The Future

In tomorrow's America, the "free-trade" Nirvana in which the republic's last native industry has finally bitten the dust (along with the last unionized workforce) and where the concept of value added labor and the production of things of public utility are as passe as the dodo bird one cannot but marvel at the inextinguishable American ingenuity that manages to bubble to surface and exploit the silver lining in bad situation:

Just a reminder

Do read Ladypoverty...

In the event you'd forgotten...

Given for what passes for journalism in the US you can be forgiven. In any event there's a place in the world where the population reacts to the usurpation of their rights with more than a shrug of the shoulders and a yawn [sound like someplace familiar?]. Hondurans and those throughout the region who support them in their struggle against the US-backed coup continue to demonstrate what fighting for democracy actually looks like.

[Hat tip to American Leftist]

Flailing, Failing, and Wailing

It's not easy these uphill battles. I'm certainly not the only one around trying to keep a positive outlook in the face of overwhelming odds but there are times (given how atomized we are) where you begin to wonder. Does anyone else notice how fucked we are? I'm not just talking about the mindless droning one finds in the mainstream media since mass distraction is its primary function. No, I'm referring to those whom I encounter during the course of a day, a week, over the last 9 months. Few seem to have a fucking clue that the party of credit-fueled mass consumerism is over. I cannot bear to count the number of conversations I've had with people in which they conclude that "recovery is around the corner" or "things will turn around". Really? Turn around to what? Can a return to the previous status quo of "free trade" madness in which the rapid deindustrialization of the US (and thus living-wage jobs) coupled with massive trade deficits with trade rivals continue unabated be really considered a "recovery" by thinking people? Recovery is the return to consumerism as 70% of GDP while producing virtually nothing of social utility? I'm stumped.

The one great "innovation" of the last thirty years, essentially the financialization of the US economy, leading directly to the unregulated alphabet soup derivative market (MBS, CDS, SIV...) has been revealed in all of its naked glory as a world-encompassing fraud while its engineers are bailed out and STILL motherfuckers believe "recovery" is just around the corner!

None grasp that their new hero in the White House works tirelessly to ensure that the war criminals of the Bush administration who made a mockery of the Constitution, the Bill of Rights and the UN Charter in route to looting Iraq at the cost of over a million lives as well as tens of thousands more in decimated Afghanistan never stand before a grand jury. It's the apathy I'm having trouble dealing with these days though given the fact that Americans are perhaps the most de-politicized population in the world I shouldn't be surprised and yet there it is. The bastards seem to be winning and I don't see anywhere near enough people irritated enough to give a damn much less take collective action against the fact. About those bastards who rule us Joe Bageant had this to say...

Choices, Choices

What's the O-Bomb gonna do? Folks are hurting everywhere but folks aren't all the same you see. On the one hand are millions of Americans who have been or soon will be tossed out of their places of residence but on the other hand there's the folks who rule the roost and now find themselves short of cash. Oh the agony of command!

Obama vs. Obama

The following public service announcement comes courtesy of Mark Fiore:


Big thanks to Dennis Perrin for introducing me to both Fiore above and Dwayne Monroe who authored the following message to disappointed Obamaniacs:

I know you're unhappy.

You tell me, via email, text messages, tweets, listserv posts and maybe even tachyon bursts I'm not yet equipped to receive.

You tell me -- and the world -- you're disheartened by Obama's velvet gloved treatment of ibanks, his failure to "take advantage of a good crisis." His inability to speak to any group of black people without yammering on about "personal responsibility" (a theme conspicuously absent from his speeches before mostly white audiences).

His escalation of the Afghan war. His supposedly groundbreaking national medical insurance plan which, once closely examined, looks an awful lot like a funds transfer program for the pharma and private insurance sectors.

His continuation of Bush era surveillance programs. His backtracking on same sex unions. His... by the gods, I could go on, but why?

Listen mates, I have some bad news for you and your ruined dreams...

You should have paid closer attention during the campaign. You should've spent a little less time shouting about new, "post-racial" politics, the excitement of "young people" and Obama's polished, upper management style of presentation and more time thinking through the totally predictable implications of the things he said.

