precedent that encourages capital flight from weak countries. This could lead to more instability, not less.

So far, there have been no signs of a mass exodus in countries such as Italy or Spain. But deposit migrations can happen slowly, with lots of time passing before they appear in official statistics. Or maybe little will change and most bank customers will go on believing “it can’t happen here,” until one day it does.

Restoring Normalcy

Much good might come from restoring some semblance of normalcy to the hierarchy of creditors in banking. Even better would be to see Germany try it for a change with its own zombie lenders, such as Commerzbank AG (CBK), which is still partly government-owned after its bailout in 2009.

The way it’s supposed to work at failing banks is that shareholders get wiped out first. Next the losses go up the ladder from junior debt holders to senior bondholders, and then all the way to uninsured depositors, if need be. Taxpayers and insured depositors shouldn’t have to absorb others’ losses or put money at risk to spare them. Troubled banks should have to fend for themselves.

This was the approach imposed on Cyprus. In ordinary circumstances, it would be considered fair. The best argument for why it wasn’t is that Cyprus had been lulled into believing it would be treated just as well as Europe’s other bailout recipients. The entire country got hooked on moral hazard.

Now Cyprus may be the template for the future, regardless of European governments’ recent statements to the contrary. If a bankrupt euro-area country can’t afford to recapitalize its own insolvent banks, it will have to “bail in” their owners and creditors first as a condition of receiving outside aid. Or at least that’s what Dutch Finance Minister Jeroen Dijsselbloem said this week in an outburst of candor, before later retracting the statement after it triggered declines in European markets.

Wealthy depositors in Spain, Italy, Greece and elsewhere should assume he was speaking the truth the first time and take measures to protect their money, rather than trusting governments to do it for them.

(Jonathan Weil is a Bloomberg View columnist. The opinions expressed are his own.)

To contact the writer of this article: Jonathan Weil in New York at jweil6@bloomberg.net

To contact the editor responsible for this article: James Greiff at jgreiff@bloomberg.net

Cyprus As Canary – It Can Happen Here: The Bank Currency Confiscation Scheme for US & UK Depositors

In Uncategorized on March 30, 2013 at 7:57 pm

https://i1.wp.com/media.npr.org/assets/img/2013/03/28/cyprusbank282way_wide-8b44df5e0364c2692b832eafdc77152c95ea425d-s6-c10.jpgOldspeak: “While U.S. Corporate media has been focused on Gay marriage and “gun control”, events in Cyprus are giving us a preview of things to come in the rest of Europe and the U.S. Things to come that according to “A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland” What we’re witnessing is the planned demolition of sovereign governments to finance the greed-fueled, reckless and illegal behavior of the international banking cartel. We’ve now reached point in this global economic looting scheme where tax financed bank bailouts are no longer sufficient. Now the hard-earned life savings of bank depositors will be appropriated without their consent. Inequality is at never before seen levels, conditions on Wall Street are basically the same and in many ways worse than they were prior to the last global economic collapse. 2 mega banks, JP Morgan Chase & Bank of America hold more in notional derivatives; 79 TRILLION and 75 TRILLION respectively, than the amount of the ENTIRE GLOBAL GDP of 70 Trillion. Let that sink in. It’s not a matter of if the next collape happens, but when. It’s already begun. Nameless Russian billionaires have been rendered broke, as a result of events in Cyprus. They won’t be the last. Eventually the confiscations will trickle down to people like you and me. Your politicians have already laid the groundwork for banks to legally use your money to bail themselves out. This sort of madness depends on the complacency and indifference of the public to get passed. In this age of Austerity sadly complacency and indifference are abundant. “Propaganda always wins  if you let allow it.”-Leni Riefenstahl . How much longer will we allow it?

By Ellen Brown @ Washingtons’ Blog:

Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds.  

New Zealand has a similar directive, discussed in my last article here, indicating that this isn’t just an emergency measure for troubled Eurozone countries. New Zealand’s Voxy reported on March 19th:

The National Government [is] pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts . . . .

Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

Can They Do That?

Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.”  The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.

The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important, Financial Institutions.”  It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state:

An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equity would become capital in one or more newly formed operating entities. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution.

No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks.  The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .” The only  mention of “insured deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to say is inadequate, implying that it needs to be modified or overridden.

An Imminent Risk

If our IOUs are converted to bank stock, they will no longer be subject to insurance protection but will be “at risk” and vulnerable to being wiped out, just as the Lehman Brothers shareholders were in 2008.  That this dire scenario could actually materialize was underscored by Yves Smith in a March 19th post titled When You Weren’t Looking, Democrat Bank Stooges Launch Bills to Permit Bailouts, Deregulate Derivatives.  She writes:

In the US, depositors have actually been put in a worse position than Cyprus deposit-holders, at least if they are at the big banks that play in the derivatives casino. The regulators have turned a blind eye as banks use their depositaries to fund derivatives exposures. And as bad as that is, the depositors, unlike their Cypriot confreres, aren’t even senior creditors. Remember Lehman? When the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors) got eight cents on the dollar. One big reason was that derivatives counterparties require collateral for any exposures, meaning they are secured creditors. The 2005 bankruptcy reforms made derivatives counterparties senior to unsecured lenders.

One might wonder why the posting of collateral by a derivative counterparty, at some percentage of full exposure, makes the creditor “secured,” while the depositor who puts up 100 cents on the dollar is “unsecured.” But moving on – Smith writes:

Lehman had only two itty bitty banking subsidiaries, and to my knowledge, was not gathering retail deposits. But as readers may recall, Bank of America moved most of its derivatives from its Merrill Lynch operation [to] its depositary in late 2011.

Its “depositary” is the arm of the bank that takes deposits; and at B of A, that means lots and lots of deposits. The deposits are now subject to being wiped out by a major derivatives loss. How bad could that be? Smith quotes Bloomberg:

. . . Bank of America’s holding company . . . held almost $75 trillion of derivatives at the end of June . . . .

That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.

$75 trillion and $79 trillion in derivatives! These two mega-banks alone hold more in notional derivatives each than the entire global GDP (at $70 trillion). The “notional value” of derivatives is not the same as cash at risk, but according to a cross-post on Smith’s site:

By at least one estimate, in 2010 there was a total of $12 trillion in cash tied up (at risk) in derivatives . . . .

$12 trillion is close to the US GDP.  Smith goes on:

. . . Remember the effect of the 2005 bankruptcy law revisions: derivatives counterparties are first in line, they get to grab assets first and leave everyone else to scramble for crumbs. . . . Lehman failed over a weekend after JP Morgan grabbed collateral.

But it’s even worse than that. During the savings & loan crisis, the FDIC did not have enough in deposit insurance receipts to pay for the Resolution Trust Corporation wind-down vehicle. It had to get more funding from Congress. This move paves the way for another TARP-style shakedown of taxpayers, this time to save depositors.

Perhaps, but Congress has already been burned and is liable to balk a second time. Section 716 of the Dodd-Frank Act specifically prohibits public support for speculative derivatives activities. And in the Eurozone, while the European Stability Mechanism committed Eurozone countries to bail out failed banks, they are apparently having second thoughts there as well. On March 25th, Dutch Finance Minister Jeroen Dijsselbloem, who played a leading role in imposing the deposit confiscation plan on Cyprus, told reporters that it would be the template for any future bank bailouts, and that “the aim is for the ESM never to have to be used.”

