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|Principal-agent problem||Quiet coup||Pecora commission||History of Casino Capitalism||Casino Capitalism Dictionary :-)||Humor||Etc|
Financialization is a process whereby financial markets, financial institutions, and financial elites gain greater influence over economic policy and economic outcomes. Financialization transforms the functioning of economic systems at both the macro and micro levels.
Its principal impacts are to (1) elevate the significance of the financial sector relative to the real sector, (2) transfer income from the real sector to the financial sector, and (3) increase income inequality and contribute to wage stagnation. Additionally, there are reasons to believe that financialization may put the economy at risk of debt deflation and prolonged recession.
Financialization operates through three different conduits: changes in the structure and operation of financial markets, changes in the behavior of nonfinancial corporations, and changes in economic policy.
Countering financialization calls for a multifaceted agenda that (1) restores policy control over financial markets, (2) challenges the neoliberal economic policy paradigm encouraged by financialization, (3) makes corporations responsive to interests of stakeholders other than just financial markets, and (4) reforms the political process so as to diminish the influence of corporations and wealthy elites.
Thomas Palley, See http://www.levyinstitute.org/pubs/wp_525.pdf
|Speculation and gambling were always a part of Wall Street but since the 1930’s
they were just a side-show, now they are the show.
Comment to Matt Taibbi article Fannie, Freddie, and the New Red and Blue t
“The sense of responsibility in the financial community
for the community as a whole is not small. It is nearly nil.”
-- John Kenneth Galbraith, The Great Crash of 1929
The term Casino Capitalism generally is symonim of neoliberalism (also called economic liberalism), but it also point out to a specific phase of neoliberal transformation of capitalism. Politically it was slow motion corporate coup d'état, which started in 70th and is now accomplished in the USA and other Western countries which buries social-democratic (New Deal style) model of capitalism.
It hypertrophied police functions of state (in the form of national-security state) while completely avoiding economic sphere in ways other then enforcement of laws (with a notable exclusion from this top 1% -- "Masters of the Universe"). Like bolshevism it uses the state for the enforcement of the social system. On top level this is crony capitalism for major corporation. On low level of medium and small business owners it presupposed a deregulated economy (in a sense of the "law of jungle" as a business environment).
Casino capitalism presupposes strong militarized state, suppressing all the attempts to challenge the new "nomenklatura" (much like was the case in the USSR). It is quite different from traditional liberalism:
“Liberalism” can refer to political, economic, or even religious ideas. In the U.S. political liberalism has been a strategy to prevent social conflict. It is presented to poor and working people as progressive compared to conservative or Right wing. Economic liberalism is different. Conservative politicians who say they hate “liberals” — meaning the political type — have no real problem with economic liberalism, including neoliberalism.
In other words this is neoliberal model of corporatism during the period of "cheap hydrocarbons". The period that is probably near the end and which by some estimate can last only another 50 years or so (less than 100 years). The major crisis of casino capitalism in 2008 was connected both with financial excesses (caused by moving to semi-criminal ways of extracting return on capital, typical for casino capitalism), but also with the rise of the price of oil and decrease of Energy returned on energy invested (EROEI). In this sense the last low oil price period which started in late 2014 and ended in spring 2018 can be viewed as the "last hurrah" of the casino capitalism.
In understanding neoliberal transformation of the society since early 80th it is important to understanding of the key role of financialization in this process. When major services are privatized (education, healthcare, pension plans) financial institution insert themselves as intermediaries in this arrangement and make it the main source of their profits. Also contrary to neoliberal propaganda this process is aided and abetted by state. State is used by neoliberalism as a tool of enforcing market relations even where they are not useless or even harmful (education). All this talk about irresolvable controversy between market and state is for gullible fools. In reality, being Trotskyism for rich, neoliberalism uses power of the state to enforce market relations by force on reluctant population even in areas where this can do no good. That make really it close to Soviet social experiment, which lasted from 1917 to 1991 or almost 75 years. As Marx noted "History repeats itself, first as tragedy, second as farce."
A very good discussion of the role of Financialisation in entrenchment of neoliberalism in modern societies can be found in the book by Costas Lapavitsas. Some highlights are provided in his Guardian article Finance's hold on our everyday life must be broken
This extraordinary public largesse towards private banks was matched by austerity and wage reductions for workers and households. As for restructuring finance, nothing fundamental has taken place. The behemoths that continue to dominate the global financial system operate in the knowledge that they enjoy an unspoken public guarantee. The unpalatable reality is that financialisation will persist, despite its costs for society.
Financialisation represents a historic and deep-seated transformation of mature capitalism. Big businesses have become "financialised" as they have ample profits to finance investment, rely less on banks for loans and play financial games with available funds. Big banks, in turn, have become more distant from big businesses, turning to profits from trading in open financial markets and from lending to households. Households have become "financialised" too, as public provision in housing, education, health, pensions and other vital areas has been partly replaced by private provision, access to which is mediated by the financial system. Not surprisingly, households have accumulated a tremendous volume of financial assets and liabilities over the past four decades.
The penetration of finance into the everyday life of households has not only created a range of dependencies on financial services, but also changed the outlook, mentality and even morality of daily life. Financial calculation evaluates everything in pennies and pounds, transforming the most basic goods – above all, housing – into "investments". Its logic has affected even the young, who have traditionally been idealistic and scornful of pecuniary calculation. Fertile ground has been created for neoliberal ideology to preach the putative merits of the market.
Financialisation has also created new forms of profit associated with financial markets and transactions. Financial profit can be made out of any income, or any sum of money that comes into contact with the financial sphere. Households, for example, generate profits for finance as debtors (mostly by paying interest on mortgages) but also as creditors (mostly by paying fees and charges on pension funds and insurance). Finance is not particular about how and where it makes its profits, and certainly does not limit itself to the sphere of production. It ranges far and wide, transforming every aspect of social life into a profit-making opportunity.
The traditional image of the person earning financial profits is the "rentier", the individual who invests funds in secure financial assets. In the contemporary financialised universe, however, those who earn vast returns are very different. They are often located within a financial institution, presumably work to provide financial services, and receive vast sums in the form of wages, or more often bonuses. Modern financial elites are prominent at the top of the income distribution, set trends in conspicuous consumption, shape the expensive end of the housing market, and transform the core of urban centres according to their own tastes.
Financialised capitalism is, thus, a deeply unequal system, prone to bubbles and crises – none greater than that of 2007-09. What can be done about it? The most important point in this respect is that financialisation does not represent an advance for humanity, and very little of it ought to be preserved. Financial markets are, for instance, able to mobilise advanced technology employing some of the best-trained physicists in the world to rebalance prices across the globe in milliseconds. This "progress" allows financiers to earn vast profits; but where is the commensurate benefit to society from committing such expensive resources to these tasks?
The term "casino capitalism" was coined by Susan Strange who used it as a title of her book Casino Capitalism published in 1986. She was one of the first who realized that
According to Susan Strange transformation of industrial capitalism into neoliberal capitalism ("casino capitalism") involved five trends. All of them increased the systemic instability of the system and the level of political corruption:
Now it is pretty much established fact that the conversion from "industrial capitalism" to neoliberal, completely financialialized "casino capitalism" is the natural logic of development of capitalism. In early and incomplete matter this trend was noticed at early 1990th by many thinkers. This is just the second iteration of the same trend which was interrupted by the Great Depression and subsequent WWII. So, in a way, replacement of industrial capitalism with financial capitalism in a natural tendency within the capitalism itself and corruption was contributing, but not decisive factor. The same is true about globalization, especially about globalization of financial flows, typical for casino capitalism, which is a form of colonialism (neocolonialism).
Also this conversion did not happen due to lack of oversight or as a folly. It was a couscous choice made by the US and GB elite, both of which faced deterioration of rates of return on capital. Also unlike "industrial capitalism" which was more-or-less stable system, able to outcompete the neo-theocratic system of the USSR, the financial capitalism is unstable in the same sense as radioactive elements are unstable. And this instability tend to increase with time. So there is probably natural half-life period for neoliberalism as a social system. It might be already reached in 2008. In we assume that global victory of neoliberalism happened in 1990. It is just 18 years. If we think that it happened in late 60th, then it is closer to 50 years.
The global crisis of neoliberal capitalism which started from bursting the USA subprime housing bubble in 2008 undermined ideological legitimacy of its central claim that "free markets" lead to faster and more uniform economic development of all countries. While the peak of its "ideological" power might be over (much like the peak of attractiveness of "command socialism" was over after WWII), it will exist in a zombie state for a long time due to economic and military power of the USA and G7. And as we know from Hollywood films, zombies can be especially bloodthirsty. It probably will remain the dominant force for at least the next two decades pursuing the same policy of "forceful" opening of energy rich and resource countries for western multinationals intact using color revolutions and local wars. But as Napoleon quipped "You can do anything with bayonets, you just can't sit on them".
Conversion to neoliberal capitalism was a reaction on stagnation of industrial production and as such it was nurtured and encouraged by a series of government decisions for the last 50 years. Stagnation of industrial production made expansion of financial sector of paramount importance for the ruling elite and by extension for Congress which represents this elite. House vote 377:4 for Commodity Futures Modernization Act of 2000 is pretty telling in this respect.
There were also at least two important parallel developments.
"Appetite comes with eating" and banks which initially rise as an alternative to usury gradually became indistinguishable from them, the new usury (vampire squid as Matt Taibbi called GS).
Financial institutions brass became dominant political force partially displacing (or more correctly complementing) media-military-industrial complex and oil-energy complex... Sen. Dick Durbin, on a local Chicago radio station blurted out an obvious truth about Congress which, despite being quite obvious, is rarely spoken "press scorps" :
“And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”
In other words the US political system is a brand of corporatism with financial capital standing on the top stop on interval to Washington, DC corporate hierarchy and holding the most of political power.
Most respectable authors like Henry Giroux in his article in Counterpunch generally consider the term "casino capitalism" to be an equivalent to the term Neoliberalism. Here is a relevant quote from Henry Giroux's Authoritarian Politics in the Age of Casino Capitalism :
There is more at work here than simply a ramped up version of social Darwinism with its savagely cruel ethic of “reward the rich, penalize the poor, [and] let everyone fend for themselves,” [ii] there is also a full scale attack on the social contract, the welfare state, economic equality, and any viable vestige of moral and social responsibility. The Romney-Ryan appropriation of Ayn Rand’s ode to selfishness and self-interest is of particular importance because it offers a glimpse of a ruthless form of extreme capitalism in which the poor are considered “moochers,” viewed with contempt, and singled out to be punished. But this theocratic economic fundamentalist ideology does more. It destroys any viable notion of the and civic virtue in which the social contract and common good provide the basis for creating meaningful social bonds and instilling in citizens a sense of social and civic responsibility. The idea of public service is viewed with disdain just as the work of individuals, social groups, and institutions that benefit the citizenry at large are held in contempt.
As George Lakoff and Glenn W. Smith point out, casino capitalism creates a culture of cruelty: “its horrific effects on individuals-death, illness, suffering, greater poverty, and loss of opportunity, productive lives, and money.”[iii]
But it does more by crushing any viable notion of the common good and public life by destroying “the bonds that hold us together.”[iv] Under casino capitalism, the spaces, institutions, and values that constitute the public are now surrendered to powerful financial forces and viewed simply as another market to be commodified, privatized and surrendered to the demands of capital. With religious and market-driven zealots in charge, politics becomes an extension of war; greed and self-interest trump any concern for the well-being of others; reason is trumped by emotions rooted in absolutist certainty and militaristic aggression; and skepticism and dissent are viewed as the work of Satan.
If the Republican candidacy race of 2012 is any indication, then political discourse in the United States has not only moved to the right—it has been introducing totalitarian values and ideals into the mainstream of public life. Religious fanaticism, consumer culture, and the warfare state work in tandem with neoliberal economic forces to encourage privatization, corporate tax breaks, growing income and wealth inequality, and the further merging of the financial and military spheres in ways that diminish the authority and power of democratic governance.[v] Neoliberal interests in freeing markets from social constraints, fueling competitiveness, destroying education systems, producing atomized subjects, and loosening individuals from any sense of social responsibility prepare the populace for a slow embrace of social Darwinism, state terrorism, and the mentality of war — not least of all by destroying communal bonds, dehumanizing the other, and pitting individuals against the communities they inhabit.
Totalitarian temptations now saturate the media and larger culture in the language of austerity as political and economic orthodoxy. What we are witnessing in the United States is the normalization of a politics that exterminates not only the welfare state, and the truth, but all those others who bear the sins of the Enlightenment — that is, those who refuse a life free from doubt. Reason and freedom have become enemies not merely to be mocked, but to be destroyed. And this is a war whose totalitarian tendencies are evident in the assault on science, immigrants, women, the elderly, the poor, people of color, and youth.
What too often goes unsaid, particularly with the media’s focus on inflammatory rhetoric, is that those who dominate politics and policymaking, whether Democrats or Republicans, do so largely because of their disproportionate control of the nation’s income and wealth. Increasingly, it appears these political elite choose to act in ways that sustain their dominance through the systemic reproduction of an iniquitous social order. In other words, big money and corporate power rule while electoral politics are rigged. The secrecy of the voting booth becomes the ultimate expression of democracy, reducing politics to an individualized purchase—a crude form of economic action. Any form of politics willing to invest in such ritualistic pageantry only adds to the current dysfunctional nature of our social order, while reinforcing a profound failure of political imagination. The issue should no longer be how to work within the current electoral system, but how to dismantle it and construct a new political landscape that is capable of making a claim on equity, justice, and democracy for all of its inhabitants. Obama’s once inspiring call for hope has degenerated into a flight from responsibility.
The Obama administration has worked to extend the policies of the George W. Bush administration by legitimating a range of foreign and domestic policies that have shredded civil liberties, expanded the permanent warfare state, and increased the domestic reach of the punitive surveillance state. And if Romney and his ideological cohorts, now viewed as the most extremists faction of the Republican Party, come to power, surely the existing totalitarian and anti-democratic tendencies at work in the United States will be dangerously intensified.
Alternatively, we could have spent more time studying the work of Hyman Minsky. We could also
have considered the possibility that, just as Keynes’s ideas were tested to destruction in the
1950s, 1960s and 1970s, Milton Friedman’s ideas might suffer a similar fate in the 1980s, 1990s
and 2000s. All gods fail, if one believes too much. Keynes said, of course, that "practical men
… are usually the slaves of some defunct economist". So, of course, are economists, even if the defunct economists are sometimes still alive.
Casino capitalism is a nickname for nailibelism. Probably more properly nickname would be financial corporatism. While the key idea of corporatism: that political actors are not individual people, but some associations and first of all corporations (which are officially considered to be "persons" and have rights as well as trade unions and some other associations) remains intact, financial corporatism is different from classic corporatism in several major ways:
Historically corporatism in various modifications became dominant social system after WWII and defeated "command socialism" as was implemented in the USSR. Here is an instructive review of corporatism history (The Economic System of Corporatism):
In the last half of the 19th century people of the working class in Europe were beginning to show interest in the ideas of socialism and syndicalism. Some members of the intelligentsia, particularly the Catholic intelligentsia, decided to formulate an alternative to socialism which would emphasize social justice without the radical solution of the abolition of private property. The result was called Corporatism. The name had nothing to do with the notion of a business corporation except that both words are derived from the Latin word for body, corpus.
The basic idea of corporatism is that the society and economy of a country should be organized into major interest groups (sometimes called corporations) and representatives of those interest groups settle any problems through negotiation and joint agreement. In contrast to a market economy which operates through competition a corporate economic works through collective bargaining. The American president Lyndon Johnson had a favorite phrase that reflected the spirit of corporatism. He would gather the parties to some dispute and say, "Let us reason together."
Under corporatism the labor force and management in an industry belong to an industrial organization. The representatives of labor and management settle wage issues through collective negotiation. While this was the theory in practice the corporatist states were largely ruled according to the dictates of the supreme leader.
One early and important theorist of corporatism was Adam Müller, an advisor to Prince Metternich in what is now eastern Germany and Austria. Müller propounded his views as an antidote to the twin dangers of the egalitarianism of the French Revolution and the laissez faire economics of Adam Smith. In Germany and elsewhere there was a distinct aversion among rulers to allow markets to function without direction or control by the state. The general culture heritage of Europe from the medieval era was opposed to individual self-interest and the free operation of markets. Markets and private property were acceptable only as long as social regulation took precedence over such sinful motivations as greed.
Coupled with the anti-market sentiments of the medieval culture there was the notion that the rulers of the state had a vital role in promoting social justice. Thus corporatism was formulated as a system that emphasized the positive role of the state in guaranteeing social justice and suppressing the moral and social chaos of the population pursuing their own individual self-interests. And above all else, as a political economic philosophy corporatism was flexible. It could tolerate private enterprise within limits and justify major projects of the state. Corporatism has sometimes been labeled as a Third Way or a mixed economy, a synthesis of capitalism and socialism, but it is in fact a separate, distinctive political economic system.
Although rulers have probably operated according to the principles of corporatism from time immemorial it was only in the early twentieth century that regimes began to identify themselves as corporatist. The table below gives some of those explicitly corporatist regimes.
|Corporatist Regimes of the Early Twentieth Century|
|National Corporatism||Italy||1922-1945||Benito Mussolini|
|Country, Religion, Monarchy||Spain||1923-1930||Miguel Primo de Rivera|
|National Socialism||Germany||1933-1945||Adolph Hitler|
|National Syndicalism||Spain||1936-1973||Francisco Franco|
|New State||Portugal||1932-1968||Antonio Salazar|
|New State||Brazil||1933-1945||Getulio Vargas|
|New Deal||United States||1933-1945||Franklin Roosevelt|
|Third Hellenic Civilization||Greece||1936-1941||Ioannis Metaxas|
|Justice Party||Argentina||1943-1955||Juan Peron|
In the above table several of the regimes were brutal, totalitarian dictatorships, usually labeled fascist, but not all the regimes that had a corporatist foundation were fascist. In particular, the Roosevelt New Deal despite its many faults could not be described as fascist. But definitely the New Deal was corporatist. The architect for the initial New Deal program was General Hugh Johnson. Johnson had been the administrator of the military mobilization program for the U.S. under Woodrow Wilson during World War I. It was felt that he did a good job of managing the economy during that period and that is why he was given major responsibility for formulating an economic program to deal with the severe problems of the Depression. But between the end of World War I and 1933 Hugh Johnson had become an admirer of Mussolini's National Corporatist system in Italy and he drew upon the Italian experience in formulating the New Deal.
It should be noted that many elements of the early New Deal were later declared unconstitutional and abandoned, but some elements such as the National Labor Relations Act which promoted unionization of the American labor force are still in effect. One part of the New Deal was the development of the Tennessee River Valley under the public corporation called the Tennessee Valley Authority (TVA). Some of the New Dealer saw TVA as more than a public power enterprise. They hoped to make TVA a model for the creation of regional political units which would replace state governments. Their goal was not realized. The model for TVA was the river development schemes carried out in Spain in the 1920's under the government of Miguel Primo de Rivera. Jose Antonio Primo de Rivera, the son of Miguel Primo de Rivera, was the founder of Franco's National Syndicalism.
Corporatist regime typically promote large governmental projects such as TVA on the basis that they are too large to be funded by private enterprise. In Brazil the Vargas regime created many public enterprises such as in iron and steel production which it felt were needed but private enterprise declined to create. It also created an organized labor movement that came to control those public enterprises and turned them into overstaffed, inefficient drains on the public budget.
Although the above locates the origin of corporatism in 19th century France it roots can be traced much further back in time. Sylvia Ann Hewlett in her book, The Cruel Dilemmas of Development: Twentieth Century Brazil, says,Corporatism is based on a body of ideas that can be traced through Aristotle, Roman law, medieval social and legal structures, and into contemporary Catholic social philosophy. These ideas are based on the premise that man's nature can only be fulfilled within a political community.
The central core of the corporatist vision is thus not the individual but the political community whose perfection allows the individual members to fulfill themselves and find happiness.
The state in the corporatist tradition is thus clearly interventionist and powerful.
Corporatism is collectivist; it is a different version of collectivism than socialism but it is definitely collectivist. It places some importance on the fact that private property is not nationalized, but the control through regulation is just as real. It is de facto nationalization without being de jure nationalization.
Although Corporatism is not a familiar concept to the general public, most of the economies of the world are corporatist in nature. The categories of socialist and pure market economy are virtually empty. There are only corporatist economies of various flavors.
These flavors of corporatism include the social democratic regimes of Europe and the Americas, but also the East Asian and Islamic fundamentalist regimes such as Taiwan, Singapore and Iran. The Islamic socialist states such as Syria, Libya and Algeria are more corporatist than socialist, as was Iraq under Saddam Hussain. The formerly communist regimes such as Russia and China are now clearly corporatist in economic philosophy although not in name.
Sine ira et studio
Tacitus, see Wikipedia
The term "Quiet coup" which means the hijacking of the political power in the USA by financial oligarchy was introduced by Simon H. Johnson, a British-American economist, who currently is the Ronald A. Kurtz Professor of Entrepreneurship at the MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. From March 2007 through the end of August 2008, he was Chief Economist of the International Monetary Fund. The term was introduced in his article in Atlantic magazine, published in May 2009(The Quiet Coup - Simon Johnson - The Atlantic). Which opens with a revealing paragraph:
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government
The wealth of financial sector gave it unprecedented opportunities of simply buying the political power iether directly or indirectly (via revolving door mechanism):
Becoming a Banana Republic
In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.
But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.
Top investment bankers and government officials like to lay the blame for the current crisis on the lowering of U.S. interest rates after the dotcom bust or, even better—in a “buck stops somewhere else” sort of way—on the flow of savings out of China. Some on the right like to complain about Fannie Mae or Freddie Mac, or even about longer-standing efforts to promote broader homeownership. And, of course, it is axiomatic to everyone that the regulators responsible for “safety and soundness” were fast asleep at the wheel.
But these various policies — lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership—had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector. Policy changes that might have forestalled the crisis but would have limited the financial sector’s profits — such as Brooksley Born’s now-famous attempts to regulate credit-default swaps at the Commodity Futures Trading Commission, in 1998—were ignored or swept aside.
The financial industry has not always enjoyed such favored treatment. But for the past 25 years or so, finance has boomed, becoming ever more powerful. The boom began with the Reagan years, and it only gained strength with the deregulatory policies of the Clinton and George W. Bush administrations. Several other factors helped fuel the financial industry’s ascent. Paul Volcker’s monetary policy in the 1980s, and the increased volatility in interest rates that accompanied it, made bond trading much more lucrative. The invention of securitization, interest-rate swaps, and credit-default swaps greatly increased the volume of transactions that bankers could make money on. And an aging and increasingly wealthy population invested more and more money in securities, helped by the invention of the IRA and the 401(k) plan. Together, these developments vastly increased the profit opportunities in financial services.
Not surprisingly, Wall Street ran with these opportunities. From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.
The great wealth that the financial sector created and concentrated gave bankers enormous political weight — a weight not seen in the U.S. since the era of J.P. Morgan (the man). In that period, the banking panic of 1907 could be stopped only by coordination among private-sector bankers: no government entity was able to offer an effective response. But that first age of banking oligarchs came to an end with the passage of significant banking regulation in response to the Great Depression; the reemergence of an American financial oligarchy is quite recent.
He further researched this theme in his book 2010 book 13 Bankers The Wall Street Takeover and the Next Financial Meltdown (ISBN 978-0307379054), coauthored with James Kwak. They also founded and regularly contributes to the economics blog The Baseline Scenario. See also History of Casino Capitalism
The net effect of the ideological counter-revolution based on market fundamentalism ideology was that it restored the power of financial oligarchy typical for Gilded Age. As Simon Johnson argues that was partially done by subverting regulators and that oversize institutions always disproportionately influence public policy:
The second problem the U.S. faces—the power of the oligarchy—is just as important as the immediate crisis of lending. And the advice from the IMF on this front would again be simple: break the oligarchy.
Oversize institutions disproportionately influence public policy; the major banks we have today draw much of their power from being too big to fail. Nationalization and re-privatization would not change that; while the replacement of the bank executives who got us into this crisis would be just and sensible, ultimately, the swapping-out of one set of powerful managers for another would change only the names of the oligarchs.
Ideally, big banks should be sold in medium-size pieces, divided regionally or by type of business. Where this proves impractical—since we’ll want to sell the banks quickly—they could be sold whole, but with the requirement of being broken up within a short time. Banks that remain in private hands should also be subject to size limitations.