What the hell did you think he meant when he said he was going to "step up" US efforts in Afghanistan? Air drop delicious snake cakes and DVDs? When a potential or sitting POTUS announces a "renewed effort" he (and one day soon, she) means only one thing: bombs, blood and blasting.

I know, that's three things.

Months ago, when you read stories about Obama's popularity among our well-fed hedge funders, what did you think that meant? Wall Street loves "diversity"? It meant those mercenaries were pointing their mojo wands towards the guy they felt would produce superior ROI.

And so on.

During the campaign months, many of you wankers (and yes, I love you but...) accused me of being cynical. Why didn't I open my heart and believe in change? Change! My black and tan amigos y amigas were dismayed I wasn't happy to see the ultimate example of a black face in a high place. Dreams, no longer deferred!

Well-intentioned pink skins scratched their heads, puzzled by my lack of glee at their non-racist action: voting for a black chief exec. Look at us!

To be cynical however, you have to be a disappointed romantic. Within each cynic's skull throbs a mind longing to believe with the fervency of a "Twilight" fan. My objections weren't cynical. I simply took Mr. Obama at his word and factored in the history of the office he sought.

So there you are, upset and worried. You're upset by how things have turned out. You're worried that unless Obama does this or does that -- zigs instead of zags, kerpluks instead of plukeriking -- his presidency will fail. Which is hella odd: what presidencies have succeeded and by whose criteria?

I recommend spending no more than five, maybe ten minutes being disappointed. And perhaps an extra half hour musing on the various things the President should do to save his historic legacy.

Pretty pictures will do

Recently I found myself in a rather long and tedious discussion with my brother over the state of the US and its relation to the rest of the world in general. For what seemed like hours he tried to convince me (and perhaps himself) that the sainted Obama administration was really, despite all evidence to the contrary, a force for change in the world. For example, when I mentioned the contrast in the Obama administration's response to the disputed elections in Iran to the coup in the one nation upon which the US exerts the most influence in Latin America, Honduras, he dissolved into to a cloud of semantics, disparately grasping at anything that would explain away the clear hypocrisy. Nuance aside, there's little difference between the Obama administration's handling of the Honduran crisis and what could have been expected of the Bush II regime that preceded it.

The same of course applies the Obama's handling of the financial crisis foisted upon us by the Wall Street hustlers and their bankrupt free-trade ideology. This is the part that really gets to the heart of my frustration with Obamaniacs such as my brother. Like most Americans, if he is not directly effected by an issue he just can't be bothered by the matter. So when it comes to our illegal invasion and occupation of a sovereign nation or the material support for ethnic cleansing on the other side of the globe well... that stuff's so out of the way and we're very busy. Well at least we used to be before half a million of us per month were losing our jobs as the Obama administration endeavors to move heaven and earth to save the very malefactors who decimated the economy (such as it is). Unlike the remote controlled, robot bombing of wedding parties the economic meltdown is something most American's can feel directly yet still there is a sizable number of people (my brother among them) who refuse to connect the dots to the policies of an administration filled to the brim with Goldman Sachs alums. Yes, cracks are starting to appear in Obama's polling numbers but we still have a long way to go before the financial oligarchy he serves starts to feel the heat.

Mad Max

Max Keiser (my new favorite financial analyst) takes it to Goldman Sachs below. When's he going to get a platform on CNBC I wonder?


Part 2:


Update: Elaine Supkis fleshes this matter out in a very good post recently.

US torture revisited

Here's the part the neo-con apologists for US torture never emphasize (hat tip "David" at EMS News):

"Yasser tearfully described that when he reached the top of the steps 'the party began…They started to put the [muzzle] of the rifle [and] the wood from the broom into [my anus]. They entered my privates from behind.'...Yasser estimated that he was penetrated five or six times during this initial sodomy incident and saw blood 'all over my feet' through a small hole in the hood covering his eyes."
–Physicians for Human Rights, Broken Laws, Broken Lives: Medical Evidence of Torture by US Personnel and Its Impact
The rest

Change in the air

What? Can't you feel that? Ok, don't take my word for it then, just check the record...