That explains the need for the FDIC-BOE resolution. If the anticipated enabling legislation is passed, the FDIC will no longer need to protect depositor funds; it can just confiscate them.

Worse Than a Tax

An FDIC confiscation of deposits to recapitalize the banks is far different from a simple tax on taxpayers to pay government expenses. The government’s debt is at least arguably the people’s debt, since the government is there to provide services for the people. But when the banks get into trouble with their derivative schemes, they are not serving depositors, who are not getting a cut of the profits. Taking depositor funds is simply theft.

What should be done is to raise FDIC insurance premiums and make the banks pay to keep their depositors whole, but premiums are already high; and the FDIC, like other government regulatory agencies, is subject to regulatory capture.  Deposit insurance has failed, and so has the private banking system that has depended on it for the trust that makes banking work.

The Cyprus haircut on depositors was called a “wealth tax” and was written off by commentators as “deserved,” because much of the money in Cypriot accounts belongs to foreign oligarchs, tax dodgers and money launderers. But if that template is applied in the US, it will be a tax on the poor and middle class. Wealthy Americans don’t keep most of their money in bank accounts.  They keep it in the stock market, in real estate, in over-the-counter derivatives, in gold and silver, and so forth.

Are you safe, then, if your money is in gold and silver? Apparently not – if it’s stored in a safety deposit box in the bank.  Homeland Security has reportedly told banks that it has authority to seize the contents of safety deposit boxes without a warrant when it’s a matter of “national security,” which a major bank crisis no doubt will be.

The Swedish Alternative: Nationalize the Banks

Another alternative was considered but rejected by President Obama in 2009: nationalize mega-banks that fail. In a February 2009 article titled “Are Uninsured Bank Depositors in Danger?“, Felix Salmon discussed a newsletter by Asia-based investment strategist Christopher Wood, in which Wood wrote:

It is . . . amazing that Obama does not understand the political appeal of the nationalization option. . . . [D]espite this latest setback nationalization of the banks is coming sooner or later because the realities of the situation will demand it. The result will be shareholders wiped out and bondholders forced to take debt-for-equity swaps, if not hopefully depositors.

On whether depositors could indeed be forced to become equity holders, Salmon commented:

It’s worth remembering that depositors are unsecured creditors of any bank; usually, indeed, they’re by far the largest class of unsecured creditors.

President Obama acknowledged that bank nationalization had worked in Sweden, and that the course pursued by the US Fed had not worked in Japan, which wound up instead in a “lost decade.”  But Obama opted for the Japanese approach because, according to Ed Harrison, “Americans will not tolerate nationalization.”

But that was four years ago. When Americans realize that the alternative is to have their ready cash transformed into “bank stock” of questionable marketability, moving failed mega-banks into the public sector may start to have more appeal.

Comment by Washington’s Blog:  The big banks have already been “nationalized” in the sense that they are state-sponsored institutions .  In fact, the big banks went totally bust in 2008, and are now completely subsidized by the government.

Americans may not like the idea of nationalization, but they are even more  disgusted by crony capitalism … which is what we have now.

Moreover, as we pointed out in 2009:

Many argue that it would be wrong for the government to break up the banks, because we would have to take over the banks in order to break them up.

That may be true. But government regulators in the U.S., Sweden and other countries which have broken up insolvent banks say that the government only has to take over banks for around 6 months before breaking them up.

In contrast, the Bush and Obama administrations’ actions mean that the government is becoming the majority shareholder in the financial giants more or less permanently. That is – truly – socialism.

Breaking them up and selling off the parts to the highest bidder efficiently and in an orderly fashion would get us back to a semblance of free market capitalism much quicker.

Spinning Out Of Control: Governments, International Banks & Energy Conglomorates Fuelling Climate Change

In Uncategorized on March 15, 2013 at 1:15 pm

https://i2.wp.com/us.123rf.com/400wm/400/400/jcdesign/jcdesign1108/jcdesign110800002/10200011-planet-earth-with-dollar-sign-shaped-continents-and-clouds-over-a-starry-sky-contains-clipping-path-.jpg

Oldspeak: “Here is a very basic question that no one is asking, not politicians, bankers nor economists.  Even those campaigning about environmental destruction and climate change are not asking it.  Why do we have to have growth? Nothing grows forever, even though it may live for a very long time.  Humans, having reached their maximum height, stop growing.  Either that or they collapse.  Their bones cannot support a body too tall or too fat.  It is the same for anything else that grows.  Everything has limits.  Endless growth is not sustainable.  We cannot grow beyond what this planet can supply, nor should we assume that it can, no matter how much we are persuaded to.  So why is it a given that the ‘economy’ has to grow?  Why can’t it drop back to a level where it might be more sustainable, and maintain a steady position instead? –Lesley Docksey. Why indeed. Nathan Gardels, author, editor and Media Fellow of the World Economic Forum had a pretty good answer when he said: “The big rupture came in the 1800s, with the steam engine, the fossil fuel age, the industrial revolution, This was a great rupture from earlier forms and rhythms of life, which were generally regenerative. What happened after the industrial revolution was that nature was converted to a resource and that resource was seen as, essentially, eternally abundant. This led to the idea, and the conception behind progress which is: limitless growth, limitless expansion.”  We hear “Pro-Growth” mantras repeated incessantly. Perpetual growth is incompatible with natural physical laws and objective reality, yet it’s seen as an essential part of our economic system.  It’s led to all sorts of dangerous, toxic, maladaptive behaviors, that constitute a slow motion extinction level event. We’ve been led to believe that our economic system is the preeminent system on this planet, and that all other systems serve to perpetuate it. That it’s perfectly acceptable to see the commons that give us life as “economically exploitable resources” and “private property”. The reality is the modern human economy is a mere subsystem of the largest and evermost important system on this planet. The Ecosystem. The Dow Jones Industrial average may be at record highs, but ecosystem in which it exists is in extreme peril. The “Market” which dictates much of our behavior as a civilization, cannot exist if the ecosystem collapses. It’s a basic fact we need to understand and change our behaviour as a civilization to account for it. This piece by Lesley Docksey makes very clear that this severe thinking disorder, that we are somehow separate from and have dominion over nature, is a global pandemic. A brilliant documentary produced by Leo DiCaprio provides a look at the state of the global environment including visionary and practical solutions for restoring the planet’s ecosystems. Check it out.

Related Media:
The 11th Hour

By Lesley Docksey @ Dissident Voice:

Being born ‘with a silver spoon in your mouth’ means that you start with an advantage that others don’t have: parents with money, property, influence, business connections and so on, connections that can last for generations.  A silver spoon that appeared recently was the exceedingly generous compensation paid to British slave owners when the UK abolished slavery in 1833, though not one penny went to the freed slaves.  The ancestors of many well-connected people (including David Cameron) benefited.  One way or another, the silver spoon allows you to inherit the best of old boys’ networks and a guaranteed place at all sorts of top tables. These days you also appear to be born with a revolving door.