This may seem like a crude and arbitrary step, but it is the best way to limit the power of individual institutions in a sector that is essential to the economy as a whole. Of course, some people will complain about the "efficiency costs" of a more fragmented banking system, and these costs are real. But so are the costs when a bank that is too big to fail—a financial weapon of mass self-destruction—explodes. Anything that is too big to fail is too big to exist.
To ensure systematic bank breakup, and to prevent the eventual reemergence of dangerous behemoths, we also need to overhaul our antitrust legislation. Laws put in place more than 100years ago to combat industrial monopolies were not designed to address the problem we now face. The problem in the financial sector today is not that a given firm might have enough market share to influence prices; it is that one firm or a small set of interconnected firms, by failing, can bring down the economy. The Obama administration’s fiscal stimulus evokes FDR, but what we need to imitate here is Teddy Roosevelt’s trust-busting.
Caps on executive compensation, while redolent of populism, might help restore the political balance of power and deter the emergence of a new oligarchy. Wall Street’s main attraction—to the people who work there and to the government officials who were only too happy to bask in its reflected glory—has been the astounding amount of money that could be made. Limiting that money would reduce the allure of the financial sector and make it more like any other industry.
Still, outright pay caps are clumsy, especially in the long run. And most money is now made in largely unregulated private hedge funds and private-equity firms, so lowering pay would be complicated. Regulation and taxation should be part of the solution. Over time, though, the largest part may involve more transparency and competition, which would bring financial-industry fees down. To those who say this would drive financial activities to other countries, we can now safely say: fine.Two Paths
To paraphrase Joseph Schumpeter, the early-20th-century economist, everyone has elites; the important thing is to change them from time to time. If the U.S. were just another country, coming to the IMF with hat in hand, I might be fairly optimistic about its future. Most of the emerging-market crises that I’ve mentioned ended relatively quickly, and gave way, for the most part, to relatively strong recoveries. But this, alas, brings us to the limit of the analogy between the U.S. and emerging markets.
Emerging-market countries have only a precarious hold on wealth, and are weaklings globally. When they get into trouble, they quite literally run out of money—or at least out of foreign currency, without which they cannot survive. They must make difficult decisions; ultimately, aggressive action is baked into the cake. But the U.S., of course, is the world’s most powerful nation, rich beyond measure, and blessed with the exorbitant privilege of paying its foreign debts in its own currency, which it can print. As a result, it could very well stumble along for years—as Japan did during its lost decade—never summoning the courage to do what it needs to do, and never really recovering. A clean break with the past—involving the takeover and cleanup of major banks—hardly looks like a sure thing right now. Certainly no one at the IMF can force it.
In my view, the U.S. faces two plausible scenarios. The first involves complicated bank-by-bank deals and a continual drumbeat of (repeated) bailouts, like the ones we saw in February with Citigroup and AIG. The administration will try to muddle through, and confusion will reign.
Boris Fyodorov, the late finance minister of Russia, struggled for much of the past 20 years against oligarchs, corruption, and abuse of authority in all its forms. He liked to say that confusion and chaos were very much in the interests of the powerful—letting them take things, legally and illegally, with impunity. When inflation is high, who can say what a piece of property is really worth? When the credit system is supported by byzantine government arrangements and backroom deals, how do you know that you aren’t being fleeced?
Our future could be one in which continued tumult feeds the looting of the financial system, and we talk more and more about exactly how our oligarchs became bandits and how the economy just can’t seem to get into gear.
The second scenario begins more bleakly, and might end that way too. But it does provide at least some hope that we’ll be shaken out of our torpor. It goes like this: the global economy continues to deteriorate, the banking system in east-central Europe collapses, and—because eastern Europe’s banks are mostly owned by western European banks—justifiable fears of government insolvency spread throughout the Continent. Creditors take further hits and confidence falls further. The Asian economies that export manufactured goods are devastated, and the commodity producers in Latin America and Africa are not much better off. A dramatic worsening of the global environment forces the U.S. economy, already staggering, down onto both knees. The baseline growth rates used in the administration’s current budget are increasingly seen as unrealistic, and the rosy "stress scenario" that the U.S. Treasury is currently using to evaluate banks’ balance sheets becomes a source of great embarrassment.
Under this kind of pressure, and faced with the prospect of a national and global collapse, minds may become more concentrated.
The conventional wisdom among the elite is still that the current slump "cannot be as bad as the Great Depression." This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances. If our leadership wakes up to the potential consequences, we may yet see dramatic action on the banking system and a breaking of the old elite. Let us hope it is not then too late.
It is pretty interesting to see how financial oligarchy filters information provided to the population to fit their biases. For example, the key facts about repeal of Glass-Steagall law (BTW Joe Biden voted for it) mostly hidden from the public:
The measure, which Mr. Gramm helped write and move through the Senate, also split up oversight of conglomerates among government agencies. The Securities and Exchange Commission, for example, would oversee the brokerage arm of a company. Bank regulators would supervise its banking operation. State insurance commissioners would examine the insurance business. But no single agency would have authority over the entire company.
"There was no attention given to how these regulators would interact with one another," said Professor Cox of Duke. "Nobody was looking at the holes of the regulatory structure."
The arrangement was a compromise required to get the law adopted. When the law was signed in November 1999, he proudly declared it "a deregulatory bill," and added, "We have learned government is not the answer."
Commodity Futures Trading Commission — under the leadership of Mr. Gramm’s wife, Wendy — had approved rules in 1989 and 1993 exempting some swaps and derivatives from regulation. In December 2000, the Commodity Futures Modernization Act was passed as part of a larger bill by unanimous consent after Senator Gramm dominated the Senate debate...
"He was the architect, advocate and the most knowledgeable person in Congress on these topics," Mr. Donovan said. "To me, Phil Gramm is the single most important reason for the current financial crisis."
"The virtually unregulated over-the-counter market in credit-default swaps has played a significant role in the credit crisis, including the now $167 billion taxpayer rescue of A.I.G.," Christopher Cox, the chairman of the S.E.C. and a former congressman, said Friday.
But you will never find discussion of flaws and adverse consequences Phil Gram (or Greenspan for a change) initiatives in Heritage Foundation and other right-wing think tanks publications.
So what we are experiencing is a the completion of the transformation of one phase of capitalism to another. It happened in stages:
Manufacturing stagnated and can't provide the "decent" rate of growth. Competition from
re-built Europe and Asian markets severely stressed the US manufacturing. due to competition
return of capital dropped and in several industries became negative.
Computers brought innovations into financial markets. They make possible real time trading
of induces like S&P500, complex financial instruments like derivatives, etc. Later they enables superfast
trading (HFT). All those instruments dramatically increased the possibilities of extracting the rent
by financial institutions from the society.
Globalization kicked in due to new opportunities offered by high speed global communications
(Internet). And that is not limited to outsourcing. Due to globalization the sheer size of the
financial markets increased to the extent that they started to represent a different, new transnational
phenomena allowing new types of redistribution of wealth to be practiced. Integration of Russian
elite (oligarchs) is just one example of this process. In case of pro-western oligarchs (fifth
column) West went to significant length to protect them and their racket (Mikhail
Khodorkovsky - Wikipedia,)
Commercial banks turned into investment banks to exploit this opportunity.
Financial sector completely corrupted academic science converting most economists to pay prostitutes
which serve their interests.
Collapse of the USSR provided the financial sector major shoot in the arm and a golden, once
in century opportunity to finance new half-billion consumers and stole for a penny on a dollar huge
industrial assets and natural resources as well as put most of those countries in the debt (Latin-Americanization
of xUSSR space). Harvard Mafia (with some
support from London) did the bidding of western banks in xUSSR space. As more becomes known about
the laundering of Russian money in Western banks, many in the United States will likely try to hide
behind stories of faraway organized crime. But U.S. policy toward Russia has contributed to that
country's sorry conditions--with the Harvard Institute for International Development's Russia project
(HIID) playing a major role (Harvard's
'Best and Brightest' Aided Russia's Economic Ruin ). Professor
Jeffery Sacks provided
a bogus idea of "shock therapy" to achieve spectacular for Western banks result. As a result all
xUSSR space became new Latin America with typical for Latin America problems like huge level of inequality,
prostitution, child poverty, and prominent role of organized crime.
Banks became dominant political force on western societies with no real counterbalance from
other parts of the elite. The first president completely subservient to banking elite was elected
in the USA in 1992. Bill Clinton regime lasted eight years and along with
economic rape of xUSSR space in best colonial powers tradition, it removed what was left of financial
regulations after the flurry of deregulation of the early 1980s. And they behaved as an occupying
force not only in xUSSR space but in the USA as well. They deprived workers out of their jobs, they
abolished the US pension system as it impede playing with population money and replaced in with widely
inadequate 401K plans. They deprived municipalities out of their revenues and assets, while municipalities
became just a den of bond traders looking for then next mark which give them the ability to put municipalities
deeper in debt.
Newly acquired political power of financial elite speeded the shift to bank "self-regulation"
created huge shadow banking system which dwarf "official" under the smoke screen of "free-market"
propaganda and PR from a coterie of corrupts academics (Chicago
Scholl, Harvard Mafia, etc) . It engaged
in pursuit of short term profits and self-enrichment of top brass which became new elite by-and-large
displacing not only the old one, but also the newly minted IT elite of dot-com boom. Using newly
acquired power financial elite remove all regulations that hamper their interests.
Glass-Steagall was repealed at the last
days of Clinton presidency, financial derivatives became unregulated.
Deindustrialization kicked in. As financial speculation proved to be much more profitable
to other activities deindustrialization kicked in the USA as the financial center of the world. Outsourcing
which first was limited to manufacturing jobs now extent its reach on IT and decimate previously
profitable sector and its export potential.
Externalities can no longer be suppressed and economics became unstable. Growth of inequality,
job insecurity, as well as frequency of financial crises were natural consequences of financialization
of the economy. They create huge imbalances, like bubble in residential real estate which was blown
with the help and full support of the USA government as a way to overcome dot-com crisis consequences.
Debt crisis strikes. Growth of debt became unsustainable and produces the financial crisis
of enormous proportions. By their reckless policies and greed financial sector caused huge financial
crisis of 2008 and now they are forcing national governments to auction off their cultural heritage
to the highest bidder. Everything must go in fire sales at prices rigged by twenty-something largest
banks, the most corrupt institutions the world has ever known.
Devastating "local" wars became "new normal". Due to financial crisis, the overconsumption in western economies came under threat. Debt expansion which led to overconsumption within the western economies affected (or infected) by financialization. To sustain the current standard of living financial expansion became the necessity. It took the form of a competition for spheres of influence in the area of energy supplies, which we see in post USSR space, Iraq, Libya and elsewhere. And central banks play critical role in financing wars. After all Banks of England was created with this exact purpose.
I think by 2008 when the second major financial crisis hit the USA, the transformation on the USA economy into casino capitalism, which is essentially implementation of neoliberal doctrine (or more correctly the US brand of corporatism) was by-and-large complete.
In short we are living in a new politico-economic system in which financial capital won victory over both labor and industrial capital. We might not like what we got, but financial elite is now a new ruling class and this fact is difficult to dispute. As a result. instead of the robber barons of the early 20th century (some of whom actually created/consolidated new industries), we have the top executives from investment banks, insurers and mortgage industry who represent a new Rentier class, much like old aristocracy.
They are living off parasitic monopolization of access to any (physical, financial, intellectual, etc.) kind of property and gaining significant amount of profit without contribution to society (see Rentier capitalism which is a very fuzzy term for neoliberal model of capitalism).
Stagnation of industrial manufacturing droved up financial speculation as the method to compensate for falling rate on return on capital. This stagnation became prominent during Reagan administration (which started the major shift toward neoliberalism), although signs of it were present from early 60th.
For example Chicago which was a manufacturing center since 1969 lost approximately 400K manufacturing jobs which were replaced mainly by FIRE-related jobs, In 1995 over 22% of those employed by FIRE industries (66K people) were working in executive and managerial positions. Another 17% are in marketing, sales and processional specialty occupations (computer system analysts, PR specialists, writer and editors).
Those changes in the structure of employment had several consequences:
The key to understanding of Casino Capitalism is that it was a series of government decisions (or rather non-decisions) that converted the state into neoliberal model. In other words casino capitalism has distinct "Government property" mark. It was the USA elite, which refused to act responsibly in the face of changing economic conditions resulting from its own actions, and instead chose to try to perpetuate, by whatever means it had at its disposal, the institutional advantages of dollar as a reserve currency which it had vis-à-vis its main economic rivals and grab as large part of the world economic pie as it can. And this power grab was supported first of all by the role of dollar as currency in which oil is traded.
There might be some geo-strategically motives as well as the US elite in late 80th perceived that competitiveness is slipping out of the USA and the danger of deindustrialization is real. Many accuse Reagan with the desire to ride dollar status as a world reserve currency (exorbitant privilege) until the horse is dead. That's what real cowboys do in Hollywood movies... But the collapse of the main rival, the USSR vindicated this strategy and give a strong short in the arm to financialization of the economy. Actually for the next ten years can be called a triumphal ascend of financialization in the USA.
Dominance of FIRE industries clustered up and in recent years reached in the USA quite dramatic proportions. The old Bolsheviks saying "When we say Lenin we mean the Party and when we say the Party we mean Lenin" now can be reworded: "Now it we say US banks, we mean the US government and vise versa if we say US government we mean US banks".
According to the Center for Responsive Politics, the FIRE sector was and is the biggest contributor to federal candidates in Washington. Companies cannot give directly, so they leave it to bundlers to solicit maximum contributions from employees and families. They might have been brought down to earth this year, but they’ve given like Gods: Goldman Sachs, $4.8 million; Citigroup, $3.7 million; J.P. Morgan Chase & Co., $3.6 million; Merrill Lynch, $2.3 million; Lehman Brothers, $2.1 million; Bank of America, $2.1 million. Some think the long-term effect of such contributions to individual candidates was clear in the roll-call votes for the bailout.
Take the controversial first House vote on bailout of major banks on Sept. 29, 2008. According to CRP, the "ayes" had received 53 percent more contributions from FIRE since 1989 than those who voted against the bill, which ultimately failed 228 to 205. The 140 House Democrats who voted for the bill got an average of $188,572 in this election cycle, while the 65 Republicans backing it got an average of $185,461 from FIRE—about 23 percent more than the bill’s opponents received. A tinkered bill was passed four days later, 263 to 171.
According to the article Fire Sale (The American Conservative) half of Obama’s top ten contributors, together giving him nearly $2.2 million, are FIREmen. The $13 million contributed by FIRE executives to Obama campaign is probably an undercount. Democratic committee leaders are also dependent of FIRE contributions. The list includes Sen. Dodd ( please look at Senator Dodd's top donors for 2007-8 on openSecrets.org ) and Sen. Chuck Schumer ($12 million from FIRE since 1989), Rep. Barney Frank ($2.5 million), and Rep. Charlie Rangel ($4 million, the top recipient in the House). All of them have been accused of taking truckloads of contributions while failing to act on the looming mortgage crisis. Dodd finally pushed mortgage reform last year but by then as his hometown paper, The Hartford Courant stated, "the damage was done."
At the same time rise of financial capital dramatically increased instability. An oversized financial sector produces instability due to multiple positive feedback loops. In this sense we can talk about Financial Sector Induced Systemic Instability of Economy. The whole society became "House of cards", "Giant Enron" and "extension of Las Vegas". Reckless management, greed and out-right stupidity in playing derivatives games was natural consequence of the oversized financial sector, not just a human folly. In a way it was dramatic manifestation of the oversized financial sector negative influence of the economy. And in 2008 it did brought out economy to the brink of destruction. Peak oil added to suffocating effect on the economy of reckless gambling (and related debts) of financial sector producing the economic calamity that rivals Great Depression. Also, like Socialism, Casino Capitalism demands too much of its elite. And in reality, the financial elite much like Bolsheviks elite, is having its own interests above the interests of the society.
As Kevin Phillips noted "In the United States, political correctness, religious fundamentalism, and other inhibitions sometimes dumb down national debate". And the same statement is true for financial elite that became the center of power under the Casino Capitalism. Due to avalanche of greed the society became one giant Enron as money that are made from value addition in the form of manufacturing fade in significance to the volume of the money that is made from shuffling money around. In other was the Wall Street's locked USA in the situation from which there is no easy exit.
Self-reinforcing ‘positive’ feedback loops prevalent in Casino Capitalism trigger an accelerating creation of various debt instruments, interest of which at some point overwhelm the system carrying capacity. Ability to lend against good collateral is quickly exhausted. At some point apparently there is no good collateral against which lending freely was possible, even at high rates. This means that each new stage of financial innovation involves scam and fraud, on increasing scale. In other words Ponzi economy of "saving and loans" is replaced with Madoff economy.
Whether you shift the resulting huge private debt to public to increase confidence or not, the net result is of this development of events is a crisis and a huge debt that society needs to take. Actually the debt bubble in 2008 can only be compared to the debt bubble of 1933. The liquidation of Bear Sterns and Lehman was only a start of consolidation of finances and we need to find something that replace financial sector dominance in the national economy. It would be nice is some technological breakthrough happened which would lift the country out of this deep hole.
See Financial Sector Induced Systemic Instability of Economy for more details.
Like Bolshevism was marked by deification of teaching of Marx and Lenin, converting them into pseudo-religious doctrine, the Casino Capitalism has its own deified ideological doctrine. It is the ideology of Neoliberalism. The latter as an ideology and an agenda seeks to topple democratic capitalism and replace it with a de facto unaccountable autocratic government which serves as channel of a wealth transfer from the public to a rentier elite. In a way it is a spectacular example of a successful (in a very negative sense) pseudo-religious doctrine.
Addiction of the societies to disastrous politico-economical doctrines are similar to addictions to alcohol and drugs in individuals. It is not easy to recover and it takes a long, long time and a lot of misery. As dissolution of the USSR aptly demonstrated not all societies can make it. In this case the USSR elite (nomenklatura) simply shed the old ideology as it understood that it will be better off adopting ideology of neoliberal capitalism; so it was revolution from above. this abrupt switch created chaos in economics (which was applauded by Washington which under Clinton administration adopted the stance the Carnage needs to be destroyed and facilitated the process), criminal privatization of major industries, and pushed into object poverty the 99% of population of those countries. For some period under "drunk Yeltsyn" Russia sees to exist as an independent country and became a vassal of Washington.
This also means that "society at large" did not had effective brakes to the assent of financial plutocracy (aka financial oligarchy). I would add to this the computer revolution and internet that made many financial transaction qualitatively different and often dramatically cheaper that in previous history. Computers also enabled creation of new financial players like mutual funds (which created a shadow banking system with their bond funds) , hedge funds, exchange-traded funds (ETFs), as well as high-frequency trading and derivatives.
From the historical view Reaganomics also can be considered to be the US flavor of Lysenkoism with economics instead of genetics as a target. Here is how Reaganomics is defined in Wikipedia
Reaganomics (a portmanteau of "Reagan" and "economics") refers to the economic policies promoted by United States President Ronald Reagan. The four pillars of Reagan's economic policy were to:
- reduce the growth of government spending,
- reduce marginal tax rates on income from labor and capital,
- reduce government regulation of the economy,
- control the money supply to reduce inflation.
In attempting to cut back on domestic spending while lowering taxes, Reagan's approach was a departure from his immediate predecessors.
Reagan became president during a period of high inflation and unemployment (commonly referred to as stagflation), which had largely abated by the time he left office.
Please not that the Number 1 idea ("reduce government spending") was essentially a scam, a smoke screen designed to attract Rednecks as a powerful voting block. In a way this was a trick similar to one played by Bolsheviks in Russia with its "worker and peasants rule" smokescreen which covered brutal dictatorship. In reality all administrations which preached Reagonomics (including Clinton's) expanded the role of state and government spending. The number two was applied by-and-large to top 1%. The number three means deregulation in the interests of financial oligarchy and dismantling all social program that hamper profit of the latter (including privatizing of Social Security). The number fours is a scam, in the same sense as number one. As soon as financial institutions get in trouble, money are printed as if there is no tomorrow.
While the essence of Reagonomics was financial deregulation, the other important element was restoring the Gilded Age level of power of financial oligarchy which influence was diminished by FDR reforms. In this sense we can say that Reagan revolution was essentially a counter-revolution: an attempt to reverse the New Deal restrictions on financial sector and restore its dominance in the society.
Like it was the case in Bolshevism the ideology was developed and forced upon the society by a very small group of players. The key ideas of Casino Capitalism were formulated and implemented by Reagan administration with some contribution by Nixon (the role of rednecks aka "moral majority", "silent majority" as an important part of republican political base, which can be attracted to detrimental to its economic position policies by the smoke screen of false "moral" promises).
It was supported by each president after Reagan (paradoxically with Clinton having the most accomplished record -- he was the best Republican President in a very perverted way). Like in case of Lysenkoism opponents were purged and economic departments of the country were captured by principless careerists ready to tow the party line for personal enrichment. Like in case of Bolshevism, many of those special breed of careerists rotated from Republican Party into Fed and other government structures. A classic example of compulsive careerists that were used by finance sector to promote its interests was Alan Greenspan.
One of the key ideas of Reaganomics was the rejection of the sound approach that there should be a balance between too much government regulation and too little and that government role is important for smooth functioning of the market. In this area Reagan and its followers can be called Anarchists and their idea of 'free market" is a misnomer that masks the idea of "anarchic market" (corporate welfare to be exact -- as it was implemented). Emergence of corporate welfare Queens such as GS, Citi, AIG, are quite natural consequence of Reaganomics.
|Reaganomics was a the US flavor of Lysenkoism with economics instead of generics as a target... It can and should be called Economic Lysenkoism.|
The most interesting part of Reaganomics was that the power of this ideology made it possible to conditioned "working class" and middle class to act against their own economic interests. It helped to ensure the stagnation of wages during the whole 25 years period, which is close to what Soviets managed to achieve with working class of the USSR, but with much more resentment. This makes it in many ways very similar to Bolshevism as a whole, not just Lysenkoism (extremes meet or in less flattering way: "history repeats, first as a tragedy, then as farce).
Along with the term Reaganimics which implicitly stresses the deregulation, the other close term "market fundamentalism" is often used. Here is how market fundamentalism is defined (Longview Institute):
Market Fundamentalism is the exaggerated faith that when markets are left to operate on their own, they can solve all economic and social problems. Market Fundamentalism has dominated public policy debates in the United States since the 1980's, serving to justify huge Federal tax cuts, dramatic reductions in government regulatory activity, and continued efforts to downsize the government’s civilian programs.
Some level of government coercion (explicit or implicit ) is necessary for proper labeling of any pseudo-scientific theory with the term Lysenkoism. This holds true for both Market Fundamentalism (after all Reagan revolution was "revolution from above" by financial oligarchy and for financial oligarchy and hired guns from academia just do what powers that be expected) and, especially, Supply side economic. The political genius of those ideas is evident. Supply-side economics transformed Republicans from a minority party into a majority party. It allowed them to promise lower taxes, lower deficits and, in effect, unchanged spending. Why should people not like this combination? Who does not like a free lunch?
In this sense the Republican Party played the role very similar to the Communist Party of the USSR.
For example supply side economics was too bizarre and would never survive without explicit government support. This notion is supported by many influential observers. For example, in the following comment for Krugman article (Was the Great Depression a monetary phenomenon):
Market fundamentalism (neoclassical counter-revolution — to be more academic) was more of a political construct than based on sound economic theory. However, it would take a while before its toxic legacy is purged from the economics departments. Indeed, in some universities this might never happen.
Extreme deregulation and extreme regulation (Brezhnev socialism) logically meets and both represent a variant of extremely corrupt society that cannot be sustained for long (using bayonets as in the case of USSR or using reserve currency and increasing leverage as is the case of the USA). In both cases the societies were economically and ideologically bankrupt at the end.
Actually, elements of market fundamentalism looks more like religious doctrine than political philosophy — and that bonds its even closer to Lysenkoism. In both cases critics were silenced with the help of the state. It is interesting to note that Reaganomics was wiped into frenzy after the dissolution of the USSR, the country which gave birth to the term of Lysenkoism. In a way the last act of the USSR was to stick a knife in the back of the USA. As a side note I would like to stress that contrary to critics the USSR was more of a neo-feudal society with elements of slavery under Stalin. Gulag population were essentially state slaves; paradoxically a somewhat similar status is typical for illegal immigrants in industrialized countries. From this point of view this category of "state slaves" is generally more numerous that gulag inmates. Prison population also can be counted along those lines.