The beautiful lies we tell

It's funny how no matter what your instincts seem to tell you about the current economic crisis, punditry-land can't wait to direct your attention to the latest signs of "green shoots" making their way through the cracks thus signaling the imminent return of the go-go recent past. Sure, the economy is shedding jobs at the rate of 600,000 per month and the American auto industry has been allowed to sink beneath the waves (those parts not wholly owned by foreign competitors) while trillions in taxpayer funds have been shoveled to the insolvent financial institutions that drove us over the cliff, but ignore all that if you will. You see, this time the very economists who missed the dangerous growth of the largest asset bubble in history and clapped like circus seals as the deregulated financial sector "innovated" the Derivative Beast into existence which now exceeds the combined GDP of the entire world in notational value are now on the case and ask that you trust their sober judgement on this.

Dmitry Orlov neatly splashes cold water on this nonsense in his latest speech. An excerpt:

Economics is not directly lethal, and economists never get sent to jail for criminal negligence or gross incompetence even when their theories do fail. Finance is about the promises we make to each other, and to ourselves. And if the promises turn out to be unrealistic, then economics and finance turn out to be about the lies we tell each other. We want to continue believing these lies, because there is a certain loss of face if we don't, and the economists are there to help us. We continue to listen to economists because we love their lies. Yes, of course, the economy will recover later this year, maybe the next. Yes, as soon as the economy recovers, all these toxic assets will be valuable again. Yes, this is just a financial problem; we just need to shore up the financial system by injecting taxpayer funds. These are all lies, but they make us feel all right. They are lying, and we are buying every word of it.


I highly recommend you read the speech in full. Sobering indeed.

Boo Hoo

The hand wringing and tear jerking over the outcome of the presidential election in Iran continues unabated in the west. Is anyone really surprised? If it seems as though there was but a fraction of this distress among the western punditry over the suspicious outcome of the contest in Mexico where the neoliberal standard bearer Felipe Calderon "won" you aren't imagining things. The following is a handy guide for easy referral the next time a foreign election turns out the "wrong way" and elicits the kind of media hysterics we're suffering through at the moment. This courtesy of the "Angry Arab", As'ad AbuKhalil:

Western Primer on Elections in Developing Countries

Some Western principles in assessing elections in developing countries:

1) When the favored candidates win, the elections are free and fair. And when they lose, elections are certainly unfree and stolen.

2) Violent protests against elections that produce winners favored by the West, are to be strictly condemned and protesters are to be called terrorists, hooligans and mobs (can you imagine if Lebanese opposition supporters were to engage in violent protests against the election results in Lebanon), while violent protests against enemies of the US when they win elections (like in Moldova) are to be admired (and the protesters in those cases are called "democracy activists".

3) It is not against free elections to have Western governments interfere in elections and in funding candidates through Western groups for the promotion of democracy.

4) Candidates (or even dictators) who serve Western interests are automatically labeled as "reform candidates" (even the Saudi tyrant is referred to as "reform-minded"), while candidates who oppose Western economic and political interests are to be labeled enemies of reform....

6) Western observers of elections are always on hand to declare an election unfair and rigged if the favored candidates lose.

7) The corruption of pro-US candidates (like the March 14 bunch in Lebanon) is preferred to the corruption of, say, Mugabe.

8) The democratic credentials of dictators immediately improve if they change their policies toward the US and if they express willingness to serve US economic and political interests.

9) Countries where dictators do a good job in serving US economic and political interests need not hold elections.

10) If favored candidates can't guarantee electoral victory (like the Palestinian Authority's Abu Mazen, whose term has expired months ago), they don't need to hold elections and will be treated as if they won an election anyway.

11) It is just not logical to assume that people in developing countries can freely ever decide to make choices that are not consistent with political and economic interests of the US....
-As'ad AbuKhalil

Bear in mind as you read the following analysis from Paul Craig Roberts over the events in Iran that outside of the opposition's assertions there is no evidence whatsoever of election fraud on the scale alleged. This from Middle East specialists Flynt Leverett and Hillary Mann Leverett provides an important overview as well.

