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[May 02, 2015] The TPP A Quiet Coup for the Investor Class by Hilary Matfess

September 25, 2012 | FPIF

The struggle over the Trans-Pacific Partnership reveals a disturbing trend in American politics. The much discussed Citizens United ruling granting corporations personhood has given way to a trade negotiation process in which corporations are granted more rights than American citizens, their elected representatives, or foreign governments impacted by the deal.

That trade negotiations with such an immense potential impact on numerous sectors of the American economy have been conducted in secret is troubling enough. To consider that those negotiating the treaty have willfully ignored experts and elected representatives in favor of corporate interests calls into question the sustainability of American democracy.

tom anocu

Patricia Gray is right. It's better if we stop using the much maligned term 'democracy' to a system that works against and NOT for the interests or ordinary people. Using it to justify the abuses government and corporations commit against citizens the world over is a travesty. You CAN'T have both, concentrations of power in the hands of the few and democracy. That is a contradiction not very well understood in the US. Journalists should recognize this and stop perpetuating the patent FARSE. The illusion of 'choice' in the Nov. elections reflects all this.

[Nov 03, 2013] Plutocrats vs. Populists By CHRYSTIA FREELAND

Nov 1, 2013 | NYTimes.com | 249 Comments

TORONTO - HERE'S the puzzle of America today: the plutocrats have never been richer, and their economic power continues to grow, but the populists, the wilder the better, are taking over. The rise of the political extremes is most evident, of course, in the domination of the Republican Party by the Tea Party and in the astonishing ability of this small group to shut down the American government. But the centrists are losing out in more genteel political battles on the left, too - that is the story of Bill de Blasio's dark-horse surge to the mayoralty in New York, and of the Democratic president's inability to push through his choice to run the Federal Reserve, Lawrence H. Summers.

All of these are triumphs of populists over plutocrats: Mr. de Blasio is winning because he is offering New Yorkers a chance to reject the plutocratic politics of Michael R. Bloomberg. The left wing of the Democratic Party opposed the appointment of Mr. Summers as part of a wider backlash against the so-called Rubin Democrats (as in Robert E. Rubin, who preceded Mr. Summers as Treasury secretary during the Clinton administration) and their sympathy for Wall Street. Even the Tea Party, which in its initial phase was to some extent the creation of plutocrats like Charles and David Koch, has slipped the leash of its very conservative backers and alienated more centrist corporate bosses and organizations.

The limits of plutocratic politics, at both ends of the ideological spectrum, are being tested. That's a surprise. Political scientists like Larry M. Bartels and Martin Gilens have documented the frightening degree to which, in America, more money means a more effective political voice: Democratic and Republican politicians are more likely to agree with the views of their wealthier constituents and to listen to them than they are to those lower down the income scale. Money also drives political engagement: Citizens United, which removed some restrictions on political spending, strengthened these trends.

Why are the plutocrats, with their great wealth and a political system more likely to listen to them anyway, losing some control to the populists? The answer lies in the particular nature of plutocratic political power in the 21st century and its limitations in a wired mass democracy.

Consider the methods with which plutocrats actually exercise power in America's New Gilded Age. The Koch brothers, who have found a way to blend their business interests and personal ideological convictions with the sponsorship of a highly effective political network, are easy to latch on to partly because this self-dealing fits so perfectly with our imagined idea of a nefarious plutocracy and partly because they have had such an impact. But the Kochs are the exception rather than the rule, and even in their case the grass roots they nurtured now follow their script imperfectly.

MOST plutocrats are translating their vast economic power into political influence in two principle ways. The first is political lobbying strictly focused on the defense or expansion of their economic interests. This is very specific work, with each company or, at most, narrowly defined industry group advocating its self-interest: the hedge fund industry protecting the carried-interest tax loophole from which it benefits, or agribusiness pushing for continued subsidies. Often, these are fights for lower taxes and less regulation, but they are motivated by the bottom line, not by strictly political ideals, and they benefit very specific business people and companies, not the business community as a whole.

As Mark S. Mizruchi, a sociologist at the University of Michigan, documents in his recent book "The Fracturing of the American Corporate Elite," this is not the business lobby that shaped America so powerfully in the 1950s and 1960s. Business leaders of the postwar era were individually weaker but collectively more effective; C.E.O. salaries were relatively lower, but the voice of business in the national conversation was much more potent, perhaps in part because it was less exclusively self-interested. The postwar era, not coincidentally a period when income inequality declined, was the time when business executives could say that what was good for G.M. was good for America and really believe it. It didn't hurt that they were sometimes willing to forgo short-term personal and corporate gain when they judged that the national interest required it.

The second way today's plutocrats flex their political muscle is more novel. Matthew Bishop and Michael Green, a pair of business writers, have called this approach "philanthrocapitalism" - activist engagement with public policy and social problems. This isn't the traditional charity of supporting hospitals and museums, uncontroversial good causes in which sitting on the board can offer the additional perk of status in the social elite. Philanthrocapitalism is a more self-consciously innovative and entrepreneurial effort to tackle the world's most urgent social problems; philanthrocapitalists deploy not merely the fortunes they accumulated, but also the skills, energy and ambition they used to amass those fortunes in the first place.

Bill Gates is the leading philanthrocapitalist, and he has many emulators - nowadays, having your own policy-oriented think tank is a far more effective status symbol among the super-rich than the mere conspicuous consumption of yachts or private jets. Philanthrocapitalism can be partisan - George Soros, one of the pioneers of this new approach, backed a big effort to try to prevent the re-election of George W. Bush - but it is most often about finding technocratic, evidence-based solutions to social problems and then advocating their wider adoption.

Philanthrocapitalism, particularly when you agree with the basic values of the capitalist in charge, can achieve remarkable things. Consider the work the Bill and Melinda Gates Foundation has done on malaria, or the transformative impact of Mr. Soros's Open Society Foundations in Eastern Europe.

Mr. Bloomberg took philanthrocapitalism one step further - he used his résumé and his wealth to win elected political office. In City Hall, Mr. Bloomberg's greatest achievements were technocratic triumphs - restricting smoking in public places, posting calorie counts and championing biking. As he prepares for life after political office, he is already honing the more typical plutocratic skill of using his money to shape public policy by energetically engaging in national battles over issues like gun control and immigration reform.

At its best, this form of plutocratic political power offers the tantalizing possibility of policy practiced at the highest professional level with none of the messiness and deal making and venality of traditional politics. You might call it the Silicon Valley school of politics - a technocratic, data-based, objective search for solutions to our problems, uncorrupted by vested interests or, when it comes to issues like smoking or soft drinks, our own self-indulgence.

But the same economic forces that have made this technocratic version of plutocratic politics possible - particularly the winner-take-all spiral that has increased inequality - have also helped define its limits. Surging income inequality doesn't create just an economic divide. The gap is cultural and social, too. Plutocrats inhabit a different world from everyone else, with different schools, different means of travel, different food, even different life expectancies. The technocratic solutions to public-policy problems they deliver from those Olympian heights arrive in a wrapper of remote benevolence. Plutocrats are no more likely to send their own children to the charter schools they champion than they are to need the malaria cures they support.

People might not mind that if the political economy were delivering for society as a whole. But it is not: wages for 70 percent of the work force have stagnated, unemployment is high and many people with jobs feel insecure about them and about their retirement. Meanwhile, the plutocrats continue to prosper. And for more and more people, the plutocrats' technocratic paternalism seems at best weak broth and at worst an effort to preserve the rules of a game that is rigged in their favor. More radical ideas, particularly ones explicitly hostile to elites and technocratic intellectuals, gain traction. And that is true not just in the United States but across the Western developed world - for instance, the Italian prime minister Enrico Letta, recently warned that "the rise of populism is today the main European social and political issue."

AS this populist wave crashes in on both sides of the Atlantic, the plutocrats, for all their treasure and their intellect, are in a weak position to hold it back.

Part of the appeal of plutocratic politics is their power to liberate policy making from the messiness and the deal making of grass-roots and retail politics. In the postwar era, civic engagement was built through a network of community organizations with thousands of monthly-dues-paying members and through the often unseemly patronage networks of old-fashioned party machines, sometimes serving only particular ethnic communities or groups of workers.

The age of plutocracy made it possible to liberate public policy from all of that, and to professionalize it. Instead of going to work as community organizers, or simply taking part in the civic life of their own communities, smart, publicly minded technocrats go to work for plutocrats whose values they share. The technocrats get to focus full time on the policy issues they love, without the tedium of building, rallying - and serving - a permanent mass membership. They can be pretty well paid to boot.

The Democratic political advisers who went from working on behalf of the president or his party to advising the San Francisco billionaire Thomas F. Steyer on his campaign against the Keystone XL pipeline provide a telling example. Twenty years ago, they might have gone to work for the Sierra Club or the Nature Conservancy or run for public office themselves. Today, they are helping to build a pop-up political movement for a plutocrat.

Plutocratic politics have much to recommend them. They are pure, smart and focused. But at a time when society as a whole is riven by an ever widening economic chasm, policy delivered from on high can get you only so far. Voters on both the right and the left are suspicious of whether the plutocrats and the technocrats they employ understand their real needs, and whether they truly have their best interests at heart. That rift means we should all brace ourselves for more extremist politics and a more rancorous political debate.

Where does that leave smart centrists with their clever, fact-based policies designed to fine-tune 21st century capitalism and make it work better for everyone?

Part of the problem is that no one has yet come up with a fully convincing answer to the question of how you harness the power of the technology revolution and globalization without hollowing out middle-class jobs. Liberal nanny-state paternalism, as it has been brilliantly described and practiced by Cass R. Sunstein and like-minded thinkers, can help, as can shoring up the welfare state. But neither is enough, and voters are smart enough to appreciate that. Even multiple nudges won't make 21st-century capitalism work for everyone. Plutocrats, as well as the rest of us, need to rise to this larger challenge, to find solutions that work on the global scale at which business already operates.

The other task is to fully engage in retail, bottom-up politics - not just to sell those carefully thought-through, data-based technocratic solutions but to figure out what they should be in the first place. The Tea Party was able to steer the Republican Party away from its traditional country-club base because its anti-establishment rage resonated better with all of the grass-roots Republican voters who are part of the squeezed middle class. Mr. de Blasio will be the next mayor of New York because he built a constituency among those who are losing out and those who sympathize with them. Politics in the winner-take-all economy don't have to be extremist and nasty, but they have to grow out of, and speak for, the 99 percent. The pop-up political movements that come so naturally to the plutocrats won't be enough.

The author of "Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else" and a Liberal Party candidate for the Canadian Parliament.

A version of this op-ed appears in print on November 3, 2013, on page SR1 of the New York edition with the headline: Plutocrats Vs. Populists.

[Aug 20, 2013] Introducing Government Finance Quasi-Capitalism by Doug Noland

Aug 17, 2013 | Safehaven.com

The Fed has been talking about bubbles for 20 years. I've been diligently studying bubbles and Money & Credit for longer. I'm here with a sense of humility. After all, I'm again relegated to wearing the proverbial "dunce cap," as I persevere through my third major bull market, "new era" and "new paradigm."

The great American economist Hyman Minsky is best known for "stability is destabilizing" and the "Financial Instability Hypothesis" - the evolution of finance from "hedge finance" to "speculative finance" and finally to highly unstable "Ponzi finance."

Minsky delineated the "Stages of Development of Capitalist Finance": "In both Keynes and Schumpeter the in-place financial structure is a central determinant of the behaviour of a capitalist economy. But among the players in financial markets are entrepreneurial profit-seekers who innovate. As a result these markets evolve in response to profit opportunities which emerge as the productive apparatus changes. The evolutionary properties of market economies are evident in the changing structure of financial institutions as well as in the productive structure... To understand the short-term dynamics of business cycles and the longer-term evolution of economies it is necessary to understand the financing relations that rule, and how the profit-seeking activities of businessmen, bankers and portfolio managers lead to the evolution of financial structures."

Minsky saw the evolution Capitalist finance as having developed in four stages: Commercial Capitalism, Finance Capitalism, Managerial Capitalism and Money Manager Capitalism. "These stages are related to what is financed and who does the proximate financing - the structure of relations among businesses, households, the government and finance."

Commercial Capitalism: "The essence of commercial capitalism was bankers providing merchant finance for goods trading and manufacturing. Financing of inventories but not capital investment."

Early economic thinkers focused on seasonal monetary phenomenon. Credit and economic cycles were prominent, although relatively short in duration.

Finance Capitalism: "Industrial Revolution and the huge capital requirements for durable long-term capital investment... The capital development of these economies mainly depended upon market financing. Flotations of stocks and bonds - securities markets, investment bankers and the Rothchilds, JP Morgan and the other money barons... The great crash of 1929-1933 marked the end of the era in which investment bankers dominated financial markets."

Managerial Capitalism: "During the great depression, the Second World War and the peace that followed government became and remained a much larger part of the economy... Government deficits led to profits - the government took over responsibility for the adequacy of profits and aggregate demand. The flaw in managerial capitalism is the assumption that enterprise divorced from banker and owner pressure and control would remain efficient... As the era progressed, individual wealth holdings increasingly took the form of ownership of the liabilities of managed funds..."

Money Manager Capitalism: "The emergence of return and capital-gains-oriented block of managed money resulted in financial markets once again being a major influence in determining the performance of the economy... Unlike the earlier epoch of finance capitalism, the emphasis was not upon the capital development of the economy but rather upon the quick turn of the speculator, upon trading profits... A peculiar regime emerged in which the main business in the financial markets became far removed from the financing of the capital development of the country. Furthermore, the main purpose of those who controlled corporations was no longer making profits from production and trade but rather to assure that the liabilities of the corporations were fully priced in the financial market..."

Late in life Minsky wrote "Today's financial structure is more akin to Keynes' characterization of the financial arrangements of advanced capitalism as a casino."

The above quotes were from a Minsky paper published in 1993. That year was notable for the inflation of a major bond market speculative Bubble. This Bubble began to burst on February 4, 1994 when Fed raised rates 25bps.

I still view 1994 as a seminal year in finance. The highly leveraged hedge funds were caught in a bond Bubble; there were serious derivative problems; and speculative deleveraging was having significant global effects, most notably the financial and economic collapse in Mexico.

[Jul 24, 2013] US Healthcare Costs a Global Outlier and Monument to Crony Capitalism

Jul 24, 2013 | jessescrossroadscafe.blogspot.com
I think the Big Pharma/Health and Big Finance sectors have similar cartel like structures where a few large companies dominate the field, exercising considering political power and the ability to obtain subsidies and protections from the system while fending off regulation and price restraints.

There are others of course, like the energy field from exploration to distribution, often known as Big Oil, but which now includes natural gas and electric energy production and distribution.

The recurring myths of the efficient market and 'free trade' are exacting a heavy toll on the general public and the real economy. They provide ideological cover to a favored elite that is acting in the manner of a privileged and extractive aristocracy while beguiling many with the allure of easy money.

The concentration of ownership in the media has become an inhibiting and directing influence in public discourse that is hard to miss.

The current recovery fueled corporate perks and ZIRP for the financial sector, a fine example of 'trickle down' economics, will be remembered as one of the great policy errors of modern economic history. They pretend ignorance, they feign helplessness, and they know. But they are getting paid not to act effectively, and even not to see, but to spin some fantasy.

They 'feel your pain.' They just do not do anything substantial about it. Even a second term president can still talk as though he is a recently arrived outsider, critiquing the actions of some predecessor and a corrupt system in which is he barely involved.

These are not leaders. They are like modern CEO's, professional organizers and managers, who talk a great game about their accomplishments but, when the truth comes out, posture that they stand outside the very system for which they have long held the ultimate responsibility.

But even worse are those who make little pretense to justice and goodness and moral principle, preferring to appeal to the darkest impulses, the fears and hatreds of a society. Their actions betray their words.

The lack of serious reform, in large part because of the partnership between Big Money and Washington's new political class, and the dormancy of the progressive impulse, will eventually stress the fabric of society to the limit. And then change will come.

Read the entire story here.

[Jul 06, 2013] Robert Johnson on the Oligarchs "They're All Standing on the Deck of the Titanic Looking in Each Other's Eyes"

April 21, 2013 | naked capitalism

Transcript

Robert Johnson: I think the, call it the oligarchy now is audacious. They don't really care if they're legitimate. There was a time – you know, I always hear Jurgen Habermas was paraphrased by saying, "Legitimate if you can, coerce if you have to, and accommodate if you must." And I think we've gone past – I almost started, this was really eerie because we didn't compare notes – I almost started my discussion about John Ralston Saul's book, The Unconscious Civilization, and I think we've gone beyond – I'm grateful we have gone beyond the unconscious civilization. A lot of people don't buy the package anymore that's emanating from those corporations you talked about.

But there is a sort of, "Okay guys, you're mad, how are you going to stop me?" mentality at the top. Now I'm going to say that that fight has to happen, but there's also, you know, they always talk about Marx and capitalism, capitalists versus labor. A lot of the interesting fissures in a system are intra-capitalist conflict, and right now, I guess the way I'd put it in a metaphor is it feels like there are an awful lot of the elite that know this system is not wholesome, and they're all standing on the deck of the Titanic looking in each other's eyes, and they're asking a question with their eyes, "Are we going to help this navigator? Are we going to help this captain get off the ice? Or are we going to get the food and the jewels from the safe and put them in our lifeboat?" And my sense is that most of them are trying to get stuff into their lifeboat, and that system isn't going to cohere. And in that dysfunction there is opportunity.

Lambert here: I'm not a worse is better kind of guy. However, as far as "How are you going to stop me?" I'd say we've been in that power relationship before, if not this exact situation, and we've come out on the other side, and better. There's always no alternative. Until there is. I've run this Thomas Nast cartoon once, but here it is again:

Maju:

There are two issues here:

So it looks, at least right now, as a very slowly evolving final act. We know it's final, we know that this situation is totally untenable but it is a time, to use a famous Gramscian quote, "in which the past isn't yet fully dead, and the future isn't yet fully born".

And this situation is, for me at least, a huge emotional drain: knowing that we are at the very end of an era, much like the late 18th century, but not seeing yet almost anywhere the breach through which we are going to transit to the new one.

MaroonBulldog :

Why do you think there's a new era coming after this? If, as you suggest, the masses lack the consciousness to organize simple revolutionary activity, where are they going to get the consciousness to organize and coordinate the feeding of 7,000,000,000 people?

To me, the new era looks a lot like post-modern Malthusian Hell.

Lambert Strether :

I reject "the masses" as an analytical category.

Murky:

Yea! Ranting out some spoon-fed ideology of evil rich capitalists verses good but poor masses does not foster any quality of discussion.

The world almost never divides up so conveniently into good and evil, black and white.

There just might be a good capitalist out there somewhere; such things have been known to happen. Take the example of Soros; he has given many millions to socially progressive foundations, most recently the Institute for New Economic Thinking. Or take Carnegie who established the public library system in the USA, a clear example of good. And there will be dregs and horrors of humanity among the so-called masses too, because no single group is all good, pure and holy. Racing to judgement about 'capitalists' or 'masses' or any other slice of humanity without a full context of fact and history just leads to shallow and mob style thinking.

Cassiodorus :

The concern with the elites has nothing to do with good or evil. It's about confronting the unsustainable nature of capital accumulation. Being an elite is being a beneficiary of capital accumulation - you can experience all sorts of gross comforts, but they're only manifested as privileges, and you have to maintain them through a narcissistic hogging of the world.

If we of the 99% had our collective act together, we could bring paradise to Earth. The process of bringing paradise to Earth would, however, involve (among many other things) the end of elite privilege.

Maju :

Don't forget Engels, mecenas of Communism.

It's not about the good or evil nature of individuals, although of course power corrupts (a lot, and also attracts those already corrupt) and capitalist property and wealth is just a form of power. It's about objective class interests: overall people who benefit from this predatory system have a vested interest in it and people who are being obviously exploited and/or marginalized in it (the vast and growing majority) have a vested interest in radical change into some other more democratic form of society and economy, i.e. socialism in its various forms.

Said that, individuals may choose a camp which is not their natural one because of free conscious (ethical or corrupt) choice, or also because of ideological brainwashing (TV, religion, school and all that). But nobody has any interest in being exploited like a slave, dumped like trash to a slow death in the streets or having their environment destroyed. Only those who get exclusive profits from such activities, i.e. the capitalists (and secondarily their mercenary minions in the armed forces, media, political arena, etc.) have interest in this system as it is.

fouad sayegh:

Mob thinking at the top is okay but at the bottom it is not. What you are missing is that the former begets the latter.

Murky :

Please, don't hold up Marx or Engels as the men with answers for suffering humanity. Look how the ideology of Marxism played out in communist Russia. Millions murdered in gulag prison camps. Likewise with Chinese communism. Marxism promised a utopian worker's paradise, but instead turned into human disaster on a colossal scale.

Marxism has already has already been historically tested on human populations with dire consequences, and historians now regard the entire Marxist edifice as a failed ideology. But there are still many, like you, who still think it has answers for all of us.

It would serve humanity very well to distrust any and all ideologies wholesale. Ideology finds itself rooted in a variety of domains, including economics, religion, and politics. The damage that ideology does, is that it coerces thought into a preset mold, thereby killing free thought and empowering a straightjacket of group-think. Listening to how Republicans and Democrats squabble is a perfect example of how North Americans have been divided and disempowered by ideology. Ideology is, in my opinion, EVIL.

We do agree on the problem, that the Global Financial Crisis resulted in grotesque economic inequality and extreme social injustice. We just disagree on the tools needed for solutions.

Massinissa:

"Nothing has contributed so much to the corruption of the original idea of socialism as the belief that Russia is a socialist country".

- George Orwell

gepay:

I believe this: "If only there were evil people somewhere Insidiously committing evil deeds and it were necessary only to separate them from the rest of us

and destroy them.