As I pointed out in Revolving Wars, the door between retiring senior military personnel or ministerial-level politicians and a well-paid position in companies supplying the military revolves at great speed, although sadly not at a fast enough rate as to fire the users into outer space – nor would they go without a profitable contract in place.  But other such doors exist.  And just as the links between government ministers, senior armed forces personnel and the arms trade make it almost impossible to stop our forces from fighting illegal and unnecessary wars, so the links between the government, banks and fossil fuel companies make it impossible to get politicians to take action to mitigate climate change or achieve realistic funding for renewable energy.

The World Development Movement has just published a briefing, Web of Power: the UK government and the energy-finance complex fuelling climate change, and it makes for disheartening reading.  Of the 125 MPs and Lords that make up the UK government, no less than 32% have links with finance and/or fossil fuel companies, while the top 5 banks give financial backing to fossil fuel companies and politicians (the City funded David Cameron’s campaign for the leadership of the Tory Party), and the fossil fuel companies give financial backing to government while lobbying hard for their industry.  There is a merry-go-round of people serving in government and sitting on the boards of financial institutions and energy companies.  It creates a cosy closed shop resulting in a lack of funding for research into and building the infrastructure for renewable energy.

Even worse, despite the noises made by politicians, any effective action to halt climate change is blocked because that would damage business.  It would ‘harm’ the economy – meaning that they, all of them, would lose money.  But they probably think they are the economy.  And, of course their mantra – that climate change is not caused by human activity and we can therefore go on chasing and making money from every scrap of oil or gas to fuel our modern lives – is funded and publicised by some very rich people indeed, many of them with links to… you’ve guessed it… fossil fuels and high finance.  Anything that might puncture that magic bubble of oil, money and power has to be fought (or bought) off by whatever means.

The thought of losing our comfortable lifestyle is challenging, which is why we are persuaded by their spin machine to see that as more of a threat than the destruction of our climate would be.  Even while we are asked to put up with cuts forced upon us by the government, they are proposing to, despite undertaking not to, subsidise companies like EDF with our money, in the hope that they will build nuclear reactors here.  And don’t even mention fracking and the carrot they hold out about ‘cheap’ gas.  It won’t be.  We are also encouraged to allow the bankers to continue paying themselves too much; otherwise they will all go somewhere else.  And, of course, they’d all far rather we worried about the price we pay to fuel our lives than think about a warming world.  Because business as usual means profits as usual.  And also because, whatever else happens, the economy (by which I mean that we remain poor and live economically while the rich grow in riches) must be encouraged to grow.

And here is a very basic question that no one is asking, not politicians, bankers nor economists.  Even those campaigning about environmental destruction and climate change are not asking it.  Why do we have to have growth?

Nothing grows forever, even though it may live for a very long time.  Humans, having reached their maximum height, stop growing.  Either that or they collapse.  Their bones cannot support a body too tall or too fat.  It is the same for anything else that grows.  Everything has limits.  Endless growth is not sustainable.  We cannot grow beyond what this planet can supply, nor should we assume that it can, no matter how much we are persuaded to.  So why is it a given that the ‘economy’ has to grow?  Why can’t it drop back to a level where it might be more sustainable, and maintain a steady position instead?

What most of us want is stability and security, and we have let ourselves be persuaded that these only come if we have more – more money, more possessions, bigger televisions, faster cars – more, more, more.  Yet the majority of humanity has spent not centuries but millennia successfully existing by having sufficient.  We need enough, not more.  And let’s face it, the growth that is demanded by governments and corporations always has and always will go into the pockets of those who are already rich, already have far more than they need and certainly far more than their fair share.

Years ago manufacturers made things that could be serviced and repaired, things that we went on using until they fell to pieces.  Then what we bought came with ‘built-in obsolescence’.  It wasn’t a question of buying something new when the old had collapsed.  The new was designed to collapse and be replaced.  Then we were treated to ‘the latest model’ and encouraged to throw away anything that was out of date.  But students at Brighton University are now being asked to design a toaster that the buyer would want to keep!  On the Today programme Professor Jonathon Chapman explained: “It’s actually very easy to design and manufacture a toaster that will last 20 years; that can be done. What’s not so easy is to design and manufacture a toaster that someone will want to keep for 20 years, because as people, as consumers, we haven’t been trained to do that.”

No.  We’ve been trained to always think there is something better out there, and that we both want and need it.  And in the same way the people with their revolving doors are doing their best to train us into thinking that, as consumers, our behaviour has absolutely nothing to do with climate change and we can carry on as usual while the government ‘fixes’ the problem, the banks lend our money to companies we wouldn’t give the time of day to, and the energy companies dig up our back gardens while they frack for gas.

Well, you know what?  As a ‘consumer’ I have decided that governments, banks and fossil fuels also have built-in obsolescence.  They have reached the point of collapse and I want to bin the lot.  I don’t want their ‘latest model’ either because it always turns out to be more of the same with a different coat of paint.  I want to try something new – or rather, something both radical and reactionary – radical because the idea would be considered ‘impossible’, and reactionary because I want to turn back the clock.  I want to return to an old way of life that was sustainable and sufficient to our needs.  And, I suspect, far more satisfying than the constant hunger of consumerism.   Whether climate change will allow me to do that I don’t know.  My time may run out before the toaster fails.

Lords of Disorder: Billions For Wall Street, Sacrifice For Everyone Else

In Uncategorized on March 7, 2013 at 5:38 pm

Lloyd C. Blankfein.Oldspeak:”“This bank is anti-fragile, we actually benefit from downturns.”-Jamie Dimon of JPMorgan ChaseThe term “antifragile” was coined by maverick financier & analyst Nassim Taleb, whose book of the same name is subtitled “Things That Gain From Disorder.” That’s a good description of JPMorgan Chase and the nation’s other megabanks… These institutions are designed to prey off economic misery. They suppress genuine market forces in order to thrive, and they couldn’t do it without our ongoing help. The Treasury Department and the Federal Reserve are making it happen.” –Richard Eskow. One look no further than how Mr. Dimon and his sociopathic corporation  profits off the misery of the poverty stricken by administering food stamp benefits to see his demented thought in practice. “A catastrophe for you and I usually presents an opportunity for the Titans of capital. And the grievous economic crisis affecting so many American families is no exception — big business has found a number of ways to profit, directly, from Main Street’s economic pain. Like vultures descending on a rotting corpse, they’ve come up with a variety of innovative methods to pull the last scraps of meat off the bones of America’s middle-class” –Joshua Holland. It’s very clear if one chooses to look. The corprocratic controllers of our political class and economic systems, profit from disorder, downturns, and catastrophes. Money is being redirected  from the people and real economy via austerity programs to prop up and sustain these failed, morally and spiritually bankrupt enterprises.  Knowing this, how logical is it to conclude that obviously deleterious political and economic policies that have us hurtling toward economic and ecological catastrophe will be changed to benefit the people? Not very. The problem is systemic. The systems around which we organize our societies must be fundamentally changed. All the nibbling around the edges that passes for sound policy is largely illusory.If we hope to survive as civilization we can no longer allow merchants of death and disorder who dominate the Military-Financial-Political Industrial Complex to reign as Lords of Disorder.”