What does a 3 billion dollar per year subsidy without strings attached get you?

Gratitude and an immense sense of entitlement for starters.

There was once a time...

...when impermissible thoughts could see the light of day.

“The essential act of war is destruction, not necessarily of human lives, but of the products of human labour. War is a way of shattering to pieces, or pouring into the stratosphere, or sinking in the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent. Even when weapons of war are not actually destroyed, their manufacture is still a convenient way of expending labour power without producing anything that can be consumed. A Floating Fortress, for example, has locked up in it the labour that would build several hundred cargo-ships. Ultimately it is scrapped as obsolete, never having brought any material benefit to anybody, and with further enormous labours another Floating Fortress is built. In principle the war effort is always so planned as to eat up any surplus that might exist after meeting the bare needs of the population. Warfare is also useful in keying up the morale to the necessary pitch.

War hysteria is continuous and universal in all countries, and such acts as raping, looting, the slaughter of children, the reduction of whole populations to slavery, and reprisals against prisoners which extend even to boiling and burying alive, are looked upon as normal, and when they are committed by one's own side and not by the enemy, meritorious. But in a physical sense war involves very small numbers of people, mostly highly trained specialists, and causes comparatively few casualties. The fighting, when there is any, takes place on the vague frontiers whose whereabouts the average man can only guess at, or round the Floating Fortresses which guard strategic spots on the sea lanes. In the centers of civilization war means no more than a continuous shortage of consumption goods, and the occasional crash of a rocket bomb which may cause a few scores of deaths. War has in fact changed its character. More exactly, the reasons for which war is waged have changed in their order of importance.

The consciousness of being at war, and therefore in danger, makes the handing-over of all power to a small caste seem the natural, unavoidable condition of survival. War not only accomplishes the necessary destruction, but accomplishes it in a psychologically acceptable way. In principle it would be simple to waste the surplus labour of the world by building temples and pyramids, by digging holes and filling them up again, or even by producing vast quantities of goods and then setting fire to them. But this would provide only the economic and not the emotional basis for a hierarchical society. What is concerned here is not the morale of the masses, whose attitude is unimportant so long as they are kept steadily at work, but the Party itself. Even the humblest Party member is expected to be competent, industrious, and even intelligent within narrow limits, but it is also necessary that he should be a credulous and ignorant fanatic whose prevailing moods are fear, hatred, adulation, and orgiastic triumph. In other words it is necessary that he should have the mentality appropriate to a state of war."
-George Orwell

and...

"Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some 50 miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people ... This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron."
-Dwight D. Eisenhower


I found these remarkable quotes courtesy of some posters over at ATR. Can you imagine words such as these coming from any important political figure today? Neither can I, but it is essential that this become part of the national dialogue if we there is ever to be change we can believe in.

Ghosts of Reason

Of all the enemies of true liberty, war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other.

War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few.

In war, too, the discretionary power of the Executive is extended; its influence in dealing out offices, honors and emoluments is multiplied; and all the means of seducing the minds, are added to those of subduing the force, of the people.

The same malignant aspect in republicanism may be traced in the inequality of fortunes, and the opportunities of fraud, growing out of a state of war, and in the degeneracy of manner and of morals, engendered in both.

No nation can preserve its freedom in the midst of continual warfare.

War is in fact the true nurse of executive aggrandizement. In war, a physical force is to be created; and it is the executive will, which is to direct it.

In war, the public treasuries are to be unlocked; and it is the executive hand which is to dispense them.

In war, the honors and emoluments of office are to be multiplied; and it is the executive patronage under which they are to be enjoyed; and it is the executive brow they are to encircle.