But the line dividing good and evil cuts through the heart of every living soul And who is willing to destroy a piece of his own heart?" -Aleksandr Solzhenitsyn I also believe that there are elites who are rich beyond greed who mostly run the world. ("This is a system?" Mr. Natural) Howvever they are made up of layers of new and old money sources starting with what's left of the Royal Families of Europe. Yes, mostly they are families like the Rockefellers and the Agnellis and the Krupp/Thyseens etc. Talented individuals like Kissinger are the last public link between us and them. Layers and layers. Occasionally they fight among themselves. Whatever faction Lehman Bros was closest to has been thrown off the bus. While a person like Bill Gates has been welcomed in. Someone like Pablo Escobar became rich enough but wasn't invited. Other gangsters are though as I believe in Peter Scotts paradigm of the Deep State – . Demaris 'Captive City'

From the moment of its incorporation as a city in 1837, Chicago has been systematically seduced, looted, and pilloried by an aeonian horde of venal politicians, mercenary businessmen, and sadistic gangsters. Nothing has changed in more than a century and a half. The same illustrious triumvirate performs the same heinous disservices and the same dedicated newspapers bleat the same inanities. If there has been any change at all, it has been within the triumvirate itself. In the beginning, the dominant member was the business tycoon, whether it be in land speculation, railroads, hotels, meat packing, or public utilities, Pirates like Potter Palmer, Phillip Armour, George Pullman, Charles T. Yerkes, and Samuel Insull fed the city with one hand and bled it dry with the other. Around the turn of the century, with the population explosion out of control, the politician gained the upper hand over his partners in the coalition. It remained for the gangster to complete the circle in 1933 following the murder of Mayor Cermak. Today it is nearly impossible to differentiate among the partners – the businessman is a politician – the politician is a gangster – the gangster is a businessman. I think the present President of the US comes from Chicago. Wall Street is now run by crimials who money launder drug money when not busy defrauding us. The Jewish billionaire oligarchs are now in as are many other billionaires from around the world.

Lenin wrote "What to do? What to do? but we now know how that turned out. Armed revolution does not seem feasible at this time but it surely does seem that world situation is devolving into another World War or anarchy. So many guns and violent people in the US. And no alternative appearing yet.

efschumacher

>I reject "the masses" as an analytical category.

You could think of it as the rentier, the (sub)urban bourgeosie and the proletariat. We've seen the income growth figures that equates these: enormous growth for the 0.1% rentier, losing ground for the bottom 80% proletariat, and just better than breaking even for the 19.9% bourgeosie.

The proletariat will not be inspired to lead anything, but may be driven herd-wise by elements of the other two factions. For the most part, they won't thank anybody, whatever the outcome.

The (sub)urban bourgeosie includes the educated and professional classes (if you're reading this: you're in it), is the class that does all the creating, runs the show and generally does the bidding of the rentier. The single most important element in the control strategy is to keep the bourgeoisie riven, fissured and divided. This, the 19.9%, is the class that must cohere if any meaningful change is to happen. It's a not so trivial task because these people stand on opposite sides of all sorts of pungent issues like regulation, gun control, abortion, 'socialism' versus 'capitalism', climate change, whether the people who created every productivity revolution should be 'entitled' in retirement to any of the very gains that they made happen, and whether the Dodgers were better than the Capitals last weekend.

I think I've seen a similar (more detailed) analysis to this somewhere else, but the original author seemed to think the (sub)urban bourgeosie were the problem, whereas in fact they are the diverse instrument set for maintaining the conduit for rentier enrichment and control.

So, tools, lay aside your differences, cohere, and rise up, you have nothing to lose but your 5 percent gains aggregated over the last 40 years.

Jessica

The way you describe the 19.9% is analogous to the bourgeoisie vis-a-vis the landed aristocracy in Europe in the 1800s. Even after they had taken over in France, it was amazing how long that new leading class remained willing to cede political power to the obsolete aristocracy in the rest of Europe. In some analyses, it was only WW1 that finally finished off the landed aristocracy. Because the new bourgeois was both internally divided and scared of the working class. One thing that is unique about the new knowledge worker class ("creative" class) is that they can only reach their full potential as a class by creating a much more inclusive system. If they try to just replace the 0.1% and make themselves into a new elite, they will continue to be throttled as a group. Because knowledge production is inherently different from thing production. Any system that holds knowledge back in order to collect rents must hold back the development of knowledge and of those who would otherwise do it. That does not mean that the knowledge worker class couldn't try. In fact, given how subservient to the rentiers the knowledge worker class has been, it is hard to imagine them not first trying to find a way to create "rational 0.1%-ism" or "0.1%-ism without the 0.1%".

ArkansasAngie

No more wedgies.

So long as they have us wedged against each other over social issues they keep us from forming coalitions that can break their hold.

I seriously do not care about abortion, immigration, NRA, gay marriage, et al.

We all know that the financial crisis was caused by criminal activity. That is the issue to focus on and rally around.

Nell

"The single most important element in the control strategy is to keep the bourgeoisie riven, fissured and divided. This, the 19.9%, is the class that must cohere if any meaningful change is to happen. It's a not so trivial task because these people stand on opposite sides of all sorts of pungent issues"

Excellent point. I have just this weekend begun to see signs of some coherence around a specific issue, the land value tax. I have read support for this from the right and from the left. Possibly because it is viewed as an anti tax haven measure.

Lexington:

It says something about the success American popular culture has had in enforcing ideological homogenity that even Americans who perceive that there is something seriously wrong with country's economic and political composition find any analysis that includes a discussion of class deeply distateful.

Things change. The agony may possibly be extended for a long period (what can we know about the future?) but something is clear: catastrophic social collapse as happened to the USSR in the 1980s or is happening to us now in the 2010s can't and won't persist forever: eventually revolutionary changes will take place.

Anyhow the only alternative under Capitalist predatory conditions is total ecological collapse of the planet, a process already way too advanced: nuclear and "conventional" pollution all around, depleted oceans, destruction of the natural refuges everywhere, accelerated extinction of one species after another and of course global warming. Space travel and colonization are just science fiction for many centuries to come: we only have this planet and Capitalism is definitely destroying it at accelerated pace.

So, if not revolution, pathetic extinction. But there's no other foreseable future, really.

Susan the other:

I agree with you Maju that this chaos is stressful. We all look to the things that have given us hope in the past and those things aren't working very well. Like the Boston Marathon. Who will ever think of marathons the same way again?

But Robert Johnson's observation that opportunities come in a crisis is a little encouraging. I really take issue with some of the comments here that the 1% is in control (not so, it's their system that is in fact out of control); that the 19% in the "middle" is the creative class (but look at the mess they have created!); and that the bottom 80%, the proles, are braindead.

Please. I'm pretty sure it is the 1% who have gone braindead. They "really haven't had a good new idea in 2000 years." (from "Catch 22″ – such a good quote).

efschumacher:

Mmmm, I'm not saying the "proles are braindead". I'm saying they are distracted, whether through fatalism, laziness, hopelessness, misdirection or some combination of the above.

Used to be that in England they had the Grammar School system, that creamed off the (academically) top 20%, gave them better educational opportunities than the rest, and loosed them to run the country, indeed, to run the world. That system was meritocratic in that it didn't matter that you had a working class background if you could make the grade academically. It allowed a constant flow upwards from the proletarian class. But it was never going to be more than 20%, although it didn't exclude some of the rest from getting on financially. So no, the proles aren't brain-dead, there is plenty of intellectual vigor there. But the vast bulk of them will still retain the chains.

The story I hear is that those kinds of educational opportunities are coming to be increasingly unavailable in this country – which has long been trumpeted by the foghorn of propaganda as the place where even Joe Q. Public can 'make it'. Maybe he can, but not in any significant proportions.

efschumacher:

Moreover, even Jane Austen dramatizes the brain-dead vapidity of the 1% back in the 1800′s.

Whereas Julian Fellowes seems to want us to be sympathetic to their shared struggle with the rest of us in the birth of modernity.

Lambert Strether:

Adding the kicker: "In the interim, a variety of morbid symptoms appear" (from memory, too lazy to Google now).

ambrit:

Dear skippy; Too true that. Ecology should give us our frame of reference here. When a biosphere loses too many so called "peripheral" species, the whole thing grinds to a halt and re sets.

Diversity is an essential feature of any healthy system. The other thing about flamethrowers is that they will occasionally blow up on the back of the wielder, leaving crispy critters everywhere.

banger:

My impression is that the oligarchs don't really have that much power. The world is ruled not by a few families but by an emergent network -– a kind of entity with its own agenda.

It is well known, for example, that many CEOs are sympathetic to things like the environment and the plight of the world–but they cannot act in any other way–the system won't allow it.

It is the system itself that is the problem not the oligarchs themselves though many of them, it is true, are truly misanthropes.

masaccio:

Can you point to something that has happened in the last 10 years or so that runs contrary to the desires of the oligarchy? Maybe the network operates to carry out the will of the oligarchs.

banger:

That's the point I'm trying to make. The system itself, without necessarily being controlled by anyone has a life of its own and distributes power towards the class that created it.

Stan Musical:

If Gramsci said that, he was cribbing from Mathew Arnold's:

Wandering between two worlds, one dead, The other powerless to be born,

I agree we're still in some sort of limbo, but while we turn in circles the planet's other denizens are slowly (or quickly) dying off. They're an "other" 99%.

And regardless of how well off, Americans, especially, are a 10%, if not 1%, at the top. Returning to the US after time spent in the "third" world, which is in fact much more real, much less infused with the Spectacle, (I'm pleased DeBord's insight is getting polularized), produces culture shock, just at the amount and variety of material goods on offer. It verges on the hallucinatory if you're not used to it.

Energy use by us "first-worlders" is wasteful to an extreme degree and polluting, and indulgence of our many "needs" we could go without–driving everywhere, creating garbage made of non-biodegradable material (often encasing processed food), drinking industrial chemical concoctions we call "soft drinks"–and so on and so forth, puts us squarely on the side of the big capitalists whether we are aware of, or can accept it.

Solidarity against the oppressors can begin with bourgeoied-up Americans consuming less and educating themselves about how the oligarchs are really–I mean really–screwing over the "other" 6 billion people on the planet.

Murky:

Thanks for the video clip; it's a good though very brief introduction to Robert Johnson. Wikipedia has a brief article about Johnson, mostly noting that he is Executive Director of the Institute for New Economic Thinking.

The best content I found on Johnson was a Youtube clip in which he verbally demolishes the economics profession. He says economists have become lackeys to Wall Street, and then he makes specific suggestions of how to get the profession back on track. Here is the clip:

http://www.youtube.com/watch?v=Bw-APh9_Jks

Lambert Strether:

April 21, 2013 at 5:49 am

Yes, it is brief. But I thought it made the exact one point that needed to be made.

just me

From the youtube info:

Interview with Robert Johnson Economist and Director of the Institute for New Economic Thinking (INET), New York

"I think the economics profession was making tremendous money in consulting for the financial sector. Many of the theories were not investigational illumination how financial markets worked. They were portraits painted like a marketing document. They did a great disservice to mankind and we're cleaning up after that right now."

"When the people become anxious they want the expert to tell them what's going to happen. And they feel good when their anxiety is relieved because they think they understand the future. But if the expert instead of telling the truth is telling snake oil, a false story, when that is unmasked the expert becomes the scapegoat."

"Economists are very much accused of "only seeing the economy through the eyes of the model" as opposed to seeing the economy and building a model as a map of what reality is. Formalism is very different to science."

"There are several modifications to economics teaching that need to take place. The first is rather than teaching introductory economics as an indoctrination in method they should teach it as a course in the philosophy of science where the subject is economics and its assumptions and the trade-offs and the flaws as well as the strings are explored sceptically on behalf of the student."

looks interesting - reminds me of Yves' post on Professor Outis Philalithopoulos…

jake chase

You might as well teach Creation Science as Economics. Perhaps they already do; it's been a while since I hung around a university.

Among other things that are broken is our university system. Most students learn more about football and sexual technique than anything else. Of course, both are great fun, but do we really need three hundred thousand business students and God knows how many in ethnic studies, art history, geography, literature, etc. All a person needs to know is how to read and how to count. It shouldn't take thirty years, but these days it not only does but most degree recipients haven't mastered either skill and don't seem to care about using them.

Fifty years ago, everyone I knew at college understood the routine was bullshit and the only sensible objective was to land some kind of job with a future. I never found one and was not surprised since there really weren't very many back then.

Think it's tough being poor in bad times? Some of you should try it on during good times. That is when it really gets personal.

Oh well, what's the point? Soft headed social critics are really just as delusional as poor saps who swallow advertising slogans. But nothing can convince them of the futility of their nostrums. Writing in to these blogs is just impersonating Syssyfus. I know I've spelled it wrong. So what?

madrona

"Think it's tough being poor in bad times? Some of you should try it on during good times. That is when it really gets personal."

Preach on, brother Jake! (virtual high-five) Been there, felt that.

mmckinl

The oligarchs game plan is quite obvious … Just look at the fire power they put on the streets of Boston … Just look at the legislation that allows information gathering that would make the former East Germany blush …

Just look at how our rights to assemble, habeus corpus and local determination are being legislated away by Congress and through trade agreements that are little more than trump cards for corporate hegemony.

A totalitarian state is just around the corner … the elites are going nowhere. With half the population a month or two away from being homeless and hungry the violence that follows will be used to crack down even harder.

Just look around … at Greece, Spain, Cypress. The protests have done little to stop the fascism. The elites will use the ring wingers to suppress everyone else. How long was Franco in power?

All the institutions are already coopted. Universities, Unions, Religion and Governance are cowed or cooperating. Local police are militarized and Federally deputized. The National Guard Federalized. And there are plenty of folks ready to lend these people a hand for their own gain.

Just look at what is directly in front of you … The elites don't need lifeboats. They already own anything of value and now they intend to use all the weight of the government against us. Look at our justice system, look at our state and federal governments … They own them lock, stock and barrel.

Cassiodorus

The unsustainability of the existing system is not changed by the fact that nearly all of it is under some form of neoliberal elite control.

mmckinl

"Unsustainability" for Who? You must be talking about the lower 99%.

It is quite sustainable for the elites. When the system goes bankrupt they will establish a new currency and loan themselves the money to keep everything they have …

Just look at the banksters. JP Morgan, Wells, Bof A, Citi and of course Goldman Sachs. They were all bailed, they will be bailed again. The Chairmen of the Bank Of England and the ECB are Goldman alumni … The Fed is next.

You are correct, there is not enough to go around, the current situation is unsustainable. And that is why the next political and social model will be fascism and a police state. Given from what I have seen of Americans they will embrace order over freedom … nothing but sheep.

How do they maintain this order? Food and fear. It is no accident that Monsanto has carte blanche and OBTW they have just purchased Blackwater now known as XE. They will control the food supply.

Social order and the economy? Through their massive data bases with which they can issue no fly orders that will be expanded to train and ship with all travel and lodging managed through credit cards that they own.

Jobs, education? With the info they store they can blacklist anyone for good jobs, schools. You will never hear that you have been blacklisted. It will be a series of failed applications, interviews and credit downgrades.

fouad sayegh

The Americans, the Greeks, the Spaniards and even the Italians seem to have caved in. I am still hopeful watching the French for an encore.

mmckinl

Indeed … And Greece and Spain had, "Socialist Goverments", and bailed their banks without question …

I don't hold out much hope for Francois Holland. His ratings are already in the tank and falling. He will bail the banks.

The next President of France will most likely be that Bilderberg favorite, the IMF sweetheart, Christine Lagarde.

Having the tag "socialist" in your logo does not make you socialist. The Socialist International today is analogous to the US Democratic Party with a single and rather anachronic exception: the Sandinista Front (which got in it in the 1980s in a rather different pre-Blairite context). Today European and other "socialist" or "labour" parties are just, like the Democratic Party in the USA, managers of hardcore Neoliberalism with just the occasional populist penchant for this or that mostly pointless reform.

A different but highly comparable situation is the "communist" regimes of East Asia (China, Vietnam, etc.), which are today hyper-capitalist with just some state planning more in the fascist sense than with any kind of socialist meaning. Today the only examples of socialism available are Cuba, Venezuela and a handful of other American states, where the welfare of the people and social cohesiveness is still the first priority.

You should not look merely at labels but contents.

Massinissa

I dont know Mckine, Im kind of expecting the next French president to be Marine Le Pen. She did incredible in the last presidential election, and wouldnt it be fitting for the next president to be an almost literal fascist?

Then again, being protectionist and eurosceptic, im not sure the elites that be would really approve of the Front National having power, fascistic or not. Dont forget that the French system has constantly denied the party seats in parliament due to the way its denied, despite its very large support among the electorate.

just me

You are correct, there is not enough to go around, the current situation is unsustainable. And that is why the next political and social model will be fascism and a police state. Given from what I have seen of Americans they will embrace order over freedom … nothing but sheep."

Want to shake you! (nicely, of course)

http://www.michaelmoore.com/words/mike-friends-blog/america-is-not-broke

March 5th, 2011 9:03 PM VIDEO: America Is NOT Broke

By Michael Moore

…WE HAVE HAD IT! We reject anyone who tells us America is broke and broken. It's just the opposite! We are rich with talent and ideas and hard work and, yes, love. Love and compassion toward those who have, through no fault of their own, ended up as the least among us. But they still crave what we all crave: Our country back! Our democracy back! Our good name back! The United States of America. NOT the Corporate States of America. The United States of America!

So how do we make this happen? Well, we do it with a little bit of Egypt here, a little bit of Madison there. And let us pause for a moment and remember that it was a poor man with a fruit stand in Tunisia who gave his life so that the world might focus its attention on how a government run by billionaires for billionaires is an affront to freedom and morality and humanity.

To paraphrase Dr. Seuss, democracy is in our grasp, so long as we have hands to clasp.

I mean, it could be fun and lively, not horrible and deadly. Like breathing again. Being us again. I myself would like to pursue happiness. With everybody. My American Dream, tyvm.

SóloSéQueNoSéNada

Once the the Dollar falters as the Reserve Currency, it is game over (inflationary depression) for the United States. Americans will wake up to their poverty.

However, a police state is certainly not in the cards. In general, Americans are so ignorant, cowardly, and overweight that a Revolution is simply inconceivable. I fully expect them to starve in front of their flatsceen TVs, wimpering into oblivion while watching some spinoff of Real Beverly Hills Housewives.

mmckinl

The dollar will be the last currency to fail. Although the petro-dollar hegemony is being tested there is no alternative.

Only the US has the military might to back a world reserve currency … Of all the giant industrial countries (Germany, Japan, China) only the US produces 50% of its own oil.

This is a contradiction: "However, a police state is certainly not in the cards. In general, Americans are so ignorant, cowardly, and overweight that a Revolution is simply inconceivable."

Once Americans lose their flat screens, along with their houses and jobs there will be trouble. Over 50% of American families are within a couple of months of being homeless and hungry.

Unlike European countries where most have extended family that is much less the case in the US. These people will be immediately desperate for the basics … Already the "Sequester" is reducing help.

A "police state" is definitely on the cards … whether we will have velvet glove fascism or iron fist fascism is the only question left to answer if revolution is not on the list.

What you fail to appreciate is that when the US goes down most other countries will already be on their knees. When the US goes down the entire world economy is going down with it …

Don Levit

Military might backs a world currency, huh? For how long? For how long are the masses going to be ruled by the military? For how long will the military back the elites? The only force in backing the U.S. dollar is the force of taxation. Unfortunately, taxes are so low in relation to our total debt, I am not sure even taxation has that much influence anymore. Don Levit

mmckinl

Don Levit ~ "The only force in backing the U.S. dollar is the force of taxation."

Only partially true … The value of the dollar is based on demand for the dollar and the ability to pay. Dollars are in demand for taxes, legal tender, loans in dollars, foreign reserves and trade such as the petrodollar.

For any currency to be viable there must be enforcement of contract. Legal tender is the start but the courts, sanctions and ultimately use of force are the pillars of strength.

SóloSéQuéNoSéNada

Countries can simply use local currencies in bilateral trade settlement. No military strength is necessary: just stop doing business with anyone who rips you off.

banger

Exactly right–moreover there is no real political opposition. The "left" such as it was has entirely disappeared as a force. The system is very robust. The main reason is that the current oligarchy is not like other oligarchies in history–this one is an emergent network where the power is diffused across the network and no one node is all that powerful–in fact as an emergent system it is, in itself, the actual Emperor of the Empire, i.e., the system itself is the power and the individual oligarchs are not necessarily in charge.

Massinissa

Im aware that the question about Franco was rhetorical, but Franco was in power from 1936-75. Thats 39 years.

Goddamn, I honestly didnt realise it was that long until I looked it up. Thats almost half a damn century.

Jessica

"Lambert here: I'm not a worse is better kind of guy." I read this more as saying that the elite will not act together in a coherent way, but fragments of the elite will do things that make sense for the fragment but are harmful for the elite as a whole. That can be to our benefit. I would say that the Republican refusal to help Obama cut social security is an example of that.

Schofield

Nope it's about confronting our necessary human nature which by default struggles to balance power and always will do. It's about refusing simple minded utopianism, like Communism, Neo-Liberalism or state imposed religions, which appears to provide balance but in reality concentrates far too much power in the hands of the few.

It's about how we can best diffuse power but still effectively meet our needs both individual and collective. Galileo and the Catholic Church (as welfare state) perfectly illustrates this. It is the end always a work in progress!

casino implosion

This guy is coming out of the Soros nexus, where the motives are ambiguous at best.

Lambert Strether

one might argue that's an example of elite fracture

Ms G

I agree entirely. To me a tell is the pervasive vagueness, metaphors and lack subject-verb-object sentences dealing with the who, what, when and why of our kleptocracy and its actors. In other words, Johnson's speech describes a world with no agency, no history and lots of vague, pseudo-poetically expressed, notions.

Compare to, and contrast with, Jeffrey Sachs's rather more incisive and direct words on, apparently, a similar subject.

Lambert Strether

Hmm. As it happens, the transcriber has been good enough to transcribe both speeches! I think you're right. And Johnson's speech was in 2012, whereas Sachs was just last week.

So it looks like, for some fractions of the elite, the language has moved from lack of agency to agency in a year. That's an interesting result.

Ms G

In the same vein, one could ask of Soros what exactly he means by an "Open Society" - fully open to looting operations by speculators or something else? I know (in my completely subjective state of being and thinking) the answer.

Jesse

Brilliant, Lambert.

Thank you.

Dennis Redmond

One point worth emphasizing: the plutocrats have one critical weakness, and that is the fact that their domination of the political system, as well as their suicidal economic policies, are very much limited to the US and EU.

Powerful anti-neoliberal social movements, political uprisings, and developmental states are on the march all across Latin America, northern Africa, Eurasia, East Asia and Southeast Asia.