It look like either implicitly or explicitly Reagan's bet was on restoration of gilded Age with its dominance of financial oligarchy, an attempt to convert the USA into new Switzerland on the "exorbitant privilege" of dollar status as the global fiat currency.
Casino Capitalism is characterized by political dominance of FIRE industries (finance, insurance, and real estate) and diminished role of other and first of all manufacturing industries. It was also accompanied by the drastic growth of inequality (New Gilded Age). Its defining feature is "the triumph of the trader in assets over the long-term producer" in Martin Wolf's words.
Attempts of theoretical justification of Economic Lysenkoism fall into several major categories:
Those can be called pillars, cornerstones of Economic Lysenkoism. Each of the deserves as separate article (see links above).
Historically especially important was Chicago school of market fundamentalism promoted pseudo-scientific theories of Milton Freedman (Chicago School) as well as supply side economics.
The huge boost of Casino Capitalism was given by the collapse of the USSR in 1991. That gave a second life to Reagan era. Collapse of the USSR was used as a vindication of market fundamentalism. After it New Deal regulations were systematically destroyed. Dumped down variants of Nietzsche philosophy like bastardatized variant promoted by Russian emigrant became fashionable with an individual "creative" entrepreneur as a new Übermensch, which stands above morality.
"The word Übermensch [designates] a type of supreme achievement, as opposed to 'modern' men, 'good' men, Christians, and other nihilists ... When I whispered into the ears of some people that they were better off looking for a Cesare Borgia than a Parsifal, they did not believe their ears." Safranski argues that the combination of ruthless warrior pride and artistic brilliance that defined the Italian Renaissance embodied the sense of the Übermensch for Nietzsche. According to Safranski, Nietzsche intended the ultra-aristocratic figure of the Übermensch to serve as a Machiavellian bogeyman of the modern Western middle class and its pseudo-Christian egalitarian value system.
The instability and volatility of active markets can devalue the economic base of real lives, or in more macro-scenarios can lead to the collapse of national and regional economies. In a very interesting and grotesque way it also incorporates the key element of Brezhnev Socialism in everyday life: huge manipulation of reality by mass media to the extend that Pravda and the USSR First TV Channel look pretty objective in comparison with Fox news and Fox controlled newspapers. Complete poisoning of public discourse and relying on the most ignorant part of the population as the political base (pretty much reminiscent of how Bolsheviks played "Working Class Dictatorship" anti-intellectualism card; it can be called "Rednecks Dictatorship").
While transformation to casino capitalism was an objective development, there were specific individuals who were instrumental in killing New Deal regulations. We would single out the following twelve figures:
There is no question that Reagan and most of his followers (Greenspan, Rubin, Phil Gramm, etc) were rabid radicals blinded by ideology. But they were radicals of quite different color then FDR with disastrous consequences for society. Here again the analogy with Bolsheviks looms strong. In a way, they can be called financial terrorists inflicting huge damage on the nation and I wonder if RICO can be use to prosecute at least some of them.
In Bailout Nation (Chapter 19) Barry Ritholtz tried to rank major players that led country into the current abyss:
1. Federal Reserve Chairman Alan Greenspan
2. The Federal Reserve (in its role of setting monetary policy)
3. Senator Phil Gramm
4-6. Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings (rating agencies)
7. The Securities and Exchange Commission (SEC)
8-9. Mortgage originators and lending banks
11. The Federal Reserve again (in its role as bank regulator)
12. Borrowers and home buyers
13-17. The five biggest Wall Street firms (Bear Stearns, Lehman Brothers, Merrill Lynch,Morgan Stanley, and Goldman Sachs) and their CEOs
18. President George W. Bush
19. President Bill Clinton
20. President Ronald Reagan
21-22. Treasury Secretary Henry Paulson
23-24. Treasury Secretaries Robert Rubin and Lawrence Summers
25. FOMC Chief Ben Bernanke
26. Mortgage brokers
27. Appraisers (the dishonest ones)
28. Collateralized debt obligation (CDO) managers (who produced the junk)
29. Institutional investors (pensions, insurance firms, banks, etc.) for
buying the junk
30-31. Office of the Comptroller of the Currency (OCC); Office of Thrift
32. State regulatory agencies
33. Structured investment vehicles (SIVs)/hedge funds for buying the junk
Hyman Minsky argued that a key mechanism that pushes an economy towards a crisis is the accumulation of debt and the fact the financial system represents a positive feedback loop that tend to destabilize the system, creating ossilations in the form of boom and bust cycles. . He identified 3 types of borrowers that contribute to the accumulation of insolvent debt: Hedge Borrowers; Speculative Borrowers; and Ponzi Borrowers. That corresponds to three stages of Casino Capitalism of increasing fragility:
Growth of debt and increased levarate at some point create predocition of the crash. The stage of business cycle at which those preconditions are met is called "Minsky moment":
A Minsky moment is the point in a credit cycle or business cycle when investors are starting to have cash flow problems due to spiraling debt they have incurred in order to finance speculative or Ponzy investments.
At this point, a major selloff begins due to the fact that no counterparty can be found to bid at the high asking prices previously quoted, leading to a sudden and precipitous collapse in market clearing asset prices and a sharp drop in market liquidity.
After the collapse of the USSR there were a lot of chest thumping of the status of America as a hyper power (American exceptionalism) and the "end of history" where neoliberalism that displaced Brazhvev socialism (and wiped out the socialist camp) was supposed to reign supreme forever.
But this triumphal march of neoliberalism was short lived. The system proved to be self-destructive due to strong positive feedback look from the unregulated financial sector.
But in 2000 the first moment to pay the piper arrives. It was postponed by Iraq war and housing bubble, but reappeared in much more menacing form in 2008. In 2009 the USA experienced a classic Minsky moment with high unemployment rate and economy suppressed by (and taken hostage) by Ponzi finance institutions which threaten the very survival of the capitalist system and way of life. Huge injection freom the state halped to save the economy from disintration, but the price was very high. And after 2009 the US economy entered the period prologed stagnation, called the perios of "secular stagnation".
In events preceding 2008 the shift from speculative toward Ponzi finance was speed up by increased corruption of major players. The drive to redistribute wealth up destroyed any remnants of the rule of the law in the USA. It became a neo-feudal two casts society with "Masters of the Universe" as the upper cast (top 1% ) and "despicables" (lower 80%) as the lower cast. With some comprador strata of professional in between (top 20% or so), who generally support the upper cast.
Loweer cast experienced deterioration of the standard of living, loss of well paying jobs to outsourcing and offshoring and in 2016 revolted electing Trump, who defeated Hillary Clinton, who became a real symbol of the corruption of neoliberal system.
"As Minsky observed, capitalism is inherently unstable. As each crisis is successfully contained, it encourages greater speculation and risk taking in borrowing and lending. Financial innovation makes it easier to finance various schemes. To a large extent, borrowers and lenders operate on the basis of trial and error. If a behavior is rewarded, it will be repeated. Thus stable periods naturally lead to optimism, to booms, and to increasing fragility.
A financial crisis can lead to asset price deflation and repudiation of debt. A debt deflation, once started, is very difficult to stop. It may not end until balance sheets are largely purged of bad debts, at great loss in financial wealth to the creditors as well as the economy at large."
For more information see
For Strange the speed at which computerized financial markets work combined with their much larger size and near-universal pervasiveness is an important qualitative change, that changes the social system into what he called "casino capitalism". She actually popularized the term "Casino Capitalism" with her important book Casino Capitalism published in 1997.
One of the side effects of this change is that volatility extends globally. Approximately $1.5 trillion dollars are invested daily as foreign transactions. It is estimated that 98% of these transactions are speculative. In comparison with this casino Las Vegas looks like a aborigine village in comparison with Manhattan.
Susan Strange (June 9, 1923 - October 25, 1998) was a British academic who was influential in the field of international political economy. Her most important publications include
- Casino Capitalism,
- Mad Money,
- States and Markets and The retreat of the State: The Diffusion of Power in the World Economy.
For a quarter of a century, Susan Strange was the most influential figure in British international studies. She held a number of key academic posts in Britain, Italy and Japan. From 1978 to 1988, she was Montague Burton Professor of International Relations at the London School of Economics and Political Science (LSE), the first woman to hold this chair and a professorial position in international relations at the LSE. She was a major figure in the professional associations of both Britain and the US: she was an instrumental founding member and first Treasurer of the British International Studies Association (BISA)  and the first female President of the International Studies Association (ISA) in 1995.
It was predominantly as a creative scholar and a forceful personality that she exercised her influence. She was almost single-handedly responsible for creating ‘international political economy’ and turning it into one of the two or three central fields within international studies in Britain, and she defended her creation with such robustness, and made such strong claims on its behalf, that her influence was felt—albeit not always welcomed—in most other areas of the discipline. She was one of the earliest and most influential campaigners for the closer integration of the study of international politics and international economics in the English language scholarship.
In the later period of her career, alongside the financial analyses offered in Casino Capitalism (the analysis in which she felt was vindicated by the South-East Asian financial crisis) and Mad Money, Strange's contributions to the field include her characterisation of the four different areas (production, security, finance and knowledge) through which power might be exercised in International Relations. This understanding of what she termed "structural power", formed the basis of her argument against the theory of American Hegemonic Decline in the early eighties.
Her analysis particularly in States and Markets focused on what she called the ‘market-authority nexus’, the see-saw of power between the market and political authority. The overall argument of her work suggested that the global market had gained significant power relative to states since the 1970s.
This led her to dub the Westphalia system Westfailure. She argued that a ‘dangerous gap’ was emerging between territorially-bound nation states and weak or partial intergovernmental cooperation in which markets had a free hand which could be constructive or destructive.
Among important early critiques of casino capitalism was John K. Galbraith. He promoted a pretty novel idea that the major economic function of Governments is to strengthen countervailing powers to achieve some kind of balance between capital and labor.
While unions are far from being perfect and tend to slide into corruption due to "iron law of oligarchy" when thier management stop representing interests of thwe worksers and start to reprreesnt interest of thier own narry strate of fat cats, there were the only sizable countewailing power that made the New Seal possible.
His prediction proved to be wrong as government actually represent the capitalist class and is not that interested in creating this balance, which was convincingly demonstrated by Thatcher and Reagan. Both Britain and the USA start sliding into a new form of corporations, called neoliberalism which actually does not allocate any space for uniot at the negotiation table and strive for their complete elimination and "atomization" of work force, when each invididual is up to himself to find employment and group solidarity is suppressed by instilling neoliberal ideology in schools and universitites as well as via MSM (which in the USA surprisingly never were allowed to use the work neoliberlaism, as if it represents some secret Masonic cult)
And it does not look like there is any renewed support of unions right (including important right to organize) at the post subprime/derivatives/shadow_banking crisis stage of neoliberalism, when neoliberal ideology became sufficiently discredited to allow rise of populist politicians such as Trump.
Still John K. Galbraith critique of primitive market fundamentalism of Milton Freedman and the whole pseudoscience of neoclassical economics which like Marxist political economy is one of there pillars of neoliberalism (along with Randism as philosophy and Neoconservatism or "Trotskyism for the rich" in politics), still has its value today. As Joseph Stiglitz noted (CSMonitor, Dec 28, 2006):
...In many ways, Galbraith was a more critical observer of economic reality.
Driven to understand market realities
Galbraith's vivid depictions of the good, bad, and ugly of American capitalism remain a sorely needed reminder that all is not quite as perfect as the perfect market models – with their perfect competition, perfect information, and perfectly rational consumers – upon which so much of Friedman's analysis depended.
Galbraith, who cut his teeth studying agricultural economics, strove to understand the world as it was, with all the problems of unemployment and market power that simplistic models of competitive markets ignore. In those models, unemployment didn't exist. Galbraith knew that made them fatally flawed
... ... ...
In his early research, Galbraith attempted to explain what had brought on the Great Crash of 1929 – including the role of the stock market's speculative greed fed by (what would today be called) irrational exuberance. Friedman ignored speculation and the failure of the labor market as he focused on the failures of the Federal Reserve. To Friedman, government was the problem, not the solution.
What Galbraith understood, and what later researchers (including this author) have proved, is that Adam Smith's "invisible hand" – the notion that the individual pursuit of maximum profit guides capitalist markets to efficiency – is so invisible because, quite often, it's just not there. Unfettered markets often produce too much of some things, such as pollution, and too little of other things, such as basic research. As Bruce Greenwald and I have shown, whenever information is imperfect – that is, always – markets are inefficient; hence the need for government action.
Galbraith reminded us that what made the economy work so well was not an invisible hand but countervailing powers. He had the misfortune of articulating these ideas before the mathematical models of game theory were sufficiently developed to give them expression. The good news is that today, more attention is being devoted to developing models of these bargaining relationships, and to complex, dynamic models of economic fluctuations in which speculation may play a central role.
While Friedman never really appreciated the limitations of the market, he was a forceful critic of government. Yet history shows that in every successful country, the government had played an important role. Yes, governments sometimes fail, but unfettered markets are a certain prescription for failure. Galbraith made this case better than most.
Galbraith knew, too, that people aren't just rational economic actors, but consumers, contending with advertising, political persuasion, and social pressures. It was because of his close touch with reality that he had such influence on economic policymaking, especially during the Kennedy-Johnson years.
Galbraith's penetrating insights into the nature of capitalism – as it is lived, not as it is theorized in simplistic models – has enhanced our understanding of the market economy. He has left an intellectual legacy for generations to come. And he has left a gap in our intellectual life: Who will stand up against the economics establishment to articulate an economic vision that is both in touch with reality and comprehensible to ordinary citizens?
Galbraith was vindicated in his belief that the only economics possible is political economics and that government is always an agent of dominant class. As such it always pursue poklitics favorable to this class, just making marginal efforts to prevent the open revolt of lower classes.
In 2008 neoliberal economist such as Krugman and (to a lesse extent) Stiglitz both have eaten humble pie, because according to neoclassical economics the crises should not have happened. Both should now reread Galbraith's The Great Crash: 1929 (see also extracts). Krugman also need to shred his previous writings with this mathiness execises of using differential equations to justify the dominance of financial oligarchy, and eat them with borsch ;-)
BTW it is interesting that in 1996 neoliberal stooge Paul Krugman criticized limitations of Galbright vision in the following way:
To be both a liberal and a good economist you must have a certain sense of the tragic--that is, you must understand that not all goals can be attained, that life is a matter of painful tradeoffs. You must want to help the poor, but understand that welfare can encourage dependency. You must want to protect those who lose their jobs, but admit that generous unemployment benefits can raise the long-term rate of unemployment. You must be willing to tax the affluent to help those in need, but accept that too high a rate of taxation can discourage investment and innovation.
To the free-market conservative, these are all arguments for government to do nothing, to accept whatever level of poverty and insecurity the market happens to produce. A serious liberal does not reply to such conservatives by denying that there are any trade-offs at all; he insists, rather, that some trade-offs are worth making, that helping the poor and protecting the unlucky may have costs but will ultimately make for a better society.
The revelation one gets from reading John Kenneth Galbraith's The Good Society is that Galbraith--who is one of the world's most celebrated intellectuals, and whom one would expect to have a deeper appreciation of the complexity of the human condition than a mere technical economist would -- lacks this tragic sense. Galbraith's vision of the economy is one without shadows, in which what is good for social justice always turns out to have no unfavorable side effects. If this vision is typical of liberal intellectuals, the ineffectuality of the tribe is not an accident: It stems from a deep-seated unwillingness to face up to uncomfortable reality.
Similar limited understanding of Galbright is demonstrated in London Times (cited from comment to Economist's View blog) :
Some motifs of Galbraith’s work have entered popular consciousness. Galbraith wrote of private opulence amid public squalor, illustrating it with a memorable metaphor of a family that travels by extravagant private car to picnic by a polluted river.
Yet while arguing for increased public expenditure on welfare, Galbraith gave scant attention to the limits of that approach. His writings perpetuate a debilitating weakness of modern liberalism: a reluctance to acknowledge that resources are scarce.
In Galbraith’s scheme, said Herbert Stein, the former chairman of the Council of Economic Advisers: “The American people were only asked whether they wanted cleaner air and water . . . The answers to such questions seemed obvious — but they were not the right questions.”
This idea of "casino capitalism" as a driver of financial instability was developed further in the book The Crisis of Global Capitalism by prominent financial speculator and staunch neoliberal George Soros (1998), who after Minsky highlights the potential for disequilibrium in the financial system, and the inability of non-market sectors to regulate markets.
the latter is a prominant feature of Casino Capitalism, which can be defined as economic system were financial barons run amok.Although the insights of the Soros critique of global capitalism are scarcely new, they were articulated with such candor and accuracy that the book made a significant impact. The following is a sampling of Soros' insights.
Bank lending also contributes to the instability, because the price of real and financial assets is set in part by their collateral value. The higher their market price rises the larger the loans banks are willing to make to their buyers to bid up prices. When the bubble bursts, the value of the assets plummets below the amount of the money borrowed against them. This forces banks to call their loans and cut back on the lending, which depresses asset prices and dries up the money supply. The economy then tanks-until credit worthiness is restored and a new boom phase begins.
When I bought shares in Lockheed and Northrop after the managements were indicted for bribery, I helped sustain the price of their stocks. When I sold sterling short in 1992, the Bank of England was on the other side of my transactions, and I was in effect taking money out of the pockets of British taxpayers. But if I had tried to take social consequences into account, it would have thrown off my risk-reward calculation, and my profits would have been reduced.
Soros argues that if he had not bought Lockheed and Northrop, then somebody else would have, and
Britain would have devalued sterling no matter what he did. "Bringing my social conscience into
the decision-making process would make no difference in the real world; but it may adversely affect
my own results." One can challenge the Soros claim that such behavior is amoral rather than immoral,
but his basic argument is accurate. His understanding that it is futile to look to individual morality
as the solution to the excesses of financial markets is all too accurate.
Publicly owned companies are single-purpose organizations-their purpose is to make money. The tougher the competition, the less they can afford to deviate. Those in charge may be well-intentioned and upright citizens, but their room for maneuver is strictly circumscribed by the position they occupy.
They are duty-bound to uphold the interests of the company. If they think that cigarettes are unhealthy or that fostering civil war to obtain mining concessions is unconscionable, they ought to quit their jobs. Their place will be taken by people who are willing to carry on.
Though not specifically mentioned by Soros, this is why corporations were in the past (at least
partially) excluded from the political processes (although it was never complete and it is well known
fact that Crusades and
Siege of Constantinople
(1204) were financed by Genoese
bankers upset by lack of access to the Byzantium markets). But at least formally other parts of the
society can define their goals and the rules of the marketplace and suppress excessive appetities
of banker, if nessesary by brute force. Financial oligarchy is incapable of distinguishing
between private corporate interests and broader public interests. And that situation became even
worse with the the global dominance of corporatism in the form of neoliberalism.
"Foreign ownership of capital deprives peripheral countries of autonomy and often hinders the development of democratic institutions. The international flow of capital is subject to catastrophic interruptions."
In times of uncertainty financial capital tends to return to its country of origin, thus depriving
countries at the periphery of the financial liquidity necessary to the function of monetized economies.
"The center's most important feature is that it controls its own economic policies and holds in its
hands the economic destinies of periphery countries."
Monetary values [under neoliberalism] have usurped the role of intrinsic values, and markets have come to dominate spheres of existence where they do not properly belong.
Law and medicine, politics, education, science, the arts, even personal relations-achievements or qualities that ought to be valued for their own sake are converted into monetary terms; they are judged by the money they fetch rather than their intrinsic value."
Because financial "capital is free to go where most rewarded, countries vie to attract and retain capital, and if they are to succeed they must give precedence to the requirements of international capital over other social objectives.
One notable later researcher of casino capitalism, especially "free market" fundamentalism propaganda Cambridge University researcher Ha-Joon Chang. In 2011 he published a fascinating book 23 Things They Don't Tell You About Capitalism. Here is a Youtube lecture at LSE (23 Things They Don't Tell You About Capitalism ). We will reproduce two Amazon reviews that shed some light at the key ideas of the book:
William PodmoreLoyd E. Eskildson
Ha-Joon Chang, Reader in the Political Economy of Development at Cambridge University, has written a fascinating book on capitalism's failings. He also wrote the brilliant Bad Samaritans. Martin Wolf of the Financial Times says he is `probably the world's most effective critic of globalization'.
Chang takes on the free-marketers' dogmas and proposes ideas like
- there is no such thing as a free market;
- the washing machine has changed the world more than the internet has --[ I respectfully disagree --NNB];
- we do not live in a post-industrial age;
- globalization isn't making the world richer;
- governments can pick winners;
- some rules are good for business;
- US (and British) CEOs are overpaid;
- more education does not make a country richer;
- and equality of opportunity, on its own, is unfair.
He notes that the USA does not have the world's highest living standard. Norway, Luxemburg, Switzerland, Denmark, Iceland, Ireland, Sweden and the USA, in that order, had the highest incomes per head. On income per hours worked, the USA comes eighth, after Luxemburg, Norway, France, Ireland, Belgium, Austria and the Netherlands. Japan, Switzerland, Singapore, Finland and Sweden have the highest industrial output per person.
Free-market politicians, economists and media have pushed policies of de-regulation and pursuit of short-term profits, causing less growth, more inequality, more job insecurity and more frequent crises. Britain's growth rate in income per person per year was 2.4 per cent in the 1960s-70s and 1.7 per cent 1990-2009. Rich countries grew by 3 per cent in the 1960s-70s and 1.4 per cent 1980-2009. Developing countries grew by 3 per cent in the 1960s-70s and 2.6 per cent 1980-2009. Latin America grew by 3.1 per cent in the 1960s-70s and 1.1 per cent 1980-2009, and Sub-Saharan Africa by 1.6 per cent in the 1960s-70s and 0.2 per cent 1990-2009. The world economy grew by 3.2 per cent in the 1960s-70s and 1.4 per cent 1990-2009.
So, across the world, countries did far better before Thatcher and Reagan's `free-market revolution'. Making the rich richer made the rest of us poorer, cutting economies' growth rates, and investment as a share of national output, in all the G7 countries.
Chang shows how free trade is not the way to grow and points out that the USA was the world's most protectionist country during its phase of ascendancy, from the 1830s to the 1940s, and that Britain was one of world's the most protectionist countries during its rise, from the 1720s to the 1850s.
He shows how immigration controls keep First World wages up; they determine wages more than any other factor. Weakening those controls, as the EU demands, lowers wages.
He challenges the conventional wisdom that we must cut spending to cut the deficit. Instead, we need controls capital, on mergers and acquisitions, and on financial products. We need the welfare state, industrial policy, and huge investment in industry, infrastructure, worker training and R&D.
As Chang points out, "Even though financial investments can drive growth for a while, such growth cannot be sustained, as those investments have to be ultimately backed up by viable long-term investments in real sector activities, as so vividly shown by the 2008 financial crisis."
This book is a commonsense, evidence-based approach to economic life, which we should urge all our friends and colleagues to read.
The 2008 'Great Recession' demands re-examination of prevailing economic thought - the dominant paradigm (post 1970's conservative free-market capitalism) not only failed to predict the crisis, but also said it couldn't occur in today's free markets, thanks to Adam Smith's 'invisible hand.' Ha-Joon Chang provides that re-examination in his "23 Things They Don't Tell You About Capitalism." Turns out that the reason Adam Smith's hand was not visible is that it wasn't there. Chang, economics professor at the University of Cambridge, is no enemy of capitalism, though he contends its current conservative version should be made better. Conventional wisdom tells us that left alone, markets produce the most efficient and just outcomes - 'efficient' because businesses and individuals know best how to utilize their resources, and 'just' because they are rewarded according to their productivity. Following this advice, countries have deregulated businesses, reduced taxes and welfare, and adopted free trade. The results, per Chang, has been the opposite of what was promised - slower growth and rising inequality, often masked by rising credit expansion and increased working hours. Alternatively, developing Asian countries that grew fast did so following a different version of capitalism, though to be fair China's version to-date has also produced much greater inequality. The following summarizes some of Chang's points:
- "There is no such thing as a free market" - we already have hygiene standards in restaurants, ban child labor, pollution, narcotics, bribery, and dangerous workplaces, require licenses for professions such as doctors, lawyers, and brokers, and limit immigration. In 2008, the U.S. used at least $700 billion of taxpayers' money to buy up toxic assets, justified by President Bush on the grounds that it was a necessary state intervention consistent with free-market capitalism. Chang's conclusion - free-marketers contending that a certain regulation should not be introduced because it would restrict market freedom are simply expressing political opinions, not economic facts or laws.