The strongest passions and most dangerous weaknesses of the human breast; ambition, avarice, vanity, the honorable or venal love of fame, are all in conspiracy against the desire and duty of peace.
-James Madison

Brand Obama

Its been a spell since I've really sat down and gave our new President any serious thought. I know that seems rather odd coming as it does from one who's take on Barockstar has been decidedly negative almost from day one, but the truth is he was so transparently not the agent of change he professed to be that I haven't experienced the deflating letdown that some on the left are now suffering as their hero reveals his inner Imperial Centrist. My hopes just weren't high enough to be let down in the first place. Having said this I must admit that, like most Americans, the swiftness and severity of the economic collapse has taken me by surprise but Obama's reaction to it has been a true revelation.

Let's bury any illusions that he has merely inherited this mess from the Bush administration since he was instrumental in twisting congressional arms last October in order to pass the 700 billion dollar TARP blank check for the reckless speculators now looting the Treasury with the help of his key appointments from the financial sector like Treasury Secretary Tim Geithner and Bush appointee to the Federal Reserve Ben Barneke. No, Obama owns this now and his policies thus far have demonstrated unequivocally that Wall Street represents his primary constituency. 13 trillion in taxpayer obligations thus far have been committed to the very insolvent institutions who's greed and recklessness cratered the world economy yet still there are those who remain entranced by what Chris Hedges calls the Obama Brand.

When you add to this Team Obama's escalation of the Af-Pak War and commitment to indefinitely occupy Iraq one wonders what more will it take to break the "change" spell that's got so many "progressives" swooning this late in the game.

Who's minding the store?

Not to worry folks, though nine trillion dollars (so far) in taxpayer loot has disappeared into the coffers of insolvent banks declared "too big to fail" your highly motivated federal "regulators" are on the case:

So much forgotten

[T]he point of attack in the political struggle lies, not in the legislative bodies, but in the people. Political rights do not originate in parliaments, they are, rather, forced upon parliaments from without. And even their enactment into law has for a long time been no guarantee of their security.

Just as the employers always try to nullify every concession they had made to labour as soon as opportunity offered, as soon as any signs of weakness were observable in the workers' organizations, so governments also are always inclined to restrict or to abrogate completely rights and freedoms that have been achieved if they imagine that the people will put up no resistance. Even in those countries where such things as freedom of the press, right of assembly, right of combination, and the like, have long existed governments are constantly trying to restrict those rights or to reinterpret them by judicial hair-splitting.

Political rights do not exist because they have been legally set down on a piece of paper, but only when they have become the ingrown habit of a people, and when any attempt to impair them will meet with the violent resistance of the populace. Where this is not the case, there is no help in any parliamentary Opposition or any Platonic appeals to the constitution. One compels respect from others when he knows how to defend his dignity as a human being. This is not only true in private life, it has always been the same in political life as well.
-Rudolph Rocker

Amen.

The Greater Fool

A quick and easy how-to guide on fucking the next 3 generations of Americans

I managed to find this while cruising Mish's Economic Trend Analysis, a very good site for insight to the latest Wall Street shenanigans. Here, in all of its diabolical glory, is the latest Team Obama/Geithner plan to save the bondholders of insolvent financial institutions at taxpayer expense:

Oddly familiar

The President of the Incorporated Estates of Earth got along with everyone, as if he wanted to. I found this odd, him odd, which is no matter. I am not the president and could never be. I am too opinionated. Too impatient. Too blunt, in my own mind if no way else.

The topic the President wished to discuss: the rebel insurgency deep in the heart of the Incorporated Estates of Earth.

Typically we ignore the rebels, the best strategy: First you ignore them, then you blast them, then you agree with them if need be - or plausibly pretend to agree - what cost a bit of rhetoric? - then you win. Again.

What I found most distressing and yet daunting and daring about the President is that he does not seem interested in winning. He assumes it. He is a winner. He wins. He gets along with everyone, not least those who fund him into power. This strikes me as terribly indiscriminate. He is willing to get along with anyone, even the rebels so long as playing nice does not cost him his job, or his funders - the banks and the incorporated estates, the class of the IEE - their power.