That's a sea change from the early 1990s, when neoliberalism was dominant pretty much everywhere.

banger

Good point–there is some limited hope in that direction–but it is in no position to actively oppose the Empire.

from Mexico

@Dennis Redmond

This is what I see going on. I perceive neoliberalism as a system in structural crisis. The use of the state's instruments of violence in the United States, deployed against its own people, comes into play as power is being lost, not as a manifestation or demonstration of omnipotent power. Many places in Latin America have already gone through this stage.

The crisis of neoliberalism is far more advanced in Latin America than it is in the United States or Europe. But the people of the US and Europe will eventually learn. It´s just that they are not very far along on the learning curve.

South America is split. Yesterday I was in La Paz, Bolivia. Bolivia, together with Argentina, Venezuela, Cuba, Uruguay, Ecuador and Brazil, are in open revolt against neoliberalism and the United States. I understand that Peru is now switching from a pro-neoliberalism to an anti-neoliberalism stance. Today I am in Bogota, Columbia. Columbia, along with Chile and Mexico, are still very much in the US/neoliberal camp.

So Latin America, which is the place where neoliberalism was first imposed, is now in the process or rejecting neoliberalism. I see the European periphery being the next place to begin rejecting neoliberalism. This is not an overnight process, however. These things take time.

Church ain't over till the fat lady sings, and in the US and Europe the fat lady isn't even near singing. The transition did not happen anywhere in Latin America without the neoliberal state, always with the backing of the United States, trying to maintain control by violent means. Economic liberalism and state violence go together like Thelma and Louise. Those who think the oligarchy has triumphed and is all-powerful with its instruments of state violence have it all wrong, in my opinion. Again, these things take time and the people must experience neoliberal victimization personally, but change is in the air.

banger

As I've commented before, the "oligarchs" are really an emergent and networked intelligent system. This system is very complex and much more robust than most critics understand. Our world is radically different than the one we saw develop during the immediate post-WWII era. The intellectual class as a whole has largely failed to understand the new political arragements that have developed. We exist in a world of new entities. Major corporations that are more complex than any Empire that ever existed and grow increasingly complex each year. The web of power now contains its own intelligence–still somewhat vague and tending to resemble the "intelligence" of social insects but infinitely more creative and adaptive.

Part of the problem is that political science has not fully grasped the developments of Systems, Chaos, and Complexity Theory. In part because we still live under the illusion that "individuals" or groups of individual are the main actors in modern life–they're not.

The only novelty about that is it's global dimension, Banger: oligarchs always had their networks, their shadow party behind the formally ruling (managing) ones. And even that is not really that new.

Much more interesting in my understanding is the development in the last decades of parallel network of intelligence (communication among intelligent beings at least) that is not dependent (or almost not) on the oligarchs and their vertical adoctrination systems. Thisphenomenon of the Internet, which is here to stay, can only be paralleled to that of print. Print caused radical changes in our world, and was almost without doubt the seed of the bourgeois revolution, not just political but also intellectual and technological.

This is similar but much bigger and faster and the primary benefitted class is not anymore the bourgeoisie but the social worker. That is the real change that we are experiencing in our lives and whose overall effects only future historians will be able to discern properly.

The other change is negative: it is the "bouncing" at the limits of Planet Earth: the absolute limit of predatory expansion – or "growth", as economists like to call it.

Seen it objectively this means the collapse of the capitalist system because if something we know from Chaos Theory is that total control is impossible. So corporations are not, like any power, so all-powerful, much less too intelligent: they have to obey the laws of physics, biology and Chaos itself. They ride the wave and try to keep their position but every wave ends with a collapse – and that is not something they can impede at all. In the end they are just as exposed to the elements like everyone else.

As the article suggests with a different metaphor: they are reaching the end of the wave and they do not know what to do next. Mostly they do not even want to think at all about it: just keep surfing as they have done all this time and pretend that the wave will last forever.

When a society collapses, revolutions tend to happen, precisely to purge the vices changing the rules and try to prevent a further collapse that way.

banger

Really, what I'm saying is that the oligarchy is becoming a virtual entity. This is a new thing because the world system is so much more complex that at any time in history. This is a single system that encompasses the entire world with a huge population.

What you says, of course makes sense–as individuals they don't want to think about it but they also believe that they, even the most powerful among them has little control over anything–I want to say "it's the system, stupid." Remember, never before has there been a society that even comes close to what we are facing this period of history is unique. We not only have a global economy incredibly interlinked but we have machine intelligence coordinating much of this and it will only increase.

Adam Noel

Although I generally agree with what you are saying I do not think the oligarchy has become a virtual entity as much as the oligarchy is of sufficient size to ensure crowd dynamics begin to take place (I believe this phenomena could still emerge sans computers, for example). Up until this point in history the oligarchy was not large enough, did not wield enough power and was constrained by geography. The problem now is that a critical threshold has been reached causing a group dynamic to begin to take place.

The anonymity of the oligarchic elite (Due to the sheer size of it) allows the group to function independent of the desires of the group itself. I think crowd psychology has finally reached the level of the elites when before it was only controlling the crowds. The result is a sort of dilemma where even if the elites want to act in the interest of the people they will likely just lose their power if they acted. The only way to dissolve the system would be for all of them to act in unison but the chance of them all acting is practically zero.

bhikshuni

That explains Soros's so-called (conveniently self-serving) reluctance to donate to non-profits he thinks won't use the donation to his satisfaction.

banger

Exactly, whether you call it "crowd dynamics" or a virtual entity it has, in some sense, a life of its own. I suggest that it is and will move beyond that into the realm of artificial life. Hopefully this life form will be less craven than it members–I think this is a possibility.

Chris Engel

Stunning words.

I think the news from Sachs and the continued noise from Buffett and Soros are evidence of his point.

Exciting times to live in, I just hope my at-will contract doesn't get cancelled abruptly in the mess :>

impermanence

As long as people want something for nothing, the Elite are more than happy to throw a low-cost crumb our way every now and again [and make us pay for it!].

Additionally, people will do ALMOST anything to get out of having to take responsibility for their own lives.

Add these two factors and you have a history of modern first-world human civilisation.

DolleyMadison

With intellectuals on both sides of the aisle sounding the alarm, yet NO ONE is stepping up to stop the carnage, you gotta wonder what its gonna take. On HuffPo, David Stockman offers a sweeping, revisionist account of US economic history, refuting myths about the Reagan years and the demise of the Soviet Union, the growth of the warfare state, and how the Fed enriches the powerful and shelters them from free markets. Above all, he shows that blaming our economic problems on "capitalism" is preposterous, and lacks an understanding of how the economy has been deformed and destroyed by crony capitalism. http://www.huffingtonpost.com/david-stockman/days-of-crony-capitalist-_b_3039943.html?goback=.gde_2654557_member_234160783

Murky

Stockman has recently published a book titled, The Great Deformation: the Corruption of Capitalism in America. Runs 700 pages, but the pages turn fast as it's packed with characterizations of Wall Street CEOs, US government cronies, and juicy stories of how Wall Street turned the American economy into a casino.

I'm only into it 100 pages, but already Stockman has completely demolished the myth that the TARP bailout had to be done. Remember the stories of how the banking system would shut down, ATMs would go dark, medicine and food wouldn't be delivered to cities, and that and social catastrophe of a Great Depression would hit in full force? Complete nonsense.

The carnage would have been confined to the canyons of Wall Street, the big investment banks would have all gone bust, and the rot of the American banking system would have been cleaned out in one fell swoop. It's a good read!

For anybody interested in Stockman's views that doesn't' have time for a thick book, there is a recently posted video on Youtube, only 53 short minutes, in which Stockman makes most of his points quite clearly.

craazyman

#Who's the elite anyway?

Are these just people with lots of money? What about Brittany Spears and Lady Gaga? Are they elite? What about Ray Lewis of the Baltimore Ravens? or Bruce Springsteen? or even Rachel Ray the TV cooking queen?

Ever notice there's no protest music these days? What? Did they forget how to play a guitar?

What about the baseball players? Are they elite? And what about some dude from the projects that gets a job in the mailroom on Wall Street and now makes 100 million a year? Are they elite? You can't do that anymore because the elite run things now and they'd never let a mailroom guy do anything. Yes, they probably are elite.

What about a congressperson or senator? Are they elite? Maybe not yet, while they're bending over taking elite sausage in the mouth. Maybe they'll never be elite or maybe they will be.

What about the president? He doesn't seem very elite to me. He seems like . . . I don't know what he seems like. A bad dream maybe. Or something that you'd make up if you were living on another planet writing science fiction about strange worlds in the sky where life is confused. At any rate, he doesn't seem elite to me.

The people who seem like they could be part of the elite are mostly hungry animals bent on stuffing themselves so full of money they expand like a corpse in the sun. They're bruised red and purple with money and their eyes are vacant sockets picked clean and dry and their mouth is a rubber hole locked in an "Oh" expression.

That's what they seem like to me. A color photograph from a war zone. Something that a German expressionist painter would draw with a black background and lots of dark reds and blues and purples. Although I admit that's kind of a cartoon. It's hard to see somebody like that as "elite". but I suppose they are.

I live in a cheap rental apartment but next to me are townhouses worth millions. I wonder if the folks who live there are elite. It's hard to say. I walk by them to the bus and they come and go with their kids. I don't notice them at all. I couldn't care less. Maybe they're elite. But they don't seem like it. They just seem like folks going to work and kids running out the door screaming. maybe at night they turn into reptilians. anything is possible.

I frankly don't think there are any elite except a few money bag CEOs, a few dozen lobbyists and a few lawyers. It's amazing how few of them there are, and how much trouble they cause. They only cause so much trouble 'cause people follow them around and do what they say. That's the problem. Everything else is just people's imaginations but it's a big "just".

Lambert Strether

I believe that wealth distribution follows a power law (and not a bell curve). So, yes, a very very few at the tip top of the power curve, a steep decline, and then a huge honking long tail.

"It's amazing how few of them there are, and how much trouble they cause." Exactly. Ursula LeGuin: "There are not very many of the Shing."

PAUL TIOXON

http://www.sussex.ac.uk/ir/research/gpe/gpesurvey/

Chapter 9: Page 22 Interlocking directorships circa 2009.

http://www.imdb.com/title/tt1535108/

I think you are going to see a lot more than protest songs. It's all cracking up and everyone knows it.

Financialization is the liquidation of the social order in order to transfer power to what ever comes next.

Lambert Strether

Paul T: That's more or less what Arrighi says.

Paul Tioxon

I Wallerstein, Giovanni's good friend and associate, is seen in the following 2 vids at the March 20 2013 Moscow Economic Forum.

The first talk is a very brief overview with the headline, World in Great Depression, unemployment all over the world bad and getting worse. If that isn't bad enough, he speaks in roomful of people who seem there for him. Capitalist want their money back in 3 years and if they can't they don't invest. Hence, liquidation and hold.

The USA is done as hegemon and no one is ready to fill the breach, including the competing currencies. Hence, the uncertainty in investment decisions leads to liquidity preference. What happens when every one is liquid but some decide that only one currency will be recognized? The anxiety spills out to society at large while the Titanic passengers stair at one another admiringly as the their piles of cash in ill fated currency go down to DAvey Jones' locker.

Then, May 1st can be talk like a pirate day for everyone looting in the streets!

Ms G

"I live in a cheap rental apartment [in New York City]."

It is much easier not to be bothered by the wealthy when one has secure and affordable shelter in one's root (physical) community. Which is another way of saying I'm jealous :)

JEHR

For me, the elite have a combination of money and power that they use for increasing their money and power in an ever-expanding cycle. Those are the elite and anyone can join that wants both money and power.

Andrew Watts

I believe there is a faction of the upper class (as they like to style themselves) who looked at Occupy Wall Street and other activists groups with the attitude "So, how do we get out of this?". Far from being openly hostile to these groups they viewed them as a source of direction or vision.

The World War(s) and the Great Depression shattered the confidence in the leadership skills of the old Anglo-Saxon Establishment. This led to the rise of the technocratic class. In the present I have no doubt that faith in the technocrats has already begun to wane. The only question that remains is who is going to provide the necessary leadership and subsequent policies that will guide the country.

Andrew Watts

(Continued, partly in response to banger)

Our corporations are modeled after and still resemble a military organization. In terms of it's hierarchy and corporate organization there is no fundamental difference. The military discipline in which corporate goals have been pursued over the years partly explains the success it's achieved. The lack of organized opposition explains the rest.

The success of Ralph Nader, and his Nader's raiders should demonstrate what even a small group of organized activists can do to undermine Corporate America.

The American oligarchy is just as decentralized as most believe it to be. However there is no dominating intelligence guiding it. Considering that not all of the oligarchs share similar goals or even moral values. It would be a grave mistake in judgment to equate the likes of the Koch brothers with George Soros. The important thing to remember about the organization of the American oligarchs is that they exercise their power through connections. The base relationship is family. This power-relationship extends to business associates and from the personal level to the institutional level.

The oligarchy isn't like the Matrix. It is neither as complex or omnipotent as people might think.

Timothy Gawne

Ahh,

Such a pleasure after the pablum of the New York Times or CNN.

You know, the rich really aren't that smart. What they are is totally shameless and oblivious.

The rich of the classical Roman empire drove their society into the ground. Some perished (Emperor Valens, anyone?) But most did great, they stole everything not nailed own and shifted it to the gated community of Constantiople, where they lived in luxury for over 1000 years. I wonder if the American rich are going to find a new Constantinople in time?

TG

steelhead23

What are we going to do about it, indeed. There is much to this question that deserves analysis. WE have institutions that are supposed to prevent or ameliorate the economic damage being foisted on us by the antics of the rentiers. Yet, as clearly presented on these pages, the rentiers have corrupted the institutions we counted on to keep them in check. If institutional control has faiied, delegitimating the government, what exactly are WE to do?

nobody

We should stop thinking about the problem at the level of the "institutions that are supposed to prevent or ameliorate the economic damage," and instead realize that nearly *all* of the institutions are in states of crisis, failure, or major malfunction.

We need to transform all of the institutions that are vital or salvageable from within, and create new institutions to replace those that have become irredeemably pathological or predatory.

And there need to be some fundamental shifts of ethos, attitude, and consciousness: from hyper-efficiency and over-optimization to resilience, from competition to cooperation, from ego-supremacism to relative interpersonal egalitarianism, from status-seeking to mutually respectful, from burning the seed corn to storing up for seven years of lean.

A Real Black Person

Centralization and concentration of resources are features of highly complex societies. Does it really matter as to whether it is a self-appointed elite or an elite that arises from free market competition that hold an increasing share of power? Would left-leaning academic elites do a better job of running societies than right-leaning capitalists?

Is anyone familiar with the book, The Collapse of Complex Societies, by Joseph Tainter?

nobody

Yes, Tainter has been mentioned here and it would seem that at least several of the regular commenters are familiar.

No, left-leaning academic elites are probably not likelier to do a better job of running societies than right-leaning capitalists, or at least not sufficiently better.

But most people are of neither the 0.01% power elite, nor the 0.01% academic elite.

Societies would be better run if the people who do the real work and the people who are deprived of the opportunity of meaningful work (or any work at all) had a meaningful say in the running of them.

The issue of power is central, regardless of the right/left sometimes blurry division. As the bureaucratic elites of the USSR demonstrated (among other many possible examples), ideology alone guarantees nothing.

Power resides on the ability to organize, which can be under formal public control (left or socialism) or under that of private actors (right or capitalism). In any case it always need additional elements like bureaucracy and armed forces of some sort, be them public, private or mixed.

Putting the economy formally in the hands of the public is an element of democratization but alone is clearly not enough, same for political structures, etc. All must be ideally in the hands of the public, what implies a radical democratization at all levels, with full guarantees for the people to exert control on managers, be them political, economical or of whatever kind: inept, corrupt or simply liar managers must be revocable with immediate effect, power in general must be decentralized, so people can exert a more direct influence on it at their local level and, through that local level, as well as directly through the global intercommunication networks, on other higher levels of power.

This is extremely challenging, of course, but what else can we do that works in a planet pushed to the limits?

Democracy at all levels, also economic, mediatic (social property) and certainly much more radical in the political aspect than what formal delegation systems allow for, is necessary not just for ethical or ideological reason (that also) but because of feedback and realism reasons. Only those on the ground, locally, at a productive task, etc. can inform the system of what works and what does not. Bureucratization (~corporatization) of some level may be unavoidable but this must be controlled from the grassroots in almost real time, what modern technologies do allow for.

This issue of power, of democracy, is central to our civilizational challenge.

A Real Black Person

April 24, 2013 at 12:36 pm

No, it's not. Let me tell you why. In urbanized societies with large populations, what if too many people want to enjoy a certain amount of something and there isn't enough of it to go around? Democracy has not really solved this problem…because different groups fight for asymmetric power and control. This is why you don't see democracies in very poor countries.

People vote based on religious affinity, ethnicity, and social class and they frequently vote to diminish the rights of other people, especially if they believe if they are right. For example, Sunnis will vote for more water to go to more Sunnis, a disproportionate amount of that water will go to a small elite of wealthy and politically connected Sunnis, while the rest will go the other Sunnis. Poor Sunnis will get the least. Social hierarchy and a pecking orders have been recurring solutions to distribute resources and among large groups of people that humans living in civilizations have come up with. Equitable distribution of resources are in only possible and sustainable in rural populations of closely-knit homogeneous people. It's technically possible at large scale, possible but the whole aversion to helping those who people perceive as too different from them, kicks in.

In large urban areas where people frequently interact with strangers, who may look different and have different values, equitable distribution of resources has no appeal.

I understand that your criticism is to this formality of pseudo-democracy in which the bourgeois class always keep power because they control the economy (in the past they were also the only ones allowed to vote but they had to make concesions). A real democracy cannot allow the economy to be out from the control of the people as collective entity as it is now.

Another element you mention and that seems central to your reasoning is communitarianism, which is a complex matter of course. However I see absolutely no reason why sunnis and shias, blacks and whites, men and women, gay and straight, religious and atheists, or whatever other differential identies, cannot freely discuss their differences as individuals who live in the same neighborhood or work in the same factory (and therefore have shared interests). Unless power structures coerce them to behave differently, in which case the problem are those power structures, for example religious sects with economic and other power interests in which people (shia, sunni and whatever else alike) are just brainwashed pawns for their power games.

Naturally the solution goes through dilution of such differences (and it may require direct confrontation of the communist-democratic camp with the religious hierarchies or whatever other bloodsucking structure like banks or whatever). Nobody said that freedom and dignity was easy to achieve. But it is necessary.

A Real Black Person

April 24, 2013 at 6:07 pm

What you fail to understand is that you want to continue fighting an uphill battle against human behavior. We are NOT capable of putting our differences aside in any meaningful capacity. As long as there is social hierarchy, it will be impossible for everyone to have freedom and dignity. As long as there are people who pine for a homogeneous tribal existence, where everyone who participates in a society adheres to the same set of core beliefs, there will be tendency to treat people who refuse to or can't fit into this ideal homogeneous society like @#$#@$. Ask teenage kid. There's no better feeling in the world than the feeling of fitting in. There's no worse feeling in the world then not fitting in. To drive home my point, I'm going to quote a recent post on NC.

From : Michael T. Klare: Entering a Resource-Shock World: How Resource Scarcity and Climate Change Could Produce a Global Explosion;

Thorstein : April 22, 2013 at 8:08 am

"…You see, when I was a child, back in the 50s, I could vote twenty times and more: my parents voted for me, both my maternal and paternal grandparents voted for me, as did my maternal and paternal aunts and uncles. We all lived in the same Congressional District.

That's no longer true in the U.S. and it's increasingly not true of other "first world" countries. My children's aunts and uncles all live in other jurisdictions, where they resent paying taxes for other people's children's schooling. The servers who wait on them in restaurants are not their second cousins. They leave small tips.

Since the 60′s, we've been trying to build communities of strangers, and it's not been working very well. Boomers aren't directly to blame, but we were present at the scene of the crime."

It won't be possible and people in general are very reasonable. Rationing works well as long as it is fair.

A Real Black Person

April 24, 2013 at 12:07 pm

What you are actually suggesting, is suggesting less complexity. If you are suggesting less complexity, you are suggesting for less civilization. It's the layers of middle men and rent-seekers that deprive the common person of their own personal agency. The layers of middle men and rent seekers are also key features of civilization, of complex societies increased divisions of labor, means that large groups of people become dependent on other large groups of people to do more of what they used to do by themselves. As a group of people become wealthier they outsource as much work as possible to other people or machines. When an affluent married couple with children can outsource all the cultivation of food, clothing, housework and child-rearing to nannies and maids, they can focus on philanthropy, the arts and science.

Work was never about meaning, it was about subsistence. Historically, the idea of work having meaning was only for a small number of people who were able to do intellectually stimulating work for the rulers.

What people are actually complaining on across the political spectrum , without them realizing it, are the fruits of civilization.

Why I Am Leaving Goldman Sachs

Hunt Elephants: get your clients - some of whom are sophisticated, and some of whom aren't - to trade whatever will bring the biggest profit to Goldman.
NYTimes.com

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world's largest and most important investment banks and it is too integral to global finance to continue to act this way.

The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

What are three quick ways to become a leader?

a) Execute on the firm's "axes," which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit.

b) "Hunt Elephants." In English: get your clients - some of whom are sophisticated, and some of whom aren't - to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don't like selling my clients a product that is wrong for them.

c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.

Lloyd Blankfein Used to Be Fat and a Poor Dresser by Jessica Pressler

Daily Intelligencer
Pay no mind to all those concerns surrounding the federal bailout of AIG and how it affected Goldman Sachs, the firm's perceived grip on the government, and their ever-reaching tentacles, House of Cards author and former banker William Cohan says in his obsequious story about Goldman Sachs in the upcoming issue of Time. The real story, Cohan says, is CEO Lloyd Blankfein.
"Goldman's riches have deflected the spotlight from what should be great story fodder: Blankfein's personal journey from one of New York City's poorest neighborhoods to its most élite investment bank - and his astounding rise within Goldman. Instead, he has to explain Goldman's performance - and connections - in the face of the nation's epic financial calamity."

You're right, William. It is a crime that the American people have wasted so much time asking questions in an attempt to figure out whether the people controlling all the money in our pension plans and bank accounts are trustworthy and will not completely fuck up the system again and then run into their barricaded second and third homes with their gold bars, leaving the rest of use mewling and starving in the streets. We're sorry, how selfish of us. Do tell us about Lloyd's "personal journey."