By Richard Eskow @ The Campaign For Americas Future:

The President’s “sequester” offer slashes non-defense spending by $830 billion over the next ten years. That happens to be the precise amount we’re implicitly giving Wall Street’s biggest banks over the same time period.

We’re collecting nothing from the big banks in return for our generosity.  Instead we’re demanding sacrifice from the elderly, the disabled, the poor, the young, the middle class – pretty much everybody, in fact, who isn’t “too big to fail.”

That’s injustice on a medieval scale, served up with a medieval caste-privilege flavor. The only difference is that nowadays injustices are presented with spreadsheets and PowerPoints, rather than with scrolls and trumpets and kingly proclamations.

And remember: The White House represents the liberal side of these negotiations.

The Grandees

The $83 billion ‘subsidy’ for America’s ten biggest banks first appeared in an editorial from Bloomberg News – which, as the creation of New York’s billionaire mayor Michael Bloomberg, is hardly a lefty outfit.  That editorial drew upon sound economic analyses to estimate the value of the US government’s implicit promise to bail these banks out.

Then it showed that, without that advantage, these banks would not be making a profit at all.

That means that all of those banks’ CEOs, men (they’re all men) who preen and strut before the cameras and lecture Washington on its profligacy, would not only have lost their jobs and fortunes in 2008 because of their incompetence – they would probably lose their jobs again today.

Tell that to Jamie Dimon of JPMorgan Chase, or Lloyd Blankfein of Goldman Sachs, both of whom have told us it’s imperative that we cut social programs for the elderly and disabled to “save our economy.” The elderly and disabled have paid for those programs – just as they paid to rescue Jamie Dimon and Lloyd Blankfein, and just as they implicitly continue to pay for that rescue today.

Dimon, Blankfein and their peers are like the grandees of imperial Spain and Portugal. They’ve been given great wealth and great power over others, not through native ability but by the largesse of the Throne.

Lords of Disorder

Just yesterday, in a rare burst of candor, Dimon said this to investors on a quarterly earnings call: “This bank is anti-fragile, we actually benefit from downturns.”

It’s true, of course. Other corporations – in fact, everybody else – has to survive or fail in real-world conditions. But Dimon and his peers are wrapped in a protective force field which was created by the people, of the people, and for … well, for Dimon and his peers.

The term “antifragile” was coined by maverick financier and analyst Nassim Taleb, whose book of the same name is subtitled “Things That Gain From Disorder.” That’s a good description of JPMorgan Chase and the nation’s other megabanks.

Arbitraging Failure

Dimon’s comment was another way of saying that his bank, and everything it represents, is The Shock Doctrine made manifest. The nation’s megabanks are arbitraging their own failures, and the economic crises that flow from those failures.

These institutions are designed to prey off economic misery. They suppress genuine market forces in order to thrive, and they couldn’t do it without our ongoing help. The Treasury Department and the Federal Reserve are making it happen.

We who have made these banks “antifragile” have crowned their leaders our Lords of Disorder.

Once Dimon told reporters that he explained to his seven-year-old daughter what a financial crisis is – “something that happens … every five to seven years,” which “we need to do a better job” managing.

Thanks to fat political contributions, Dimon manages them well. So do his peers. Misery is the business model. And by Dimon’s reckoning another shock’s coming any day now.

Money For Nothing

Bloomberg’s use of the word ‘subsidy’ in this instance can be slightly misleading. Public institutions don’t issue $83 billion in checks to Wall Street’s biggest banks every year. But they didn’t let them fail as they should have – through an orderly liquidation – after they created the crisis of 2008 through fraud and chicanery. Instead it allowed them to prosper from it, creating that $83 billion implicit guarantee.

As we detailed in 2011, the TARP program didn’t “make money,” either. Banks received a free and easy trillion-plus dollars from our public institution, on terms that amounted to a gift worth tens of billions, and possibly hundreds of billions.

That gift prevented them from failing. In private enterprise, this kind of rescue is only given in return for part ownership or other financial concessions. But our government asked for nothing of the kind.

Unpaid Debts

Breaking up the big banks would have protected the public from more harm at their hands. That didn’t happen.

Government institutions could have imposed a financial transaction tax, whose revenue could be used to repair the harm the banks caused while at the same time discouraging runaway gambling.  They still could.

They could have imposed fees on the largest banks to offset the $83 billion per year advantage we’ve given them. They still could.

But they haven’t. This one-sided giveaway is the equivalent of an $83 billion gift for Wall Street each and every year.

Cut and Paste

$83 billion per year: Our current budget debate is framed in ten-year cycles, which means that’s $830 billion in Sequester Speak.  You’d think our deficit-obsessed capital would be trying to collect that very reasonable amount from Wall Street. Instead the White House is proposing $130 billion in Social Security cuts, $400 in Medicare reductions, $200 billion in “non-health mandatory savings,” and $100 billion in non-defense discretionary cuts.

That adds up to exactly $830 billion.

No doubt there is genuine waste that could be cut. But $830 billion, or some portion of it, could be used to grow our economy and brings tens of millions of Americans out of the ongoing recession that is their daily reality, even as the Lords of Disorder continue to prosper. It could be used for educating our young people and helping them find work, for reducing the escalating number of people in poverty, for addressing our crumbling infrastructure, for giving people decent jobs.

It’s going to Wall Street instead.

Trillion-Dollar Tribute

The right word for that is tribute. As in, “a payment by one ruler or nation to another in acknowledgment of submission …” or “an excessive tax, rental, or tariff imposed by a government, sovereign, lord, or landlord … an exorbitant charge levied by a person or group having the power of coercion.” (Courtesy Merriam-Webster)

In this case the tribute is made possible, not by military occupation, but by the hijacking of our political process by the corrupting force of corporate contributions.

The fruits of that victory are rich: Bank profits are at near-record highs. Most of the country is still struggling to dig out from the wreckage they created but, as Demos’ Policy Shop puts it, “for the banks it’s 2006 all over again.”

On Bended Knee

“Millions for defense,” they said in John Adams’ day, “but not one cent for tribute.”

Today we’re paying for both. That doesn’t leave much for the elderly, the disabled, the impoverished, the children, or anybody else who doesn’t “benefit from disorder.” Nobody’s fighting for them in this budget battle.

That leaves the public with a clear choice: Demand solutions that are more just and democratic – or submit willingly to the Lords of Disorder.

Billionaires For Austerity: With Cuts Looming, Wall Street Roots of “Fix the Debt” Campaign Exposed

In Uncategorized on February 26, 2013 at 9:11 pm

https://i2.wp.com/www.sourcewatch.org/images/5/5f/FixTheDebtFlat.pngOldspeak:The tried and true Problem Reaction Solution method is being used to attempt to manufacture consent for austerity measures favored only by the fabulously wealthy. The problem is the across the board government spending cuts soon to take effect and the major political parties inability to compromise to avoid them. The reaction courtesy of corporate controlled media broadcasting certain doom is a panicked populace, fearful of job losses, insecurity and instability in their daily lives. The solution is cutting spending on social programs, public services  and the military while preserving tax breaks for wealthy individuals and corporations that pay negative tax rates.  We are told that entitlements are the biggest drivers of our deficits (when in fact social security is solvent, and medicaid/aid has been shown to be less costly that privatized heath care) The reality is deficits are being driven by massive waste, fraud in government and the private sector, particularly banking  & the many trillions of  taxpayer dollars dollars being printed by Federal Reserve and shipped to banksters, foreign and domestic to keep up the illusion of a functioning financial system. The oligarchy that pay our government are controlling the range of “the sequester” debate.  It’s just as The Oracle Dr. Chomsky said : “The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow a very lively debate within that spectrum“.