- "Companies should not be run in the interest of their owners." Shareholders are the most mobile of corporate stakeholders, often holding ownership for but a fraction of a second (high-frequency trading represents 70% of today's trading). Shareholders prefer corporate strategies that maximize short-term profits and dividends, usually at the cost of long-term investments. (This often also includes added leverage and risk, and reliance on socializing risk via 'too big to fail' status, and relying on 'the Greenspan put.') Chang adds that corporate limited liability, while a boon to capital accumulation and technological progress, when combined with professional managers instead of entrepreneurs owning a large chunk (e.g.. Ford, Edison, Carnegie) and public shares with smaller voting rights (typically limited to 10%), allows professional managers to maximize their own prestige via sales growth and prestige projects instead of maximizing profits. Another negative long-term outcome driven by shareholders is increased share buybacks (less than 5% of profits until the early 1980s, 90% in 2007, and 280% in 2008) - one economist estimates that had GM not spent $20.4 billion on buybacks between 1986 and 2002 it could have prevented its 2009 bankruptcy. Short-term stockholder perspectives have also brought large-scale layoffs from off-shoring. Governments of other countries encourage longer-term thinking by holding large shares in key enterprises (China Mobile, Renault, Volkswagen), providing greater worker representation (Germany's supervisory boards), and cross-shareholding among friendly companies (Japan's Toyota and its suppliers).
- "Free-market policies rarely make poor countries rich." With a few exceptions, all of today's rich countries, including Britain and the U.S., reached that status through protectionism, subsidies, and other policies that they and their IMF, WTO, and World Bank now advise developing nations not to adopt. Free-market economists usually respond that the U.S. succeeded despite, not because of, protectionism. The problem with that explanation is the number of other nations paralleling the early growth strategy of the U.S. and Britain (Austria, Finland, France, Germany, Japan, Korea, Singapore, Sweden, Taiwan), and the fact that apparent exceptions (Hong Kong, Switzerland, The Netherlands) did so by ignoring foreign patents (a free-market 'no-no'). Chang believes the 'official historians' of capitalism have been very successful re-writing its history, akin to someone trying to 'kick away the ladder' with which they had climbed to the top. He also points out that developing nations that stick to their Ricardian 'comparative advantage,' per the conservatives prescription, condemn themselves to their economic status quo.
- "We do not live in a post-industrial age." Most of the fall in manufacturing's share of total output is not due to a fall in the quantity of manufactured goods, but due to the fall in their prices relative to those for services, caused by their faster productivity growth. A small part of deindustrialization is due to outsourcing of some 'manufacturing' activities that used to be provided in-house - e.g.. catering and cleaning. Those advising the newly developing nations to skip manufacturing and go directly to providing services forget that many services mainly serve manufacturing firms (finance, R&D, design), and that since services are harder to export, such an approach will create balance-of-payment problems. (Chang's preceding points directly contradict David Ricardo's law of comparative advantage - a fundamental free market precept. Chang's example of how Korea built Pohang Steel into a strong economic producer, despite lacking experienced managers and natural resources, is another.)
- "The U.S. does not have the highest living standard in the world." True, the average U.S. citizen has greater command over goods and services than his counterpart in almost any other country, but this is due to higher immigration, poorer employment conditions, and working longer hours for many vs. their foreign counterparts. The U.S. also has poorer health indicators and worse crime statistics. We do have the world's second highest income per capita - Luxemburg's higher, but measured in terms of purchasing power parity (PPP) the U.S. ranks eighth. (The U.S. doesn't have the fastest growing economy either - China is predicted to pass the U.S. in PPP this coming decade.) Chang's point here is that we should stop assuming the U.S. provides the best economic model. (This is already occurring - the World Bank's chief economist, Justin Lin, comes from China.)
- "Governments can pick winners." Chang cites examples of how the Korean government built world-class producers of steel (POSCO), shipbuilding (Hyundai), and electronics (LG), despite lacking raw materials or experience for those sectors. True, major government failures have occurred - Europe's Concorde, Indonesia's aircraft industry, Korea's promotion of aluminum smelting, and Japan's effort to have Nissan take over Honda; industry, however, has also failed - e.g.. the AOL-Time Warner merger, and the Daimler-Chrysler merger. Austria, China, Finland, France, Japan, Norway, Singapore (in numerous other areas), and Taiwan have also done quite well with government-picked winners. Another problem is that business and national interests sometimes clash - e.g.. American firms' massive outsourcing has undermined the national interest of maintaining full employment. (However, greater unbiased U.S. government involvement would be difficult due to the 10,000+ corporate lobbyists and billions in corporate campaign donations - $500 million alone from big oil in 2009-10.) Also interesting to Chang is how conservative free marketing bankers in the U.S. lined up for mammoth low-cost loans from the Federal Reserve at the beginning of the Great Recession. Government planning allows minimizing excess capacity, maximizing learning-curve economies and economies of scale and scope; operational performance is enhanced by also forcing government-owned or supported firms into international competition. Government intervention (loans, tariffs, subsidies, prohibiting exports of needed raw materials, building infrastructure) are necessary for emerging economies to move into more sophisticated sectors.
- "Making rich people richer doesn't make the rest of us richer." 'Trickle-down' economics is based on the belief that the poor maximize current consumption, while the rich, left to themselves, mostly invest. However, the years 1950-1973 saw the highest-ever growth rates in the U.S., Canada, Australia, and New Zealand, despite increased taxation of the rich. Before the 'Golden Age,' per capita income grew at 1-1.5%/year; during the Golden Age it grew at 2-3% in the U.S. Since then, tax cuts for the rich and financial deregulation have allowed greater paychecks for top managers and financiers, and between 1979 and 2006 the top 0.1% increased their share of national income from 3.5% to 11.6%. The result - investment as a ratio of national output has fallen in all rich economies and the pace at which the total economic pie grew decreased.
- "U.S. managers are over-priced." First, relative to their predecessors (about 10X those in the 1960s; now 300-400X the average worker), despite the latter having run companies more successfully, in relative terms. Second, compared to counterparts in other rich countries - up to 20X. (Third, compared to counterparts in developing nations - e.g.. JPMorgan Chase, world's 4th largest bank, paid its CEO $19.6 million in 2008, vs. the CEO of the Industrial and Commercial Bank of China, the world's largest, being paid $234,700. Read more ›
Willem Buiter in his FT article After the Crisis Macro Imbalance, Credibility and Reserve-Currency suggested that after financial crisis of 2008 there might be very long a painful deleveraging period aka secular stagnation. He was right.
In short each financial crisis make recovery longer and longer. That's why the US will most likely face a long period of stagnation: the digestion of huge excessive debt of the private sector might well take a decade:
Since the excess of debt is relative to income and GDP, the lower the rate of growth, the longer the required period of digestion. This explains for the paradox of trying to stimulate consumption when the economy faces a monumental crisis provoked exactly by excessive debt and excessive consumption. A cartoon line best captured the spirit of it: "country addicted to speculative bubbles desperately searches a new bubble to invest in. "
... ... ...
The roots of the crisis are major international macroeconomic imbalances. Despite the fact that the excesses of the financial system were instrumental to lead these imbalances further than otherwise possible, insufficient regulation should not be viewed as the main factor behind the crisis. The expenditure of central countries, spinned by all sort of financial innovations created by a globalized financial system, was the engine of world growth. When debt became clearly excessive in central countries and the debt-financed expenditure cycle came to an end, the ensuing crisis paralyzed the world economy. With the lesson of 1929 well assimilated, American monetary policy became aggressively expansionist. The Fed inundated the economy with money and credit, in the attempt to avoid a deep depression. Even if successful, the economies of the US and the other central countries, given the burden of excessive debt, are likely to remain stagnant under the threat of deflation for the coming years. The assumption of troubled assets by the public sector, in order to avoid the collapse of the financial system, might succeed, but at the cost of a major increase in public debt. Fiscal policy is not efficient to restart the economy when the private sector remains paralyzed by excessive debt. Even if a coordinated effort to increase public expenditure is successful, the central economies will remain stagnant for as long as the excessive indebtedness of the private sector persists. The period of digestion of excess debt will be longer than the usual recessive cycle. Since imports represent a drain in the effort to reanimate domestic demand through public expenditure, while exports, on the contrary, contribute to the recovery of internal demand, the temptation to central economies to also adopt a protectionist stance will be strong.
Willem Buiter also defined ‘cognitive regulatory capture’ which existed during the Greenspan years and when the Fed were just an arm of Wall Street.
This regulatory capture has resulted in an excess sensitivity of the Fed to financial market and financial sector concerns and fears and in an overestimation of the strength of the link between financial market turmoil and financial sector deleveraging and capital losses on the one hand, and the stability and prosperity of the wider economy on the other hand. The paper gives five examples of recent behavior by the Fed that are most readily rationalized with the assumption of regulatory capture. The abstract of the paper follows next. The latest version of the entire enchilada can be found here. Future revisions will also be found there.
No. 1: Reagan Fires Fed Chairman Volcker and Replaces Him With Greenspan in 1987:
Volcker also understood that financial markets need to be regulated. Reagan wanted someone who did not believe any such thing, and he found him in a devotee of the objectivist philosopher and free-market zealot Ayn Rand.
If you appoint an anti-regulator as your enforcer, you know what kind of enforcement you’ll get. A flood of liquidity combined with the failed levees of regulation proved disastrous.
Greenspan presided over not one but two financial bubbles.
I had opposed repeal of Glass-Steagall. The proponents said, in effect, Trust us: we will create Chinese walls to make sure that the problems of the past do not recur. As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest—toward short-term self-interest, at any rate, rather than Tocqueville’s "self interest rightly understood."
Stiglitz also refers to a 2004 decision by the SEC "to allow big investment banks to increase their debt-to-capital ratio (from 12:1 to 30:1, or higher) so that they could buy more mortgage-backed securities, inflating the housing bubble in the process."
Once more, it was deregulation run amuck, and few even noticed.
The Bush administration was providing an open invitation to excessive borrowing and lending—not that American consumers needed any more encouragement.
Here he refers to bad accounting, the failure to address problems with stock options, and the incentive structures of ratings agencies like Moodys that led them to give high ratings to toxic assets.
Valuable time was wasted as Paulson pushed his own plan, "cash for trash," buying up the bad assets and putting the risk onto American taxpayers. When he finally abandoned it, providing banks with money they needed, he did it in a way that not only cheated America’s taxpayers but failed to ensure that the banks would use the money to re-start lending. He even allowed the banks to pour out money to their shareholders as taxpayers were pouring money into the banks.
The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal. Looking back at that belief during hearings this fall on Capitol Hill, Alan Greenspan said out loud, "I have found a flaw." Congressman Henry Waxman pushed him, responding, "In other words, you found that your view of the world, your ideology, was not right; it was not working." "Absolutely, precisely," Greenspan said. The embrace by America—and much of the rest of the world—of this flawed economic philosophy made it inevitable that we would eventually arrive at the place we are today.
The flawed economic philosophy brought by Reagan, and embraced by so many, brought us to this day. Ideas have consequences, especially when we stop empirically testing them. Republican economics have created great pain to America and harmed our national interest.
The flaw that Greenspan found was always there: self-regulation does not work. As Stiglitz said:
As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest — toward short-term self-interest
Yes, for all their claims to science, the premise conflicts with tendencies of people.
This is the real legacy of Ronald Reagan and Alan Greenspan:
The whole scheme was kick-started under Ronald Reagan. Between his tax cuts for the rich and the Greenspan Commission’s orchestrated Social Security heist, working Americans lost out in a generational wealth transfer shift now exceeding $1 trillion annually from 90 million working class households to for-profit corporations and the richest 1% of the population. It created an unprecedented wealth disparity that continues to grow, shames the nation and is destroying the bedrock middle class without which democracy can’t survive.
Greenspan helped orchestrate it with economist Ravi Batra calling his economics "Greenomics" in his 2005 book "Greenspan’s Fraud." It "turns out to be Greedomics" advocating anti-trust laws, regulations and social services be ended so "nothing....interfere(s) with business greed and the pursuit of profits."
In Orwell's Animal Farm all animals are equal - except that some are more equal than others. All in the spirit of law, order and the proper functioning of society, of course. Fittingly, the animals that have chosen this role by themselves and for themselves, are the pigs.
Cut to US financial markets today. After years of swinish behavior more reminiscent of Animal House than anything else, the pigs are threatening to destroy the entire farm. As if it wasn't enough that they devoured all the "free market" food available and inundated the world with their excreta, they now wish to be put on the public trough. Truly, some businessmen believe they are more equal than others.
But do not blame the pigs; they are expected to act as swine nature dictates. The fault lies entirely with the farmers, those authorities entrusted by the people to oversee the farm because they supposedly knew better. While the pigs were rampaging and tearing the place apart, they were assuring us all that farms function best when animals are free to do as they please, guided solely by invisible hooves. No regulation, no oversight, no common sense. Oh yes, and pigs fly..
So what is to be done now? Two things:
- (a) Let financial markets sort themselves out, but with rock solid backing for bank depositors, pension funds and public institutions. The public purse should not be used to bail out - directly or indirectly - speculators in hedge funds, private equity funds and the like. Those that live by the leverage sword can defend themselves or perish by credit destruction.
- (b) Revamp public policy towards increasing earned income for working people.
In other words, the focus from now on should be on adding value by means of work and savings (capital formation), instead of inflating assets and borrowing.
Furthermore, we should realize that in a world already inhabited by close to 7 billion people and beset by resource depletion and environmental degradation, defending growth for growth's sake is a losing proposition. The wheels are already wobbling on the Permagrowth model; pumping harder on the accelerator is not going to make it go any faster and will likely result in a fatal crash.
Debt, and finance in general, should be left to re-size downwards to a level that better reflects the carrying capacity of our world. The Fed's current actions are shortsighted and "conservative" in the worst interpretation of the words: they are designed to artificially maintain debt at levels that myopically projects growth as far as the eye can see.
What level of resizing may be necessary? I hope not as much as at Bear Stearns, which got itself bought by Morgan at buzz-saw prices: $2 per share represents a 98% discount from its $84 book value. What scares me, though, is the statement by Morgan's CFO, who said the price reflected the risk the firm was taking, even though he was comfortable with the valuation of assets in Bear's books. It "...gives us the flexibility and margin of error that's appropriate given the speed at which the transaction came together", he said.
If it takes a 98% discount and the explicit guarantee of the Fed for a large portion of assets to buy one of the largest investment banks in the world, where should all other financial firms be trading at? ....Hello? Anyone? Is that a great big silence I hear, or the sound of credit imploding into a vacuum?
Aug 19, 2018 | www.zerohedge.com
"Russian influence will flow through that pipeline right into Europe, and that is what we are going to prevent," an unnamed U.S. official told the Wall Street Journal just as Russian President Vladimir Putin and Chancellor Angela Merkel meet outside of Berlin on Saturday centered on the two countries moving forward with the controversial Russian-German Nord Stream 2 gas pipeline, but also involving issues from the Iran nuclear deal to ending the war in Syria.
Intense pressure from Washington is overshadowing the project, construction of which is already in advanced stages, as the WSJ cites current and former US officials who say sanctions are under discussion and could be mobilized in a mere matter of weeks .
These potential sanctions, ostensibly being discussed in response to US intelligence claims of Russian interference in the 2016 election, could target companies and financial firms involved in the massive pipeline's construction . This comes after comments from President Trump at the opening of a NATO summit in July made things uncomfortable for his German counterpart when he said that Germany is so dependent on Russia for energy that it's essentially being "held captive" by Vladimir Putin and his government.
"Germany is captive of Russia because it is getting so much of its energy from Russia. They pay billions of dollars to Russia and we have to defend them against Russia," Trump told NATO chief Jens Stoltenberg at a televised opening breakfast.
The pipeline has been opposed by multiple US administrations, who have long accuse the Kremlin of seeking to accrue political leverage over Europe given the latter's already high dependence on Russian natural gas. The pipeline has been a frequent talking point and target of attacks by Trump, who has threatened to escalate the trade war against Germany going back months if it supported the construction of the pipeline. US officials have also expressed concern that Russia will pull pack significantly from delivering natural gas via Ukraine when its Gazprom tranit contract expires by the close of 2019. Ukraine is currently the chief Russian natural-gas export point to the EU and depends heavily on levying fees on this trade.
Both Russia and Germany have sought to calm US concerns over the Ukraine issue, with Putin himself reportedly telling both Merkel and Trump that he is "ready to preserve" gas transit through Ukraine even after Nord Stream 2 was completed.
US officials speaking to the WSJ , however, downplayed the Ukraine issue, instead focusing on the urgency of allowing such significant and irreversible Russian economic, political, and infrastructural inroads into the heart of Europe .
Richard Grenell, the U.S. ambassador to Germany, told the WSJ , "We have been clear that firms working in the Russian energy export-pipeline sector are engaging in a line of business that carries sanctions risk," -- something which he's repeatedly emphasized with officials in Berlin. President Trump himself has also reportedly raised the issue directly with Chancellor Merkel on multiple occasions. But for all the shrill US media claims that Trump is somehow doing Putin's bidding, the WSJ has this illuminating line : "Officially, the European Commission, the EU's executive body, is coordinating the gas-transit talks, but Ms. Merkel also has played a leading role because of her regular contacts and longstanding relationship with Mr. Putin, European officials say ."
Meanwhile, it appears that Washington has a losing hand even while making threats of sanctions in an attempt to block the pipeline project.
Crucially, the WSJ report provides further confirmation of the following previously known but hugely significant detail :
A European energy executive familiar with the discussions said company representatives had told John McCarrick, deputy assistant secretary in the State Department's Bureau of Energy Resources, that the five European companies and Gazprom had already provided €5.5 billion ($6.3 billion) in financing and that the project wouldn't be stopped even if the U.S. were to impose sanctions .
The Nord Stream 2 project was started in 2015 and is a major joint venture between Russia's Gazprom and European partners, including German Uniper, Austria's OMV, France's Engie, Wintershall and the British-Dutch multinational Royal Dutch Shell.
The pipeline is set to run from Russia to Germany under the Baltic Sea - doubling the existing pipeline's capacity of 55 cubic meters per year, and is therefore critical for Europe's future energy needs.
Currently, the second phase involves utilizing an existing pipeline already channelling smaller amount of gas from Russia to Germany. Construction for the second phase started in May of this year.
GlassHouse101 -> Winston Churchill Sat, 08/18/2018 - 13:29 Permalink07564111 -> GlassHouse101 Sat, 08/18/2018 - 13:35 Permalink
More Sanctions!! Sanction all of the countries!
will lead only to war with Russia..take that as fact.
Aug 18, 2018 | www.zerohedge.comThe FBI has been dealt a major blow after a Washington DC judge ruled that the agency must respond to a FOIA request for documents concerning the bureau's efforts to verify the controversial Steele Dossier, before it was used as the foundation of a FISA surveillance warrant application and subsequent renewals.
US District Court Judge Amit Mehta - who in January sided with the FBI's decision to ignore the FOIA request, said that President Trump's release of two House Intelligence Committee documents (the "Nunes" and "Schiff" memos) changed everything.
Considering that the FBI offered Steele $50,000 to verify the Dossier's claims yet never paid him, BuzzFeed has unsuccessfully tried to do the same to defend themselves in a dossier-related lawsuit, and a $50 million Soros-funded investigation to continue the hunt have turned up nothing that we know of - whatever documents the FBI may be forced to cough up regarding their attempts to verify the Dossier could prove highly embarrassing for the agency.
[I]f Mr. Steele could get solid corroboration of his reports, the F.B.I. would pay him $50,000 for his efforts , according to two people familiar with the offer. Ultimately, he was not paid . - NYT
What's more, forcing the FBI to prove they had an empty hand will likely embolden calls to disband the special counsel investigation - as the agency's mercenary and politicized approach to "investigations" will be laid all the more bare for the world to see. Then again, who knows - maybe the FBI verified everything in the dossier and it simply hasn't leaked.
That said, while the FBI will likely be forced to acknowledge the documents thanks to the Thursday ruling, the agency will still be able to try and convince the judge that there are other grounds to withhold the records.
In January, Mehta blessed the FBI's decision not to disclose the existence of any records containing the agency's efforts to verify the dossier - ruling that Trump's tweets about the dossier didn't require the FBI and other intelligence agencies to act on records requests.
" But then the ground shifted ," writes Mehta of Trump declassifying the House memos. "As a result of the Nunes and Schiff Memos, there is now in the public domain meaningful information about how the FBI acquired the Dossier and how the agency used it to investigate Russian meddling."
The DOJ also sought to distinguish between the Steele Dossier and a synopsis of the dossier presented to both Trump and then-President Obama in 2016, however Mehta rejected the attempt, writing "That position defies logic," while also rejecting the government's refusal to even say if the FBI has a copy of that synopsis.
"It remains no longer logical nor plausible for the FBI to maintain that it cannot confirm nor deny the existence of documents," Mehta wrote.
It is simply not plausible to believe that, to whatever extent the FBI has made efforts to verify Steele's reporting, some portion of that work has not been devoted to allegations that made their way into the synopsis. After all, if the reporting was important enough to brief the President-elect, then surely the FBI thought enough of those key charges to attempt to verify their accuracy . It will be up to the FBI to determine which of the records in its possession relating to the reliability of the Dossier concerns Steele's reporting as discussed in the synopsis.
"This ruling represents another incremental step in revealing just how much the FBI has been able to verify or discredit the rather personal allegations contained in that synopsis derived from the Steele dossier," said Brad Moss, a lawyer pressing the lawsuit for the pro-transparency group, the James Madison Project. "It will be rather ironic if the president's peripheral actions that resulted in this ruling wind up disclosing that the FBI has been able to corroborate any of the 'salacious' allegations."
In other words, the FBI must show what they did to verify the claims contained within the Nunes and Schiff memos.
Because the case was heard on appeal, the ruling will not take immediate effect, notes Politico , which adds that the appeals court is now likely to remand the case to Mehta, while the FBI is going to try and convince him the records should remain unreleased.
GoFuqYourself -> vaporland Sat, 08/18/2018 - 12:57 Permalinkjin187 -> GoFuqYourself Sat, 08/18/2018 - 13:08 Permalink
Maybe the globalists are starting to capitulate to the nationalists behind the scenes
Strange how the alphabet soup agencies always seem to fight hardest only when it comes to hiding embarrassing information from the American people. Yet they wonder why we don't consider them all civil servants and heroes.
Aug 19, 2018 | www.unz.com
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We can all thank God for the fact that the AngloZionists did not launch a war on the DPRK, that no Ukronazi attack on the Donbass took place during the World Cup in Russia and that the leaders of the Empire have apparently have given up on their plans to launch a reconquista of Syria. However, each of these retreats from their hysterical rhetoric has only made the Neocons more frustrated and determined to show the planet that they are still The Hegemon who cannot be disobeyed with impunity. As I wrote after the failed US cruise missile strike on Syria this spring, " each click brings us closer to the bang ". In the immortal words of Michael Ledeen , " Every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business ". The obvious problem is that there are no "small crappy little countries" left out there, and that those who are currently the object of the Empire's ire are neither small nor crappy.
Having now shown several times that for all its hysterical barking the Empire has to back down when the opponent does not cower away in fear, the Empire is now in desperate need to prove its "uniqueness" and (racial?) superiority. The obvious target of the AngloZionist wrath is Iran. In fact, Iran has been in the cross-hairs of the Empire ever since the people of Iran dared to show the AngloZionists to the door and, even worse, succeed in creating their own, national and Islamic democracy. To punish Iran, the US, the USSR, France and all the other "democratic" countries unleashed their puppet (Saddam Hussein) and gave him full military support, and yet the Iranians still prevailed, albeit at a terrible cost. That Iranian ability to prevail in the most terrible circumstances is also the most likely explanation for why there has not been an overt attack on Iran for the past four decades (there have, of course, there has been plenty of covert attacks during all these years).
I won't list all the recent AngloZionist threats against Iran – we all know about them. The bottom line is this: the US, Israel and the KSA are, yet again, working hand in hand to set the stage for a major war under what we could call the " Skripal-case rules of evidence " aka " highly likely ". And yet, in spite of all this saber-rattling, Iranian Supreme Leader Ali Khamenei has summed up Iran's stance in the following words " there will be no war and no negotiations ".