Actually, it's pretty good:

Once upon a time, he smoked two to three packs of cigarettes a day. He was overweight. He often dressed inappropriately or ostentatiously. And he had a love of gambling in Las Vegas.

See? Nothing to be worried about here. Lloyd understands! He used to be fat and pathetic and goofy and poor and embarrassed about being so smart, but he tried hard and Lost The Weight, and became successful, like that nice Tina Fey. There's nothing to worry about with Lloyd, even if he does like to gamble a lot and now he has a lot of billions of dollars to do it with. He and his crew are like George and Brad et al. in the Ocean's Eleven movies; they can always get themselves out of a sticky wicket. Somehow. They think. I mean, they're pretty sure.

"If AIG would have gone bankrupt, it would have affected every institution in the world, because it would have had a big effect on the entire financial system," explains David Viniar, Goldman's CFO. He countered, though, that Goldman would have most likely figured out how to make money trading in such a volatile environment.
We feel much better.

[Mar 09, 2013] Goldman, Banking, Washington, and Business Ethics Cultural Observations from Two Smiths

"We don't pay taxes. Only the little people pay taxes."
Feb 26, 2013 | Jesse's Café Américain

"I'm a very firm believer that a liar is a cheat and a thief and a crook. I don't like liars. I never lie. I always told my own child, "If you murder somebody, tell me. I'll help you hide the body. But don't you lie to me."

"We don't pay taxes. Only the little people pay taxes."

Leona Helmsley

"There is not a more perilous or immoral habit of mind than the sanctifying of success."

Lord Acton

I wish that C-Span would permit their videos to be 'embeddable.'

Greg's talk is excellent, and thanks to C-Span the video quality is good.

Greg Smith Speaking At Stanford on His Experience at Goldman and Reasons for the Corrosive Decline in Business Ethics

Speaking of excellent essays on corruption, Yves Smith has written a wonderful piece titled, Jack Lew's Grotesque Citi Employment Deal and the Institutionalization of Corruption.

Corruption, facilitated by the credibility trap, is the biggest problem facing the West today. That is the real subsidy, the most debilitating entitlement.

It is the belief of the elite that the power of their office is an achievement that rewards them with the right to lie, cheat and steal, both for themselves and their friends.

Although it is most important to understand that they would be shocked and insulted if one uses those words, lie, cheat and steal, to describe what they are doing. They view themselves as exceptionally hard working, as obligated by their natural gifts and superiority.

Through a long indoctrination that starts sometimes in their families, but is most often affirmed in their elite schools and with their circle of privileged friends, they learn to rationalize selective moral behaviour not as immoral but as 'the entitlement of success.' And they are supported by a horde of morally ambivalent enablers who will tell them whatever they wish to hear.

There are one set of rules for themselves and their friends, and another set of rules for the rest.

Few who actually do evil consciously choose to be evil. They rationalize what they do in any number of ways, but the deceit often hinges on their own natural superiority, and the objectification and denigration of the other. We are makers, and they are takers. Although many may work hard, they see their own work as having special value and merit, while the actions of the others are inconsequential and unworthy.

Given enough time, their rationalizations become an ideology, desensitized to the meaning and significance of others outside their own select group. This supremacy of ideology empties their souls, and opens the door to mass privation and even murder, although rarely done by their own hands.

This is what Glenn Greenwald calls 'justice for some.' Or even earlier what George Orwell captured in the slogan, 'Some animals are more equal than others.'

And just to be clear on this, with regard to the Anglo-American political situation, the tragedy is not that just some are corrupted, which is always the case. The tragedy is that the Democrats and the Labor Party learned that they could become as servilely corrupted by Big Money as the Republicans and the Conservative Party, while maintaining the illusion of serving their traditional political base.

And it has rewarded them very well in terms of extraordinarily well-funded political power, and almost unbelievable personal enrichment afterwards.

In such a climate of corruption, political discourse loses the vitality of ideas and compromise for the general good, and take on the character of competing gangs and crime families, engaged in aggressive schemes and protracted turf wars, tottering from one pitched battle and crisis to another.

"A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.

And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.

The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious hypocrisy.

And you know how I feel about this.
The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

The problem which the modern world has not yet grappled is how to react to the rise of a global elite, which considers itself the children of a power which is above national restraints, and a law unto themselves.

Their success has been propelled by the dominance of Anglo-American financialization, and the rise of oligarchies in Russia, China, Latin America, and India. Countervailing power has been co-opted and subsumed. Any opposition has become marginalized and isolated.

The new oligarchs are supported by their fiat currencies, which together the increase of insubstantial 'cashlessness' in wealth, provides the ability to define and allocate value at will.

They have a penchant towards globalization and deregulation to support selective justice, to the extreme detriment of local rule, and individual choice and freedom. Above all, they are a law unto themselves, above what they consider subhuman restraint. Übermenschen.

"Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition-and many of them, as a result, have an ambivalent attitude toward those of us who didn't succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today's super-rich are increasingly a nation unto themselves...

A multibillion-dollar bailout and Wall Street's swift, subsequent reinstatement of gargantuan bonuses have inspired a narrative of parasitic bankers and other elites rigging the game for their own benefit. And this, in turn, has led to wider-and not unreasonable-fears that we are living in not merely a plutonomy, but a plutocracy, in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble."

Chrystia Freeland, The Rise of the New Global Elite

Of course this tendency is not new in history, as it is a facet of the human heart, and the empires of the past. But the scope of it is something rarely seen before this. And it is supported by technologies for mass action and control that seem terrifyingly powerful and new.

And as hard as it may be to believe, this too shall pass. But as always, we have some work to do in our own time.

"The mills of God grind slowly, yet they grind exceeding small;
Though with patience He stands waiting, with exactness He grinds all."

Henry Wadsworth Longfellow

[Mar 02, 2013] ROBERT HUNZIKER - The New Transnational Elite

August 8, 2012 | prn.fm

ROBERT HUNZIKER - The New Transnational Elite

DAVOS/SWITZERLAND, 24JAN04 - Dick Cheney, Vice...

The world's epicenter of capitalism is the United States, and its reach/power/influence circumnavigates the globe. The elites of the capitalist class are no longer tied to territoriality or driven by national competition. "U.S. capitalism has expanded its reach by morphing into a Transnational Capitalist Class." according to William Robinson (Univ. of Calif.) Global Capitalism and 21st Century Fascism, Aljazeera, May 2011.

The driving force that binds together this elite cadre is free market capitalism; it is the heartbeat of a worldwide network of capitalists that thrive off profits and wealth creation. Their nonpareil world order is driven by money which equates to success, power, collegiality, and increasingly, as this new world order coalesces into the most formidable political entity in the history of humankind, democratic nation-states lose the legacy of the Age of Enlightenment, which played such a major role in the French Revolution (1789-99) and the American Revolution (1775-83), contributing to the Declaration of Independence (1776), and the U.S. Bill of Rights (1791)… stripping away national identities.

The notion that a company or corporate executive or wealthy entrepreneur is bound by an allegiance to their country of origin is passé. The elite capitalists of today are bound to one another, not to countries. They meet at the same conferences, like the World Economic Forum in Davos, Switzerland, or the The Bilderberg Group annual geopolitic forum, or in Asia it is the Boao Forum on China's Hainan Island each spring, or the Aspen Institute's Ideas Festival, or Herb Allen's Sun Valley gathering for media moguls, or the Google Zeitgeist conference, all defining the characteristics of today's plutocrats; they are forming a global community, and their ties to one another are increasingly closer than their ties to the multitudes back home.

They attend the same operas and polo matches, stay at the same 5-star hotels, lease the same private jets, dine at the same 5-star restaurants, meet Bono, and ceaselessly travel the globe together, with homes on every continent, residing wherever the weather is seasonally most favourable. Their allegiances extend well beyond the borders of their nation-states of origin, and they could care less about the various underling classes of society in any particular country where they do business.

This new global elite, according to Chrystia Freeland (Global Editor at Large, Reuters, who traveled with, and mingles with, the elites), The Rise of the New Global Elite, Atlantic Magazine, Jan./Feb. 2011: "Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today's super-rich are increasingly a nation unto themselves."

This federation of convenience by the global elite is a lingering problem for the lower classes in America. The U.S.-based CEO of one of the world's largest hedge funds told Chrystia Freeland that his firm's investment committee often discusses the question of who wins and who loses in today's economy. In a recent internal debate, he said, one of his senior colleagues argued that the hollowing-out of the American middle class didn't really matter. "His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that's not such a bad trade." Notice the CEO's reference to "not such a bad trade" as representative of free market lingo, i.e., "trade." Everything is measured in trade terms, like statistics… if you look in the mirror, you'll see the reflection of a commodity.

This viewpoint is typical of how the global ruling class thinks, and proof positive of it is reflected in today's politics in America. The right wing embodies this same viewpoint by striving to strip the federal government of public welfare services, privatizing governmental assets, and undercutting benefits to society at large, especially via manipulation of the federal tax code. This same occurrence is happening in real time right now in Greece, Spain, and Portugal as the cadre of elite technocrats out of Brussels, de facto capital of the EU, dictate nation-state policies to those three forlorn countries. The world's elites love hard times/recessions because of the set up. It makes it easier for them to strip away government largess via austerity programs that they force upon governments, and it allows for undercutting the wages of average citizens as well as dismantling of governmental regulations. This, in turn, prompts protestors to congregate in the streets of capital cities, but over time, the capitalist class waits them out, temporarily residing in one of their homes elsewhere, away from danger, and with time on their side, the capitalists win.

Upon reading Chrystia Freeland's article in Atlantic Magazine, one comes away with the impression the elite capitalists look down with disdain upon the masses of people, expressing a contempt for those in society who do not have the personal merit to rise to the occasion of wealth and power. Meritocracy is their biblical source, not equality and fraternity. These are hackneyed terms from 'America of old' and no longer applicable in the new technologically enhanced world, which itself is the major source of many of the new self-made wealthy.

This global ruling class controls the levers of an emergent trans-national state apparatus of global decision-making and orders emanate from the IMF, World Bank, the EU, and the WTO. The ruling bloc of this world order consists of chieftains of global corporations and financial conglomerates, major players in the dominant political parties of the world, media conglomerates, and technocratic elites.

Several thousand people, who all play in the same sandbox, control the world of finance and politics, similar to the faceless/nameless/shameless fictional elites in the TV series The X-Files. In that series, the 'Smoking Man' is the only personality from amongst the elite cadre that is recognized on an on-going basis; he is C.G.B.Spender, the public face of the "Syndicate," which is a shadow government and highly secretive organization. As the Smoking Man says, "If people were to know of the things that I know… it would all fall apart." Similarly, one wonders what those 'things' are in today's world, and there are definitely cracks in the veneer of this new capitalistic world order.

For example, "Market capitalism has proven to be a remarkable engine of wealth creation, but if it continues to function in the next 25 years as it has in the past 25, we are in for a violent ride or, worse, a serious breakdown in the system itself. That sounds dire, and it is," Global Capitalism at Risk. What are you Doing About it? by Joseph L. Bower, Herman B. Leonard, and Lynn S. Paine, Harvard Business Review, Sept. 2011. This article co-written by three professors at Harvard University pinpoints a festering problem that may be impossible to address because, as the article goes on to relate: "The leaders we talked to identified various forces that could severely disrupt the global market system in the decades ahead… these forces arise from multiple sources. Some are fueled by negative consequences of the market system and feedback into it in disruptive ways. Others arise from sources external to the system. Still others relate to…." Frankly, the multiplicity of the financial problem is the problem! The world of finance is a mind-boggling complexity of derivatives overlying derivatives superimposed upon CMOs interlocking with CDSs and residing within the depths of major brokerages and banks, deep in their vaults for nobody to see in full living color. The legendary investor Sir John Templeton summed up the financial monster in two words, writing a memorandum to close friends and family before his death, as he anticipated the future, "Financial Chaos." World banking/finance is a multi-headed hydra monster of global proportions that may bring the world of capitalism down to its knees, prompting police state intervention to maintain social order. The early stages of this phenomenon have already appeared, and historians may one day earmark the summer of 2007 as the start of the Age of Financial Calamity!

According to William Robinson: Transnational capital has been able to break free of nation-state constraints to shift the correlation of class and social forces worldwide sharply in its favour and to undercut the strength of popular and working class movements around the world. One new structural dimension of 21st century global capitalism is a dramatic expansion of the global superfluous population or that portion marginalized and locked out of productive participation … constituting some one-third of humanity. The need to assure the social control of this mass of humanity living in slums gives a powerful impetus to neo-fascist projects and facilitates the transition from social welfare to social control, otherwise known as police states. Over time, this system becomes ever more violent and the ability of economic power to determine electoral outcomes opens the door for 21st century fascism to emerge without a rupture in electoral cycles and/or a constitutional change.

The door for 21st century fascism has more than opened. It has been blown off the hinges starting with the U.S. Patriot Act, which act violates the U.S. Constitution and which act was rammed down the throats of the U.S. Congress, whose members did not even read the document, by the Bush Administration, implying that any members who voted against the hurried-bill would be blamed for any further attacks at a time when the nation was braced for a second attack.

Another example of impending fascism occurred when President Obama signed the National Defense Authorization Act, which act negates the writ of habeas corpus, the most powerful cornerstone of civil rights since the Magna Carta. Subsequently, May 2012, U.S. District Judge Katherine B. Forrest overruled the domestic military detention provisions of the act, an act that was roundly supported by Democrats and Republicans.

This is a clear, and extremely troubling, clarion call for how far legislators will go to strip U.S. citizens of their rights. According to Republican presidential candidate Ron Paul, "American individual liberties are being stripped away." The elites contend the negation of individual rights is foisted upon the government in order to maintain civil order, and their lackeys in Congress take bait with open-arms.

As transnational capitalism gains momentum, the chieftains of major U.S. international corporations feel less, and less, empathy towards their homeland and more akin to a world-state wherein the entire planet is their haunt. Their quest for profits dictates a worldly view that brushes aside nation-state regulations that interfere with profits, and their disdain for the peoples of any given nation-state leads to statist political leanings, meaning a concentration of economic controls and planning in the hands of a centralized government for control of individual nation-states whilst worldwide trade is subjected to free market capitalism. This course of action is already evident in Europe where nation-states like Portugal are being dictated to by a centralized body of technocrats, the EU. Likewise, this is happening in America where the Central Bank has become dictator of the markets whilst the global corporations on the Dow Jones Industrial Average carry on in their own markets around the world, splashing strong profits, in part, because of neoliberal tendencies that discriminate between which nation-states offer the cheapest labor and the weakest regulations. The common denominator of global corporations is cheap labor; they hover like bees around the queen wherever cheap labor is to be found.

As a result of an assortment of extremely powerful economic and political forces intertwined within transnational capitalism, it is reasonable to assume the various classes in American society will continue to experience a significant downgrade of lifestyle as the transnational capitalists comb the world for the cheapest labor and the loosest regulations.

In time, America itself will become a target for transnational capitalists' manufacturing plants & facilities as American wages and benefits continue to stagnate and as right-wingers attack governmental regulations and privatize government assets.

Read more: http://prn.fm/2012/08/08/robert-hunziker-transnational-elite/#ixzz2MKrzC3Ia
Under Creative Commons License: Attribution

[Mar 02, 2013] Growing Split Within Republicans On Too Big To Fail Banks by Simon Johnson

February 7, 2013 | baselinescenario.comon-too-big-to-fail-banks | 47 Comments

By Simon Johnson

An interesting debate is developing within the Republican Party on how to approach the problem of too-big-to-fail financial institutions.

On the one hand, a growing number of influential voices are pushing for measures that would limit the size of megabanks or even push them to become smaller. Richard Fisher, president of the Federal Reserve Bank of Dallas, continues to draw a lot of attention, as does Thomas Hoenig, the former president of the Federal Reserve Bank of Kansas City and now vice chairman of the Federal Deposit Insurance Corporation. And Jon Huntsman planted a strong conservative flag on this issue during his run for the presidency in 2011.

This assessment is now shared much more broadly across the right, as seen in recent opinion pieces by George Will and Peggy Noonan, as well as regular analysis by James Pethokoukis of the American Enterprise Institute, including on the issue I write about today. See this Holiday 2012 survey, provided by the Dallas Fed, with links to views in favor of and against breaking up the big banks.

Senator David Vitter of Louisiana and Jim DeMint, the former senator from South Carolina who now heads the Heritage Foundation, have also come out hard against very big banks. Both men are usually considered to be in the right wing of the party.

But some other Republicans are pushing back, as seen this week in a paper by Hamilton Place Strategies, a group headed in part by communications professionals who previously worked with President George W. Bush, John McCain and Mitt Romney. (The people involved insist that it is not a Republican firm. Of its five partners, four previously had senior Republican jobs, while the fifth worked for Hillary Clinton and other Democrats. Of its three managing directors, two have worked for Democrats and one was a senior staff member on the Romney campaign. Historically, of course, deference to big banks is bipartisan.)

Can Hamilton Place Strategies help turn the tide within Republican thinking? This is not likely, because its paper is not credible and should not be taken seriously for three reasons.

First, it fails to deal with the most important recent work showing the problems with big banks. For example, it essentially ignores the analysis of Andrew Haldane and his colleagues at the Bank of England, which finds no economies of scale and scope for the world's largest financial institutions (the paper mentions the finding that economies of scale do not exist above about $100 billion but does not go into the specifics of this result). I see no mention of Richard Fisher and Harvey Rosenblum of the Dallas Fed, who explain clearly how megabanks weaken the effectiveness of monetary policy and undermine United States influence over all aspects of our financial system (a direct counter to one main point of the Hamilton Place Strategies paper).

The paper makes vague assertions about bank equity capital now being sufficient to withstand future adverse shocks, but it fails to take on any of the many concerns raised by Anat Admati and her co-authors, which are increasingly gaining traction. Professor Admati and Martin Hellwig have a new book, "The Bankers' New Clothes," which will be introduced on Monday at the Peterson Institute for International Economics (where I am a senior fellow); excerpts have been posted on Bloomberg. Anyone who wants to be taken seriously in this debate needs to read the book (and the technical papers already available).

Second, Hamilton Place Strategies denies the existence of too-big-to-fail subsidies for global megabanks. This is laughable. Has it talked to anyone in credit markets about how they price various kinds of risk – and assess the willingness and ability of the government and the Fed to support troubled megabanks? Or have its authors read the report on the SAFE Banking Act, produced by the staff of Senator Sherrod Brown, Democrat of Ohio? The International Monetary Fund, the Bank of England and other sources cited there put the funding advantage of too-big-to-fail banks at 50 to 80 basis points (0.5 to 0.8 of a percentage point, which is a lot in today's market).

Such subsidies encourage big banks to borrow more – to take more risk and to become even larger. The damage when such a bank fails is generally proportional to its size. So this implicit taxpayer subsidy creates serious risks for the macroeconomy and contributes to the further build-up of taxpayer liabilities – when any financial system crashes, that causes a recession, reduces tax revenue, and pushes up government debt.

Even William Dudley, the former Goldman Sachs executive who now heads the Federal Reserve Bank of New York, acknowledges that too-big-to-fail and its associated subsidies continue. Daniel Tarullo, the lead Fed governor for financial regulation, is in the same place. (Again, neither is cited in the Hamilton Place Strategies document.)

Hamilton Place Strategies contends that large banks can be resolved – taken through liquidation by the F.D.I.C. without difficulties – and that the "living wills" process helps to provide a meaningful road map. I talk to people closely involved with these issues, officials and private-sector participants (as a member of the F.D.I.C.'s Systemic Resolution Advisory Committee and as a member of the Systemic Risk Council, led by Sheila Bair, the former chairwoman of the F.D.I.C.). Hamilton Place Strategies is completely wrong on the substance here.

Hamilton Place Strategies also asserts that global megabanks are an essential part of a well-functioning international economy. Again, I don't know where this comes from. As part of my work at the Massachusetts Institute of Technology and at the Peterson Institute, I talk with people who run companies, large and small, operating around the world; they emphasize that they need financial services provided by well-run institutions and markets that have integrity.

Putting too-big-to-jail banks in charge of financial flows helps no one – except, presumably, the executives at those banks that the Department of Justice has determined are immune from criminal prosecution.

Third, the Hamilton Place Strategies "report" reads as if it is either some form of paid advertising or a sales pitch to potential clients - but the firm refuses to disclose for whom it is working and on what basis.

In response to an e-mail request for such information, Patrick Sims of Hamilton Place Strategies replied:

"While we don't publicly disclose our individual clients, we make no secret that we do work for large financial institutions, both foreign and domestic, and related associations. It would be fair for you to note that in your writing. But the views expressed in the paper represent the longstanding views of the firm."

I'm not sure what "longstanding" means, as the firm was founded in 2010. But in any case, this lack of disclosure completely destroys the credibility of Hamilton Place Strategies and its work in this area.

The firm is in the business of influencing opinion. As it says prominently on its Web site, "We show clients how to shape opinion, navigate challenges, make informed decisions and create opportunities."

While the firm's clients in this area may not be clear, the language in its report strongly resembles arguments being made by the Financial Services Forum and other lobbying groups for large banks. For example, an unsigned blog post on the Financial Services Forum's Web site from November 2011 has the same arguments and similar wording to what is in the Hamilton Place Strategies report. (It also objects to an earlier commentary I wrote.)

Perhaps all this is a coincidence; the firm has not yet been willing to discuss these points.

When I acquainted the firm with what I was writing in this post and sought comment, the only substantive reaction was a request not to characterize it as a Republican firm.

We have seen deceptive lobbying, posing as objective "research," many times in the financial reform debate – for example, the case of Keybridge Research on derivatives, which I wrote about in 2011.

If a company's lawyer is quoted in the press, the report will always include mention of the client-lawyer relationship. Everyone is entitled to a spokesperson.

Law firms are not afraid to tell you whom they represent. After Charles Ferguson's Oscar-winning movie, "Inside Job," many academics now disclose when they produce a paper on behalf of an industry association (e.g., Darrell Duffie of Stanford disclosed that he was paid $50,000 by the Securities Industry and Financial Markets Association, a lobbying group, to write a paper opposing the Volcker Rule). Karen Shaw Petrou, a leading banking analyst with whom I have also disagreed on too-big-to-fail issues, discloses "selected clients and subscribers" in some detail.