So the President plays nice and wins and called me in to deal with the rebels. He tells me it is my job to play nice with the rebels. Not in so many words, but I get it. He wants me to give the rebels the velvet glove covering the iron fist, via the brilliant tongue. He wants me to cut the rebels to size as if making love to them with a rock. First you ignore them, then you blast them, then you pretend to agree with them (if need be), then you win. "Do you understand?"
"I understand, sir."

"The rebels are IEEans like us. Only poorer, or disenchanted, or just cantankerous. We need them to love the IEE. They need to love the IEE. For their own good. For our own good. For the good. You see?"
"I think I know exactly what you mean, sir."

"I need a speech. Soon. I plan to address the rebels personally, visit their camp. I need real face-to-face words. Words that go beyond the teleprompter. Words that are easy to memorize. Easy to take deep into the heart. From my heart to their heart. Can you write that for me? I know you can. Yes, you can."
"You write it now for me, sir. You have a knack, that gift. You touch their hearts. You solace the vassals of the IEE."
-Lesson 15, The Vassal's Handbook--"first you ignore them"

Eliot Spitzer returns

Back from his "fall from grace"--no doubt greased by the Wall Street titans whom he terrorized, the former governor of New York Eliot Spitzer has been hired by Slate magazine to put his opinions to pen and paper. His latest effort reflects upon the distracting hue and cry being raised over the millions of taxpayer dollars funneled to AIG employees who helped loot the company while largely ignoring the billions shipped to AIG counter-parties with names like Goldman Sachs, HBS, Bank of America, Merrill Lynch, Barclays... you get the picture.

How much for that drink?

What follows is courtesy of "Angela", a commenter at Elaine Supkis' blog which presents the current economic crisis in a refreshing new way:

Thank goodness there’s the occasional humor in all of this- making the rounds on the net…

THE FINANCIAL CRISIS EXPLAINED IN SIMPLE TERMS:

· Heidi is the proprietor of a bar in Berlin.
· In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later.
· She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).
· Word gets around, and as a result increasing numbers of customers flood Into Heidi’s bar.
· Taking advantage of her customers’ freedom from immediate payment constraints, Heidi increases her prices for wine and beer, the most-consumed beverages.
Her sales volume increases massively.
· A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi’s borrowing limit.
· He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

· At the bank’s corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS.
· These securities are then traded on markets worldwide.
· No one really understands what these abbreviations mean and how the securities are guaranteed.
· Nevertheless, as their prices continuously climb, the securities become top-selling items.

· One day, although the prices are still climbing, a risk manager (subsequently, of course, fired due to his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Heidi’s bar.
· However they cannot pay back the debts.
· Heidi cannot fulfill her loan obligations and claims bankruptcy. DRINKBOND and ALKBOND drop in price by 95%.
· PUKEBOND performs better, stabilizing in price after dropping by 80%.

· The suppliers of Heidi’s bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation.
· Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor.
· The bank is saved by the government following dramatic round-the-clock consultations by leaders from the governing political parties.
· The funds required for this purpose are obtained by a tax levied on the non-drinkers.

· Finally, an explanation we understand.

-"Angela"

A voice of sanity

... and one you will never hear on CNBC
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For more like this check out The Renegade Economist whom I've added to my blog roll.

PS: Speaking of my blog roll feel free to use the 'Lair as a way station to these other sites during my frequent absences.

Hey, where'd my job go?

Curious? Well here's Kathy Sanborn with something you should know.

We The People...

It's been fascinating of late to watch Team Obama struggle to put the proper spin on the latest attempt to unburden Wall Street of its troubles at taxpayer expense. Ever wonder why all the efforts of "our" elected representatives are so focused on the travails of insolvent banks and the reckless speculators who ran them into the ground? Well this little ditty by Bernard Chazelle should answer any remaining questions you may have:

House Financial Services Committee Chairman Barney Frank, D-Mass., said banks were acting stupid and making it harder for lawmakers to defend them.
You may wonder if it's a congressman's job to be defending banks. Shouldn't the Congress be defending "We the people," instead?