First, let's first look at Iranian rationale for "no negotiations"The obvious: "no negotiations"
Ayatollah Ali Khamenei has been very clear in his explanations for why negotiating with the US makes no sense. On his Twitter account he wrote:
The Iranian Supreme Leader even posted a special graphic summary to summarize and explain the Iranian position:
Finally, Ayatollah Ali Khamenei reiterated his fundamental approach towards the AngloZionist Empire:
The contrast between the kindergarten-level low-IQ bumbling hot air and threats coming out of the White House and the words of Ali Khamenei could not be greater, especially if we compare the words the two leaders decided to post all in caps;
Trump : To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!
Khamenei : THERE WILL BE NO WAR, NOR WILL WE NEGOTIATE WITH THE U.S..
Notice first that in his typical ignorance, Trump fails to realize that Hassan Rouhani is only the President of Iran and that threatening him makes absolutely no sense since he does not make national security decisions, which is the function of the Supreme Leader. Had Trump taken the time to at the very least check with Wikipedia he would have understood that the Iranian President " carries out the decrees, and answers to the Supreme Leader of Iran, who functions as the country's head of state ". It is no wonder that Trump's infantile threats instantly turned into an Internet meme !
In contrast, Khamenei did not even bother to address Trump by name but, instead, announced his strategy to the whole world.
Trump's ALL IN CAPS meme
Of course, issuing ALL IN CAPS threats just to be treated with utter contempt by the people you are trying to hard to bully and having your words become a cause of laughter on the Internet will only further enrage Trump and his supporters. When you are desperately trying to show the world how tough and scary you are, there is nothing more humiliating as being treated like some stupid kid. Therein also lies the biggest danger: such derision could force Trump and the Neocons who run him to do something desperate to prove to the word that their "red button" is still bigger than everybody else's.
ORDER IT NOW
It is important to note here that making negotiations impossible is something the Trump administration seems to have adopted as a policy. This is best illustrated by the conditions attached to the latest sanctions against Russia which, essentially, demand that Russia admit poisoning the Skripals. In fact, all the western demands towards Russia (admitting that Russia is guilty for the Skripal case, that Russia shot down MH-17, that Russia hand over Crimea to the Ukronazis, etc.) are carefully crafted to make absolutely sure that Russia will not negotiate. The sames, of course, goes for the ridiculous Pompeo demands towards the DPRK (including handing over to the US 60 to 70 percent of its nukes within six to eight months; no wonder the North Koreans denounced a "gangster-like" attitude) or the latest US grandstanding towards Turkey. Sadly, but the Neocon run media has successfully imposed the notion that negotiations are either a sign of weakness, or treason, or both. Thus to be "patriotic" and "strong" no US official can afford to be caught red-handed negotiating with the enemy of the day.
Under these conditions, why would anybody want to negotiate with the US?
Frankly, the "no negotiations" approach makes perfectly good sense, and while the Iranians are the only ones who have openly said so, the Russians have hinted to the same on many occasions (see their words about the US being "non-agreement capable" or about US diplomats confusing Austria and Australia). To any objective observer it should by now be completely obvious by now that a) the US cannot negotiate (due to intellectual, cultural and political limitations) and b) the US has no desire to negotiate. This is, of course, a highly undesirable and dangerous situation, but it would only make things worse to pretend that civilized negotiations with the US are possible.
So, if both sides agree on "no negotiations", what about war?The not so obvious: No war?
This is where Ali Khamenei's stance is more puzzling, at least to me: when he says that there will be no war, does he mean that the US threats are not credible or does he mean that Iran has the means to deter a US attack? His words make it sound like he is quite certain that there will be no war. How can he be so sure? I am especially amazed by the apparent Iranian confidence that the AngloZionists will not attack them when I compare it with the obvious Russian policy of actively preparing for war since at least 2014 (also see here , here , here , here , here and here ). Of course, Iran has been preparing for war with the US for almost 40 years now whereas the Russians only woke up to reality comparatively recently. I see several potential explanations for Ali Khamenei's statement (there might be more, of course):
Political: Iran is trying to demonstrate that it will do everything possible to avoid a war so that if a war should break out, it would be absolutely clear to everybody that Iran did not want it, Iran did not trigger it and the responsibility for the consequences fall entirely and solely upon the US and Israel. Deception: Iran knows that a war is coming but is trying to pretend like it won't to better conceal the war preparations and lure the Empire into a sense of complacency resulting into an ineffective/costly attack. Intelligence: the Iranians might have intelligence indicating to them that all the US threats are just hot air spewed in order to appease the Israel Lobby and to look "patriotic" in preparation for the upcoming elections this Fall. Miscalculation: the Iranians might underestimate the level of hubris, arrogance and stupidity of the US leadership and mistakenly conclude that since an attack on Iran makes no sense and the US cannot "win", such an attack will therefore not happen.
Personally, every time I think of a possible US attack on Iran I think of the Israeli attack on Lebanon in 2006 which happened in spite of the fact that it was plainly visible to everybody that the Israelis were waltzing straight into a conflict which they could not win and which, in fact, resulted into one of the most abjects defeats in military history. Conversely, while Hezbollah did win a truly historical victory, it also remains a fact that Hezbollah leaders did not expect the Israelis to launch a full-scale ground offensive. Finally, history is full of examples of wars which were started in spite of all objective factors indicating that they would end up in disaster.
It seems to me that in purely military terms (not in political ones!) Israel could be seen as a stand-in for the US and Hezbollah as a stand-in for Iran and that the outcome of any future US-Iranian war will be very similar to the outcome of the war in 2006, albeit on a much larger (and bloodier) scale. I am confident that the folks in the Pentagon realize that, but what about their Neocon bosses – do they even care about Iranian or, for that matter, US casualties? I highly doubt it: all they care about is their power and messianic ideology.
If it weren't for its nuclear arsenal, the US could be dismissed as a particularly obnoxious country led by ignorant leaders with bloated and mostly ineffective armed forces. Alas, the US nuclear arsenal is very real (and still very capable) and we know that top-level US Neocons have already considered using tactical nuclear weapons against a non-nuclear state's conventional force in the past . In a twisted way, this makes sense: if you are a megalomaniac infused with a sense of messianic superiority then international or even civilizational norms of behavior are of no interest (or even relevance) to you. Listening to US Presidents, pretty much all of them (but especially Obama and Trump) it is pretty clear that these folks consider themselves to be the Kulturträger and the Herrenvolk of the 21st century and their messianism is in no way less delusional than the one of their Nazi predecessors (or, for that matter, the one of the Popes of the past 1000 years). And why would the people who nuked two Japanese cities under the (entirely fallacious) pretext of "shortening the war" (almost a humanitarian operation!) not do the same thing in Iran?
Of sure, they probably realize that using nukes will result in a massive political backlash, but they are confident that no matter what happens in the end, they will always be able to say "screw you!" to the rest of the planet. After all, this is something which Israel and the US have been doing with almost total inpunity for decades already – why would they stop now? As for the fact that the Persian people have been dealing with all kinds of invaders since no less than 2500 years will not stop the AngloZionists from trying to crush them. After all, having laid waste to a country which many see as the cradle of civilization, Iraq, why not do the same thing to Iran? Iraq, Iran – what's the difference, they are all just "sand niggers" and our red button is bigger than theirs, right?Standing up to Shaytân-e Bozorg (almost alone?)
It would be a big mistake to dismiss the US because of its incapable military or moral bankruptcy. The truth is that in terms of aggregate national power, the US still remains the most powerful country on the planet (even if we don't include nuclear weapons). Anyone doubting that needs to look how how the currencies of the countries the US is singles out for attack suddenly began slipping: the Russian ruble (which has since bounced back), the Iranian rial, the Venezuelan bolivar, the Turkish lira , etc.) or how little time it took Trump to bring the (admittedly spineless) Europeans to heel .
As for Russia, for all her military might, she remains only a semi-sovereign country in which the pro-US/pro-Israeli "Atlantic Integrationists" continue to try to sabotage (often successfully) everything Putin and his supporters are doing . I would not place big hopes in China either, especially considering the lack of meaningful Chinese action in Syria where Russia and Iran did all the heavy lifting.
Sadly, but the only ally Iran can truly count on is Hezbollah. And while Hezbollah is considered a "non-state actor", it has a formidable capability to strike at the US's colonial masters, especially in terms of missiles .
This will not protect Iran, but it could serve as a very real deterrent to the Israelis, especially since Hezbollah Secretary General Hassan Nasrallah he has made it clear that Hezbollah more than capable of taking on Israel .
For the time being, the Israelis are already preparing for a re-match against Hezbollah and they are massing forces in the north to prepare for a war against Hezbollah .
Does that look to you like there will be no war against Iran?
I hope so. But to me it very much looks like an attack is pretty much inevitable. I have been predicting such an attack since 2007 and, so far, I have been completely wrong (and thank God for that!). The very first article I ever wrote for my blog was entitled " Where the Empire meets to plan the next war " ended with the following words:
So count with yet another imperial war of aggression, a barrel of crude at over 100$ and oil shortages, rocketing inflation, job losses, a stagnant real estate market and stock exchange, and a national debt and government deficit which would make even Reagan proud. And plenty of dead Americans (nevermind the Iranians, right?). But don't worry: there will still be a huge supply of Chinese-made US flags to wave!
And yet, 11 years later, the AngloZionist attack which looked so imminent in 2007 has not happened yet. Could it be that this time again an attack on Iran can be avoided? Ayatollah Ali Khamenei appears to be very confident that it will not happen. I am not so sure, but I fervently hope that he is right.
Aug 19, 2018 | thenewkremlinstooge.wordpress.com
Mark Chapman August 17, 2018 at 3:39 pmWith much joviality and humour, Ukraine prepares to sever all remaining public-transit links with Russia. I suppose there are still roads, and if you have a car and can afford gas, you can still drive there.
This, according to the transport minister, is 'like the good old days'. I'll tell you something else that's like the good old days, Mr. Minister – the living wage in Ukraine.
And yet Ukraine still seems to think Europe must force Russia to continue transiting Russian gas through Ukraine, and paying Kuh-yiv for the privilege.
Aug 19, 2018 | thenewkremlinstooge.wordpress.com
Mark Chapman August 16, 2018 at 8:42 pm
Well, well; guess who has money in Naftogaz?
Aug 18, 2018 | crookedtimber.org
Heliopause 08.17.18 at 9:00 pm (no link)"Public statements by Trump make it clear that there wasn't, in fact, a plausible national security rationale for revoking Brennan's clearance."ph 08.17.18 at 11:12 pm (no link)
This is false, the White House has released more than one statement about Brennan's lying and unhinged behavior, whether you accept them or not. And in fact Brennan has made a number of hysterically deranged statements, most notably around the time of the Putin summit, that would make even Joe McCarthy blush.
And this latest Constitutional principle that we've suddenly discovered, that a top security clearance is a form of speech, opens a large can of worms. The implications are so obvious that spelling it out seems unnecessary, I'll just note that when I get the security clearance that is my inalienable right as an American I won't be using it for my own selfish ends.
"I'm basically OK with a tactical alliance with people in the national security establishment, insofar as there are shared political interests. Trump is a disaster across many dimensions"
Got it. Our choice is either the Fuhrer or the Deputy Reichsfuhrer. Gosh, I wonder why so many Americans are disconnected from the political process@4 Seems to get this right, imo. The best and simplest identification of this class of self-interested profiteers, 'patriots,'policy wonks, grifters, and their minions and water-carriers in elected office and the media was made by Eisenhower in his farewell speech.Hidari 08.18.18 at 6:45 am (no link)
Henry is entirely right to recognize they are as permanent as the weather, and as much a feature of life as they were during Chaucer's time. This is their world, we just live in it.
The pedigrees and connections identified in @4 exist to ensure that the public face of the corporation masquerading as an individual (to quote RN) looks and sounds 'right.'
That's what made the 44th president absolutely ideal. Even better he proved a loyal and willing servant -- expanding the Bush/Cheney security state, drone strikes, and surveillance and execution of US citizens occasionally deemed enemies of the state. 45 has fewer allies in that community, but he's proving more far more difficult to remove than many had thought. Henry is right -- this looks very much like an inside baseball story.
Whatever Trump does or does not accomplish, the profits from violence, manipulation, and duplicity via the wheels of government will remain and be one of the principal driving forces in nation-state external and internal relations for a very long time.likbez 08.19.18 at 3:08 am ( 53 )'Some people have a substantive critique of Trump for furthering the fundamentally evil cause of racist US global empire, while others have a procedural critique of Trump for harming this fundamentally noble cause by carrying it out incompetently, if not a purely aesthetic critique for harming this fundamentally noble cause by making it look too gauche and uncouth. Those two styles of critique are fundamentally at odds.'
This seems to me to be fundamentally the point. Particularly when (in the case of Russia and North Korea) the Democrats and the (majority of the) corporate media are essentially trying to outflank Trump on the Right , and the more or less complete failure of the Left to oppose in any meaningful way American machinations in Syria or Libya (with a few honourable exceptions),
With very few exceptions (mainly on trivial issues) Trump has governed absolutely and precisely as any Republican would have done. His 'base' is almost exactly the same as Romney's.* There was no 'Trump surge'. He didn't win the election, Clinton (a weak candidate) lost it. Despite the hysteria, most of his deviations from 'the norm' have been in a more imperial direction (e.g. his desire for a stronger NATO which, rather unbelievably, was reported in the worthless media as a desire to destroy NATO). Trump's disgusting and hypocritical sanctions on Russia (which will cause much suffering of ordinary people) have, to the best of my knowledge, not been criticised by any leftist, anywhere, although the insane fantasy that he is 'soft on Russia' is quite popular (with the implication that he should be 'tougher' on Russia, maybe risking nuclear war) presumably because it fits in with the increasingly deranged Russiagate nonsense. CF also his more aggressive stance towards China (another nuclear power) which again risks nuclear war, and which has again, passed almost uncommented on in elite discourse (to be fair he follows in Obama's footsteps here).
I might add that Trump's most egregious and disgraceful departure from the 'consensus', permitting the American Embassy to move from Tel Aviv to Jerusalem, has also passed more or less uncriticised, as the Democrats still instinctively obsequiously grovel to the far right Netanyahu when they get the chance, whimpering like whipped dogs (this simile is unfair to dogs).
Meanwhile the corporate media get hysterical about which apparatchik got fired or got their security clearance revoked for some reason or something and who said what to whom or whatever .it's all so boring I can scarcely type it out (and in fact I haven't).
*Almost the first thing Trump arranged was a tax cut for his rich cronies.@Hidari 08.18.18 at 6:41 pmHidari 08.19.18 at 10:41 am ( 56 )
Powerful post and a very clear thinking. Thank you !
Also an interesting analogy with NSDAP the 25-point Plan of 1928
Hitler's initial programme really did have a tiny element of 'socialism' in it, and some elements of the working class (shamefully) swallowed the lies and gained him votes.
But it was never real, and Hitler was never going to deliver. He dealt with the Brownshirts (the most authentically 'working class' and 'socialist' part of the Nazi movement) in the Night of the Long Knives, and from that point on, the 'socialist' parts of the Nazi programme were steadily ditched, as the regime became more and more strongly right wing throughout the '30s.
Same with Trump (in this respect only). It's true that in the run-up to the election he threw some scraps to the working class, and some of his protectionist rhetoric swung him some states in the Rust Belt. Some union supporters, to their shame, trooped along to the White House soon after.
Actually NSAP program of 1928 has some political demands which are to the left of Sanders such as "Abolition of unearned (work and labor) incomes", ".We demand the nationalization of all (previous) associated industries (trusts)." and "We demand a division of profits of all heavy industries.". Here is a sample:
... ... ...
7.We demand that the state be charged first with providing the opportunity for a livelihood and way of life for the citizens
9.All citizens must have equal rights and obligations.
10.The first obligation of every citizen must be to productively work mentally or physically. The activity of individuals is not to counteract the interests of the universality, but must have its result within the framework of the whole for the benefit of all. Consequently, we demand:
11.Abolition of unearned (work and labour) incomes. Breaking of debt (interest)-slavery.
12.In consideration of the monstrous sacrifice in property and blood that each war demands of the people, personal enrichment through a war must be designated as a crime against the people. Therefore, we demand the total confiscation of all war profits.
13.We demand the nationalisation of all (previous) associated industries (trusts).
14.We demand a division of profits of all heavy industries.
15.We demand an expansion on a large scale of old age welfare.
16.We demand the creation of a healthy middle class and its conservation, immediate communalization of the great warehouses and their being leased at low cost to small firms, the utmost consideration of all small firms in contracts with the State, county or municipality.
17.We demand a land reform suitable to our needs, provision of a law for the free expropriation of land for the purposes of public utility, abolition of taxes on land and prevention of all speculation in land.
18.We demand struggle without consideration against those whose activity is injurious to the general interest. Common national criminals, usurers, profiteers and so forth are to be punished with death, without consideration of confession or race.
21.The state is to care for the elevating national health by protecting the mother and child, by outlawing child-labor, by the encouragement of physical fitness, by means of the legal establishment of a gymnastic and sport obligation, by the utmost support of all organizations concerned with the physical instruction of the young.
22.We demand abolition of the mercenary troops and formation of a national army.
23.We demand legal opposition to known lies and their promulgation through the press.
24.We demand freedom of religion for all religious denominations within the state so long as they do not endanger its existence or oppose the moral senses of the Germanic race...
But I think Trump was de-facto impeached with the appointment of Mueller. And that was the plan ( "insurance" as Strzok called it). Mueller task is just to formalize impeachment.
Pence already is calling the shots in foreign policy via members of his close circle (which includes Pompeo). The recent "unilateral" actions of State Department are a slap in the face and, simultaneously, a nasty trap for Trump (he can cancel those sanctions only at a huge political cost to himself) and are a clear sign that Trump does not control even his administration. Here is how Philip Giraldi described this obvious slap in the face:
The most recent is the new sanctioning of Russia over the Skripal poisoning in Salisbury England. For those not following developments, last week Washington abruptly and without any new evidence being presented, imposed additional trade sanctions on Russia in the belief that Moscow ordered and carried out the poisoning of Sergey Skripal and his daughter Yulia on March 4th. The report of the new sanctions was particularly surprising as Yulia Skripal has recently announced that she intends to return to her home in Russia, leading to the conclusion that even one of the alleged victims does not believe the narrative being promoted by the British and American governments.
Though Russian President Vladimir Putin has responded with restraint, avoiding a tit-for-tat, he is reported to be angry about the new move by the US government and now believes it to be an unreliable negotiating partner. Considering the friendly recent exchanges between Putin and Trump, the punishment of Russia has to be viewed as something of a surprise, suggesting that the president of the United States may not be in control of his own foreign policy.
From the very beginning, any anti-globalization initiative of Trump was sabotaged and often reversed. Haley is one example here. She does not coordinate some of her actions with Trump, or the Secretary of State, unliterary defining the US foreign policy.
Her ambitions worry Trump, but he can very little: she is supported by Pence and Pence faction in the administration. Rumors "Haley/Pence 2020" surfaced and probably somewhat poison atmosphere in the WH.
Add to this that Trump has hostile to him Justice Department, CIA, and FBI. He also does not control some critical appointments such as the recent appointment of CIA director (who in no way can be called Trump loyalist).
Which means that in some ways Trump already is a hostage and more a ceremonial President than a real.@53
'The President is very much a figurehead – he wields no real power whatsoever. He is apparently chosen by the (people), but the qualities he is required to display are not those of leadership but those of finely judged outrage. For this reason the President is a controversial choice, always an infuriating but fascinating character. His job is not to wield power but to draw attention away from it.' (Douglas Adams)
CF Also the LRB:
'Trump comports himself not as a president or even a politician, but as a reality TV host. He is a showman above all. In a process where the media are cast as reviewers, and voters as spectators, the show is getting bad reviews but doing nicely: the clear sign of success is that nobody can stop talking about the star. He keeps up the suspense with teasers and decoys and unscheduled interruptions, with changes in the sponsors and the supporting cast and production team. The way to match the Trump pace is by tweeting; but that is to play his game – a gambit the White House press corps have found irresistible. Much of the damage to US politics over the last two years has been done by the anti-Trump media themselves, with their mood of perpetual panic and their lack of imagination. But the uncanny gift of Trump is an infectious vulgarity, and with it comes the power to make his enemies act with nearly as little self-restraint as he does. The proof is in the tweets.'
Aug 19, 2018 | www.moonofalabama.org
... ... ...
At the beginning of the year one U.S. dollar cost 3.5 lira. At the beginning of August it cost 4.80 lira. It then went up to 7.00 lira/$ and at Friday's closing it was down again at 6.00 TL/$. But Monday morning lira will again lose more of its value:Turkey's credit rating was cut further into junk Friday by S&P Global Ratings and Moody's Investors Service, which said the volatile lira and wide current-account deficit may undermine the Middle East's largest economy.
S&P reduced Turkey's foreign-currency rating to four notches below investment grade at B+ from BB-, on par with Argentina, Greece and Fiji. Moody's lowered its grade to Ba3 from Ba2, three notches below investment grade. The ratings companies said the weak currency, runaway inflation and current-account deficit are Turkey's key vulnerabilities .
Turkey's crisis is homemade . The current spat with the United States only exaggerates it. For years Turkey borrowed large amounts of money from abroad and invested it into local infrastructure instead of producing exportable products. Its current account deficit this year will again be some $50 to $60 billion. International banks and other foreign lenders now demand interests rates above 20% from Turkish lenders because the chance of losing the lent money is high.
After the 17% crash on August 13 down to 7 TL/$ the Turkish Central Bank used some one-time measures to support the currency without raising its interest rate. The Turkish president Erdogan is ideologically adverse to interests and keeps the bank from doing what it must do to cool the Turkish economy and to stabilize the currency.
Erdogan asked Russia for help but received nothing but good advice. He also called in favors. When in June 2017 Saudi Arabia's clown prince Mohammed bin Salman (MbS) tried to take over Qatar and to steal its juicy $350 billion sovereign wealth fund, the emir of Qatar called on Turkey for help. Erdogan sent the Turkish army and air force. His troops protected Qatar from a Saudi invasion.
With the lira in trouble the emir flew to Ankara and promised a new $15 billion investment into Turkey. Additionally some mysterious cargo was unloaded from his plane. That saved the lira for a few days. But Turkey's structural problems are unsolved. Erdogan is no longer trusted and his son in law, who he made finance minister, lacks the necessary qualification for the job. Thus :"We forecast a recession next year," S&P said. "Inflation will peak at 22 percent over the next four months, before subsiding to below 20 percent by mid-2019."
The Qatari move came a few days before its arch enemy Saudi Arabia also moved into the area. On Friday the U.S. announced that Saudi Arabia would support the U.S. occupied north-east Syria with 100 million dollar . The Wahhabi Saudis are now financing the secular Kurdish terror organization PKK/YPG, the local U.S. proxy in north-east Syria.
If the Saudi clown prince MbS wants to take revenge on Turkey's Erdogan for messing up his plans for Qatar, he now has his chance.
Posted by b on August 18, 2018 at 03:56 PM | Permalink
Mark2 , Aug 18, 2018 5:12:42 PM | 4One refinement to add to 'b's outstanding post (how the hell does he do it, miraculous !) as far as I can see Turkey fell into the same deep state bankers financial trap, that Spain Greece Italy fell for. Bail out a vunrable country then pull the rug out ! You own them ! So I would slightly disagree with it being entirely of there own making. I blame the Rothchild family.Fastfreddy , Aug 18, 2018 5:32:52 PM | 5Moody's and S&P ratings agencies are fraudulent institutions. For having AAA rated billions worth of junk mortgages, they should have been indicted and prosecuted.Lochearn , Aug 18, 2018 5:44:06 PM | 6Excellent analysis again, b. You surpass yourself. There is something you talk about that has always intrigued metelescope , Aug 18, 2018 5:50:52 PM | 7
"For years Turkey borrowed large amounts of money from abroad and invested it into local infrastructure instead of producing exportable products."
There is a parallel here with Spain. From entry into the Euro in 1999 the floodgates of credit opened. Bankers, politicians and builders were involved in creating vast swathes of speculative urbanization; two airports were built which now stand empty, a formula 1 track hosted five races before closing, a phantom theme park; huge, almost empty accommodation complexes, and the list goes on. The ghost airport in Ciudad Real, which cost £1.2 million euros, was sold off to Chinese buyers for a mere 10,000 euros. The "Cajas", the regional banks, were all bailed out by the government.