Upton Sinclair once quipped, "It is difficult to get a man to understand something, when his salary depends upon his not understanding it."

Hamilton Place Strategies' decision not to disclose who is paying for its "research" is far more significant than all the errors in its white paper.

An edited version of this post appeared this morning on the NYT.com's Economix blog; it is used here with permission. If you would like to reproduce the entire column, please contact the New York Times.

Bond
February 7, 2013 at 10:34 am

With the recent disclosure by Mr. Dimon of the "money room" at Chase in Florida moving "4 or 5 $$$ trillion a day", it is hardly conceivable that big banks are going to be pared down to size any time soon. Power is too concentrated, in the hands of too few.

Annie
February 7, 2013 at 5:32 pm

cut and pasted from the wiki article:

"….Some, such as former International Monetary Fund chief economist Simon Johnson even went so far as to argue that the increased power and influence of the financial services sector had fundamentally transformed the American polity, endangering representative democracy itself.[7]

In February 2009, white-collar criminologist and former senior financial regulator William K. Black listed the ways in which the financial sector harms the real economy. Black wrote, "The financial sector functions as the sharp canines that the predator state uses to rend the nation. In addition to siphoning off capital for its own benefit, the finance sector misallocates the remaining capital in ways that harm the real economy in order to reward already-rich financial elites harming the nation."[8]….."

http://en.wikipedia.org/wiki/Financialization

So if Prof. Johnson says, "Again, I don't know where this comes from."

Then that could mean that whoever is saying it doesn't know what they are talking about :-))

@Bond, "Power is too concentrated, in the hands of too few."

And they are free to blow themselves up with the power that they have.

The question I have is whether they have the right to blow up the web of sustainable life on the planet that runs itself through commerce and trade transactions?

Bruce E. Woych
February 7, 2013 at 5:40 pm

Posited:

"Among us today a concentration of private power without equal in history is growing."

"Private enterprise is ceasing to be free enterprise and is becoming a cluster of private collectivisms; masking itself as a system of free enterprise after the American model, it is in fact becoming a concealed cartel system after the European model."
[and]
"And industrial empire building, unfortunately, has evolved into banker control of industry. We oppose that."
[and]
"We have also learned that a realistic system of business regulation has to reach more than consciously immoral acts. The community is interested in economic results. It must be protected from economic as well as moral wrongs. We must find practical controls over blind economic forces as well as over blindly selfish men."
=============================================
Excerpted from:
Faculty Research
The New Deal
Franklin D. Roosevelt Speeches
Message to Congress on the Concentration of Economic Power
Franklin D. Roosevelt
April 29, 1938
To the Congress of the United States:
http://publicpolicy.pepperdine.edu/faculty-research/new-deal/roosevelt-speeches/fr042938.htm

Bruce E. Woych
February 7, 2013 at 5:48 pm

The Case For and Against Too-Big-to-Fail Banks

"The case for the too-big-to-fail banks, by Neil Irwin: …[I]n the last few months, there's been a new wave of calls to break up the "too big to fail" banks that were at the center of the crisis - and the beneficiaries of a massive wave of bailouts.

So, is splitting those banks up the answer? … The move … has a growing list of powerful allies. … But what is the counterargument? … A new paper from Patrick Sims of Hamilton Place Strategies, a policy and communications firm led by Bush administration White House and Treasury official Tony Fratto, amounts to a case for the big banks. (Hamilton Place counts major banks and their trade associations among its clients)…, here are some of the arguments…"
http://economistsview.typepad.com/economistsview/financial_system/

Daniel Barkalow
February 7, 2013 at 6:53 pm

"Can Hamilton Place Strategies help turn the tide within Republican thinking? This is not likely, because its paper is not credible and should not be taken seriously for three reasons."

While the paper is not credible and should not be taken seriously, that fails to relate to the question. Since when has credibility determined the effect of a document on politics?

Bruce E. Woych
February 7, 2013 at 11:45 pm

http://www.theamericanconservative.com/articles/revolt-of-the-rich/
(A Growing Split…with integrity & insight)
http://www.theamericanconservative.com/articles/revolt-of-the-rich/
"Almost all conservatives who care to vote congregate in the Republican Party. But Republican ideology celebrates outsourcing, globalization, and takeovers as the glorious fruits of capitalism's "creative destruction." As a former Republican congressional staff member, I saw for myself how GOP proponents of globalized vulture capitalism, such as Grover Norquist, Dick Armey, Phil Gramm, and Lawrence Kudlow, extolled the offshoring and financialization process as an unalloyed benefit. They were quick to denounce as socialism any attempt to mitigate its impact on society."
[and]
" Conservatives need to think about the world they want: do they really desire a social Darwinist dystopia?

The objective of the predatory super-rich and their political handmaidens is to discredit and destroy the traditional nation state and auction its resources to themselves. Those super-rich, in turn, aim to create a "tollbooth" economy, whereby more and more of our highways, bridges, libraries, parks, and beaches are possessed by private oligarchs who will extract a toll from the rest of us. Was this the vision of the Founders? Was this why they believed governments were instituted among men-that the very sinews of the state should be possessed by the wealthy in the same manner that kingdoms of the Old World were the personal property of the monarch?"
Revolt of the Rich
http://www.theamericanconservative.com/articles/revolt-of-the-rich/
Our financial elites are the new secessionists.
By Mike Lofgren • August 27, 2012

Brian Wilson
February 8, 2013 at 12:08 am

Muppets rearranging chairs on the Titanic, while the band plays on. Whatever. The danger to the global economy has never been more palpable. The last place anyone looks for change and hope is Washington. At this juncture, people would do well to accept that there is nothing that will save the global economy from the fate of monumental greed embodied by the TBTF banks.

http://theeconomiccollapseblog.com/archives/watch-the-financial-markets-in-europe

Xavier L.
February 8, 2013 at 5:08 am

"The damage when such a bank fails is generally proportional to its size."

Here, I cannot agree. It is much worse than that. A bank two times bigger will do more than twice the damage when it fails.
In wonkish terms, the consequences of a failure are convex, and it is (or should be) one of the main arguments for breaking the big banks.

RueTheDay
February 8, 2013 at 9:00 am

What we're seeing here is a repeat of the debate that played out between Roosevelt/Taft and Wilson a hundred years ago – trust busting vs. regulation. I thought this debate had been settled, such that it was recognized that some circumstances call for breaking up monopolies, others for regulation, and still others for both. Apparently not. Though I suspect that, in this rendition, both sides are being disingenuous in their arguments because in actuality they oppose both approaches.

Peter P
February 8, 2013 at 11:58 am

A great article, but missing Simon's normal clarity of message. It start with a polarizing and prickly headline "A Growing Split Within Republicans On Too Big To Fail Banks", but hardly addresses that.

But then it analyzes the "Hamilton Place Strategies", which is obviously a paid opinion piece masquerading as independent opinion, and demolishes it accurately. How do we set standards or expectations so that paid-for-speech is easily seen to be what it is, and valued for what it is: largely worthless?

Patrick R. Sullivan
February 8, 2013 at 4:00 pm

Does this argument hold also for Fannie Mae (and Freddie Mac)? Fannie was the country's largest borrower, behind only the Treasury at one time.

Its lobbyists always managed to trump the concerns over its size, of Larry Summers, Phil Gramm, Ronald Reagan, Paul Volcker, Alan Greenspan, Jim Leach (to name just a few). Their winning argument being that their size made interests rates lower for home purchasers.

I missed the part where the GSEs were included in TBTF.

AnneWainwright
February 8, 2013 at 4:18 pm

What it must be like to be Professor Johnson and know what he knows. Very few manage to still sleep at night with that knowledge. Prepare, people.

Bruce E. Woych
February 8, 2013 at 5:08 pm

Trusted Criminals: White Collar Crime In Contemporary Society [Paperback]
David O. Friedrichs (Author)

Trusted Criminals: White Collar Crime In Contemporary Society by David O. Friedrichs (Jun 25, 2009)

Bruce E. Woych
February 8, 2013 at 5:42 pm

The Revolt of the Elites and the Betrayal of Democracy [Paperback]
Christopher Lasch (Author)

The Revolt of the Elites and the Betrayal of Democracy

The Revolt of the Elites and the Betrayal of Democracy

Anonymous
February 9, 2013 at 12:21 pm

""I'm saying that there is a 90% chance of collapse by next April, but it could happen at any time between now and April," Keiser reported on August 17. "You have to look at [the global economy] in terms of the way a systems analyst would look at any complicated system. Every time you add more to the system the complexity doesn't rise in a linear fashion, it rises exponentially. So every time the Fed puts on more quantitative easing, every time investment banks bail out some other investment bank, every time more derivatives are released into the system, you don't go from, let's say, 700 trillion notional value derivatives to 800 trillion in a linear way. You have to think of it in terms of this global quadrillion to two quadrillion derivative soufflé being encumbered with, exponentially, more risk. This is classic systems analysis."

This nation's economy has been growing in complexity, exponentially, since 1971 when the U.S. dollar was taken off the gold standard. "The game here is to try to pick where it starts, what is the trigger, and to study it in terms of how the economies rattle and roll, as a result of this complete and utter systemic breakdown," continued the founding host of The Keiser Report, a biweekly program, that aired its 330th episode yesterday.

Could Japan trigger the global economic collapse?

Keiser looks to the economy of Japan as a "weakest link" and a possible trigger for systemic collapse. He says what turned his eye toward Japan was the recent announcement that the second biggest buyer of U.S. Treasury debt is no longer China. Keiser explains, "America is the biggest buyer of its own debt. But taking the second spot is Japan. China is walking away from the table."

Keiser continues, "Japan has always been under the treasury of America's thumb. They will do whatever America says. And now they are the number two biggest buyer [sic] of US Treasury bonds. But that is extremely dangerous because their economy itself is a tinderbox, probably the weakest, most fragile economy in the world-after the Fukushima disaster, after 20 years of the zombie economy and the zombie banks. But now they are supporting America. Japan, the zombie economy, is supporting the American economy, to give you an idea how fragile the system is."

"There is no avoiding the collapse. There is no remedy for the collapse."

He then predicts civil unrest and a generational civil war. Therefore, the government is preparing for civil unrest, long anticipated by the John Warner National Defense Authorization Act of 2007, which rewrote federal law to allow deployment of the military, specifically, in cases of "economic collapse."

After describing our evolving "hard gulag" situation in this country with private prison systems increasing capitalization, expecting 20-50 million more inmates in the near future, Keiser defines a new type of dystopia he calls a "soft gulag," where citizens give up more freedoms-such as facial recognition-in exchange for deals on consumer goods."

http://mediaroots.org/max-keiser-predicts-global-economic-collapse-by-april-2013.php

Norm Cimon
February 9, 2013 at 1:49 pm

After reading Irwin's tout of Hamilton's PR flakery, I wrote him an email. In it, I pointed out how much deception was involved in the use of correlation to explain away the MBS risk. I also pointed him off to the research that shows how the financial houses and their quant lackeys are part of a dynamical marketplace that will explode again. This is no longer about house A competing against house B for some perceived marginal gain. It's about the entire market place cycling between periodic bursts of wildly excessive risk-hypnosis punctuated by market-destroying bouts of de-leveraging. It really is all systemically one, just as the hippies were fond of saying. They were just ahead of their time.

There's a lot going on. The Bank of England appears to have taken the lead on this. Led by Andrew Haldane, they're rethinking their risk management given what they now understand about the dynamics of the marketplace for derivatives, and the British government seems to be moving this along. The bankers don't seem worried but I think they've missed the boat – again.

This undercurrent, with the Fed deferring to the Bank of England in developing new strategies, has been flowing through the scientific and policy community for a while. There's been a gradual ratcheting up of both the regulatory talk, and policy visibility. There are quite a few links in one of Felix Salmon's blog entries, with lots of opinion's on both sides: http://blogs.reuters.com/felix-salmon/2013/02/04/counterparties-volcker-with-voltage/

I might be delusional, but I don't think so. It's all happening at a glacial pace for a very simple reason. This house of cards could easily collapse again if any fast moves are made, it's that dangerous.

With the ouster, pardon me the resignation, of Lanny Breuer from the Justice Department, we're also hearing much tougher talk and the initiation of criminal litigation. Eric Schneiderman seems like a serious guy. He's now stepped to the front as the point-man for this effort. At the very least, he doesn't seem to have any illusions about what went down:
http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-crisis/untouchables/eric-schneiderman-mortgage-task-force-eyeing-broader-suits/

There was lots of talk about how Frontline did a hit job on Breuer. I certainly hope so. That may not have been a random targeting either. It really was time for him to move on given his fawning approach to the criminal activity that led to this collapse. Again, everything has moved very slowly for what seems to me the obvious reason. There is no solid ground, only wall-to-wall eggshells in this oh-so-weak recovery.

There are endless questions to be answered all of them leading to the only important one: can we have a consumer economy without consumers? But we'll save that for another day.

Anonyomousy
February 9, 2013 at 4:25 pm

We insist you remove that wig and fake moustache at once private Ryan.
Well I can't sir, it's growed on.

Bruce E. Woych
February 10, 2013 at 2:44 pm

Bubble Psychology and Complicity in Financial Fraud
By Noah Millman • February 7, 2013, 11:38 AM
http://www.theamericanconservative.com/millman/bubble-psychology-and-complicity-in-financial-fraud/
(Recent article in the American Conservative) Quite a good point!
Essentially the author points out that buyers in a black market that expect to turn a profit themselves on questionable goods and their sources, simply don't want to know too much information…which indirectly makes the buyers complicit to the corruption. It is a good article and raises a more comprehensive perspective as to the nature of a corrupt bubble posing as institutional and normative errors.
===============================================
….Neither a borrower nor a lender be? …Well in contemporary jingo…it's more like "…Off the record, on the QT, and very hush-hush…"
===============================================
But Noah Millman goes further to raise eyebrows and ask academia for help in answering it…(perhaps a future Baseline title issue?):
….I'd be interested to know whether there's any academic literature addressing this question of opacity/complexity and its relationship to bubbles."
"In any bull market, the willingness of intermediaries to "conceal materially relevant information" goes up, and so does the willingness of risk-takers to let that information be concealed. It's very hard to regulate away that behavior – doing so would be tantamount to regulating away bubble psychology. But how possible it is to conceal this kind of information is a function not only of the regulatory environment (which also gets laxer during bubbles – bubble psychology works on regulators, too) but of the nature of the products themselves. Credit securitization provided multiple opportunities to inaccurately represent risk, each of which was seized by somebody, and which collectively resulted in a much more substantial mis-representation than would have been the case with simpler products.
I'd be interested to know whether there's any academic literature addressing this question of opacity/complexity and its relationship to bubbles."
Bubble Psychology and Complicity in Financial Fraud
By Noah Millman • February 7, 2013, 11:38 AM
http://www.theamericanconservative.com/millman/bubble-psychology-and-complicity-in-financial-fraud/
(Recent article in the American Conservative)

Bruce E. Woych
February 10, 2013 at 4:06 pm

"And Jon Huntsman planted a strong conservative flag on this issue during his run for the presidency in 2011." (text above)
---------------------------
P "rebuilder-in-chief" with an eye toward 2016."
???????????????????????????????????????????????
A Growing? split…seems retrospective. The conservatives are driven by party politics and political bosses are labeling working conservatives as outsiders. There isn't (or shouldn't be…) a novel split in the "Party" but the extreme fundamentalists in the tea party helm have factioned and fractured as the lobby-driven fiscal conservatives have made hypocrites out of true social conservativism. Meanwhile, anything labeled moderate takes on a mantel of rejection from the political bosses that feed off of the extremist's absolute intolerance for outsiders (left undefined as everyone else). So we end up with Mitt Romney instead of a true leader and politician like Jon Huntsman. Given the choices, as a life long Democrat I would have accepted Huntsman as a compromise with a true intention to lead the people, rather than take another beating from Obama's three ring Monty circus of crisis derailing promises and false appeals to empathy that sells his image while we become entrenched in suspended disbelief at his actions.

So heads up Conservatives, you have been split all along and the entire country is becoming factioned and fracked into corruption and pollution. You don't need a change of heart; you need a complete heart transplant. A virtual revolt against the capture of your party by "nuts" and bolts political animals serving a financial minority. You may still get a second chance to rally around a real candidate that would not only be your "rebuilder-in-chief" but may well reunite America and save Democracy from corporatism and oligarchic command restructuring of the Republic itself.

http://www.washingtonpost.com/blogs/the-fix/wp/2013/01/14/whither-jon-huntsman/
Whither Jon Huntsman?
Posted by Sean Sullivan on January 14, 2013 at 3:32 pm
(Excerpt)
"Written off as too moderate by conservatives and crowded out by Mitt Romney among centrist Republicans, Huntsman was a man without a political home in the 2012 primary field.

Looking ahead to 2016, he still is, in many respects.

After the primary, Huntsman had some tough talk for his party, lashing the GOP over immigration and even taking on Romney's policies. He's kept up his tough love the past few months, telling the The Ripon Forum last month: "As long as compromise is seen as something akin to treason, it becomes impossible for us to move the policy ball forward."

In the wake of Romney's controversial "47 percent" comment and post-election remark that Obama won by bestowing "gifts" upon certain voters, Huntsman is not the only one in the Republican Party calling for a new message. And given the way the way the public views the GOP these days, few would argue that a makeover isn't in order.

As we've written, there is already a race to be the
GOP "rebuilder-in-chief" with an eye toward 2016."

Bayard Waterbury
February 10, 2013 at 5:05 pm

Simon, Hamilton Place Strategies is simply another plutocratic shill for the same old financial oligarchs who keep working to rip out the throats of global investors. I am far from convinced that the Dodd-Frank enactment did anything substantial to avert future catastrophic financial occurances. Hell, we aren't even close to making regulation based upon the law, let alone sufficiently staffing the enforcers or budgeting them for effectiveness. Pays to have friends in high places? Goldman, etal, define that principle. And, it isn't just the endless risk high volume proprietary trading that bothers me, but the fact that the derivatives market has grown exponentially without any regulation in the law to more that a qaudrillion of notional value, if not twice that size. Who cares about TBTF, when these absurd investment gambles represent a potential for near term financial holocaust!! Who can bail out the world, when everything fails?

Bruce E. Woych
February 11, 2013 at 2:39 am

10 Reasons The U.S. Is No Longer The Land Of The Free
by Jonathan Turley … the Shapiro professor of public interest law at George Washington University.
http://jonathanturley.org/2012/01/15/10-reasons-the-u-s-is-no-longer-the-land-of-the-free/
(585 Responses to "10 Reasons The U.S. Is No Longer The Land Of The Free")

Bruce E. Woych
February 11, 2013 at 3:39 pm

Cultures and Organizations, Software of the Mind: Intercultural Cooperation and its Importance for Survival

Geert Hofstede (Author)

From the Back Cover

The Classic Work on "Groupthink" -- now in paperback! Since its original hardcover publication, this trailblazing work has stirred a response so deep and wide that its subtitle has become part of our language. Now for the first time in paperback, Geert Hofstede's study of the "software of the mind" helps us look at how we think-also at how we fail to think as members of groups. Drawing on decades of rigorous research, the author reveals the unexamined rules by which we live and work together.

Melding unswerving intellectual courage and hard social, cultural, and organizational research, Hofstede shapes a sobering picture of a world perilously lacking in self-knowledge-unaware of serious difference between the groups that populate our planet and appallingly oblivious to the hidden "programs" that govern the behavior of cultures in a time of skyrocketing global contact.

But culture shock-whether the shocking contact is between an individual and a new country, between organizations, between the sexes, or between opposing diplomats-can be turned to our advantage, Hofstede says -- if we understand it. And understanding is what this work is all about.

This is a book that every thinking person will want to read. Broad in scope, profoundly original in thought and profoundly important, it offers vital knowledge and insight on issues that will shape the future of our individual and collective lives. and profoundly
See all Editorial Reviews

http://www.amazon.com/Cultures-Organizations-Software-Mind-Intercultural/dp/0070293074/ref=sr_1_2?s=books&ie=UTF8&qid=1360610736&sr=1-2&keywords=software+of+the+mind#reader_0070293074
Cultures and Organizations, Software of the Mind: Intercultural Cooperation and its Importance for Survival

robd
February 11, 2013 at 4:44 pm

How about this for a research project for a econ student:

When most people read "The damage when such a bank fails is generally proportional to its size." they think that this quote describes a linear relationship. (i.e. if a bank of 2X in assets fails and the impact on the economy is 2Y, then if a bank of 4X fails the impact will be 4Y.) I would think the relationship is more likely to be logarithmic. More like the richter scale for earthquakes.

Has someone actually tried to compile actual data on something like this? (versus economic models based on a bunch of assumptions which may or may not be valid)

Bruce E. Woych
February 12, 2013 at 9:45 pm

Simon Johnson :
The Wall Street Takeover and the Next Financial Meltdown

Bruce E. Woych
February 12, 2013 at 11:22 pm

The Coming Collapse of the Middle Class
Jan 31, 2008
Distinguished law scholar Elizabeth Warren

Bruce E. Woych
February 12, 2013 at 11:30 pm

(British spellings from original [sic])
"In 1943, in an analysis of Hitler's programme in the Quarterly Journal of Economics, the word 'privatisation' entered the academic literature for the first time. The author, Sidney Merlin, wrote that the Nazi Party 'facilitates the accumulation of private fortunes and industrial empires by its foremost members and collaborators through "privatisation" and other measures, thereby intensifying centralisation of economic affairs and government in an increasingly narrow group that may for all practical purposes be termed the national socialist elite'.The gung-ho free marketeers who rode to power with Thatcher in 1979 don't seem to have been aware of the Nazi prelude, although they would have known of later privatisations in Pinochet's Chile."
http://www.lrb.co.uk/v34/n17/james-meek/how-we-happened-to-sell-off-our-electricity
====================================================

Bruce E. Woych
February 13, 2013 at 12:20 am

Financialization and the World Economy

Bruce E. Woych
February 13, 2013 at 12:25 am

Quadrillion Dollar Derivatives Market 20 Times Global GDP

Bruce E. Woych
February 13, 2013 at 2:02 pm

http://www.prwatch.org/cmd
The Center for Media and Democracy is a non-profit investigative reporting group whose work aids public awareness about the people, companies, and groups attempting to shape the media and our democracy. Founded in 1993, our national reporting and analysis focus on exposing corporate spin. We accept no funding from for-profit corporations or the government. The Center for Media and Democracy's websites are PR Watch, SourceWatch, BanksterUSA, ALECexposed and Food Rights Network.