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By Amy Goodman @ Democracy Now:

AARON MATÉ: We begin with the Capitol Hill showdown over the $85 billion across-the-board budget cuts taking effect this Friday. The White House and analysts fear the so-called “sequester” could jeopardize hundreds of thousands of jobs. While Republicans and Democrats largely agree the cuts are ill-advised, they are far from reaching any sort of agreement. President Obama wants Republicans to end tax breaks, mostly for the wealthy; Republicans are insisting government spending be cut first. This is House Speaker John Boehner.

SPEAKER JOHN BOEHNER: The president says we have to have another tax increase in order to avoid the sequester. Well, Mr. President, you got your tax increase. It’s time to cut spending here in Washington. Instead of using our military men and women as campaign props, if the president was serious, he’d sit down with Harry Reid and begin to address our problems. The House has acted twice. We shouldn’t have to act a third time before the Senate begins to do their work.

AMY GOODMAN: Today President Obama plans to travel to a major military community in Newport News, Virginia, to highlight the impact of Pentagon cuts on a shipbuilding facility. On Monday, Obama urged a gathering of governors to push Congress into action to avert the looming sequester showdown.

PRESIDENT BARACK OBAMA: Now, these impacts will not all be felt on day one, but rest assured, the uncertainty is already having an effect. Companies are preparing layoff notices. Families are preparing to cut back on expenses. And the longer these cuts are in place, the bigger the impact will become. So, while you are in town, I hope that you speak with your congressional delegation and remind them, in no uncertain terms, exactly what is at stake and exactly who is at risk, because here’s the thing: These cuts do not have to happen. Congress can turn them off any time with just a little bit of compromise.

AMY GOODMAN: Well, joining us now are two guests who have uncovered how billionaire investors such as Pete Peterson have helped reshape the national debate on economy, the debt and social spending. Between 2007 and 2011, Peterson personally contributed nearly $500 million to his Peter G. Peterson Foundation to push for Congress to cut Social Security, Medicare and Medicaid, while providing tax breaks for corporations and the wealthy. Peterson served as secretary of commerce under Richard Nixon and went on to serve as chair and CEO of Lehman Brothers. He co-founded the private equity firm The Blackstone Group.

Joining us from Madison, Wisconsin, is John Nichols, The Nation magazine’s political correspondent. His latest piece is “The Austerity Agenda: An Electoral Loser.” It’s part of a major exposé based on a new website called “Pete Peterson Pyramid.” Lisa Graves of the Center for Media and Democracy is editor of the site, which links billionaires like Peterson to the Campaign to Fix the Debt.

We welcome you both to Democracy Now! John Nichols, why don’t you lay out who Pete Peterson is and how he fits into this picture of sequester that we look like we’re about to see by the end of the week?

JOHN NICHOLS: Sure. Pete Peterson is an old-school moderate Republican. He’s not some sort of hard-line conservative. He’s a very expensive suit, private jet, mineral water kind of guy. And he has been obsessed, for a number of years, with restructuring the U.S. economy, and particularly restructuring U.S. fiscal policy. This is an important thing to understand. Pete Peterson and the people around him do not want—or aren’t, I would suggest, particularly interested in fixing the debt or dealing with deficits. What they’re really interested in is taking advantage of a moment when the United States is looking at these issues to establish a very different approach to a host of issues. And at the core of this is changing the way that we look at retirement in this country, definitely undermining Social Security, Medicare and Medicaid, changing those earned benefit programs into something very different than what they’ve been and something far less reliable, but also making an awfully lot of other cuts in programs that serve the great mass of Americans, while at the same time continuing and even advancing the tax breaks for billionaires and corporations that have helped to make Pete Peterson a very, very wealthy man.

He sold this idea to around 125 other CEOs and very wealthy people. They’ve all chipped in a whole bunch of money, millions and millions, perhaps as much as $60 million for the current campaign, to this “Fix the Debt” group. And this Fix the Debt group is the primary proponent in the United States today of austerity. They want to, quote-unquote, “cut our way to progress,” as President Obama suggested, but in reality, it’s cutting the way toward progress for them and cutting the way toward a real hard hit for the average working American and potentially a slowing of the economy that begins with the sequester but does not end there.

AARON MATÉ: Well, let’s turn to Pete Peterson in his own words. This is from a video posted on the YouTube page of his foundation.

PETE PETERSON: We live in a society of special interests of various kinds. The organizations that are lobbying for expanding benefits and making the problems worse are unbelievably powerful. But who’s representing you? And why don’t you then get organized in young organizations? And I’ve had a dream. And my little dream is that one day there’d be 100,000 young people and their parents parading in Washington, saying, “I’m madder than hell, and I don’t intend to take it anymore.”

AARON MATÉ: That’s billionaire Pete Peterson talking about his dream of a revolt in favor of austerity. Lisa Graves, you’ve come up with the Peterson Pyramid.

LISA GRAVES: That’s right. We—our team at the Center for Media and Democracy has worked hard to expose the conflicts of interest by a number of the people who are leaders of the Fix the Debt operation. When Pete Peterson talks about the bevy of special interests in Washington, he’s one of them, and he has helped—he’s helped seed an organization that’s filled with special interests. And so, what we’ve done at PetersonPyramid.org is document that. So we talk about how Erskine Bowles, who’s famous for the Bowles-Simpson plan, which is the—another version of the austerity plan, how he’s on the board of Morgan Stanley and gets paid over $300,000 a year for a couple hours of work on that board, how he’s been paid over $600,000 on the board of Facebook, which recently had a huge tax giveaway. And so, that’s just one example that’s the tip of the iceberg, and we document it on our site because the people of the United States need to know that this is sort of a Pied Piper operation by Pete Peterson and his buddies to try to claim that the real crisis is the debt, when in fact the real crisis is our economy and the lack of focus on jobs. And as Dean Baker, the great economist, said, you can’t cut your way to prosperity. And, in fact, it’s like saying, when a house is on fire, stop putting so much water on the fire to put it out.

AMY GOODMAN: Tell us more about who Pete Peterson is, Lisa Graves. And also, have they responded? Has he or his organization responded to Peterson’s Pyramid, what you have just laid out?

LISA GRAVES: Well, I think Pete Peterson has an unhealthy obsession with Social Security—and, you know, as a man who’s never actually going to really need it. But most Americans in fact do need Social Security. One of the things you see with the Pete Peterson organizations that he has seeded or created over time is this obsession with Social Security. In fact, Social Security is solvent. It’s solvent for at least the next 20 years. It’s more solvent than you or I or probably anyone who’s watching this show. And yet they want to make sure that cuts to Social Security, changes to Social Security, the retirement age and the benefits, having those decrease over time as people age, is part of a so-called balanced deal or a package. That’s a terrible idea. And that’s part of the Pete Peterson legacy.