Apart from local corruption, which is nothing new, I think there must have been a deliberate strategy on the part of EU elites not to finance industrial projects that would generate export currency, and hence compete with EU industrial powers such as Germany (I once read Spanish academic paper arguing this but have not managed to track it down). When the same happens in Turkey, obviously not an EU country, you have to wonder whether is it part of a transatlantic banker strategy: corrupt national elites finance corrupt local elites to build ghost infrastructures as cheap and shoddy as you can get, the banks that financed it get bailed out if it all crashes. What's not to like?Turks can't avoid Greek-style crisis now. The solution calls for a violent swing in trade balance from huge deficit to sizable surplus, somewhere in a range of $100B. That can't happen unless people of Turkey are warehoused in slave-labor-condition factories that can be competitive enough to displace Asian players. That entails bone-crushing fall in living standards.Mark2 , Aug 18, 2018 6:29:19 PM | 12
All in all, 20 percent decline in GDP is now all but certainty. The longer Erdogan tries to avoid the harsh medicine, the deeper this cancer goes. He should either bow to IMF, or to exit NATO, join BRICS and ask for loans from that grouping.
Of course, Turkish military can say bye-bye to its present size. It's unsustainable. Financial crunch will reduce Turkish armed forces to less than half of their present size.
And if Erdogan wants to keep his soldiers well-equipped for half the price - which he should - he'll have to switch to much more reasonably priced Russian weaponry. Once he does that, even Russia may contribute $10B to his bailout kitty.
Otherwise, Erdogan is a dead man. The economic hurricane barreling his way is only gathering strength with every passing day. And all he is doing is unfurling umbrellas and increasing the volume of music.
That list of infrastructure @ Lochern mentions looks geared toward the holiday industry which in the past has been a major income for Turkey ! Worth at the time perhaps investing in. Very popular with Eurapians but very popular with Russians. My wild guess would be---- some dodgey ploy by the west to drive a wedge between Russia and Turky, devideding and ruling both! By meens of conflict and bank debt .The gains would be numerous long term and short term. But as already mentioned may back fire and bring Russia and Turkey closer. I hope so.Pft , Aug 18, 2018 6:30:54 PM | 13Much of Turkeys external debt is private and not government . Their BIS controlled central bank kept interest rates high. This forced Turkish banks to take out loans in USD or Euro which had lower interest rates to meet loan demands in the private corporate sector , which they made at higher interest rates after exchanging for Lira. More profitable. The assumption was there would be a relatively stable exchange rate. So there was risk.CDWaller , Aug 18, 2018 6:52:06 PM | 15
That risk made them vulnerable fx attack by the globalist banking cartel. When Erdogan took over more control from the TCB last month to reduce interest rates and reduce demand for foreign loans this was seen as an act of war. The independence of the central bank must be defended. Trumps additional tarrif increases, mild as they were were simply a symbolic barking of orders to take Turkey down
Looking at the broader picture. Since the 2008 financial blowout there has been "carry trade" fueled by zero-cost liquidity pumped into the global system by quantitative easing, which was then shipped to high-interest emerging markets such as Brazil, Turkey and other countries.
With the beginning of the Fed's "tapering" of QE and rising interest rates since 2015, the whole financial system has triggered a "reverse carry trade" where dollars flow out of emerging markets back to safer havens. This is what you are seeing in Turkey, Argentina, Russia, Brazil, etc.
The last 10 years are a replay of the decade running up to the 1997/1998 crisis. While the 1985 'Plaza Accord' dollar devaluation was not exactly QE, it had the same intent and results – a flood of cheap money and dollar debt, and therefore growing global dependence on the dollar and vulnerability to US monetary and economic policy
Some say countries like Turkey should know better, but countries have little control over their monetary policy under the global and independent central banking system forced on them. Go against this system and you will be hit with sanctions , subject to regime change or will be invaded
So call it a homegrown crisis if thats the reality you choose to live in. Who am I to say otherwise?These rating agencies are the same ones that rated junk mortgage bonds AA. They are for sale to highest bidder or since they haven't been prosecuted for their criminal behavior, vulnerable to threats from the same political machine that turned a blind eye in 2008.dh-mtl , Aug 18, 2018 7:26:48 PM | 17
Turkey may have homegrown economic problems as you have pointed out but they certainly have even more problems with a vindictive and extremely corrupt Uncle Sam who ruthlessly punish any and all independent actions.Another excellent blog B. I agree with many of the above commenters that the breadth and depth of the analysis on MOA is truly amazing.Mark2 , Aug 18, 2018 8:03:33 PM | 18
Pft@13. Good analysis as well.
However, I would expect that Turkey will not be another Greece. Rather I expect Turkey to get help from its friends to stabilize its economic position, resist U.S. sanctions and avoid an IMF bail-out.
With the support of Qatar, and I would expect China as well, I would expect Turkey to protect its banks. However, it is also possible that they will let some private Turkish companies, with dollar denominated debts, default. Such defaults, combined with the pressure that declining dollar liquidity is already putting on other emerging markets and Italy, would be destabilizing for the Western financial system. Sooner or later, and I suspect sooner, the FED will be required to start printing money again, which will reverse the dollar's recent strength and relieve the pressure on Turkey.
At the end of the day, however, I expect that this episode will be another step in the direction of de-dollarization and will further reduce the ability of the U.S. to use economic sanctions to bully its adversaries.A strange paradox of life !ben , Aug 18, 2018 8:19:12 PM | 19
Owe your bank 1000 the bank manager will make you bankrupt, owe the bank a million and he'll invite you home for dinner ! More to lose !
By this token I'd like to think, the more country's that refuse there debt, the less power the west will have ! The less credibility and the less fear and influence they can inflict .
If the west wants to weaponise banking so be it ! Bring it on. Let's pull the rug out from under the banks/Rothchilds.
Feet ! Natural justice !Pft @ 13 said:"Some say countries like Turkey should know better, but countries have little control over their monetary policy under the global and independent central banking system forced on them. Go against this system and you will be hit with sanctions , subject to regime change or will be invaded."
CDWaller @ 15 said:"These rating agencies are the same ones that rated junk mortgage bonds AA. They are for sale to highest bidder or since they haven't been prosecuted for their criminal behavior, vulnerable to threats from the same political machine that turned a blind eye in 2008."
The usual suspects described perfectly.
Aug 19, 2018 | thenewkremlinstooge.wordpress.com
Northern Star August 16, 2018 at 3:07 pmhttp://www.wsws.org/en/articles/2018/08/16/pers-a16.html
"But to an extent hardly imaginable in 2008, all the world's leading economies are locked in a perpetually escalating cycle of economic warfare. This global trade war is spearheaded by the Trump White House, which sees trade sanctions and tariffs, such as the onslaught it launched against Turkey, as an integral component of its drive to secure the United States' geopolitical and economic interests at the expense of friend and foe alike.
The character of world economy has undergone a major transformation in the past decade in which economic growth, to the extent it that it occurs, is not driven by the development of production and new investments but by the flow of money from one source of speculative and parasitic activity to the next."
"But while they are deeply divided as to their economic and geo-political objectives, the capitalist ruling classes are united on one essential question. However the next stage of the ongoing breakdown of world capitalism proceeds, they will all strive by whatever means considered necessary to make the working class the world over pay for it.
This is the lesson from the past decade which, in every country, has seen a deepening attack on wages, social conditions and living standards as wealth is redistributed up the income scale, raising social inequality to unprecedented heights.
In 2008, capitalist governments around the world, above all in the US, derived enormous benefit from the decades-long suppression of the class struggle by the trade unions and the parties of the political establishment. The rescue operation they carried out on behalf of parasitic and criminal finance capital would not have been possible without it."
Aug 17, 2018 | www.nakedcapitalism.comBy Sam Husseini an independent journalist who contributes to The Nation, CounterPunch, Truthdig, Consortium News, CommonDreams and other outlets. He is also senior analyst at the Institute for Public Accuracy and founder of VotePact.org . Originally published at his website
Today, hundreds of newspapers , at the initiative of the Boston Globe , are purporting to stand up for a free press against Trump's rhetoric.
Today also marks exactly one month since I was dragged out of the July 16 Trump-Putin news conference in Helsinki and locked up until the middle of the night.
As laid in my cell, I chuckled at the notion that the city was full of billboards proclaiming Finland was the " land of free press ".
So, I've grown an especially high sensitivity to both goonish behavior toward journalists trying to ask tough questions -- and to those professing they are defending a free press when they are actually engaging in a marketing campaign.
As some have noted, the editorials today will likely help Trump whip up support among his base against a monolithic media. But, just as clearly, the establishment media can draw attention away from their own failures, corruptions and falsehoods simply by focusing on some of Trump's.
Big media outlets need not actually report news that affects your life and point to serious solutions for social ills. They can just bad mouth Trump. And Trump need not deliver on campaign promises that tapped into populist and isolationist tendencies in the U.S. public that have grown in reaction to years of elite rule. He need only deride the major media.
They are at worst frenemies. More likely, at times, Trump and the establishment media log roll with each other. The major media built up Trump . Trump's attacks effectively elevate a select few media celebrities.My case is a small but telling one. Major media outlets were more likely to disinform about the manhandling I received in my attempt to ask about U.S., Russian and Israeli nuclear threats to humanity -- I'll soon give a detailed rebuttal to the torrent of falsehoods , some of which I've already noted on social media -- than to crusade against it.
Other obvious cases: None of the newspaper editorials I've seen published today mention the likely prosecution of Wikileaks . If there were solidarity among media, the prospect of Julian Assange being imprisoned for publishing U.S. government documents should be front and center today.
Neither did I see a mention of RT or, as of this week, Al Jazeera , being compelled to register as foreign agents. State Department Spokesperson Heather Nauert has openly refused to take questions from reporters working for Russian outlets. Virtual silence -- in part because Russia is widely depicted as the great enemy, letting U.S. government policy around the world off the hook.
The above are actual policies that the Trump administration has pursued targeting media -- not rhetoric that dominates so much establishment coverage of Trump.
Then there's the threat of social media.
My day job is with the Institute for Public Accuracy. Yesterday, I put out a news release titled " Following Assassination Attempt, Facebook Pulled Venezuela Content ." Tech giants can decide -- possibly in coordination with the U.S. government -- to pull the plug on content at a time and manner of their choosing.
You would think newspaper people might be keen to highlight the threat that such massive corporations thus pose, not least of all because they have eaten up their ad revenue (the Boston Globe page on the effort is actually behind a paywall .)
The sad truth is that this is what much of the media have long done: Counter to the lofty rhetoric of many of today's editorials, the promise of an independent and truth-seeking press has frequently been subservient to propaganda, pushing for war or narrow economic and other interests.
The other major story of the day -- quite related to this -- is that of Trump pulling former CIA Director John Brennan's security clearance. NPR tells me this is an attempt to "silence a critic". But Brennan has an op-ed in today's New York Times and is frequently on major media. He oversaw criminal policies during the Obama administration, including drone assassinations. If anything, this has elevated Brennan's major media status.
Those who have been truly silenced in the "Trump era" are those who were critical of the seemingly perpetual U.S. government war machine since the invasion of Iraq.
Trump attacks on the establishment media -- like many media attacks on him -- are frequently devoid of substance. But recently one of his rhetorically tweets stated that media " cause wars ". I would say "push for war", but that's quibbling.
Trump is technically right on that point, but it's totally disingenuous coming from him. He's actually been the beneficiary of the media compulsion he claims to deride. When he exalts U.S. bombing strikes in Yemen, Syria and elsewhere, CNN calls him " presidential ".
Many consider "Russiagate" critical to scrutinizing the Trump administration, but the two reporters, apparently picked by the White House, during the Helsinki news conference focused on "Russiagate" -- which eventually led to Brennan and others attacking Trump as "treasonous". Meanwhile, much more meaningful collusion that can be termed Israelgate is being ignored as the U.S. and Israeli governments attempt to further mold the Mideast.
The need for genuinely free sources of information is greater than ever. It is unclear to me if traditional newspapers can be part of the equation. Quite likely, the institutions desperately needed to carry out that critical mission are yet to be born.
Epistrophy , August 17, 2018 at 5:32 amolga , August 17, 2018 at 8:14 am
The other major story of the day -- quite related to this -- is that of Trump pulling former CIA Director John Brennan's security clearance.
I fail to understand why any ex-government employee should keep a top-level security clearance. When you leave, you leave, full stop. One serves in government at the leisure of the American public. In my view, Brennan is behaving like a mafiosi 'made-man', not as a public servant.
Tech giants can decide -- possibly in coordination with the U.S. government -- to pull the plug on content at a time and manner of their choosing.
I cannot figure out what is going on with Google, Youtube, Facebook and Twitter – lets call them the 'Four Horsemen'. I cannot believe that they are stupid enough to think that blanket bans are going to stifle the alternative media and enhance Democrat election prospects. Surely they aren't that naive?
In fact the exact opposite is happening. The Four Horsemen have super-charged Trump's base. Before the ban, alternative media at least tried to comply with their Community Guidelines.
Now, having been banned, alternative media are completely unleashed and their following is exploding.JTMcPhee , August 17, 2018 at 8:56 am
They are just following a long-established path (well-trodden, in other words). Set out an afternoon and read this comprehensive report: http://themillenniumreport.com/2018/02/how-the-c-i-a-completely-took-over-the-mainstream-media-with-operation-mockingbird/
Nothing new under the sun. And yes, the more they push, the more people will turn to alternatives.anonymous , August 17, 2018 at 9:25 am
As to turning to alternatives, I'm not clear on the whole net and web architecture thing. Are there not choke points that the Borg/Panopticon have their strangler's hands around, so that at some point, when their algos and auguries tell them the time is ripe, they can squeeze, and kill all such outside-the-Narrative interchange? It's not like the Big Data Piles that the NSA is constantly adding to, with full cooperation from the Four Horsement, don't already identify and catalog and characterize the "threats" to the project posed by mopes like us, who participate in "well-known Russian outlets" like NC.
Full spectrum dominance includes planned and actual dominance by the Borg/Pentagram of the entire electromagnetic spectrum too, http://www.doncio.navy.mil/mobile/ContentView.aspx?ID=5833&TypeID=21 . So even ham radio operators, the people who provide, from their own meager,resources, the communications substrate that has been so helpful in many disasters, https://en.wikipedia.org/wiki/Amateur_radio_emergency_communications , and the remaining broadcasters in the long- and shortwave ranges, will find that their bit of bandwidth will be hashed and crashed. http://articles.baltimoresun.com/2001-06-25/news/0106250301_1_shortwave-radios-bbc-broadcasts Noting that so much of the content of remaining broadcast media is, shall we say, "affected" by the Borg via "initiatives" like Operation Mockingbird
I'm reminded of the back story bit in "Independence Day," when Jeff Goldblum's character intuits that there's a timing signal in the Evil Consumer Aliens' communication stream that reports the countdown to when the Giant Black Ships (why are Evil Aliens always black? Why not some hippie rainbow coloration?) with their city-destroying weapons are all in position and they can start blasting the hum-ants that might oppose their looting of this planetLord Koos , August 17, 2018 at 3:55 pm
Think of the internet as a tollway with booths at either end and monitoring along the way. When you control a booth, for example, you can see which cars pass by.
I have seen that process in action and am in favor of privacy tools (VPN, control of Java scripts, ad/malware blockers, etc) to preserve some semblance of anonymity. Even with those in place, there are still ways for actors to observe. Be guided accordingly.Epistrophy , August 17, 2018 at 10:29 am
From what I understand, a VPN can be hacked but only by using a lot of resources to do it, you'd have to be a person of great interest for them to bother with it. (I use one myself at all times.)
Beyond censoring social media platforms, the next step would be to remove access to any blog or and site which doesn't go along with the narrative the state is promoting. I assume that would not be too difficult, but if the site in question is on a foreign server they would have to actually hack it. Has Naked Capitalism ever considered using a foreign host that would be more difficult to compromise?sharonsj , August 18, 2018 at 10:05 am
Very difficult to provide choke points – but I am sure they are working on it. Because almost everything depends upon instantaeous network connectivity, such as power systems, logistics systems, communication systems, transport systems, defence systems and banking systems, among others, any interference is going to have side effects that could be quite serious.
In addition, systems are becoming more and more distributed, with no central control point – blockchain being a recent example.
For example, I stopped using youtube.com years ago. Mostly I use bitchute to watch some things directly, view videos through a search engine like DuckDuckGo or view videos embedded in websites like NC.
Bitchute uses bittorrent to transmit videos – meaning that the viewers of the videos also provide the bandwidth to each other – a peer to peer transmission method – so there is almost no bandwidth cost to Bitchute and no central point of control. The more users or 'nodes', the better the system works.
Youtube, on the other hand, can control or 'choke' content, but it has huge central server bandwidth costs.
As I see it, YouTube is going to morph into a proprietary Netflix-type of service in just a few years. Garage-produced indie content and alternative media startups will probably move to a different platform.none , August 17, 2018 at 10:18 pm
I checked out bitchute and all I saw were mostly right-wingers, conspiracy theorists and anti-Semitic rants. None of that could be considered reliable news.Bill Smith , August 17, 2018 at 6:40 am
It's normal for clearances to stay active after a person leaves employment where it was required. It can help them get new employment. Example: you're a machinist at Lockheed milling engine parts for fighter planes. You need a clearance for that, because the engine specs are classified. Now the project ends and you're without a job. Something else comes online at Northrup Grumman up the street: you already have a clearance, so you get hired. If the clearance lapsed you'd have to go through months of background checks all over again, so you keep it current. That doesn't mean you keep having access to classified info about stuff you're not working on, it just means you follow a bunch of regulations like I think you have to report to the feds if you travel out of the country (as if they didn't already know).
I see job ads now and then (esp. in aerospace) where clearances are required or preferred (because they have to get one for you if you don't have it already), for reasons like the above. It's pretty mundane imho. Like being a licensed electrician almost.
The situation with Brennan and other grifter spooks is different, but the idea of a clearance just means you've been investigated and found to be a low risk for leaking classified info. Just because you leave a job doesn't mean you suddenly *become* a risk, so there's no reason to yank the clearance merely because there's an interval in which you're not using it.JTMcPhee , August 17, 2018 at 8:29 am
"I fail to understand why any ex-government employee should keep a top-level security clearance."
It is not unusual for someone who left government service to get contacted by someone who is currently working on a project the ex-employee worked on. The likelihood of this happening certainly decreases as time passes. If the ex-employee doesn't still have the security clearance talking about the project would be illegal.Pat , August 17, 2018 at 8:47 am
And given how revolving door rotates, and how corrupt the majority of those "projects" is, why is it a bad thing that ex-employees (who might, say, have used the NSA's Panopticon to spy on and harass ex-lovers and present significant others, or to trash people who dare question the Narrative, or to have engaged in the manifold frauds and corruptions that the Pentagram and much of the state security (sic) apparatus have, and are, engaged in?
There's no "loyalty to America," no "defense of the Constitution" by so very many of the current employees (and millions of self-interested "contractors") who slurp at the government trough, while claiming to be "serving the Nation" as they build and foster the machinery of the Panopticon and perpetual war machine that does not even try to "win victories" except as between procurement projects and in vicious conflicts for better office space. What entitles these people to continue to have the "economic benefit," and it clearly is one, of a "security clearance," on departing from such employment? Is that the kind of 'entitlement" that is worthy of protection, when stuff like Social Security (a prepaid insurance against abject poverty in old age and disability) and Medicar-Medicaid, are as those "security professionals" would say, are "threatened" and "under attack?"
As to "illegality of communications," I bet you may be well aware that such "communications" in violation of all kinds of laws and principles of "democracy" are part of the tradecraft and standard practice. Lady Justice wears a blindfold, not for the mythical reasons of treating all equally, but to let the malefactors get away with stuff. She ought to have at least one hand tied behind her back, too, though I guess one hand has to be left free to wield the sword and cut off anyone not protected by 'current practices" and the Leona Helmsley Rule that "law is for the little people "JTMcPhee , August 17, 2018 at 9:08 am
So the government has no mechanism they can use to contact these employees for information, say having the current employer act as an agent of the government. Said employee making an appointment at a government facility a t the government's time and choosing and providing a limited waiver of secrecy for that meeting and that meeting alone would probably satisfy both security issues and the issue of former employee using his knowledge for the good of the people not personal or private gain, revenge, leverage, etc we have now.a different chris , August 17, 2018 at 8:56 am
Yah, so simple, it would seem. And of course, on the record, and on the history of how this vast, unauditable, covert, growing, immensely corrupt blob operates, not ever going to become the practice. This link kind of overemphasizes sexsexsex stories, but does cover (below the fold) a whole lot of the vast corruption that is standard practice for the Imperial government -- just as has been the case, and downfall, of previous empires: http://washingtonsblog.com/2016/01/corrupt-american-government.html
And all this assumes that the folks still slurping at the govenment trough are acting in good faith, for the general welfare, subject to the Congressionally mandated and smugly ignored oath they are all supposed to swear to:
Oath of Office for Federal Officials
Employees of the United States Government including all members of Congress are required to take the following oath before assuming elected or appointed office.
5 U.S.C. 3331:
An individual, except the President, elected or appointed to an office of honor or profit in the civil service or uniformed services shall take the following oath: I, [name], do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter. So help me God.Lambert Strether , August 18, 2018 at 2:22 pm
>to get contacted by someone who is currently working on a project the ex-employee worked on
Well before they commence the actual conversation he/she needs to get re-cleared. If it takes 6 months then that's just the way it is.
So some guy has a high security clearance, and then you want his input say 10 years later. You're telling me the CIA/NSA/(insert alphabetic blood-sucking agency here) has been keeping as tight tabs on his behavior as they have the rest of the people in your office? Dude could have gotten a coke addiction and turned to, sigh, the Russians for some moola. Would they really know?
And "the likelihood decreases" is not a defense. You either have a policy – "security clearance decreases at the following rate: x, y, z" or you don't.Mike Barry , August 17, 2018 at 7:04 am
> he/she needs to get re-cleared. If it takes 6 months then that's just the way it is.
That makes too much sense. Stop that.JTMcPhee , August 17, 2018 at 8:32 am
Israeli logrollers gon' drink yo blood and gitcho mama!. Ooga Booga!The Rev Kev , August 17, 2018 at 7:59 am
Does that mean you agree that the Israel-ites actually do drive a lot of the content of 'our" media, and the behaviors of "our" government? Or is it a "have bara, will travel" kind of comment? Or what? Not clear.Kokuanani , August 17, 2018 at 9:20 am
This author is right. I do not know if you would call what the media did a form of virtue-signalling or whatever but the net effect is a demonstration that the media is into coordinated campaigns. I do not think that people have forgotten the "This Is Extremely Dangerous to Our Democracy" Sinclair script a few months ago. This is just more of the same.
I don't even know why they act so b***-hurt when Trump attacks their honesty. In the last few months I have seen them call him a traitor, a gay-bitch, they have called for a military coup to unseat him, they have begged for the deep state to rescue them, they have elevated people who are responsible for the deaths of thousands of American soldiers to the ranks of noble heroes of the Republic. As far as I am concerned, they have made their own bed and now they can lay in it, even if they have to share it with Donald J. Trump.Angie Neer , August 17, 2018 at 1:40 pm
Big media outlets need not actually report news that affects your life and point to serious solutions for social ills. They can just bad mouth Trump.
Substitute "The Democratic Party" for "big media outlets" and you've got another accurate picture.Bill Smith , August 17, 2018 at 2:05 pm
Yesterday when I looked at the NYT online, the big featured graphic in the center of the page, typically a photo, was a rotating feed of Trump tweets, in headline-sized text. It struck me as a new low in the pathetic Trump-media feedback loop. It's all a game of "made you look!"Seamus Padraig , August 18, 2018 at 5:07 am
Yeah, they probably got a summer intern to do that.
Anyone read Ronan Farrows "War on Peace: The End of Diplomacy and the Decline of American Influence"?
In one passage he describes a meeting at the State Department where they are complaining that nobody is interested in their policy prescriptions and decide that the problem is that they need some graphs. They all turn to Farrrow and look at him as he is the youngest in the meeting and figure he is the only one who would know how to do that. "Ageism" he thought.Altandmain , August 17, 2018 at 6:25 pm
Trump vs. the MSM: the greatest reality-TV show ever!Lambert Strether , August 18, 2018 at 2:32 pm
The problem with the mainstream media calling out Trump is that this is like the pot calling a kettle black.