Bruce E. Woych
February 13, 2013 at 8:50 pm

The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead by David Callahan
http://www.amazon.com/Cheating-Culture-Americans-Doing-Wrong/dp/0156030055/ref=sr_1_1?s=books&ie=UTF8&qid=1360802286&sr=1-1&keywords=David+Callahan

Desi Girl: Deport Simon Johnson
February 16, 2013 at 1:13 pm

Too-Idiotic-to-Jail Professors like Simon and Anant will write anything for a quick buck and to sell books.

Will Simon and Anat disclose their earnings from MIT and Stanford when they are also spending time writing books, useless columns and TV talk shows?

Simon's second retort against the Hamilton Place Strategies paper is too ludicrous to be true. Isolating the funding advantage of a large firm to 'government subsidies'? Haha. I really wonder how MIT keeps subsidizing this man!.

IBM 5Y CDS is quoted at 34 bps. Intel 5Y CDS is quoted at 55 bps.

Does IBM have the implicit backing of the government? Ha Ha

Research funded by (stolen from) unknowing students at MIT and Stanford is not a prerequisite for accuracy.

Simon is too-connected-to-deport because of his friends in high places (i.e. elisabeth warren)

Bruce E. Woych
February 16, 2013 at 8:54 pm

Sorry there Old Desi Girl…you're off the reservation (and your meds…) and completely out of line with the new Republican consensus.
The Republican talking points are clear…we must keep our immigration population….. so Simon will not be deported as you demand (slightly aside…pssss…dope! He's a "citizen!).

"Hamilton Place Strategies, a Washington research group, argued in a recent paper that low-skilled immigrant workers in agriculture also boost the economy by increasing work for Americans in other sectors, such as transportation and marketing.

Republican Senator Marco Rubio, who was picked by his party to respond to Obama's speech late Tuesday, also emphasized the economic benefits of immigration reform."
"We can also help our economy grow if we have a legal immigration system that allows us to attract and assimilate the world's best and brightest," said Rubio, a son of Cuban immigrants who is working to forge a bipartisan immigration bill in the Senate."

Bruce E. Woych
February 16, 2013 at 9:18 pm

Banker Occupation: Waging Financial War on Humanity
Stephen Lendman (Author)

Banker Occupation: Waging Financial War on Humanity

Banker Occupation: Waging Financial War on Humanity

Bruce E. Woych
February 16, 2013 at 9:29 pm

Catherine Austin Fitts Interview:The Looting Of America (Part 4 of 4)

Bruce E. Woych
February 17, 2013 at 7:19 pm

"Too Big to Fail has become Too Big for Trial"
Senator Elizabeth Warren·3 videos
Published on Feb 15, 2013

http://warren.senate.gov
Senator Elizabeth Warren asks federal bank regulators why no banks were taken to trial in the aftermath of the financial crisis.

usapeis
February 19, 2013 at 11:45 am

At the risk of sounding political, Republicans will fall in line with whatever lobbyist/plutocrats decide. As far as a viable system, size is not the key issue. The key issue is reasonable and regulated risk, with regulated insurance and reinsurance on all risk taking. Hello from a Progressive voice – "USA: Politics, Economics and International Issues" is a blog for Progressive change. American citizens need to hear about the real problems and solutions that are important to the USA. Most of our problems are not complex, but powerful interests have disguised these problems, employed gridlock in Congress and muddied the waters with special interest media sources. Please check out this blog and follow our posts. Your comments and suggestions are always welcome. Thank you, USA: Politics, Economics and International Issues https://usapeis.wordpress.com

Bruce E. Woych
February 19, 2013 at 11:56 am

CIA Officer Explains New World Order's Demise

Tony Foresta
February 20, 2013 at 3:35 am

Anyone who worked for the den of viper and thieves and wanton warprofiteers in the fascist bushgov is suspect!!! How can they be trusted since every single policy, directive, word, and deed of the pathological liars and fascists in the bushgov was intent on deception, division, ruthless dominance, wanton profiteering, fascism, and savage advancement and shielding of the predatorclass and predatorclass oligarchs exclusively. These shaitans and their broods can NEVER be trusted or believed on any subject unless you are fascist, redneck, religios fanatic, wingnut, or predatorclass. Now I know all the sensitive erudite adults visiting this blog will dismiss my commentary as incendiary or insane other other such dispersions, – but I dare any of you to counter my positions on the merits. You have now, did not then, and never will have any grounds to stand on. The bushgov was a fascist regime that gutted poor workingclass Americans, raped, dismantled and redefined that thing we call the Constitution, shamed America and the ruleoflaw, and hurled the nation into the most severe, longest lasting economic crisis since the Great Depression. So any commentary, white paper, research, or criticism from anyon affiliated with the fascists chickenhawk warmongers and wanton profiteers in the bushgov must always and forevermore be dismissed, denied, ridiculed, and condemned. No one can reasonably challenge or refute these assertions, but I welcome the debate!!!

>[Oct 03, 2012] America's Financial Oligarchy Is Still in Control by W. Lorimer Wilson
April 6, 2009 | FSU Editorial

"The crash has laid bare many unpleasant truths about the United States . One of the most alarming is that the finance industry has effectively captured our government", says Simon Johnson, a chief economist with the International Monetary Fund in 2007 and 2008. In an article entitled "The Quiet Coup" in the May, 2009 issue of the Atlantic magazine he (with James Kwak) goes on to say that "if the IMF's staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform and if we are to prevent a true depression, we're running out of time".

America is in financial crisis but instead of the financial oligarchy being broken up to permit essential reform they are continuing to use their influence to prevent precisely the sorts of reforms that are needed immediately to pull the economy out of its nosedive. Unfortunately, our legislators seem unwilling to act against these powerful financiers opting instead to succumb to their power and influence and continue to give them what they deem to be in their best interest instead of that of the taxpayers'. All this is happening because of the false belief by all concerned that large financial institutions and free-flowing capital markets are crucial to America's position in the world and that whatever the banks say is true and what they want is necessary. The government's velvet-glove approach with the banks is deeply troubling, for one simple reason: it is inadequate to change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior must change. There is no better time to take such action than now but it is evident that reform is but a pipe dream. Americas financial oligarchy is still in control and, as such, the long-term consequences will be dire!

Johnson's article is so frank, so insightful and so alarming it deserves the widest readership possible during these traumatic times and, as such, I have taken the liberty to edit and paraphrase in places his intriguing interpretation of what ails Americas economic state and what needs to be done to alleviate the crisis.

The Powerful Elites have Over-reached

Johnson says that "typically countries in crisis are in a desperate economic situation for one simple reason-the powerful elites within them overreached in good times and took too many risks and that certainly is the case in America . Indeed, 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 alarmingly, they are now using their influence to prevent precisely the sorts of reforms that are needed immediately to pull the economy out of its nosedive. Unfortunately, the government seems helpless, or unwilling, to act against these powerful financiers.

Financial Industry has Gained Political Power

Of course, the U.S. is unique in that, just as we have the world's most advanced economy, military, and technology, we also have its most advanced oligarchy.

In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts.

Instead, the American financial industry gained political power by amassing a kind of cultural capital, a belief system … in which Washington insiders believe that large financial institutions and free-flowing capital markets are crucial to America's position in the world … and always and utterly convinced that whatever the banks said was true.

Of course, this was mostly an illusion. Regulators, legislators, and academics almost all assumed that the managers of these banks knew what they were doing. In retrospect, they didn't.

As more and more of the rich made their money in finance, the cult of finance seeped into the culture at large….In a society that celebrates the idea of making money, it was easy to infer that the interests of the financial sector were the same as the interests of the country-and that the winners in the financial sector knew better what was good for America than did the career civil servants in Washington. Faith in free financial markets grew into conventional wisdom-trumpeted on the editorial pages of The Wall Street Journal and on the floor of Congress.

From this confluence of campaign finance, personal connections, and ideology there flowed, in just the past decade, a river of deregulatory policies that is, in hindsight, astonishing.

The mood that accompanied these measures in Washington seemed to swing between nonchalance and outright celebration: finance unleashed, it was thought, would continue to propel the economy to greater heights.

America's Oligarchs and the Financial Crisis

America's oligarchy and the government policies that aided it did not alone cause the financial crisis that exploded last year. Many other factors contributed, including excessive borrowing by households and lax lending standards out on the fringes of the financial world. But major commercial and investment banks-and the hedge funds that ran alongside them-were the big beneficiaries of the twin housing and equity-market bubbles of this decade, their profits fed by an ever-increasing volume of transactions founded on a relatively small base of actual physical assets. Each time a loan was sold, packaged, securitized, and resold, banks took their transaction fees, and the hedge funds buying those securities reaped ever-larger fees as their holdings grew. (See the article I wrote entitled "Our Worst Nightmare: The Puncture of the U.S Housing Bubble" back in early 2006 for a detailed expose on just how such loans were handled.)

Because everyone was getting richer, and the health of the national economy depended so heavily on growth in real estate and finance, no one in Washington had any incentive to question what was going on.

In a financial panic, the government must respond with both speed and overwhelming force. The root problem is uncertainty-in our case, uncertainty about whether the major banks have sufficient assets to cover their liabilities. Half measures combined with wishful thinking and a wait-and-see attitude cannot overcome this uncertainty. And the longer the response takes, the longer the uncertainty will stymie the flow of credit, sap consumer confidence, and cripple the economy-ultimately making the problem much harder to solve. Yet the principal characteristics of the government's response to the financial crisis have been delay, lack of transparency, and an unwillingness to upset the financial sector.

The response so far is perhaps best described as "policy by deal" in that when a major financial institution gets into trouble, the Treasury Department and the Federal Reserve engineer a bailout over the weekend and announce on Monday that everything is fine.

Some of these deals may have been reasonable responses to the immediate situation but it was never clear (and still isn't) what combination of interests was being served, and how. Treasury and the Fed did not act according to any publicly articulated principles, but just worked out a transaction and claimed it was the best that could be done under the circumstances. This was late-night, backroom dealing, pure and simple.

Throughout the crisis, the government has taken extreme care not to upset the interests of the financial institutions, or to question the basic outlines of the system that got us here.

Even leaving aside fairness to taxpayers, the government's velvet-glove approach with the banks is deeply troubling, for one simple reason: it is inadequate to change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior must change. As an unnamed senior bank official said to The New York Times last fall, "It doesn't matter how much Hank Paulson gives us, no one is going to lend a nickel until the economy turns." But there's the rub: the economy can't recover until the banks are healthy and willing to lend.

The Way Out

Looking just at the financial crisis (and leaving aside some problems of the larger economy), we face at least two major, interrelated problems. The first is a desperately ill banking sector that threatens to choke off any incipient recovery that the fiscal stimulus might generate. The second is a political balance of power that gives the financial sector a veto over public policy, even as that sector loses popular support.

Big banks, it seems, have only gained political strength since the crisis began. And this is not surprising. With the financial system so fragile, the damage that a major bank failure could cause-Lehman was small relative to Citigroup or Bank of America-is much greater than it would be during ordinary times. The banks have been exploiting this fear as they wring favorable deals out of Washington.

The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary.

Nationalize the Banks

In some ways, of course, the government has already taken control of the banking system. It has essentially guaranteed the liabilities of the biggest banks, and it is their only plausible source of capital today. Meanwhile, the Federal Reserve has taken on a major role in providing credit to the economy-the function that the private banking sector is supposed to be performing, but isn't. Yet there are limits to what the Fed can do on its own; consumers and businesses are still dependent on banks that lack the balance sheets and the incentives to make the loans the economy needs, and the government has no real control over who runs the banks, or over what they do.

At the root of the banks' problems are the large losses they have undoubtedly taken on their securities and loan portfolios. But they don't want to recognize the full extent of their losses, because that would likely expose them as insolvent. So they talk down the problem, and ask for handouts that aren't enough to make them healthy (again, they can't reveal the size of the handouts that would be necessary for that), but are enough to keep them upright a little longer. This behavior is corrosive: unhealthy banks either don't lend (hoarding money to shore up reserves) or they make desperate gambles on high-risk loans and investments that could pay off big, but probably won't pay off at all. In either case, the economy suffers further, and as it does, bank assets themselves continue to deteriorate-creating a highly destructive vicious cycle.

To break this cycle, the government must force the banks to acknowledge the scale of their problems. As the IMF understands (and as the U.S. government itself has insisted to multiple emerging-market countries in the past), the most direct way to do this is nationalization. Instead, Treasury is trying to negotiate bailouts bank by bank, and behaving as if the banks hold all the cards-contorting the terms of each deal to minimize government ownership while forswearing government influence over bank strategy or operations. Under these conditions, cleaning up bank balance sheets is impossible.

Nationalization would not imply permanent state ownership. The IMF's advice would be, essentially: scale up the standard Federal Deposit Insurance Corporation process. An FDIC "intervention" is basically a government-managed bankruptcy procedure for banks. It would allow the government to wipe out bank shareholders, replace failed management, clean up the balance sheets, and then sell the banks back to the private sector. The main advantage is immediate recognition of the problem so that it can be solved before it grows worse.

The government needs to inspect the balance sheets and identify the banks that cannot survive a severe recession. These banks should face a choice: write down your assets to their true value and raise private capital within 30 days, or be taken over by the government. The government would write down the toxic assets of banks taken into receivership-recognizing reality-and transfer those assets to a separate government entity, which would attempt to salvage whatever value is possible for the taxpayer (as the Resolution Trust Corporation did after the savings-and-loan debacle of the 1980s). The rump banks-cleansed and able to lend safely, and hence trusted again by other lenders and investors-could then be sold off.

Cleaning up the megabanks will be complex. And it will be expensive for the taxpayer; according to the latest IMF numbers, the cleanup of the banking system would probably cost close to $1.5 trillion (or 10 percent of our GDP) in the long term. But only decisive government action-exposing the full extent of the financial rot and restoring some set of banks to publicly verifiable health-can cure the financial sector as a whole.

This may seem like strong medicine. But in fact, while necessary, it is insufficient. 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.

Limit Bank Size

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.

Overhaul Antitrust Legislation

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 100 years 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.

Cap Executive Compensation

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.

Increase Regulation and Taxation

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. Therefore, regulation and taxation should be part of the solution.

More Transparency and Competition

Over time 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 Plausible Scenarios

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. Moreover, 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:

a) the global economy continues to deteriorate,

b) 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,

c) creditors take further hits and confidence falls further,

d) Asian economies that export manufactured goods are devastated, and the commodity producers in Latin America and Africa are not much better off,

e) 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,

f) under this kind of pressure, and faced with the prospect of a national and global collapse, minds 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."

The Financial Oligarchy's Control Continues

Please Note: Such wishful thinking is not about to happen any time soon as evidenced by a change just this past Thursday on April 2nd, 2009 to three accounting rules by the Financial Accounting Standards Board (FASB) that now gives banks more discretion in reporting the value of mortgage securities. The new rules, referred to as mark-to-market, will enable all financial institutions with such securities to report higher profits by assuming that the securities are worth more than anyone now is prepared to pay for them.

FASB, at first, resisted making the changes because they would enable financial institutions to avoid recognizing losses from bad loans that they had made but they buckled under heavy political pressure brought to bear, on behalf of the financial oligarchy, by legislators from both parties.

As a result of having their way the financial institutions affected are now free to apply the new rules to their financial statements for the quarter that ended on March 31st. How convenient! Edward Yingling, president of the oligarchy's lobby group, the American Bankers Association, was naturally very pleased with their successful efforts and praised the FASB quickly putting a spin on the changes saying that 'Today's decision should improve information for investors by providing more accurate estimates of market values.'

Not everyone was so elated, however. Two of the rule changes passed unanimously including one that will permit financial institutions to write down assets to market value only if they conclude that the decline is 'other than temporary.' The one that will allow banks to keep part of such declines off their income statements but still show said declines on the institutions' balance sheets, however, had one of the FASB dissenters in the vote, Thomas J. Linsmeier, arguing that accounting rules already on the books allowed 'the fiction that all banks are well capitalized', adding that such changes 'would make them seem better capitalized' than they actually were. Linsmeier was not alone. The vote drew condemnation from an organization called the Investors Working Group, and the two former S.E.C. chairmen who lead it – William H. Donaldson and Arthur Levitt Jr. but even they were no match for the power and influence of the financial oligarchy.

The country is in financial crisis and instead of the financial oligarchy being broken up to permit essential reform they are continuing to use their influence to prevent precisely the sorts of reforms that are needed immediately to pull the economy out of its nosedive. Unfortunately, our legislators seem unwilling to act against these powerful financiers opting instead to succumb to their power and influence and continue to give them what they deem to be in their best interest instead of that of the taxpayers'. All this is happening because of the false belief that large financial institutions and free-flowing capital markets are crucial to America's position in the world … and always and utterly convinced that whatever the banks say is true and what they want is necessary. The government's velvet-glove approach with the banks is deeply troubling, for one simple reason: it is inadequate to change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior must change. There is no better time to take such action than now but it is evident that reform is but a pipe dream. America's financial oligarchy is still in control and, as such, the long-term consequences will be dire!

Simon Johnson is a former chief economist with the International Monetary Fund and is currently a professor at the MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. He, along with James Kwak, a former McKinsey consultant, is a co-founder of The Baseline Scenario (www.baselinescenario.com) which is a blog dedicated to explaining what happened in the global economy and what we can do about it.

Lorimer Wilson is an economic/market analyst and commentator who has written numerous articles on the major economic and financial crises (past, present and impending) of our times, investing in times of crisis, commodities, market timing and other investment philosophies. He is a Contributing Editor to www.preciousmetalswarrants.com and can be contacted at lorimer [dot] wilson [at] live [dot] com.

[Sep 02, 2012] Jesse's Café Américain Robert Johnson Audacious Oligarchy - Unmasking Wall Street and the Decline of Confidence

Sep 02, 2012 | jessescrossroadscafe.blogspot.com

Robert Johnson on Oligarchy at Culture Project's IMPART 2012 Festival

Replacing Economic Democracy with Financial Oligarchy By Michael Hudson

June 03, 2011 | Information Clearing House
Soon after the Socialist Party won Greece's national elections in autumn 2009, it became apparent that the government's finances were in a shambles. In May 2010, French President Nicolas Sarkozy took the lead in rounding up €120bn ($180 billion) from European governments to subsidize Greece's unprogressive tax system that had led its government into debt – which Wall Street banks had helped conceal with Enron-style accounting.

The tax system operated as a siphon collecting revenue to pay the German and French banks that were buying government bonds (at rising interest risk premiums). The bankers are now moving to make this role formal, an official condition for rolling over Greek bonds as they come due, and extend maturities on the short-term financial string that Greece is now operating under. Existing bondholders are to reap a windfall if this plan succeeds. Moody's lowered Greece's credit rating to junk status on June 1 (to Caa1, down from B1, which was already pretty low), estimating a 50/50 likelihood of default. The downgrade serves to tighten the screws yet further on the Greek government. Regardless of what European officials do, Moody's noted, "The increased likelihood that Greece's supporters (the IMF, ECB and the EU Commission, together known as the "Troika") will, at some point in the future, require the participation of private creditors in a debt restructuring as a precondition for funding support."1

The conditionality for the new "reformed" loan package is that Greece must initiate a class war by raising its taxes, lowering its social spending – and even private-sector pensions – and sell off public land, tourist sites, islands, ports, water and sewer facilities. This will raise the cost of living and doing business, eroding the nation's already limited export competitiveness. The bankers sanctimoniously depict this as a "rescue" of Greek finances.

What really were rescued a year ago, in May 2010, were the French banks that held €31 billion of Greek bonds, German banks with €23 billion, and other foreign investors. The problem was how to get the Greeks to go along. Newly elected Prime Minister George Papandreou's Socialists seemed able to deliver their constituency along similar lines to what neoliberal Social Democrat and Labor parties throughout Europe had followed –privatizing basic infrastructure and pledging future revenue to pay the bankers.

The opportunity never had been better for pulling the financial string to grab property and tighten the fiscal screws. Bankers for their part were eager to make loans to finance buyouts of public gambling, telephones, ports and transport or similar monopoly opportunities. And for Greece's own wealthier classes, the EU loan package would enable the country to remain within the Eurozone long enough to permit them to move their money out of the country before the point arrived at which Greece would be forced to replace the euro with the drachma and devalue it. Until such a switch to a sinking currency occurred, Greece was to follow Baltic and Irish policy of "internal devaluation," that is, wage deflation and government spending cutbacks (except for payments to the financial sector) to lower employment and hence wage levels.

What actually is devalued in austerity programs or currency depreciation is the price of labor. That is the main domestic cost, inasmuch as there is a common world price for fuels and minerals, consumer goods, food and even credit. If wages cannot be reduced by "internal devaluation" (unemployment starting with the public sector, leading to falling wages), currency depreciation will do the trick in the end. This is how the Europe's war of creditors against debtor countries turns into a class war. But to impose such neoliberal reform, foreign pressure is necessary to bypass domestic, democratically elected Parliaments. Not every country's voters can be expected to be as passive in acting against their own interests as those of Latvia and Ireland.

Most of the Greek population recognizes just what has been happening as this scenario has unfolded over the past year. "Papandreou himself has admitted we had no say in the economic measures thrust upon us," said Manolis Glezos on the left. "They were decided by the EU and IMF. We are now under foreign supervision and that raises questions about our economic, military and political independence."2 On the right wing of the political spectrum, conservative leader Antonis Samaras said on May 27 as negotiations with the European troika escalated: "We don't agree with a policy that kills the economy and destroys society. … There is only one way out for Greece, the renegotiation of the [EU/IMF] bailout deal."3

But the EU creditors upped the ante: To refuse the deal, they threatened, would result in a withdrawal of funds causing a bank collapse and economic anarchy.

The Greeks refused to surrender quietly. Strikes spread from the public-sector unions to become a nationwide "I won't pay" movement as Greeks refused to pay road tolls or other public access charges. Police and other collectors did not try to enforce collections. The emerging populist consensus prompted Luxembourg's Prime Minister Jean-Claude Juncker to make a similar threat to that which Britain's Gordon Brown had made to Iceland: If Greece would not knuckle under to European finance ministers, they would block IMF release of its scheduled June tranche of its loan package. This would block the government from paying foreign bankers and the vulture funds that have been buying up Greek debt at a deepening discount.