He’s also seeding these groups to have this sort of youth group element to it, which is really—it would be funny if it weren’t so worrisome, where they have put a lot of money into this notion that the youth of America are having this uprising, the dream that he said in that video, when in fact most American students are deeply concerned about the jobs in this country. And cutting our—cutting our government budget in the ways that Peterson and his buddies propose will make that job climate even worse for those students. Those students are far more concerned about their own personal debt and student loans than the debt that is supposedly being levied on them by Social Security, which does not actually contribute to the debt.

AMY GOODMAN: Has Peterson responded, Lisa, to Peterson’s Pyramid?

LISA GRAVES: Fix the Debt’s communications director has responded. He called our office to claim that their organization never claimed that they were trying to raise $60 million, he said. Their vice president of communications said that they were trying to raise any amount, not just $60 million. I pointed out we had it on their letterhead, in fact, that they were marking out a campaign worth $60 million to push these issues this year. He basically said that wasn’t true. We’ve got it on paper. You know, I said, you know, that’s why we don’t really quote the press secretaries, because they’re not obligated to tell the truth. We’ve got the documentary evidence.

And so, they pushed back a little, but, quite frankly, we have them—we have the goods on them. And that’s why this material is just streaming through the Internet, to show these conflicts of interest; to show the Democrats who are former members of Congress who have left and cashed out and work as lobbyists for some of these big firms; to show the Republicans that continue to do the bidding of some of the big firms that they’ve joined since leaving office; to show the conflicts of some of these huge firms that are part of Fix the Debt who have a negative tax rate—who have a negative tax rate—not 35 percent like you or me, not 20 percent, not 10 percent, not 5 percent, but a negative tax rate. And on top of that—

AMY GOODMAN: Like which ones?

LISA GRAVES: —we show how many of these firms are underfunding their pension programs.

AMY GOODMAN: Like which ones?

LISA GRAVES: Oh, sure. So we have documented how General Electric is one of those firms that has had a negative—a negative tax rate. A number of the firms that are part of the Fix the Debt operation have negative tax rates. We’ve got about a dozen of them that we document on the site, including, you know, major defense contractor General Electric. We have other firms that, we have documented, are underfunding their pension programs. And we also show how much they’re—how well they’re funding their CEO pensions, while underfunding their worker pensions, and pushing this operation of Fix the Debt, which is trying to underfund every other Americans retirement, basically, pension programs through Social Security.

AMY GOODMAN: Isn’t the head of GE President Obama’s job czar?

LISA GRAVES: Yes, that is in fact the case. And so, you know, we do think that this is a huge, important part of this exposé, is to show how this bipartisan—this bipartisan pitch from these guys, from these CEOs, and from Democrats and Republicans, is unfortunately not a grand bargain, but really a grand swindle.

AARON MATÉ: Well, Lisa, speaking of bipartisan, of course, we had the Simpson-Bowles Commission. In December, former Wyoming Senator Alan Simpson went on The Daily Show with Jon Stewart to discuss his budget proposal.

SEN. ALAN SIMPSON: Our corporate tax rate is the highest in the world. And so—

JON STEWART: But not actually.

SEN. ALAN SIMPSON: Well, 36 percent is where we’re at. What we did, we took away all of these tax expenditures, all of these deductions, all of this stuff. This is just earmarks by any other name, and it’s spending by any name, and it’s at one trillion one hundred billion bucks a year. And only 20 percent of the American people use 80 percent of the stuff in that tax code. Does that give you the wake-up call of who’s gimme-ing the system?

JON STEWART: Right.

SEN. ALAN SIMPSON: OK.

JON STEWART: But see, that brings up an interesting point.

SEN. ALAN SIMPSON: And so we got rid of all of that—

JON STEWART: Yeah, mm-hmm.

SEN. ALAN SIMPSON: —and we say now give the American people from zero to 70 grand, they pay 8 percent; from 70 grand to $210,000, they pay 14; anything over that, 23. Take the corporate rate to 26 from 36 and not tax them twice when they bring it back. And when they bring it back, the Democrats, as Erskine says, a Democrat, the Democrats will say, “Well, they’ll just use it for dividends and to buy stock.” And he said, “Well, hell, at least they’ll be using it in the United States of America instead of sticking it over there and leaving it.”

AARON MATÉ: That was former Senator Alan Simpson of the Simpson-Bowles Commission speaking on The Daily Show in December. John Nichols, if you could talk about Alan Simpson and the Simpson-Bowles Commission and how they fit into this Campaign to Fix the Debt.

JOHN NICHOLS: Sure. I think the best way for folks to understand the Simpson-Bowles Commission is that it is a classic example of how, if you have wealthy people behind you, you can fail miserably and still continue to be at the center of the debate. The Simpson-Bowles Commission was established by President Obama with the purpose of coming up with some debt and deficit solution ideas. I think it was a bad idea from the start, and I think it was an example of President Obama bowing to arguments of the austerity caucus, if you will, in Washington, which includes both Democrats and Republicans.

But they were put in charge of this. They came up with a plan. It was such an unpopular and unappealing plan that the commission itself did not recommend its report. Only Simpson and Bowles came out with their proposal. Then they tried to peddle it in Congress. They could only find 38 members of the House who would actually vote for their ideas. Then they went out into the November elections. They actually started endorsing candidates. The candidates that Simpson and Bowles endorsed, not only did they lose, but often you could tie the defeats of the candidates they endorsed to the fact that they were linked to Simpson and Bowles. So, if you want to see an example of two figures in American politics, career political types, who have been absolutely rejected by the American people, it’s Simpson and Bowles. And yet, interestingly enough, they’re back at the center of the debate, getting huge amounts of media coverage now. And one of the reasons for it is they’re tied to Fix the Debt.

When Fix the Debt was launched last summer, it wasn’t launched at a kitchen table of some working family or in an abandoned factory; it was launched in Sun Valley, Idaho, at a retreat for CEOs and billionaires. And Simpson and Bowles said, “We’re going to go out and launch a grassroots campaign to get the American people to force Congress to act on the ideas that we’ve put forward,” which are an American austerity agenda. And they said they were going to get 10 million signatures on petitions to do this. Amazingly enough, for this big grassroots campaign, all this millions and millions in spending, they still only got about 300,000 signatures. And most of those signatures appear to be tied to either bought lists or people who work for companies allied with the Fix the Debt operation. So the bottom line is, Simpson and Bowles are arguing for austerity and being held up by much of the media as legitimate players, when in fact they are advocating for zombie ideas, ideas that have been slain by the voters and, frankly, even by Congress, and yet they walk among us.

AMY GOODMAN: Let’s go to another clip, this one uploaded to YouTube by a new group called “The Can Kicks Back.” It features Alan Simpson addressing, quote, “the youth.”

SEN. ALAN SIMPSON: Stop Instagraming your breakfast and tweeting your first-world problems and getting on YouTube so you can see “Gangnam Style.” And start using those precious social media skills and go out and sign people up on this, baby. Three people a week. Let it grow. And don’t forget: Take part or get taken apart. Boy, these old coots will clean out the Treasury before you get there.