Trump is awful, sure. But so is the corporate media with its pro-war and neoliberal economic agenda.
As Ian Welsh notes, the press is Trump's enemy, not the servant of the people:
A case could be made that independent media like Naked Capitalism is doing a key public service. Not the corporate media though, whose main objective is always to maximize advertising revenues and to impose the views of its owners, the very rich, on society.
Two random comments on this topic:
1) The best justification for giving officials formally out of government clearance on either side of the revolving door is that you may need to call on them for advice. It seems to me that this incentivizes "intelligence" over wisdom. And for wisdom, long experience plus open sources should be enough. (For example, if you want to call in an ex-official on North Korean nukes, they don't really need to know the details of the latest weaponry, or Kim's weight gain, or whatever. That can be explained to them by the customer , as needed. What's really needed is an outside voice -- the role played by an honest consultant -- plus wisdom about power relations on the Korean peninsula. No need for clearance there.)
2) RussiaRussiaRussia has been very profitable, not only personally for the talking heads in the intelligence community but for the press. Removing clearance not only hits the talking heads in the wallet, it disrupts the relation between the press and its network of anonymous sources.
Aug 18, 2018 | www.zerohedge.com
By the SRSrocco Report ,
Big trouble is brewing in the mighty North Dakota Bakken Oil Field. While oil production in the Bakken has reversed since it bottomed in 2016 and increased over the past few years, so has the amount of by-product wastewater. Now, it's not an issue if water production increases along with oil. However, it's a serious RED FLAG if by-product wastewater rises a great deal more than oil.
And... unfortunately, that is exactly what has taken place in the Bakken over the past two years. In the oil industry, they call it, the rising "Water Cut." Furthermore, the rapid increase in the amount of water to oil from a well or field suggests that peak production is at hand . So, now the shale companies will have an uphill battle to try to increase or hold production flat as the water cut rises.
According to the North Dakota Department of Mineral Resources, the Bakken produced 201 million barrels of oil in the first six months of 2018. However, it also produced a stunning 268 million barrels of wastewater:
Thus, the companies producing shale oil in the Bakken had to dispose of 268 million barrels of by-product wastewater in just the first half of the year. I have spoken to a few people in the industry, and the estimate is that it cost approximately $4 a barrel to gather, transport and dispose of this wastewater. Which means, the shale companies will have to pay an estimated $2.2 billion just to get rid of their wastewater this year.
Now, some companies may be recycling their wastewater, but this isn't free. Actually, I have seen estimates that it cost more money to recycle wastewater than it does to simply dispose of it. So, as the volume of wastewater increases while the percentage of oil production declines, then the shale companies are hit with a double-whammy... less oil revenue and rising wastewater disposal costs.
To give you an idea just how much more water is being produced versus oil in the Bakken, I went back to the North Dakota Department of Mineral Resources and looked at their data back to 2015. Unfortunately, the data published in excel only goes back to 2015, even though they have figures published in PDF form starting in 2003.
Regardless, four years is plenty of time to show just how bad the situation is becoming in the Bakken. In June 2015, the North Dakota Bakken produced 16% more water than oil. However June this year, the Bakken field produced 38% more water than oil :
You will notice that overall oil and water production declined in 2016, due to the falling oil price, but as production grew in 2017 and 2018, the percentage increase of by-product wastewater surged to 32% and 38% respectively. Here is an interesting comparison:
Bakken Oil & Water Production:
June 2015 Oil = 34.4 million barrels
June 2015 Water = 39.8 million barrels (16% more water)
June 2018 Oil = 33.8 million barrels
June 2018 Water = 46.8 million barrels (38% more water)
As we can see, while overall Bakken oil production in June 2018 was less than it was in June 2015, the volume of waster water increased by an additional 7 million barrels.
I believe there are two negative forces at work in the Bakken as it pertains to the rising volume of wastewater.
- As the wells and field age, more water is produced than oil
- Larger Frac Stages, which require more water and sand, are now being utilized to keep production growing or to keep it from falling
While a rising water cut isn't a surprise to the industry as it is a natural progression of an aging oil well or field, the use of Larger Frac Stage wells should be a WAKE-UP CALL to investors. Why? Because Larger Frac Stage wells consume a great deal more water and sand to produce more oil initially, but the decline rates are even more severe than regular shale wells.
So, when the Investor Relations are bragging how the companies are using the newer technology of more complex Large Frac Stage wells, this isn't a good sign. This means that the company is now desperate to try and grow production, or at worst, to keep it from falling.
Unfortunately, the U.S. Shale Industry is in serious trouble. Most of the shale fields have reached a peak and when production starts to decline, especially during a collapsing oil price, I forecast a rapid disintegration of the industry. We must remember, as the oil price and oil production falls, then company stock and asset values will plummet while the high debt levels remain. Thus, the shale industry will have increasing difficulty in servicing its debt.
I will continue to monitor the production of oil and wastewater in the Bakken. Please check back for updates.
IMPORTANT NOTE: If you are new to the SRSrocco Report, please consider subscribing to my: SRSrocco Report Youtube Channel .
Aug 18, 2018 | www.zerohedge.com
rosiescenario Sat, 08/18/2018 - 16:52 PermalinkMaxDemon Sat, 08/18/2018 - 18:05 Permalink
The most embarrassing outcome will turn out to be that they actually did nothing to verify the Steele dossier. Why would they question it? They wanted to use it as a political tool. Do I question and inspect a hammer before I swing it?
Barring that, if they did try to verify it, their complete and utter stupidity will see the light of day.
In either case they are truly fucked by this court order.
So the FBI's position is that they cannot confirm nor deny the existence of documents to confirm or deny the truth of the dossier, but they used it in the FISA warrants. But the procedure required for the warrants are that all information must be verified, so those documents need to exist. So the FBI is admitting that they did not follow the required procedure. That makes the warrants void, which means that all information obtained that way is mute, and thus the entire case collapses. Further, filling a warrant request where the rules have not been followed is perjury, making everyone who signed it guilty of a criminal offense against the court.
Aug 17, 2018 | russia-insider.com"As America weakens, Russia, Turkey, Iran and all the other countries that have been steamrolled by Washington will likely seek revenge." 145 There has been a dramatic shift in how the United States government carries out its business internationally. Admittedly, Washington has had a tendency to employ force to get what it has wanted ever since 9/11, but it also sometimes recognized that other countries had legitimate interests and accepted there was a place for diplomacy to resolve issues short of armed conflict.
The Bush Administration reluctance to broaden its engagement in the Middle East after it recognized that it had blundered with Iraq followed by Obama's relaxation of tensions with Cuba and his negotiation of a nuclear agreement with Iran demonstrated that sanity sometimes prevailed in the West Wing.
That willingness to be occasionally accommodating has changed dramatically , with the State Department under Mike Pompeo currently more prone to deliver threats than any suggestions that we all might try to get along.
It would be reasonable enough to criticize such behavior because it is intrinsically wrong, but the truly frightening aspect of it would appear to be that it is based on the essentially neoconservative a ssumption that other countries will always back down when confronted with force majeure and that the use of violence as a tool in international relations is, ultimately, consequence free.
I am particularly disturbed with the consequence free part as it in turn is rooted in the belief that countries that have been threatened or even invaded have no collective memory of what occurred and will not respond vengefully when the situation changes.
There have been a number of stunningly mindless acts of aggression over the past several weeks that are particularly troubling as they suggest that they will produce many more problems down the road than solutions.
The most recent is the new sanctioning of Russia over the Skripal poisoning in Salisbury England. For those not following developments, last week Washington abruptly and without any new evidence being presented, imposed additional trade sanctions on Russia in the belief that Moscow ordered and carried out the poisoning of Sergey Skripal and his daughter Yulia on March 4th.
The report of the new sanctions was particularly surprising as Yulia Skripal has recently announced that she intends to return to her home in Russia , leading to the conclusion that even one of the alleged victims does not believe the narrative being promoted by the British and American governments.
Though Russian President Vladimir Putin has responded with restraint, avoiding a tit-for-tat, he is reported to be angry about the new move by the US government and now believes it to be an unreliable negotiating partner.
Considering the friendly recent exchanges between Putin and Trump, the punishment of Russia has to be viewed as something of a surprise, suggesting that the president of the United States may not be in control of his own foreign policy.
Turkey is also feeling America's wrath over the continued detention of an American Protestant Pastor Andrew Brunson by Ankara over charges that he was connected to the coup plotters of 2016, which were allegedly directed by Fetullah Gulen, a Muslim religious leader, who now resides in Pennsylvania.
Donald Trump has made the detention the centerpiece of his Turkish policy, introducing sanctions and tariffs that have led in part to a collapse of the Turkish lira and a run on the banking system which could easily lead to default and grave damage to European banks that hold a large party of the country's debt.
And then there is perennial favorite Iran, which was hit with reinstated sanctions last week and is confronting a ban on oil sales scheduled to go into effect on November 4th. The US has said it will sanction any country that buys Iranian oil after that date, though a number of governments including Turkey, India and China appear to be prepared to defy that demand. Several European countries are reportedly preparing mechanisms that will allow them to trade around US restrictions.
What do Russia, Turkey and Iran have in common? All are on the receiving end of punitive action by the United States over allegations of misbehavior that have not been demonstrated. Nobody has shown that Russia poisoned the Skripals, Turkey just might have a case that the Reverend Brunson was in contact with coup plotters, and Iran is in full compliance with the nuclear arms agreement signed in 2015.
One has to conclude that the United States has now become the ultimate angry imperial power, lashing out with the only thing that seems to work – its ability to interfere in and control financial markets – to punish nations that do not play by its rules.
Given Washington's diminishing clout worldwide, it is a situation that is unsustainable and which will ultimately only really punish the American people as the United States becomes more isolated and its imperial overreach bankrupts the nation.
As America weakens, Russia, Turkey, Iran and all the other countries that have been steamrolled by Washington will likely seek revenge. To avoid that, a dramatic course correction by the US is needed, but, unfortunately, is unlikely to take place.
Aug 18, 2018 | www.unz.com
Virgile , August 17, 2018 at 3:36 pm GMTThat is the true face of America that has emerged after having been hidden behind good manners success and glamour.
Trump is only a catalyst to that revelation. The illness have been there for long time disguised in a motto "We are a great democratic nation'. It is now showing its real and ugly face.
The USA's illness cannot be cured other than by a 'regime change'.
Maybe that is what is brewing..
Aug 18, 2018 | www.counterpunch.org
Consistent with its possession as a leading and money-making asset of the nation's wealthy elite, the United States corporate and commercial mass media is a bastion of power-serving propaganda and deadening twaddle designed to keep the U.S. citizenry subordinated to capital and the imperial U.S. state. It regularly portrays the United States as a great model of democracy and equality. It sells a false image of the U.S. as a society where the rich enjoy opulence because of hard and honest work and where the poor are poor because of their laziness and irresponsibility. The nightly television news broadcasts and television police and law and order dramas are obsessed with violent crime in the nation's Black ghettoes and Latino barrios, but they never talk about the extreme poverty, the absence of opportunity imposed on those neighborhoods by the interrelated forces of institutional racism, capital flight, mass structural unemployment, under-funded schools, and mass incarceration. The nightly television weather reports tells U.S. citizens of ever new record high temperatures and related forms of extreme weather but never relate these remarkable meteorological developments to anthropogenic climate change.
The dominant corporate U.S. media routinely exaggerates the degree of difference and choice between the candidates run by the nation's two corporate-dominated political organizations, the Democrats and the Republicans. It never notes that the two reigning parties agree about far more than they differ on, particularly when it comes to fundamental and related matters of business class power and American Empire. It shows U.S. protestors engaged in angry confrontations with police and highlights isolated examples of protestor violence but it downplays peaceful protest and never pays serious attention to the important societal and policy issues that have sparked protest or to the demands and recommendations advanced by protest movements.
As the prolific U.S. Marxist commentator Michael Parenti once remarked, US "Newscasters who want to keep their careers afloat learn the fine art of evasion with great skill they skirt around the most important parts of a story. With much finesse, they say a lot about very little, serving up heaps of junk news filled with so many empty calories and so few nutrients. Thus do they avoid offending those who wield politico-economic power while giving every appearance of judicious moderation and balance. It is enough to take your breath away." 
U.S. newscasters and their print media counterparts routinely parrot and disseminate the false foreign policy claims of the nation's imperial elite. Earlier this year, U.S. news broadcasters dutiful relayed to U.S. citizens the Obama administration's preposterous assertion that social-democratic Venezuela is a repressive, corrupt, and authoritarian danger to its own people and the U.S. No leading national U.S. news outlet dared to note the special absurdity of this charge in the wake of Obama and other top U.S. officials' visit to Riyadh to guarantee U.S. support for the new king of Saudi Arabia, the absolute ruler of a leading U.S. client state that happens to be the most brutally oppressive and reactionary government on Earth.
In U.S. "mainstream" media, Washington's aims are always benevolent and democratic. Its clients and allies are progressive, its enemies are nefarious, and its victims are invisible and incidental. The U.S. can occasionally make "mistakes" and "strategic blunders" on the global stage, but its foreign policies are never immoral, criminal, or imperialist in nature as far as that media is concerned. This is consistent with the doctrine of "American Exceptionalism," according to which the U.S., alone among great powers in history, seeks no selfish or imperial gain abroad. It is consistent also with "mainstream" U.S. media's heavy reliance on "official government sources" (the White House, the Defense Department, and the State Department) and leading business public relations and press offices for basic information on current events.
As the leading Left U.S. intellectuals Noam Chomsky and Edward Herman showed in their classic text Manufacturing Consent: The Political Economy of the Mass Media (1988), Orwellian double standards are rife in the dominant U.S. media's coverage and interpretation of global affairs. Elections won in other countries by politicians that Washington approves because those politicians can be counted on to serve the interests of U.S. corporations and the military are portrayed in U.S. media as good and clean contests. But when elections put in power people who can't be counted on to serve "U.S. interests," (Hugo Chavez and Nicolas Maduro for example), then U.S. corporate media portrays the contests as "rigged" and "corrupt." When Americans or people allied with Washington are killed or injured abroad, they are "worthy victims" and receive great attention and sympathy in that media. People killed, maimed, displaced and otherwise harmed by the U.S. and U.S. clients and allies are anonymous and "unworthy victims" whose experience elicits little mention or concern.
U.S. citizens regularly see images of people who are angry at the U.S. around the world. The dominant mass media never gives them any serious discussion of the US policies and actions that create that anger. Millions of Americans are left to ask in childlike ignorance "Why do they hate us? What have we done?"
In February of 2015, an extraordinary event occurred in U.S. news media – the firing of a leading national news broadcaster, Brian Williams of NBC News. Williams lost his position because of some lies he told in connection with the U.S. invasion of Iraq. A naïve outsider might think that Williams was fired because he repeated the George W. Bush administration's transparent fabrications about Saddam Hussein's weapons of mass destruction and Saddam's supposed connection to 9/11. Sadly but predictably enough, that wasn't his problem. Williams lost his job because he falsely boasted that he had ridden on a helicopter that was forced down by grenade fire during the initial U.S. invasion. If transmitting Washington's lies about Iraq were something to be fired about, then U.S. corporate media authorities would have to get rid of pretty much of all their top broadcasters.
More than Entertainment
The U.S. corporate media's propagandistic service to the nation's reigning and interrelated structures of Empire and inequality is hardly limited to its news and public affairs wings. Equally if not more significant in that regard is that media's vast "entertainment" sector, which is loaded with political and ideological content but was completely ignored in Herman and Chomsky's groundbreaking Manufacturing Consent.  One example is the Hollywood movie "Zero Dark Thirty," a 2012 "action thriller" that dramatized the United States' search for Osama bin-Laden after the September 11, 2001 jetliner attacks. The film received critical acclaim and was a box office-smash. It was also a masterpiece of pro-military, pro-CIA propaganda, skillfully portraying U.S. torture practices "as a dirty, ugly business that is necessary to protect America" (Glenn Greenwald) and deleting the moral debate that erupted over the CIA's "enhanced interrogation techniques." Under the guise of a neutral, documentary-like façade, Zero Dark Thirty normalized and endorsed torture in ways that were all the more effective because of its understated, detached, and "objective" veneer. The film also marked a distressing new frontier in U.S. military-"embedded" filmmaking whereby the movie-makers receive technical and logistical support from the Pentagon in return for producing elaborate public relations on the military's behalf.
The 2014-15 Hollywood blockbuster American Sniper is another example. The film's audiences is supposed to marvel at the supposedly noble feats, sacrifice, and heroism of Chris Kyle, a rugged, militantly patriotic, and Christian-fundamentalist Navy SEALS sniper who participated in the U.S. invasion of Iraq to fight "evil" and to avenge the al Qaeda jetliner attacks of September 11, 2001. Kyle killed 160 Iraqis over four tours of "duty" in "Operational Iraqi Freedom." Viewers are never told that the Iraqi government had nothing to do with the 9/11 attacks or al Qaeda or that the U.S. invasion was one of the most egregiously criminal and brazenly imperial and mass-murderous acts in the history of international violence. Like Zero Dark Thirty's apologists, American Sniper's defenders claim that the film takes a neutral perspective of "pure storytelling," with no ideological bias. In reality, the movie is filled with racist and imperial distortions, functioning as flat-out war propaganda.
These are just two among many examples that could be cited of U.S. "entertainment" media's regular service to the American Empire. Hollywood and other parts of the nation's vast corporate entertainment complex plays the same power-serving role in relation to domestic ("homeland") American inequality and oppression structures of class and race. 
Seen broadly in its many-sided and multiply delivered reality, U.S. corporate media's dark, power-serving mission actually goes further than the manufacture of consent. A deeper goal is the manufacture of mass idiocy, with "idiocy" understood in the original Greek and Athenian sense not of stupidity but of childish selfishness and willful indifference to public affairs and concerns. (An "idiot" in Athenian democracy was characterized by self-centeredness and concerned almost exclusively with private instead of public affairs.). As the U.S. Latin Americanist Cathy Schneider noted, the U.S.-backed military coup and dictatorship headed by Augusto Pinochet "transformed Chile, both culturally and politically, from a country of active participatory grassroots communities, to a land of disconnected, apolitical individuals" – into a nation of "idiots" understood in this classic Athenian sense.
In the U.S., where violence is not as readily available to elites as in 1970s Latin America, corporate America seeks the same terrible outcome through its ideological institutions, including above all its mass media. In U.S. movies, television sit-coms, television dramas, television reality-shows, commercials, state Lottery advertisements, and video games, the ideal-type U.S. citizen is an idiot in this classic sense: a person who cares about little more than his or her own well-being, consumption, and status. This noble American idiot is blissfully indifferent to the terrible prices paid by others for the maintenance of reigning and interrelated oppressions structures at home and abroad.
A pervasive theme in this media culture is the notion that people at the bottom of the nation's steep and interrelated socioeconomic and racial pyramids are the "personally irresponsible" and culturally flawed makers of their own fate. The mass U.S. media's version of Athenian idiocy "can imagine," in the words of the prolific Left U.S. cultural theorist Henry Giroux "public issues only as private concerns." It works to "erase the social from the language of public life so as to reduce" questions of racial and socioeconomic disparity to "private issues of individual character and cultural depravity. Consistent with "the central neoliberal tenet that all problems are private rather than social in nature," it portrays the only barriers to equality and meaningful democratic participation as "a lack of principled self-help and moral responsibility" and bad personal choices by the oppressed. Government efforts to meaningfully address and ameliorate (not to mention abolish) societal disparities of race, class, gender, ethnicity, nationality and the like are portrayed as futile, counterproductive, naïve, and dangerous.
To be sure, a narrow and reactionary sort of public concern and engagement does appear and take on a favorable light in this corporate media culture. It takes the form of a cruel, often even sadistically violent response to unworthy and Evil Others who are perceived as failing to obey prevalent national and neoliberal cultural codes. Like the U.S. ruling class that owns it, the purportedly anti-government corporate media isn't really opposed to government as such. It's opposed to what the French sociologist Pierre Bourdieu called "the left hand of the state" – the parts of the public sector that serve the social and democratic needs of the non-affluent majority. It celebrates and otherwise advances the "right hand of the state": the portions of government that serve the opulent minority, dole out punishment for the poor, and attacks those perceived as nefariously resisting the corporate and imperial order at home and abroad. Police officers, prosecutors, military personnel, and other government authorities who represent the "right hand of the state" are heroes and role models in this media. Public defenders, other defense attorneys, civil libertarians, racial justice activists, union leaders, antiwar protesters and the like are presented at best as naïve and irritating "do-gooders" and at worst as coddlers and even agents of evil.
The generation of mass idiocy in the more commonly understood sense of sheer stupidity is also a central part of U.S. "mainstream" media's mission. Nowhere is this more clearly evident than in the constant barrage of rapid-fire advertisements that floods U.S. corporate media. As the American cultural critic Neil Postman noted thirty years ago, the modern U.S. television commercial is the antithesis of the rational economic consideration that early Western champions of the profits system claimed to be the enlightened essence of capitalism. "Its principal theorists, even its most prominent practitioners," Postman noted, "believed capitalism to be based on the idea that both buyer and seller are sufficiently mature, well-informed, and reasonable to engage in transactions of mutual self-interest." Commercials make "hash" out of this idea. They are dedicated to persuading consumers with wholly irrational claims. They rely not on the reasoned presentation of evidence and logical argument but on suggestive emotionalism, infantilizing manipulation, and evocative, rapid-fire imagery.
The same techniques poison U.S. electoral politics. Investment in deceptive and manipulative campaign commercials commonly determines success or failure in mass-marketed election contests between business-beholden candidates that are sold to the audience/electorate like brands of toothpaste and deodorant. Fittingly enough, the stupendous cost of these political advertisements is a major factor driving U.S. campaign expenses so high (the 2016 U.S. presidential election will cost at least $5 billion) as to make candidates ever more dependent on big money corporate and Wall Street donors.
Along the way, mass cognitive competence is assaulted by the numbing, high-speed ubiquity of U.S. television and radio advertisements. These commercials assault citizens' capacity for sustained mental focus and rational deliberation nearly sixteen minutes of every hour on cable television, with 44 percent of the individual ads now running for just 15 seconds. This is a factor in the United States' long-bemoaned epidemic of "Attention Deficit Disorder."
Seventy years ago, the brilliant Dutch left Marxist Anton Pannekoek offered some chilling reflections on the corporate print and broadcast media's destructive impact on mass cognitive and related social resistance capacities in the United States after World War II:
"The press is of course entirely in hands of big capital [and it] dominates the spiritual life of the American people. The most important thing is not even the hiding of all truth about the reign of big finance. Its aim still more is the education to thoughtlessness. All attention is directed to coarse sensations, everything is avoided that could arouse thinking. Papers are not meant to be read – the small print is already a hindrance – but in a rapid survey of the fat headlines to inform the public on unimportant news items, on family triflings of the rich, on sexual scandals, on crimes of the underworld, on boxing matches. The aim of the capitalist press all over the world, the diverting of the attention of the masses from the reality of social development, nowhere succeed with such thoroughness as in America."
"Still more than by the papers the masses are influenced by broadcasting and film. These products of most perfect science, destined at one time to the finest educational instruments of mankind, now in the hands of capitalism have been turned into the strongest means to uphold its rule by stupefying the mind. Because after nerve-straining fatigue the movie offers relaxation and distraction by means of simple visual impressions that make no demand on the intellect, the masses get used to accepting thoughtlessly all its cunning and shrewd propaganda. It reflects the ugliest sides of middle-class society. It turns all attention either to sexual life, in this society – by the absence of community feelings and fight for freedom – the only source of strong passions, or to brute violence; masses educated to rough violence instead of to social knowledge are not dangerous to capitalism "
Pannekoek clearly saw an ideological dimension (beyond just diversion and stupefaction) in U.S. mass media's "education to thoughtlessness" through movies as well as print sensationalism. He would certainly be impressed and perhaps depressed by the remarkably numerous, potent, and many-sided means of mass distraction and indoctrination that are available to the U.S. and global capitalist media in the present digital and Internet era.
The "entertainment" wing of its vast corporate media complex is critical to the considerable "soft" ideological "power" the U.S. exercises around the world even as its economic hegemony wanes in an ever more multipolar global system (and as its "hard" military reveals significant limits within and beyond the Middle East). Relatively few people beneath the global capitalist elite consume U.S. news and public affairs media beyond the U.S., but "American" (U.S.) movies, television shows, video games, communication devices, and advertising culture are ubiquitous across the planet.