To many Greeks, this is a threat by finance ministers to shoot themselves in the foot. If there is no money to pay, foreign bondholders will suffer – as long as Greece puts its own economy first. But that is a big "if." Socialist Prime Minister Papandreou emulated Iceland's Social Democratic Sigurdardottir in urging a "consensus" to obey EU finance ministers. "Opposition parties reject his latest austerity package on the grounds that the belt-tightening agreed in return for a €110bn ($155bn) bail-out is choking the life out of the economy." (Ibid.)

At issue is whether Greece, Ireland, Spain, Portugal and the rest of Europe will roll back democratic reform and move toward financial oligarchy. The financial objective is to bypass parliament by demanding a "consensus" to put foreign creditors first, above the economy at large. Parliaments are being asked to relinquish their policy-making power. The very definition of a "free market" has now become centralized planning – in the hands of central bankers. This is the new road to serfdom that financialized "free markets" are leading to: markets free for privatizers to charge monopoly prices for basic services "free" of price regulation and anti-trust regulation, "free" of limits on credit to protect debtors, and above all free of interference from elected parliaments. Prying natural monopolies in transportation, communications, lotteries and the land itself away from the public domain is called the alternative to serfdom, not the road to debt peonage and a financialized neofeudalism that looms as the new future reality. Such is the upside-down economic philosophy of our age.

Concentration of financial power in non-democratic hands is inherent in the way that Europe centralized planning in financial hands was achieved in the first place. The European Central Bank has no elected government behind it that can levy taxes. The EU constitution prevents the ECB from bailing out governments. Indeed, the IMF Articles of Agreement also block it from giving domestic fiscal support for budget deficits. "A member state may obtain IMF credits only on the condition that it has 'a need to make the purchase because of its balance of payments or its reserve position or developments in its reserves.' Greece, Ireland, and Portugal are certainly not short of foreign exchange reserves … The IMF is lending because of budgetary problems, and that is not what it is supposed to do. The Deutsche Bundesbank made this point very clear in its monthly report of March 2010: 'Any financial contribution by the IMF to solve problems that do not imply a need for foreign currency – such as the direct financing of budget deficits – would be incompatible with its monetary mandate.' IMF head Dominique Strauss-Kahn and chief economist Olivier Blanchard are leading the IMF into forbidden territory, and there is no court which can stop them."4

The moral is that when it comes to bailing out bankers, rules are ignored – in order to serve the "higher justice" of saving banks and their high-finance counterparties from taking a loss. This is quite a contrast compared to IMF policy toward labor and "taxpayers." The class war is back in business – with a vengeance, and bankers are the winners this time around.

The European Economic Community that preceded the European Union was created by a generation of leaders whose prime objective was to end the internecine warfare that tore Europe apart for a thousand years. The aim by many was to end the phenomenon of nation states themselves – on the premise that it is nations that go to war. The general expectation was that economic democracy would oppose the royalist and aristocratic mind-sets that sought glory in conquest. Domestically, economic reform was to purify European economies from the legacy of past feudal conquests of the land, of the public commons in general. The aim was to benefit the population at large. That was the reform program of classical political economy.

European integration started with trade as the path of least resistance – the Coal and Steel Community promoted by Robert Schuman in 1952, followed by the European Economic Community (EEC, the Common Market) in 1957. Customs union integration and the Common Agricultural Policy (CAP) were topped by financial integration. But without a real continental Parliament to write laws, set tax rates, protect labor's working conditions and consumers, and control offshore banking centers, centralized planning passes by default into the hands of bankers and financial institutions. This is the effect of replacing nation states with planning by bankers. It is how democratic politics gets replaced with financial oligarchy.

Finance is a form of warfare. Like military conquest, its aim is to gain control of land, public infrastructure, and to impose tribute. This involves dictating laws to its subjects, and concentrating social as well as economic planning in centralized hands. This is what now is being done by financial means, without the cost to the aggressor of fielding an army. But the economies under attacked may be devastated as deeply by financial stringency as by military attack when it comes to demographic shrinkage, shortened life spans, emigration and capital flight.

This attack is being mounted not by nation states as such, but by a cosmopolitan financial class. Finance always has been cosmopolitan more than nationalistic – and always has sought to impose its priorities and lawmaking power over those of parliamentary democracies.

Like any monopoly or vested interest, the financial strategy seeks to block government power to regulate or tax it. From the financial vantage point, the ideal function of government is to enhance and protect finance capital and "the miracle of compound interest" that keeps fortunes multiplying exponentially, faster than the economy can grow, until they eat into the economic substance and do to the economy what predatory creditors and rentiers did to the Roman Empire.

This financial dynamic is what threatens to break up Europe today. But the financial class has gained sufficient power to turn the ideological tables and insist that what threatens European unity is national populations acting to resist the cosmopolitan claims of finance capital to impose austerity on labor. Debts that already have become unpayable are to be taken onto the public balance sheet – without a military struggle, needless to say. At least such bloodshed is now in the past. From the vantage point of the Irish and Greek populations (perhaps soon to be joined by those of Portugal and Spain), national parliamentary governments are to be mobilized to impose the terms of national surrender to financial planners. One almost can say that the ideal is to reduce parliaments to local puppet regimes serving the cosmopolitan financial class by using debt leverage to carve up what is left of the public domain that used to be called "the commons." As such, we now are entering a post-medieval world of enclosures – an Enclosure Movement driven by financial law that overrides public and common law, against the common good.

Within Europe, financial power is concentrated in Germany, France and the Netherlands. It is their banks that held most of the bonds of the Greek government now being called on to impose austerity, and of the Irish banks that already have been bailed out by Irish taxpayers.

On Thursday, June 2, 2011, ECB President Jean-Claude Trichet spelled out the blueprint for how to establish financial oligarchy over all Europe. Appropriately, he announced his plan upon receiving the Charlemagne prize at Aachen, Germany – symbolically expressing how Europe was to be unified not on the grounds of economic peace as dreamed of by the architects of the Common Market in the 1950s, but on diametrically opposite oligarchic grounds.

At the outset of his speech5 on "Building Europe, building institutions," Mr. Trichet appropriately credited the European Council led by Mr. Van Rompuy for giving direction and momentum from the highest level, and the Eurogroup of finance ministers led by Mr. Juncker. Together, they formed what the popular press calls Europe's creditor "troika." Mr. Trichet's speech refers to "the 'trialogue' between the Parliament, the Commission and the Council."

Europe's task, he explained, was to follow Erasmus in bringing Europe beyond its traditional "strict concept of nationhood." The debt problem called for new "monetary policy measures – we call them 'non standard' decisions, strictly separated from the 'standard' decisions, and aimed at restoring a better transmission of our monetary policy in these abnormal market conditions." The problem at hand is to make these conditions a new normalcy – that of paying debts, and re-defining solvency to reflect a nation's ability to pay by selling off its public domain.

"Countries that have not lived up to the letter or the spirit of the rules have experienced difficulties," Mr. Trichet noted. "Via contagion, these difficulties have affected other countries in EMU. Strengthening the rules to prevent unsound policies is therefore an urgent priority." His use of the term "contagion" depicted democratic government and protection of debtors as a disease. Reminiscent of the Greek colonels' speech that opened the famous 1969 film "Z": to combat leftism as if it were an agricultural pest to be exterminated by proper ideological pesticide. Mr. Trichet adopted the colonels' rhetoric. The task of the Greek Socialists evidently is to do what the colonels and their conservative successors could not do: deliver labor to irreversible economic reforms.

Arrangements are currently in place, involving financial assistance under strict conditions, fully in line with the IMF policy. I am aware that some observers have concerns about where this leads. The line between regional solidarity and individual responsibility could become blurred if the conditionality is not rigorously complied with.

In my view, it could be appropriate to foresee for the medium term two stages for countries in difficulty. This would naturally demand a change of the Treaty.

As a first stage, it is justified to provide financial assistance in the context of a strong adjustment programme. It is appropriate to give countries an opportunity to put the situation right themselves and to restore stability.

At the same time, such assistance is in the interests of the euro area as a whole, as it prevents crises spreading in a way that could cause harm to other countries.

It is of paramount importance that adjustment occurs; that countries – governments and opposition – unite behind the effort; and that contributing countries survey with great care the implementation of the programme.

But if a country is still not delivering, I think all would agree that the second stage has to be different. Would it go too far if we envisaged, at this second stage, giving euro area authorities a much deeper and authoritative say in the formation of the country's economic policies if these go harmfully astray? A direct influence, well over and above the reinforced surveillance that is presently envisaged? … (my emphasis)

The ECB President then gave the key political premise of his reform program (if it is not a travesty to use the term "reform" for today's counter-Enlightenment):

We can see before our eyes that membership of the EU, and even more so of EMU, introduces a new understanding in the way sovereignty is exerted. Interdependence means that countries de facto do not have complete internal authority. They can experience crises caused entirely by the unsound economic policies of others.

With a new concept of a second stage, we would change drastically the present governance based upon the dialectics of surveillance, recommendations and sanctions. In the present concept, all the decisions remain in the hands of the country concerned, even if the recommendations are not applied, and even if this attitude triggers major difficulties for other member countries. In the new concept, it would be not only possible, but in some cases compulsory, in a second stage for the European authorities – namely the Council on the basis of a proposal by the Commission, in liaison with the ECB – to take themselves decisions applicable in the economy concerned.

One way this could be imagined is for European authorities to have the right to veto some national economic policy decisions. The remit could include in particular major fiscal spending items and elements essential for the country's competitiveness. …

By "unsound economic policies," Mr. Trichet means not paying debts – by writing them down to the ability to pay without forfeiting land and monopolies in the public domain, and refusing to replace political and economic democracy with control by bankers. Twisting the knife into the long history of European idealism, he deceptively depicted his proposed financial coup d'état as if it were in the spirit of Jean Monnet, Robert Schuman and other liberals who promoted European integration in hope of creating a more peaceful world – one that would be more prosperous and productive, not one based on financial asset stripping.

Jean Monnet in his memoirs 35 years ago wrote: "Nobody can say today what will be the institutional framework of Europe tomorrow because the future changes, which will be fostered by today's changes, are unpredictable."

In this Union of tomorrow, or of the day after tomorrow, would it be too bold, in the economic field, with a single market, a single currency and a single central bank, to envisage a ministry of finance of the Union? Not necessarily a ministry of finance that administers a large federal budget. But a ministry of finance that would exert direct responsibilities in at least three domains: first, the surveillance of both fiscal policies and competitiveness policies, as well as the direct responsibilities mentioned earlier as regards countries in a "second stage" inside the euro area; second, all the typical responsibilities of the executive branches as regards the union's integrated financial sector, so as to accompany the full integration of financial services; and third, the representation of the union confederation in international financial institutions.

Husserl concluded his lecture in a visionary way: "Europe's existential crisis can end in only one of two ways: in its demise (…) lapsing into a hatred of the spirit and into barbarism ; or in its rebirth from the spirit of philosophy, through a heroism of reason (…)".

As my friend Marshall Auerback quipped in response to this speech, its message is familiar enough as a description of what is happening in the United States: "This is the Republican answer in Michigan. Take over the cities in crisis run by disfavored minorities, remove their democratically elected governments from power, and use extraordinary powers to mandate austerity." In other words, no room for any agency like that advocated by Elizabeth Warren is to exist in the EU. That is not the kind of idealistic integration toward which Mr. Trichet and the ECB aim. He is leading toward what the closing credits of the film "Z" put on the screen: The things banned by the junta include: "peace movements, strikes, labor unions, long hair on men, The Beatles, other modern and popular music ('la musique populaire'), Sophocles, Leo Tolstoy, Aeschylus, writing that Socrates was homosexual, Eugène Ionesco, Jean-Paul Sartre, Anton Chekhov, Harold Pinter, Edward Albee, Mark Twain, Samuel Beckett, the bar association, sociology, international encyclopedias, free press, and new math. Also banned is the letter Z, which was used as a symbolic reminder that Grigoris Lambrakis and by extension the spirit of resistance lives (zi = 'he (Lambrakis) lives')."6

As the Wall Street Journal accurately summarized the political thrust of Mr. Trichet's speech, "if a bailed-out country isn't delivering on its fiscal-adjustment program, then a 'second stage' could be required, which could possibly involve 'giving euro-area authorities a much deeper and authoritative say in the formation of the county's economic policies …'"7 Eurozone authorities – specifically, their financial institutions, not democratic institutions aimed at protecting labor and consumers, raising living standards and so forth – "could have 'the right to veto some national economic-policy decisions' under such a regime. In particular, a veto could apply for 'major fiscal spending items and elements essential for the country's competitiveness.'

Paraphrasing Mr. Trichet's lugubrious query, "In this union of tomorrow ... would it be too bold in the economic field ... to envisage a ministry of finance for the union?" the article noted that "Such a ministry wouldn't necessarily have a large federal budget but would be involved in surveillance and issuing vetoes, and would represent the currency bloc at international financial institutions."

My own memory is that socialist idealism after World War II was world-weary in seeing nation states as the instruments for military warfare. This pacifist ideology came to overshadow the original socialist ideology of the late 19th century, which sought to reform governments to take law-making power, taxing power and property itself out of the hands of the classes who had possessed it ever since the Viking invasions of Europe had established feudal privilege, absentee landownership and financial control of trading monopolies and, increasingly, the banking privilege of money creation.

But somehow, as my UMKC colleague, Prof. Bill Black commented recently in the UMKC economics blog: "One of the great paradoxes is that the periphery's generally left-wing governments adopted so enthusiastically the ECB's ultra-right wing economic nostrums – austerity is an appropriate response to a great recession. ... Why left-wing parties embrace the advice of the ultra-right wing economists whose anti-regulatory dogmas helped cause the crisis is one of the great mysteries of life. Their policies are self-destructive to the economy and suicidal politically."8

Greece and Ireland have become the litmus test for whether economies will be sacrificed in attempts to pay debts that cannot be paid. An interregnum is threatened during which the road to default and permanent austerity will carve out more and more land and public enterprises from the public domain, divert more and more consumer income to pay debt service and taxes for governments to pay bondholders, and more business income to pay the bankers.

If this is not war, what is?

Dr. Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of Super-Imperialism: The Economic Strategy of American Empire (1968 and 2003) and of The Myth of Aid (1971).

[Apr 21, 2010 ] The Financial Oligarchy in the US


April 21, 2010 | Jesse's Café Américain

If you do nothing else this week, read the transcript or watch this video.

I have a serious difference of opinion with the speakers with regard to Robert Rubin and his role, but they make up for it with their description of Jamie Dimon as close to the White House and one of the most dangerous men in America today.

And I thought it was interesting that Simon Johnson would say openly that the ONLY Senator who is speaking the truth plainly is Ted Kaufman from Delaware.

Other than that they are substantially putting out a very sound and realistic view of the root of the problems that created the financial crisis, and what requires to be done to rebalance the system and create a sustainable recovery.

BILL MOYERS: And you say that these this oligarchy consists of six megabanks. What are the six banks?

JAMES KWAK: They are Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo.

BILL MOYERS: And you write that they control 60 percent of our gross national product?

JAMES KWAK: They have assets equivalent to 60 percent of our gross national product. And to put this in perspective, in the mid-1990s, these six banks or their predecessors, since there have been a lot of mergers, had less than 20 percent. Their assets were less than 20 percent of the gross national product.

BILL MOYERS: And what's the threat from an oligarchy of this size and scale?

SIMON JOHNSON: They can distort the system, Bill. They can change the rules of the game to favor themselves. And unfortunately, the way it works in modern finance is when the rules favor you, you go out and you take a lot of risk. And you blow up from time to time, because it's not your problem. When it blows up, it's the taxpayer and it's the government that has to sort it out.

BILL MOYERS: So, you're not kidding when you say it's an oligarchy?

JAMES KWAK: Exactly. I think that in particular, we can see how the oligarchy has actually become more powerful in the last since the financial crisis. If we look at the way they've behaved in Washington. For example, they've been spending more than $1 million per day lobbying Congress and fighting financial reform. I think that's for some time, the financial sector got its way in Washington through the power of ideology, through the power of persuasion. And in the last year and a half, we've seen the gloves come off. They are fighting as hard as they can to stop reform.

The Financial Oligarcy in the US - Bill Moyer's Journal

Fighting America's 'Financial Oligarchy'

April 16, 2009 | NPR

Former International Monetary Fund chief economist Simon Johnson has advised many countries in financial crisis. When it comes to America's current economic woes, Johnson says that U.S. suffers from "financial oligarchies" - government officials and elite members of the financial sector that run the country like a profit-seeking company.

In his article "The Quiet Coup" in the May issue of The Atlantic Monthly, Johnson explains that the close connections between government officials and financial leaders are a major part of the U.S.'s economic problems:

"We face at least two major, interrelated problems," Johnson writes. "The first is a desperately ill banking sector that threatens to choke off any incipient recovery that the fiscal stimulus might generate. The second is a political balance of power that gives the financial sector a veto over public policy, even as that sector loses popular support."

Johnson insists the U.S. must temporarily nationalize banks so the government can "wipe out bank shareholders, replace failed management, clean up the balance sheets, and then sell the banks back to the private sector." But, Johnson adds, the U.S. government is unlikely to take these steps while the financial oligarchy is still in place.

Unless the U.S. breaks up its financial oligarchy, Johnson warns that America could face a crisis that "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."

Johnson was the chief economist at the International Monetary Fund during 2007 and 2008. He is a professor at MIT's Sloan School of Management.

Gary Lo (KCtucker) wrote:

Is it no wonder we are now hearing of banks such as Wells Fargo and Capital One posting profits now?

These banks are taking the governments "free" bail out money (our tax dollars) like spoiled kids grabbing Halloween candy. They are filling their vaults with our money and NOT using it to give out loans and modifcations. I have been currently waiting 8 MONTHS plus for Wells Fargo to give me a mortgage modification. Last week they announced a 3 BILLION dollar profits. Surprise, surprise! They are all crooked! a temporary nationalizing of the banks sounds good to me. At least when the government screws you over you now it's because of incomptence, not greed.

R H (littlehunt) :

Another big mistake is believing the FED is the government. The FED is a private bank. It's not the Treasury and is not the government. The FED is part of the oligarchy. It doesn't answer to the public in anyway. There is no accountability to America. It serves it's own interests.

R H (littlehunt) wrote:

Oligarchy is the perfect word to use for America. We aren't truly democratic or capitalist. Oligarchy properly describes our economics and politics and the way in which our country has truly come to function. 9 out of 10 of those who control everything in America (and the world for that matter) aren't elected by anyone and are usually never known to the average person. Scary. Very scary.

How Financial Oligarchy Replaces Democracy | Michael Hudson

Jun 6, 2011

When Greece exchanged its drachma for the euro in 2000, most voters were all for joining the Eurozone. Their hope was that it would ensure stability, and that this would promote rising wages and living standards. Few saw that the stumbling point was tax policy. Greece was excluded from the eurozone the previous year as a result of failing to meet the 1992 Maastricht criteria for EU membership, limiting budget deficits to 3 percent of GDP, and government debt to 60 percent.

The euro also had other serious fiscal and monetary problems at the outset. There is little thought of wealthier EU economies helping bring less productive ones up to par, e.g. as the United States does with its depressed areas (as in the rescue of the auto industry in 2010) or when the federal government does declares a state of emergency for floods, tornados or other disruptions.

As with the United States and indeed nearly all countries, EU "aid" is largely self-serving – a combination of export promotion and bailouts for debtor economies to pay banks in Europe's main creditor nations: Germany, France and the Netherlands. The EU charter banned the European Central Bank (ECB) from financing government deficits, and prevents (indeed, "saves") members from having to pay for the "fiscal irresponsibility" of countries running budget deficits. This "hard" tax policy was the price that lower-income countries had to sign onto when they joined the European Union.

Also unlike the United States (or almost any nation), Europe's parliament was merely ceremonial. It had no power to set and administer EU-wide taxes. Politically, the continent remains a loose federation. Every member is expected to pay its own way. The central bank does not monetize deficits, and there is minimal federal sharing with member states. Public spending deficits – even for capital investment in infrastructure – must be financed by running into debt, at rising interest rates as countries running deficits become more risky.

This means that spending on transportation, power and other basic infrastructure that was publicly financed in North America and the leading European economies must be privatized. Prices for these services must be set high enough to cover interest and other financing charges, high salaries and bonuses, and be run for profit – indeed, for rent extraction as public regulatory authority is disabled.

This makes countries going this route less competitive. It also means they will run into debt to Germany, France and the Netherlands, causing the financial strains that now are leading to showdowns with democratically elected governments. At issue is whether Europe should succumb to centralized planning – on the right wing of the political spectrum, under the banner of "free markets" defined as economies free from public price regulation and oversight, free from consumer protection, and free from taxes on the rich.

The crisis for Greece – as for Iceland, Ireland and debt-plagued economies capped by the United States – is occurring as bank lobbyists demand that "taxpayers" pay for the bailouts of bad speculations and government debts stemming largely from tax cuts for the rich and for real estate, shifting the fiscal burden as well as the debt burden onto labor and industry. The financial sector's growing power to achieve this tax favoritism is crippling economies, driving them further into reliance on yet more debt financing to remain solvent. Aid is conditional upon recipient countries reducing their wage levels ("internal devaluation") and selling off public enterprises.

The tunnel vision that guides these policies is self-reinforcing. Europe, America and Japan draw their economic managers from the ranks of professionals sliding back and forth between the banks and finance ministries – what the Japanese call "descent from heaven" to the private sector where worldly rewards are greatest. It is not merely delayed payment for past service. Their government experience and contacts helps them influence the remaining public bureaucracy and lobby their equally opportunistic replacements to promote pro-financial fiscal and monetary policies – that is, to handcuff government and deter regulation and taxation of the financial sector and its real estate and monopoly clients, and to use the government's taxing and money-creating power to provide bailouts when the inevitable financial collapse occurs as the economy shrinks below break-even levels into negative equity territory.

Regressive tax policies – shifting taxes off the rich and off property onto labor – cause budget deficits financed by public debt. When bondholders pull the plug, the resulting debt pressure forces governments to pay off debts by selling land and other public assets to private buyers (unless governments repudiate the debt or recover by restoring progressive taxation). Most such sales are done on credit. This benefits the banks by creating a loan market for the buyouts. Meanwhile, interest absorbs the earnings, depriving the government of tax revenue it formerly could have received as user fees.