AMY GOODMAN: That was Alan Simpson of the Simpson-Bowles Commission. Lisa Graves, what is this Can Kicks Back group?

LISA GRAVES: Well, it’s interesting. Simpson has talked about the Can Kicks Back as if it was some sort of grassroots operation that emerged on college campuses nationwide. In fact, it operates out of the Fix the Debt offices in Washington, and it is another arm of their operation. Internally, in essence, they call it the “millennial” part of their operation. This is a well-funded, very slick, glossy campaign with T-shirts and videos, featuring people like Simpson and others, claiming that your grandparents are ruining your future. It’s quite an audacious set of claims by these guys, especially when Social Security actually isn’t contributing to the debt currently and could easily be fixed 20 years from now by cutting out the loophole for all—for Social Security taxes on income above $110,000. And so, it’s quite a scam. It’s a gimmick. It’s part of the gimmick of their campaign. And it’s something that I think people ought to be very wary of.

AARON MATÉ: And quickly, John Nichols, the cuts are supposed to take effect on Friday. Their potential effect on working people?

JOHN NICHOLS: Their potential effect on working people is severe. First off, there are the direct effects. You have an across-the-board austerity cut in federal programs, and that will have service impacts right away, things like flying, just traveling in this country. Also, there are very credible estimates that this will lead to at a base line of 700,000 job losses. And so we’re talking, over the coming months, if this sequester goes forward, of a significant slowing of the U.S. economy.

This is classic austerity: cuts at a time when the economy is weak, followed by job losses. And the tragedy of it, the really significant thing to be conscious of, is that Simpson and Bowles and Fix the Debt are waiting on the sidelines here to jump in and say, “Well, this is so disorderly. You know, we don’t want to have across-the-board cuts.” And what they are really arguing for is a systematized austerity, one where you have very, very wealthy people deciding what sort of fixes we will have for our economy. And at the end of the day, invariably, the fix will be to lower their tax rates while at the same time taking deep cuts out of the earned benefit programs that Americans desperately need.

AMY GOODMAN: We’re going to leave it there, but we’re going to continue to follow this, of course. John Nichols, political writer for The Nation; his latest piece for The Nation is “The Austerity Agenda: An Electoral Loser.” And thanks to Lisa Graves, executive director of the Center for Media and Democracy and editor of “Pete Peterson Pyramid,” a new website that connects the dots between billionaire Pete Peterson and the Campaign to Fix the Debt campaign. The website is PetersonPyramid.org.

 

 

 

 

 

Welcome to the Network of Global Corporate Control: Meet the Global Corporate “Supra-Government”

In Uncategorized on February 12, 2013 at 7:36 pm

we-the-corporations-article

Oldspeak: “This small network of dominant global companies and banks, many of which are larger than most countries on earth, with no democratic accountability, are also acting independently as a type of “global supra-government” forcing even our dysfunctional and façade-like “democratic” governments to collapse if they do not do as “financial markets” say – such as the recent cases of democratically-elected governments in Greece and Italy whose officials were forced out and replaced with unelected bankers. In any other situation that’s called a coup d’état. Powerful government officials will not oppose this network, whether or not the power is good for human lives and human communities.”Andrew Gavin Marshall “They oust entrenched regimes where normal political processes could not do so. They force austerity, banking bail-outs and other major policy changes. Their influence dwarfs multilateral institutions such as the International Monetary Fund. Indeed, leaving aside unusable nuclear weapons, they have become the most powerful force on earth.” –Roger Altman, the former Deputy Secretary of the Treasury under the Clinton administration. Behold! The fruits of “free markets”, globalization, & unfettered capitalism. Workers around the world being fleeced, literally worked to death. People suffering with poverty, malnutrition, homelessness. The environment we all depend on being depleted, poisoned, destroyed… all to relentlessly maximize profits for the “supra-government” ever tightening its grip on power and all the while obliterating every day, incrementally, civil, human, natural and economic rights & freedoms. This system is not working. It must be changed.

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The “Real” Recovery: Welcome to the Network of Global Corporate Control
Cash Hoarding, Tax Evasion, and the Corporate Coup
Revealed: The Transnational Corporate Network That Runs The World

By Andrew Gavin Marshall @ AndrewGavinMarshall.Com:

Part 1: Meet the Global Corporate “Supra-Government”

We live in a corporate culture, where most of us have worked or currently work for corporations, we spend our money at corporate venues, on corporate products, watch corporately-owned television shows and movies, listen to corporate-sponsored music; our modes of transportation, communication and recreation are corporately influenced or produced; our sports stadiums and movie theaters are named after car companies and global banks; our food is genetically altered by multinational conglomerates, our drinking water is brought to us by Coca-Cola, our news is brought to us by Pfizer, and our political leaders are brought to us by Exxon, Shell, Goldman Sachs and JP Morgan Chase.

In this global corporate culture it is often difficult to take a step back and look at transnational corporations, beyond what they represent in our culture, and see that they are, in fact, totalitarian institutions with power being exercised from the top down, with no democratic accountability, legally bound to be interested only – and exclusively – in maximizing quarterly short-term profits, often to the detriment of the environment, labor, human rights, democracy, peace and the population as a whole.

In this first of a three-part series on the reaches of global corporate power, we’ll look specifically at the size and network influence of the world’s largest corporations. This is especially important given that the world’s population faces increasing challenges with over 1 billion people living in slums, billions more living in poverty, hunger and increasing starvation; with unemployment increasing, austerity and “adjustment” programs demanding that even those in the once-industrialized West dramatically reduce their living standards; as the environment is plundered and pillaged, and as governments give corporations more state welfare and subsidies while cutting welfare and social services for the poor.

Corporate culture creates, over time, a totalitarian culture as this dominant institution seeks to remake society in its own image – where people are punished and impoverished as corporations are supported, rewarded and empowered.

The network of global corporate control, in numbers

In the year 2000, of the world’s 100 largest economies, 51 were corporations, while only 49 were countries, based upon national GDP (gross domestic product) and corporate sales. Of the top 200 corporations in 2000, the United States had the largest share with 82, followed by Japan at 41, Germany at 20, and France at 17.

Of the world’s 100 largest economic entities in 2010, 42% were corporations; when looking at the top 150 economic entities, 58% were corporations. The largest corporation in 2010 was Wal-Mart, the 25th largest economic entity on earth, surpassed only by the 24 largest countries in the world, but with greater revenues than the GDP of 171 countries, placing it higher on the list than Norway and Iran.

Following Wal-Mart, the largest corporations in the world were: Royal Dutch Shell (larger than Austria, Argentina and South Africa), Exxon Mobil (larger than Thailand and Denmark), BP (larger than Greece, UAE, Venezuela and Colombia), followed by several other energy and automotive conglomerates.

In 2012, Fortune published its annual Global 500 list of the top 500 corporations in the world in 2011. The top 10 corporations in the world, as determined by total revenue, are: Royal Dutch Shell, Exxon Mobil, Wal-Mart Stores, BP, Sinopec Group, China National Petroleum, State Grid, Chevron, ConocoPhillips, and Toyota Motor.