Explaining "Mainstream" Media Corporate Ownership
There's nothing surprising about the fact that the United States' supposedly "free" and "independent" media functions as a means of mass indoctrination for the nation's economic and imperial elite. The first and most important explanation for this harsh reality is concentrated private ownership – the fundamental fact that that media is owned primarily by giant corporations representing wealthy interests who are deeply invested in U.S. capitalism and Empire. Visitors to the U.S. should not be fooled by the large number and types of channels and stations on a typical U.S. car radio or television set or by the large number and types of magazines and books on display at a typical Barnes & Noble bookstore. Currently in the U.S., just six massive and global corporations – Comcast, Viacom, Time Warner, CBS, The News Corporation and Disney – together control more than 90 percent of the nation's print and electronic media, including cable television, airwaves television, radio, newspapers, movies, video games, book publishing, comic books, and more. Three decades ago, 50 corporations controlled the same amount of U.S. media.
Each of the reigning six companies is a giant and diversified multi-media conglomerate with investments beyond media, including "defense" (the military). Asking reporters and commentators at one of those giant corporations to tell the unvarnished truth about what's happening in the U.S. and the world is like asking the company magazine published by the United Fruit Company to the tell the truth about working conditions in its Caribbean and Central American plantations in the 1950s. It's like asking the General Motors company newspaper to tell the truth about wages and working conditions in GM's auto assembly plants around the world.
As the nation's media becomes concentrated into fewer corporate hands, media personnel become ever more insecure in their jobs because they have fewer firms to whom to sell their skills. That makes them even less willing than they might have been before to go outside official sources, to question the official line, and to tell the truth about current events and the context in which they occur.
A second explanation is the power of advertisers. U.S. media managers are naturally reluctant to publish or broadcast material that might offend the large corporations that pay for broadcasting by purchasing advertisements. As Chomsky has noted in a recent interview, large corporations are not only the major producers of the United States' mass and commercial media. They are also that media's top market, something that deepens the captivity of nation's supposedly democratic and independent media to big capital:
"The reliance of a journal on advertisers shapes and controls and substantially determines what is presented to the public the very idea of advertiser reliance radically distorts the concept of free media. If you think about what the commercial media are, no matter what, they are businesses. And a business produces something for a market. The producers in this case, almost without exception, are major corporations. The market is other businesses – advertisers. The product that is presented to the market is readers (or viewers), so these are basically major corporations providing audiences to other businesses, and that significantly shapes the nature of the institution."
At the same time, both U.S. corporate media managers and the advertisers who supply revenue for their salaries are hesitant to produce content that might alienate the affluent people who count for an ever rising share of consumer purchases in the U.S. It is naturally those with the most purchasing power who are naturally most targeted by advertisers.
A third great factor is U.S. government media policy and regulation on behalf of oligopolistic hyper-concentration. The U.S. corporate media is hardly a "natural" outcome of a "free market." It's the result of government protections and subsidies that grant enormous "competitive" advantages to the biggest and most politically/plutocratically influential media firms. Under the terms of the 1934 Communications Act and the 1996 Telecommunications Act, commercial, for-profit broadcasters have almost completely free rein over the nation's airwaves and cable lines. There is no substantive segment of the broadcast spectrum set aside for truly public interest and genuinely democratic, popular not-for profit media and the official "public" broadcasting networks are thoroughly captive to corporate interests and to right-wing politicians who take giant campaign contributions from corporate interests. Much of the 1996 bill was written by lobbyists working for the nations' leading media firms. 
A different form of state policy deserves mention. Under the Obama administration, we have seen the most aggressive pursuit and prosecution in recent memory of U.S. journalists who step outside the narrow parameters of pro-U.S. coverage and commentary – and of the whistleblowers who provide them with leaked information. That is why Edward Snowden lives in Russia, Glenn Greenwald lives in Brazil, Chelsea Manning is serving life in a U.S. military prison, and Julian Assange is trapped in the Ecuadorian Embassy in London. A leading New York Times reporter and author, James Risen, has been threatened with imprisonment by the White House for years because of his refusal to divulge sources.
Treetops v. Grassroots Audiences
In this writer's experience, the critical Left analysis of the U.S. "mainstream" media as a tool for "manufacturing consent" and idiocy developed above meets four objections from defenders of the U.S. media system, A first objection notes that the New York Times, the Washington Post, the Financial Times (FT), the Wall Street Journal (WSJ) and other major U.S. corporate media outlets produce a significant amount of, informative, high-quality and often candid reporting and commentary that Left thinkers and activists commonly cite to support their cases for radical and democratic change. Left U.S. media critics like Chomsky and Herman are said to be hypocrites because they obviously find much that is of use as Left thinkers in the very media that they criticize for distorting reality in accord with capitalist and imperial dictates.
The observation that Leftists commonly use and cite information from the corporate media they harshly criticize is correct but it is easy to account for the apparent anomaly within the critical Left framework by noting that that media crafts two very different versions of U.S. policy, politics, society, "life," and current events for two different audiences. Following the work of the brilliant Australian propaganda critic Alex Carey, we can call the first audience the "grassroots." It comprises the general mass of working and lower-class citizens. As far as the business elites who own and manage the U.S. mass media and the corporations that pay for that media with advertising purchases are concerned, this "rabble" cannot be trusted with serious, candid, and forthright information. Its essential role in society is to keep quiet, work hard, be entertained (in richly propagandistic and ideological ways, we should remember), buy things, and generally do what they're told. They are to leave key societal decisions to those that the leading 20th century U.S. public intellectual and media-as-propaganda enthusiast Walter Lippman called "the responsible men." That "intelligent," benevolent, "expert," and "responsible" elite (responsible, indeed, for such glorious accomplishments as the Great Depression, the Vietnam War, the invasion of Iraq, the Great Recession, global warming, and the rise of the Islamic State) needed, in Lippman's view, to be protected from what he called "the trampling and roar of the bewildered herd." The deluded mob, the sub-citizenry, the dangerous working class majority is not the audience for elite organs like the Times, the Post, and the Journal.
The second target group comprises the relevant political class of U.S. citizens from at most the upper fifth of society. This is who reads the Times, the Post, WSJ, and FT, for the most part. Call this audience (again following Carey) the "treetops": the "people who matter" and who deserve and can be trusted with something more closely approximating the real story because their minds have been properly disciplined and flattered by superior salaries, significant on-the-job labor autonomy, and "advanced" and specialized educational and professional certification. This elite includes such heavily indoctrinated persons as corporate managers, lawyers, public administrators, and (most) tenured university professors. Since these elites carry out key top-down societal tasks of supervision, discipline, training, demoralization, co-optation, and indoctrination – all essential to the rule of the real economic elite and the imperial system – they cannot be too thoroughly misled about current events and policy without deleterious consequences for the smooth functioning of the dominant social and political order. They require adequate information and must not be overly influenced by the brutal and foolish propaganda generated for the "bewildered herd." At the same time, information and commentary for the relevant and respectable business and political classes and their "coordinator class" servants and allies often contains a measure of reasoned and sincere intra-elite political and policy debate – debate that is always careful not to stray beyond narrow U.S. ideological parameters. That is why a radical Left U.S. thinker and activist can find much that is of use in U.S. "treetops" media. Such a thinker or activist would, indeed, be foolish not to consult these sources.
"P"BS and N"P"R
A second objection to the Left critique of U.S. "mainstream" media claims that the U.S. public enjoys a meaningful alternative to the corporate media in the form of the nation's Public Broadcasting Service (television) and National Public Radio (NPR). This claim should not be taken seriously. Thanks to U.S. "public" media's pathetically weak governmental funding, its heavy reliance on corporate sponsors, and its constant harassment by right wing critics inside and beyond the U.S. Congress, N"P"R and "P"BS are extremely reluctant to question dominant U.S. ideologies and power structures.
The tepid, power-serving conservatism of U.S. "public" broadcasting is by longstanding political and policy design. The federal government allowed the formation of the "public" networks only on the condition that they pose no competitive market or ideological challenge to private commercial media, the profits system, and U.S. global foreign policy. "P"BS and N"P"R are "public" in a very limited sense. They not function for the public over and against corporate, financial, and imperial power to any significant degree.
"The Internet Will Save Us"
A third objection claims that the rise of the Internet creates a "Wild West" environment in which the power of corporate media is eviscerated and citizens can find and even produce all the "alternative media" they require. This claim is misleading but it should not be reflexively or completely dismissed. In the U.S. as elsewhere, those with access to the Internet and the time and energy to use it meaningfully can find a remarkable breadth and depth of information and trenchant Left analysis at various online sites. The Internet also broadens U.S. citizens and activists' access to media networks beyond the U.S. – to elite sources that are much less beholden of course to U.S. propaganda and ideology. At the same time, the Internet and digital telephony networks have at times shown themselves to be effective grassroots organizing tools for progressive U.S. activists.
Still, the democratic and progressive impact of the Internet in the U.S. is easily exaggerated. Left and other progressive online outlets lack anything close to the financial, technical, and organizational and human resources of the corporate news media, which has its own sophisticated Internet. There is nothing in Left other citizen online outlets that can begin to remotely challenge the "soft" ideological and propagandistic power of corporate "entertainment" media. The Internet's technical infrastructure is increasingly dominated by an "ISP cartel" led by a small number of giant corporations. As the leading left U.S. media analyst Robert McChesney notes:
"By 2014, there are only a half-dozen or so major players that dominate provision of broadband Internet access and wireless Internet access. Three of them – Verizon, AT&T, and Comcast – dominate the field of telephony and Internet access, and have set up what is in effect a cartel. They no longer compete with each other in any meaningful sense. As a result, Americans pay far more for cellphone and broadband Internet access than most other advanced nations and get much lousier service These are not 'free market' companies in any sense of the term. Their business model, going back to pre-Internet days, has always been capturing government monopoly licenses for telephone and cable TV services. Their 'comparative advantage' has never been customer service; it has been world-class lobbying.' 
Along the way, the notion of a great "democratizing," Wild West" and "free market" Internet has proved politically useful for the corporate media giants. The regularly trumpet the great Internet myth to claim that the U.S. public and regulators don't need to worry about corporate media power and to justify their demands for more government subsidy and protection. At the same time, finally, we know from the revelations of Edward Snowden, Glenn Greenwald and others that the nation's leading digital and Internet-based e-mail (Google and Yahoo), telephony (e.g. Verizon), and "social network" (Facebook above all) corporations have collaborated with the National Security Agency and with the nation's local, state, and federal police in the surveillance of U.S. citizens' and activists' private communications.
The fourth objection accuses Left media critics of being overly negative, "carping" critics who offer no serious alternatives to the nation's current corporate-owned corporate-managed commercial and for-profit media system. This is a transparently false and mean-spirited charge. Left U.S. media criticism is strongly linked to a smart and impressive U.S. media reform movement that advances numerous and interrelated proposals for the creation of a genuinely public and democratically run non-commercial and nonprofit U.S. media system. Some of the demand and proposals of this movement include public ownership and operation of the Internet as a public utility; the break-up of the leading media oligopolies; full public funding of public broadcasting; limits on advertising in commercial media; the abolition of political advertisements; the expansion of airwave and broadband access for alternative media outlets; publicly-funded nonprofit and non-commercial print journalism; the abolition of government and corporate surveillance, monitoring, and commercial data-mining of private communication and "social networks." With regard to the media as with numerous other areas, we should recall Chomsky's sardonic response to the standard conservative claim that the Left offers criticisms but no solutions: "There is an accurate translation for that charge: 'they present solutions and I don't like them.'"
A False Paradox
The propagandistic and power-serving mission and nature of dominant U.S, corporate mass media might seem ironic and even paradoxical in light of the United States' strong free speech and democratic traditions. In fact, as Carey and Chomsky have noted, the former makes perfect sense in light of the latter. In nations where popular expression and dissent is routinely crushed with violent repression, elites have little incentive to shape popular perceptions in accord with elite interests. The population is controlled primarily through physical coercion. In societies where it is not generally considered legitimate to put down popular expression with the iron heel of armed force and where dissenting opinion is granted a significant measure of freedom of expression, elites are heavily and dangerously incentivized to seek to manufacture mass popular consent and idiocy. The danger is deepened by the United States' status as the pioneer in the development of mass consumer capitalism, advertising, film, and television. Thanks to that history, corporate America has long stood in the global vanguard when it comes to developing the technologies, methods, art, and science of mass persuasion and thought control.
It is appropriate to place quotation marks around the phrase "mainstream media" when writing about dominant U.S. corporate media. During the Cold War era, U.S. officials and media never referred to the Soviet Union's state television and radio or its main state newspapers as "mainstream Russian media." American authorities referred to these Russian media outlets as "Soviet state media" and treated that media as means for the dissemination of Soviet "propaganda" and ideology. There is no reason to consider the United States' corporate and commercial media as any more "mainstream" than the leading Soviet media organs were back in their day. It is just as dedicated as the onetime Soviet state media to advancing the doctrinal perspectives of its host nation's reigning elite -- and far more effective.
Its success is easily exaggerated, however. To everyday Americans' credit, corporate media has never been fully successful in stamping out popular resistance and winning over the hearts and minds of the U.S. populace. A recent Pew Research poll showed that U.S. "millennials" (young adults 18-29 years old) have a more favorable response to the word "socialism" than to "capitalism" – a remarkable finding on the limits of corporate media and other forms of elite ideological power in the U.S. The immigrant worker uprising of May 2006, the Chicago Republic Door and Window plant occupation of 2008, the University of California student uprisings of 2009 and 2010, the Wisconsin public worker rebellion in early 2011, the Occupy Movement of late 2011, and Fight for Fifteen (for a $15 an hour minimum wage) and Black Lives Matter movements of 2014 and 2015 show that U.S. corporate and imperial establishment has not manufactured anything like comprehensive and across the board mass consent and idiocy in the U,S. today. The U.S. elite is no more successful in its utopian (or dystopian) quest to control every American heart and mind than it is in its equally impossible ambition of managing events across a complex planet from the banks of the Potomac River in Washington D.C. The struggle for popular self-determination, democracy, justice, and equality lives on despite the influence of corporate media.
Aug 18, 2018 | www.zerohedge.com
agcw86 , Fri, 08/17/2018 - 10:07 PermalinkBut always remember, the FBI/DOJ is "honorable". Yeah, that's the term they use to refer to the scumbags that "represent" us in congress. In reality, "there is no honor amongst thieves", and government is full of them because sociopaths gravitate to positions of power.
romanmoment Fri, 08/17/2018 - 10:08 Permalink
It's a unruly fuck show at the FBI and nobody is being held accountable. No leadership, no standards, no neutrality, no accountability. Obama weaponized the FBI. Fire everyone.
Aug 17, 2018 | www.zerohedge.com
The Wall Street Journal continues to counter the liberal mainstream media's Trump Derangement Syndrome , dropping uncomfortable truth-bombs and refusing to back off its intense pressure to get to the truth and hold those responsible, accountable (in a forum that is hard for the establishment to shrug off as 'Alt-Right' or 'Nazi' or be 'punished' by search- and social-media-giants) .
And once again Kimberley Strassel - who by now has become the focus of social media attacks for her truth-seeking reporting - does it again this morning, as she points out - hours after former CIA Director Brennan threw a tantrum over having his security clearance removed - that while Justice has released some damning documents - particularly on what Bruce Ohr was doing - much of the truth is still classified.
Via The Wall Street Journal,What Was Bruce Ohr Doing?
The Federal Bureau of Investigation and Justice Department have continued to insist they did nothing wrong in their Trump-Russia investigation. This week should finally bring an end to that claim, given the clear evidence of malfeasance via the use of Bruce Ohr.
Mr. Ohr was until last year associate deputy attorney general.
He began feeding information to the FBI from dossier author Christopher Steele in late 2016 - after the FBI had terminated Mr. Steele as a confidential informant for violating the bureau's rules. He also collected dirt from Glenn Simpson, cofounder of Fusion GPS, the opposition-research firm that worked for Hillary Clinton's campaign and employed Mr. Steele. Altogether, the FBI pumped Mr. Ohr for information at least a dozen times, debriefs that remain in classified 302 forms.
All the while, Mr. Ohr failed to disclose on financial forms that his wife, Nellie, worked alongside Mr. Steele in 2016, getting paid by Mr. Simpson for anti-Trump research. The Justice Department has now turned over Ohr documents to Congress that show how deeply tied up he was with the Clinton crew - with dozens of emails, calls, meetings and notes that describe his interactions and what he collected.
Mr. Ohr's conduct is itself deeply troubling. He was acting as a witness (via FBI interviews) in a case being overseen by a Justice Department in which he held a very senior position. He appears to have concealed this role from at least some superiors, since Deputy Attorney General Rod Rosenstein testified that he'd been unaware of Mr. Ohr's intermediary status.
Lawyers meanwhile note that it is a crime for a federal official to participate in any government matter in which he has a financial interest. Fusion's bank records presumably show Nellie Ohr, and by extension her husband, benefiting from the Trump opposition research that Mr. Ohr continued to pass to the FBI. The Justice Department declined to comment.
But for all Mr. Ohr's misdeeds, the worse misconduct is by the FBI and Justice Department.
It's bad enough that the bureau relied on a dossier crafted by a man in the employ of the rival presidential campaign. Bad enough that it never informed the Foreign Intelligence Surveillance Court of that dossier's provenance. And bad enough that the FBI didn't fire Mr. Steele as a confidential human source in September 2016 when it should have been obvious he was leaking FBI details to the press to harm Donald Trump's electoral chances. It terminated him only when it was absolutely forced to, after Mr. Steele gave an on-the-record interview on Oct. 31, 2016.
But now we discover the FBI continued to go to this discredited informant in its investigation after the firing -- by funneling his information via a Justice Department cutout. The FBI has an entire manual governing the use of confidential sources, with elaborate rules on validations, standards and documentation. Mr. Steele failed these standards. The FBI then evaded its own program to get at his info anyway.
And it did so even though we have evidence that lead FBI investigators may have suspected Mr. Ohr was a problem.
An Oct. 7, 2016, text message from now-fired FBI agent Peter Strzok to his colleague Lisa Page reads: "Jesus. More BO leaks in the NYT," which could be a reference to Mr. Ohr.
The FBI may also have been obtaining, via Mr. Ohr, information that came from a man the FBI had never even vetted as a source -- Mr. Simpson. Mr. Steele had at least worked with the FBI before; Mr. Simpson was a paid political operative. And the Ohr notes raise further doubts about Mr. Simpson's forthrightness. In House testimony in November 2017, Mr. Simpson said only that he reached out to Mr. Ohr after the election, and at Mr. Steele's suggestion. But Mr. Ohr's inbox shows an email from Mr. Simpson dated Aug. 22, 2016 that reads, in full: "Can u ring."
The Justice Department hasn't tried to justify any of this; in fact, last year it quietly demoted Mr. Ohr. In what smells of a further admission of impropriety, it didn't initially turn over the Ohr documents; Congress had to fight to get them.
But it raises at least two further crucial questions.
First, who authorized or knew about this improper procedure? Mr. Strzok seems to be in the thick of it, having admitted to Congress interactions with Mr. Ohr at the end of 2016. While Mr. Rosenstein disclaims knowledge, Mr. Ohr's direct supervisor at the time was the previous deputy attorney general, Sally Yates. Who else in former FBI Director Jim Comey's inner circle and at the Obama Justice Department nodded at the FBI's back-door interaction with a sacked source and a Clinton operative?
Second, did the FBI continue to submit Steele- or Simpson-sourced information to the FISA court? Having informed the court in later applications that it had fired Mr. Steele, the FBI would have had no business continuing to use any Steele information laundered through an intermediary.
* * *
Strassel concludes with the point that she and The Wall Street Journal Editorial Board have been hammering for months...
We could have these answers pronto; they rest in part in those Ohr 302 forms. And so once again: a call for President Trump to declassify.
It's time for things to get more serious than slaps on the wrist, firings, and self-inflicted black-eyes!
onewayticket2 -> IridiumRebel Fri, 08/17/2018 - 11:23 PermalinkCheapBastard -> GoFuqYourself Fri, 08/17/2018 - 12:51 Permalink
That Mueller is ignoring this OBVIOUS Clinton/Steele/Ohr/FBI etc, etc Russian collusion while prosecuting Manafort for an unrelated, 2005 financial crime (while granting IMMUNITY to Tony Podesta for the identical crime) is all the proof you need it's a coverup, not an "investigation" into russian collusion.
Strassel deserves a Pulitzer. But instead, CNN received an award for their comey story (after it was proven that comey leaked the documents to them....it's not that CNN did tons of investigative work....the docs were handed to them and they published them - dutifully in exchange for an award to be given at the WH Correspondents' dinner.)fwiw imho -> onewayticket2 Fri, 08/17/2018 - 13:06 Permalink
Kimberly Strassel deserves a Pulitzer Prize for her investigative journalism, esp in the face of so many far left commie attackers.
She legitimizes the WSJ as a paper worth reading.
Kudos to Ms Strassel.nmewn -> Stan522 Fri, 08/17/2018 - 10:07 Permalink
hmmm, cnn publishing classified documents. How is that any different than WikiLeaks?replaceme -> nmewn Fri, 08/17/2018 - 10:30 Permalink
That's a fact, long after Steele was fired as a "foreign asset" Ohr was still passing his Russian procured bullshit through to fellow travelers within the FBI & DoJ...like McCabe and Stzrok.
Hell the day before the Trump Tower meeting with Natalia, Glenn Simpson was dining with this "Russian government lawyer".And oddly enough, the very next day too.
The ONLY Russian collusion was happening on the dim side and one of the first clues is ALWAYS watch for what they are accusing other's of cuz that is what THEY are doing ;-)Kokulakai -> Brazen Heist II Fri, 08/17/2018 - 13:26 Permalink
Every time I read these things I start by saying the FBI/DOJ was trying to hide ____ , then I replace that with the FBI/DOJ conspired to hide ____. You start doing that too much and you have to say the FBI/DOJ colluded to nullify the election, overthrow an elected president. Somewhere this Summer I started saying the word coup with a little more conviction. When 350 news outlets then write coordinated editorials targeting that same president, not the architects of this conspiracy, this failed (so far) coup, I tend to side more against than with them. Journalism and Yellow Journalism are different things - I think that's why they added "Yellow" to the term.blindfaith -> Stan522 Fri, 08/17/2018 - 12:49 Permalink
Sessions was a sleeper, planted in the Trump campaign day one.
His reputation normally would exclude him from becoming AG.
Yet there he sits abetting the coup from the inside.TeethVillage88s -> Ghost of PartysOver Fri, 08/17/2018 - 10:01 Permalink
"When CNN and MSNBC start to ask questions like this then I'll start paying attention."
Their money loving greed will never allow them to tell their dedicated liberals any such thing..
The media is the enemy of the Constitution, its amendments, and the Declaration of Independence. They do not care about who they hurt, they do not care about Americans or America....they are a foreign enemy under foreign control.
I thought better of Gates, I was wrong.adonisdemilo -> Ghost of PartysOver Fri, 08/17/2018 - 10:38 Permalink
Hatch Act Violations by many in FBI... plus CIA, NSA, DNI, DOJ. Prohibitions against political activity by Federal Employees. Brennen should be scared that we all prove common policy prohibition does lead to lying/deceit and even sedition, treason, subterfuge, subversion charges.
https://www.washingtonpost.com/news/federal-eye/wp/2014/10/30/hatch-act https://osc.gov/Resources/HA%20Pamphlet%20Sept%202014.pdf https://osc.gov/Pages/The-Hatch-Act-Frequently-Asked-Questions-on-Feder https://www.opm.gov/policy-data-oversight/employee-relations/training/pDarracq -> Ghost of PartysOver Fri, 08/17/2018 - 11:20 Permalink
@Ghost of PartysOver,
"Bruce Ohr was NOT a Lone Wolf"
Not a lone wolf, I agree, and he is the fall guy, bloody fool.Darracq -> Ghost of PartysOver Fri, 08/17/2018 - 11:31 Permalink
This article, along with all the other reports, always state that the DOJ did this, the FBI did that, but fails to name the individual involved or the department heads who were responsible. The information is always muddled and obfuscated by the bureaucratic organization, so no individual is responsible. Enough of this, name names please!!! or no one will ever be accountable.NumberNone -> youarelost Fri, 08/17/2018 - 10:06
Who was Ohr handing off the information to? There is an entire chain of people here who have to be exposed and prosecuted.