The tax gift to financiers is based on the bad policy of treating debt financing as a necessary cost of doing business, not as a policy choice – one that indeed is induced by the tax distortion of making interest payments tax-deductible.

Buyers borrow credit to appropriate "the commons" in the same way they bid for commercial real estate. The winner is whoever raises the largest buyout loan – by pledging the most revenue to pay the bank as interest. So the financial sector ends up with the revenue hitherto paid to governments as taxes or user fees. This is euphemized as a free market.

Promoting the financial sector at the economy's expense

The resulting debt leveraging is not a solvable problem. It is a quandary from which economies can escape only by focusing on production and consumption rather than merely subsidizing the financial system to enable players to make money from money by inflating asset prices on free electronic keyboard credit. Austerity causes unemployment, which lowers wages and prevents labor from sharing in the surplus. It enables companies to force their employees to work overtime and harder in order to get or keep a job, but does not really raise productivity and living standards in the way envisioned a century ago. Increasing housing prices on credit – requiring larger debts for access to home ownership – is not real prosperity.

To contrast the "real" economy from the financial sector requires distinctions to be drawn between productive and unproductive credit and investment. One needs the concept of economic rent as an institutional and political return to privilege without a corresponding cost of production. Classical political economy was all about distinguishing earned from unearned income, cost-value from market price. But pro-financial lobbyists deny that any income or rentier wealth is unearned or parasitic. The national income and product accounts (NIPA) do not draw any such distinction. This blind spot is not accidental. It is the essence of post-classical economics. And it explains why Europe is so crippled.

The way in which the euro was created in 1999 reflects this shallow vision. The Maastricht fiscal and financial rules maximize the commercial loan market by preventing central banks from supplying governments (and hence, the economy) with credit to grow. Commercial banks are to be the sole source of financing budget deficits – defined to include infrastructure investment in transportation, communication, power and water. Privatization of these basic services blocks governments from supplying them at subsidized rates or freely. So roads are turned into toll roads, charging access fees that are readily monopolized. Economies are turned into sets of tollbooths, paying out their access charges as interest to creditors. These extractive rents make privatized economies high-cost. But to the financial sector that is "wealth creation." It is enhanced by untaxing interest payments to banks and bondholders – aggravating fiscal deficits in the process.

The Greek budget crisis in perspective

A fiscal legacy of the colonels' 1967-74 junta was tax evasion by the well to do. The "business-friendly" parties that followed were reluctant to tax the wealthy. A 2010 report stated that nearly a third of Greek income was undeclared, with "fewer than 15,000 Greeks declar[ing] incomes of over €100,000, despite tens of thousands living in opulent wealth on the outskirts of the capital. A new drive by the Socialists to track down swimming pool owners by deploying Google Earth was met with a virulent response as Greeks invested in fake grass, camouflage and asphalt to hide the tax liabilities from the spies in space." (Helena Smith, "The Greek spirit of resistance turns its guns on the IMF," The Observer)

As a result of the military dictatorship depressing public spending below the European norm, infrastructure needed to be rebuilt – and this required budget deficits. The only way to avoid running them would have been to make the rich pay the taxes they were supposed to. But squeezing public spending to the level that wealthy Greeks were willing to pay in taxes did not seem politically feasible. (Since the 1980s almost no country has enacted Progressive Era tax policies.) The 3 per cent Maastricht limit on budget deficits refused to count capital spending by government as capital formation, on the ideological assumption that all government spending is deadweight waste and only private investment is productive.

The path of least resistance was to engage in fiscal deception. Wall Street bankers helped the "conservative" (that is, fiscally regressive and financially profligate) parties conceal the extent of the public debt with the kind of junk accounting that financial engineers had pioneered for Enron. And as usual when financial deception in search of fees and profits is concerned, Goldman Sachs was in the middle. In February 2010, the German magazine Der Spiegel exposed how the firm had helped Greece conceal the rise in public debt, by mortgaging assets in a convoluted derivatives deal – legal but with the covert intent of circumventing the Maastricht limitation on deficits. "Eurostat's reporting rules don't comprehensively record transactions involving financial derivatives," so Greece's obligation appeared as a cross-currency swap rather than as a debt. The government used off-balance-sheet entities and derivatives similar to what Icelandic and Irish banks later would use to indulge in fictitious debt disappearance and an illusion of financial solvency.

Continued

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[Jul 25, 2017] Oligarchs Succeed! Only the People Suffer! by James Petras

[Jul 25, 2017] The Coup against Trump and His Military – Wall Street Defense by James Petras

[Dec 31, 2017] Anti-Populism Ideology of the Ruling Class by James Petras

[Jun 30, 2017] Elections Absenteeism, Boycotts and the Class Struggle by James Petras

[Jun 24, 2017] The Criminal Laws of Counterinsurgency by Todd E. Pierce

[May 23, 2017] CIA, the cornerstone of the deep state has agenda that is different from the US national interest and reflect agenda of the special interest groups such as Wall Street bankers and MIC

[Dec 31, 2017] Truth-Killing as a Meta-Issue

[May 01, 2017] Trump: A Resisters Guide by Wesley Yang

[Dec 07, 2018] Brexit Theresa May Goes Greek! by Brett Redmayne

[Nov 30, 2018] US Warlords now and at the tome Miill's Poer Elite was published

[Nov 24, 2018] Anonymous Exposes UK-Led Psyop To Battle Russian Propaganda

[Nov 24, 2018] British Government Runs Secret Anti-Russian Smear Campaigns

[Nov 24, 2018] When you are paid a lot of money to come up with plots psyops, you tend to come up with plots for psyops . The word entrapment comes to mind. Probably self-serving also.

[Nov 12, 2018] The Democratic Party long ago earned the designation graveyard of social protest movements, and for good reason

[Nov 09, 2018] Globalism Vs Nationalism in Trump's America by Joe Quinn

[Sep 29, 2018] The Schizophrenic Deep State is a Symptom, Not the Disease by Charles Hugh Smith

[Sep 29, 2018] Trump Surrenders to the Iron Law of Oligarchy by Dan Sanchez

[Sep 27, 2018] Hiding in Plain Sight Why We Cannot See the System Destroying Us

[Sep 27, 2018] The power elites goal is to change its appearance to look like something new and innovative to stay ahead of an electorate who are increasingly skeptical of the neoliberalism and globalism that enrich the elite at their expense.

[Aug 24, 2018] The priorities of the deep state and its public face the MSM

[Aug 14, 2018] US Intelligence Community is Tearing the Country Apart from the Inside by Dmitry Orlov

[Jul 28, 2018] American Society Would Collapse If It Were not For These 8 Myths by Lee Camp

[Jul 23, 2018] The Prophecy of Orwell's 1984. Totalitarian Control and the Entertainment Culture that Takes Over by Edward Curtin

[Jul 23, 2018] Chickens with Their Heads Cut Off, Coming Home to Roost. The "Treason Narrative" by Helen Buyniski

[Jul 20, 2018] Doubting The Intelligence Of The Intelligence Community by Ilana Mercer

[Jul 15, 2018] What Mueller won t find by Bob In Portland

[Jun 06, 2018] Neoliberal language allows to cut wages by packaging neoliberal oligarchy preferences as national interests

[May 04, 2018] Media Use Disinformation To Accuse Russia Of Spreading Such by b

[Apr 22, 2018] The American ruling class loves Identity Politics, because Identity Politics divides the people into hostile groups and prevents any resistance to the ruling elite

[Mar 28, 2018] Deep State and False Flag Attacks

[Mar 23, 2018] Skripal Poisoning a Desperate British Attempt To Resurrect Their American Coup by Barbara Boyd

[Mar 16, 2018] NATO to display common front in Skripal case

[Mar 16, 2018] Are We Living Under a Military Coup ?

[Mar 14, 2018] Jefferson Morley on the CIA and Mossad Tradeoffs in the Formation of the US-Israel Strategic Relationship

[Mar 12, 2018] There is no democracy without economic democracy by Jason Hirthler

[Feb 25, 2018] Democracies are political systems in which the real ruling elites hide behind an utterly fake appearance of people power

[Feb 16, 2018] The Deep Staters care first and foremost about themselves.

[Feb 15, 2018] Trump's War on the Deep State by Conrad Black

[Feb 11, 2018] How Russiagate fiasco destroys Kremlin moderates, accelerating danger for a hot war

[Feb 10, 2018] The generals are not Borgists. They are something worse ...

[Jan 06, 2018] Russia-gate Breeds Establishment McCarthyism by Robert Parry

[Jan 02, 2018] Neocon warmongers should be treated as rapists by Andrew J. Bacevich

[Jan 02, 2018] What We Don t Talk about When We Talk about Russian Hacking by Jackson Lears

[Dec 20, 2019] Intelligence community has become a self licking ice cream cone

[Dec 20, 2019] The purpose of manufactured hysteria in the US is to obfuscate the issues important to the Deep State like destroying the first amendment, renewing the 'Patriot' act, extremely increasing the war/hegemony budget, etc

[Dec 19, 2019] Historically the ability of unelected, unaccountable, secretive bureaucracies (aka the "Deep State") to exercise their own policy without regard for the public or elected officials, often in defiance of these, has always been the hallmark of the destruction of democracy and incipient tyranny.

[Dec 07, 2019] Impeachment does not require a crime.

[Dec 02, 2019] The Fake Myth of American Meritocracy by Barbara Boland

[Nov 21, 2019] The deep state is individuals INSIDE the government that do the bidding of the banksters, the military-industrial complex, the globalists and other nefarious interests

[Nov 07, 2019] Rigged Again Dems, Russia, The Delegitimization Of America s Democratic Process by Elizabeth Vos

[Oct 25, 2019] Trump-Haters, Not Trump, Are The Ones Wrecking America s Institutions, WSJ s Strassel Says

[Oct 23, 2019] The Pathocracy Of The Deep State Tyranny At The Hands Of A Psychopathic Government

[Sep 30, 2019] Stephen Miller calls whistleblower a 'partisan hit job' in fiery interview

[Sep 22, 2019] More Americans Questioning Official 9-11 Story As New Evidence Contradicts Official Narrative by Whitney Webb

[Sep 17, 2019] The reincarnation of the idea of Soviet Nomenklatura on a new level in a different social system

[Aug 21, 2019] Solomon If Trump Declassifies These 10 Documents, Democrats Are Doomed

[Aug 18, 2019] IV- MICHELS: THE IRON LAW OF OLIGARCHY by Dr. Mustafa Delican

[Aug 14, 2019] Charge of anti-Semitism as a sign of a bitter factional struggle in UK Labor Party between neoliberal and alternatives to neoliberalism wings

[Aug 14, 2019] The Citadels of America s Elites Fractured and At Odds with Each Other by Alastair Crooke

[Aug 14, 2019] There is little chance that Western elites will behave any differently than a street corner drug dealer

[Aug 12, 2019] New York Mayor Bill de Blasio has called Epstein's death "way too convenient."

[Aug 11, 2019] One weak spot of the conspiracy theory that Epstein was killed: Why not terminate him overseas before his return? No mess, no fuss

[Jul 29, 2019] The hidden control mechanism of what the late Paul A. Samuelson called our "democratic oligarchy".

[Jul 27, 2019] Russia interfered on a massive scale ($3,684 was spends on ads on which $1932 on promoting Trump) and is doing it again as we sit here! Just how massive? They spent $100,000 on clickbait ads from a company owned by a man who was in a photo with the evil mastermind!

[Jul 27, 2019] Understanding the Roots of the Obama Coup Against Trump by Larry C Johnson

[Jul 25, 2019] The Epstein Case Is A Rare Opportunity To Focus On The Depraved Nature Of America s Elite

[Jul 21, 2019] Breaking: Clinton Just Got Devastating News

[Jul 14, 2019] MODELS OF POWER STRUCTURE IN THE UNITED STATES Political Issues We Concern

[Jul 09, 2019] Ex-FBI, CIA Officials Draw Withering Fire on Russiagate by Ray McGovern

[Jun 27, 2019] Western News Agencies Mistranslate Iran's President Speech - It Is Not The First Time Such 'Error' Happens

[Jun 26, 2019] The first rule of political hypocrisy: Justify your actions by the need to protect the weak and vulnerable

[Jun 22, 2019] Use of science by the US politicians

[Jun 20, 2019] The difference between old and new schools of jounalism: old-school journalism was like being assigned the task of finding out what "1+1 =?" and the task was to report the answer was "1." Now the task would be to report that "Some say it is 1, some say it is 2, some say it is 3."

[Jun 19, 2019] America s Suicide Epidemic

[Jun 02, 2019] Somer highlights of Snowden spreach at Dalhousie University

[May 30, 2019] Whatever you may think of Trump, the people who set out to 'get him' are the scum of the Earth

[May 13, 2019] Not Just Ukraine; Biden May Have A Serious China Problem As Schweizer Exposes Hunter s $1bn Deal

[May 12, 2019] Is rabid warmonger, neocon chickenhawk Bolton a swinger? That s a mental picture that s deeply disturbing yet funny at the same time

[Apr 28, 2019] Tit For Tat: Why Did Mueller Let Trump Off the Hook by Mike Whitney

[Apr 21, 2019] Even if we got a candidate against the War Party the Party of Davos, would it matter? Trump betayal his voters, surrounded himself with neocons, continues to do Bibi's bidding, and ratcheting up tensions in Latin America, Middle East and with Russia. What's changed even with a candidate that the Swamp disliked and attempted to take down?

[Apr 21, 2019] Muller report implicates Obama administration in total and utter incompetence, if not pandering to the foreign intervention into the USA elections. The latter is called criminal negligence in legal speak.

[Apr 21, 2019] John Brennan's Police State USA

[Apr 21, 2019] Deciphering Trumps Foreign Policy by Oscar Silva-Valladares

[Apr 17, 2019] Haspel is not the "underling". Trump is the underling. Sure, being that he is also an oligarch makes Trump's role in the show complicated, but Presidents are installed in order to serve the oligarchy, and the CIA are top level strategists/enforcers for the oligarchy.

[Apr 17, 2019] Deep State and the FBI Federal Blackmail Investigation

[Apr 16, 2019] The incompetent, the corrupt, the treacherous -- not just walking free, but with reputations intact, fat bank balances, and flourishing careers. Now they re angling for war with Iran.

[Apr 16, 2019] CIA Director Used Fake Skripal Incident Photos To Manipulate Trump

[Apr 10, 2019] Habakkuk on cockroaches and the New York Times

[Apr 04, 2019] How Brzezinski's Chessboard degenerated into Brennan's Russophobia by Mike Whitney

[Apr 02, 2019] Requiem to Russiagate by CJ Hopkins

[Mar 29, 2019] Trumps billionaire coup détat: Donald Trump is about to break the record of withdrawing his promises faster than any other US president in history

[Mar 25, 2019] The Mass Psychology of Trumpism by Eli Zaretsky

[Mar 24, 2019] The manner in which Guccifer 2.0's English was broken, did not follow the typical errors one would expect if Guccifer 2.0's first language was Russian.

[Mar 24, 2019] The accountability that must follow Mueller's report

[Mar 24, 2019] "Russia Gate" investigation was a color revolution agaist Trump. But a strnge side effect was that Clintons have managed to raise a vicious, loud mouthed thug to the status of some kind of martyr.

[Mar 24, 2019] With RussiaGate Over Where's Hillary

[Mar 18, 2019] Journalists who are spies

[Mar 18, 2019] Doublethink and Newspeak Do We Have a Choice by Greg Guma

[Mar 18, 2019] The Why are the media playing lapdog and not watchdog – again – on war in Iraq?

[Mar 15, 2019] Patriots Turning To #YangGang In Response To Trump, Conservatism Inc. Failure by James Kirkpatrick

[Mar 05, 2019] The Shadow Governments Destruction Of Democracy

[Feb 27, 2019] Their votes mean absolutely nothing, and that the entire American electoral system is just a simulation of democracy

[Feb 26, 2019] Neoliberalism by Julie Wilson

[Feb 18, 2019] Do You Believe in the Deep State Now by Robert W. Merry

[Feb 17, 2019] Was Trump was a deep state man from day one, just like Obama, Bush, Clinton and all the rest?

[Feb 17, 2019] Trump is Russian asset memo is really neocon propaganda overkill

[Jan 29, 2019] Guardian became Deep State Guardian

[Jan 26, 2019] Can the current US neoliberal/neoconservative elite be considered suicidal?

[Jan 19, 2019] According to Wolin, domestic and foreign affairs goals are each important and on parallel tracks

[Jan 12, 2019] Tucker Carlson Mitt Romney supports the status quo. But for everyone else, it's infuriating Fox News

[Jan 12, 2019] Tucker Carlson has sparked the most interesting debate in conservative politics by Jane Coaston

[Jan 02, 2019] That madness of the US neocons comes from having no behavioural limits, no references outside of groupthink, and manipulating the language. Simply put, you don't know anymore what's what outside of the narrative your group pushes. The manipulators ends up caught in their lies.

[Feb 23, 2020] Where Have You Gone, Smedley Butler The Last General To Criticize US Imperialism by Danny Sjursen

[Jan 23, 2020] An incredible level of naivety of people who still think that a single individual, or even two, can change the direction of murderous US policies that are widely supported throughout the bureaucracy?

[Jan 20, 2020] Fake Investigations... Designed To Fool by Bryce Buchanan

[Jan 19, 2020] Not Just Hunter Widespread Biden Family Profiteering Exposed

[Jan 18, 2020] The inability of the USA elite to tell the truth about the genuine aim of policy despite is connected with the fact that the real goal is to attain Full Spectrum Dominance over the planet and its people such that neoliberal bankers can rule the world

Sites



Etc

Society

Groupthink : Two Party System as Polyarchy : Corruption of Regulators : Bureaucracies : Understanding Micromanagers and Control Freaks : Toxic Managers :   Harvard Mafia : Diplomatic Communication : Surviving a Bad Performance Review : Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime : PseudoScience : Who Rules America : Neoliberalism  : The Iron Law of Oligarchy : Libertarian Philosophy

Quotes

War and Peace : Skeptical Finance : John Kenneth Galbraith :Talleyrand : Oscar Wilde : Otto Von Bismarck : Keynes : George Carlin : Skeptics : Propaganda  : SE quotes : Language Design and Programming Quotes : Random IT-related quotesSomerset Maugham : Marcus Aurelius : Kurt Vonnegut : Eric Hoffer : Winston Churchill : Napoleon Bonaparte : Ambrose BierceBernard Shaw : Mark Twain Quotes

Bulletin:

Vol 25, No.12 (December, 2013) Rational Fools vs. Efficient Crooks The efficient markets hypothesis : Political Skeptic Bulletin, 2013 : Unemployment Bulletin, 2010 :  Vol 23, No.10 (October, 2011) An observation about corporate security departments : Slightly Skeptical Euromaydan Chronicles, June 2014 : Greenspan legacy bulletin, 2008 : Vol 25, No.10 (October, 2013) Cryptolocker Trojan (Win32/Crilock.A) : Vol 25, No.08 (August, 2013) Cloud providers as intelligence collection hubs : Financial Humor Bulletin, 2010 : Inequality Bulletin, 2009 : Financial Humor Bulletin, 2008 : Copyleft Problems Bulletin, 2004 : Financial Humor Bulletin, 2011 : Energy Bulletin, 2010 : Malware Protection Bulletin, 2010 : Vol 26, No.1 (January, 2013) Object-Oriented Cult : Political Skeptic Bulletin, 2011 : Vol 23, No.11 (November, 2011) Softpanorama classification of sysadmin horror stories : Vol 25, No.05 (May, 2013) Corporate bullshit as a communication method  : Vol 25, No.06 (June, 2013) A Note on the Relationship of Brooks Law and Conway Law

History:

Fifty glorious years (1950-2000): the triumph of the US computer engineering : Donald Knuth : TAoCP and its Influence of Computer Science : Richard Stallman : Linus Torvalds  : Larry Wall  : John K. Ousterhout : CTSS : Multix OS Unix History : Unix shell history : VI editor : History of pipes concept : Solaris : MS DOSProgramming Languages History : PL/1 : Simula 67 : C : History of GCC developmentScripting Languages : Perl history   : OS History : Mail : DNS : SSH : CPU Instruction Sets : SPARC systems 1987-2006 : Norton Commander : Norton Utilities : Norton Ghost : Frontpage history : Malware Defense History : GNU Screen : OSS early history

Classic books:

The Peter Principle : Parkinson Law : 1984 : The Mythical Man-MonthHow to Solve It by George Polya : The Art of Computer Programming : The Elements of Programming Style : The Unix Hater’s Handbook : The Jargon file : The True Believer : Programming Pearls : The Good Soldier Svejk : The Power Elite

Most popular humor pages:

Manifest of the Softpanorama IT Slacker Society : Ten Commandments of the IT Slackers Society : Computer Humor Collection : BSD Logo Story : The Cuckoo's Egg : IT Slang : C++ Humor : ARE YOU A BBS ADDICT? : The Perl Purity Test : Object oriented programmers of all nations : Financial Humor : Financial Humor Bulletin, 2008 : Financial Humor Bulletin, 2010 : The Most Comprehensive Collection of Editor-related Humor : Programming Language Humor : Goldman Sachs related humor : Greenspan humor : C Humor : Scripting Humor : Real Programmers Humor : Web Humor : GPL-related Humor : OFM Humor : Politically Incorrect Humor : IDS Humor : "Linux Sucks" Humor : Russian Musical Humor : Best Russian Programmer Humor : Microsoft plans to buy Catholic Church : Richard Stallman Related Humor : Admin Humor : Perl-related Humor : Linus Torvalds Related humor : PseudoScience Related Humor : Networking Humor : Shell Humor : Financial Humor Bulletin, 2011 : Financial Humor Bulletin, 2012 : Financial Humor Bulletin, 2013 : Java Humor : Software Engineering Humor : Sun Solaris Related Humor : Education Humor : IBM Humor : Assembler-related Humor : VIM Humor : Computer Viruses Humor : Bright tomorrow is rescheduled to a day after tomorrow : Classic Computer Humor

The Last but not Least Technology is dominated by two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt. Ph.D


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Last modified: March, 01, 2020