Among some of the other top 100 are: Total (11), Gazprom (15), E.ON (16), ENI (17), ING Group (18), GM (19), General Electric (22), AXA (25), BNP Paribas (30), GDF Suez (33), Banco Santander (44), Bank of America (46), JP Morgan Chase (51), HSBC Holdings (53), Apple (55), IBM (57), Citigroup (60), Société Générale (67), Nestlé (71), Wells Fargo (80), Archer Daniels Midland (92), and Bank of China (93).

The 10 largest corporations in Canada include: Manulife Financial, Suncor Energy, Royal Bank of Canada, Power Corporation of Canada, George Weston, Magna International, Toronto-Dominion Bank, Bank of Nova Scotia, Onex, and Husky Energy.

The 10 largest corporations in Britain are: BP, HSBC Holdings, Tesco, Vodafone, Barclays, Lloyds Banking Group, Royal Bank of Scotland, Aviva, Rio Tinto Group, and Prudential.

The 10 largest conglomerates in France are: Total, AXA, BNP Paribas, GDF Suez, Carrefour, Crédit Agricole, Société Générale, Électricité de France, Peugeot, and Groupe BPCE.

The 10 largest conglomerates in Germany are: Volkswagen, E. ON, Daimler, Allianz, Siemens, BASF, BMW, Metro, Munich Re Group, and Deutsche Telekom.

The 10 largest conglomerates in the United States are: Exxon Mobil, Wal-Mart Stores, Chevron, ConocoPhillips, General Motors, General Electric, Berkshire Hathaway, Fannie Mae, Ford Motor, and Hewlett-Packard.

In October of 2011, a scientific study about the global financial system was released, the first of its kind, undertaken by three complex systems theorists at the Swiss Federal Institute of Technology in Zurich, Switzerland. The conclusion of the study revealed what many theorists and observers have noted for years:

“An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.” As one of the researchers stated, “Reality is so complex, we must move away from dogma, whether it’s conspiracy theories or free-market… Our analysis is reality-based.” Using a database which listed 37 million companies and investors worldwide, the researchers studied all 43,060 trans-national corporations (TNCs), including the share ownerships linking them.

The mapping of “power” was done through the construction of a model showing which companies controlled other companies through shareholdings. The web of ownership revealed a core of 1,318 companies with ties to two or more other companies. This “core” was found to own roughly 80% of global revenues for the entire set of 43,000 TNCs.

And then came what the researchers referred to as the “super-entity” of 147 tightly-knit companies, which all own each other, and collectively own 40% of the total wealth in the entire network. One of the researchers noted, “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network.”

This network poses a huge risk to the global economy, noted the researchers: “If one [company] suffers distress… this propagates.” The study was undertaken with a data set established prior to the economic crisis, thus, as the financial crisis forced some banks to fail (such as Lehman Brothers) and others to merge (such as Merrill Lynch and Bank of America), the “super-entity” would now be even more connected, concentrated, and thus, dangerous for the economy.

The top 50 companies on the list of the “super-entity” included (as of 2007): Barclays Plc (1), Capital Group Companies Inc (2), FMR Corporation (3), AXA (4), State Street Corporation (5), JP Morgan Chase & Co. (6), UBS AG (9), Merrill Lynch & Co Inc (10), Deutsche Bank (12), Credit Suisse Group (14), Bank of New York Mellon Corp (16), Goldman Sachs Group (18), Morgan Stanley (21), Société Générale (24), Bank of America Corporation (25), Lloyds TSB Group (26), Lehman Brothers Holdings (34), Sun Life Financial (35), ING Groep (41), BNP Paribas (46), and several others.

In December of 2011, Roger Altman, the former Deputy Secretary of the Treasury under the Clinton administration, wrote an article for the Financial Times in which he explained that financial markets were “acting like a global supra-government,” noting:

“They oust entrenched regimes where normal political processes could not do so. They force austerity, banking bail-outs and other major policy changes. Their influence dwarfs multilateral institutions such as the International Monetary Fund. Indeed, leaving aside unusable nuclear weapons, they have become the most powerful force on earth.”

Altman continued, explaining that when the power of this “global supra-government” is flexed, “the immediate impact on society can be painful – wider unemployment, for example, frequently results and governments fail.” But of course, being a former top Treasury Department official, he went on to praise the “global supra-government,” writing that, “the longer-term effects can be often transformative and positive.”

Ominously, Altman concluded: “Whether this power is healthy or not is beside the point. It is permanent,” and “there is no stopping the new policing role of the financial markets.”

So, this small network of dominant global companies and banks, many of which are larger than most countries on earth, with no democratic accountability, are also acting independently as a type of “global supra-government” forcing even our dysfunctional and façade-like “democratic” governments to collapse if they do not do as “financial markets” say – such as the recent cases of democratically-elected governments in Greece and Italy whose officials were forced out and replaced with unelected bankers.

In any other situation that’s called a coup d’état. But as Altman’s view reflected, powerful government officials will not oppose this network, whether or not the power is good for human lives and human communities – which is, in Altman’s words, “beside the point.” After all, in his view, “it is permanent.”

Unless, of course, the people of the world decide to have a say in the matter.

Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, with a focus on studying the ideas, institutions, and individuals of power and resistance across a wide spectrum of social, political, economic, and historical spheres. He has been published in AlterNet, CounterPunch, Occupy.com, Truth-Out, RoarMag, and a number of other alternative media groups, and regularly does radio, Internet, and television interviews with both alternative and mainstream news outlets. He is Project Manager of The People’s Book Project and has a weekly podcast show with BoilingFrogsPost.

Overdose: The Next Financial Crisis

In Uncategorized on December 20, 2012 at 6:09 pm

Oldspeak: ““Ultimately there is going to be a price all around the world to be paid for this and the longer it continues the bigger that price is going to be.” – Peter P. Schiff, President Euro Pacific CapitalWhen the world’s financial bubble blew, the solution was to lower interest rates and pump trillions of dollars into the sick banking system. “The solution is the problem, that’s why we had a problem in the first place”. For Economics Nobel laureate Vernon Smith, the Catch 22 is self-evident. But interest rates have been at rock bottom for years, and governments are running out of fuel to feed the economy. “The governments can save the banks, but who can save the governments?” Forecasts predict all countries’ debt will reach 100% of GDP by next year. Greece and Iceland have already crumbled, who will be next?” The bailout bubble will inevitably pop. It is many times larger than any other financial bubble yet seen and it is global. Corporations world wide are being bailed out by governments, but as we’ve seen in Greece, Iceland, Spain, Italy, Portugal, governments themselves are collapsing under weight of the bailouts. Now governments need bailouts, ceding control to technocrats who go about the business of privatizing public assets, cutting social services and increasing taxes to facilitate extraction of the government and nations resources. Conditions are very much similar to those that existed in 2008 before the last collapse.   When it pops this will be the mother of all bubbles.  Interest rates are at or near zero across much of the world. There is no more rate lowering to be done to make possible more “stimulus packages”. It will be very interesting to see how thing proceed past that point.  My guess is not well.

Overdose: The Next Financial Crisis

https://www.youtube.com/watch?feature=player_embedded&v=4ECi6WJpbzE