If you're wondering, it's because you don't understand the modern incarnation of representative democracy. Yes, you know your Electoral College; sure, you've mastered your chads, pregnant, dimpled, hanging or otherwise, but still, perhaps just perhaps, you're missing the point. Indirect representation works like this:

A empowers B to elect C to serve A.
With a little diagram to highlight the subtleties:

A---------> B --------> C
|------<----------<-------|

Now one common mistake is to think that you're A. Nope, you're B. Who's A then? Corporate America is A. Goldman Sachs, GE, WalMart, etc; they're A. You're B. They empower you (B) to elect a government (C) whose sole purpose is to serve them (A). This leads us to the fundamental equation of indirect representation:

Corporate America empowers you to elect a government to serve Corporate America.
How does Corporate America empower you? They outsource the job to an entity called "the media." The media's mission is to brainwash you so you believe you are A. But you are B. You are the empowered delegate ("empowered" in the sense of "authorized," not "made powerful.") Why are you even needed in that equation? What's wrong with

A empowers C to serve A ?
Somewhere in that loop, someone's pocket needs to be picked and that someone is you. That's why A needs you. There's a second reason for your presence, which distinguishes representative democracy from oligarchy. It's called "legitimacy," which is just a fancy way of saying "anything that keeps the people away from their pitchforks." But let's not get too technical and, mostly it's just that: a technicality.

A few days later, the liberal Barney Frank uttered stern, harsh words. I paraphrase:

The bankers won't get extra resources unless there's a radical change in their behavior.
Notice the conditionality. Let's follow Frank's logic. Suppose the bankers don't change their behavior (which behavior is left unspecified but you can be sure that does not include "being A.") Then what? If Frank denies them the money, then who is he punishing? If he is punishing the American people, then my point is proven. The guy works for the bankers. If he is punishing the bankers but not the American people, then the money was obviously not needed in the first place, except to please the bankers. In other words, if Americans don't notice the difference whether the money is given out to the banks or not, then why give it? And if they suffer from the money being withheld, then why is Frank making their happiness conditional on the bankers' behavior? He could have the bankers fired. He could have reversed the conditionality and said: "The bankers won't get a penny until a million demonstrators march down Pennsylvania Avenue demanding "More Bonuses to Bankers!"

But he did not. Why? Because Frank (hardly the worst of the bunch) was elected by you to work for them! (Go back to earlier diagram if this point hasn't sunken in yet.) Why isn't Frank working for you the people? Because you the people are the delegates, and who in the world works for delegates?

Why do we need the media? Because my observations are trivial. That's why. You need communications experts, backed by deep scientists called "economists," to convince you that 2+2=5. That's hard work. That's why those people are paid lots of money and only the brightest succeed. Take "trickle down economics" for example. That's not even 2+2=5. It's more like 2+2=36376472828363828. But they pulled it off! And this very minute they're convincing you that the only way to deal with a thief who steals your money is to reward him with more of your money.

Barney Frank had more to say:

“People really hate you,” he said, imploring banks to do everything possible to avoid offending people.
When is the last time you "implored" someone to stop being offensive by stealing money from the very people they're offending and giving it to the offenders?

— Bernard Chazelle

The Imponderable

In truth the time to kill the Federal Reserve banking system was over half a century ago but I'm willing to take what I can get. So now is as good a time as any to kill this bitch, a fact made clear in this fine essay by Doug Page over at Dissident Voice a few days ago.

Update:

Here's a crucial essay by economist Michael Hudson on Team Obama's Bailout 2.0 that answers all the important questions one may have about how the banksters intend to fuck us. This is a must-read so pass it on.

Something for your book list

Do yourself a solid and run out and pick up The Liberal Defense of Murder by Richard Seymour whose blog Lenin's Tomb is required reading for any serious progressive. This remarkable book will serve as a critical point of reference as Team Obama cranks up the killing machine liberal style (with better graphics and production values). Here Richard sits with George Galloway for a chat about some of the justifications liberals have utilized throughout the centuries when going about the unfortunate but necessary business of killing savages... for the greater good of course.

Oh no, fooled again!

What was that neat little trick Nancy always pulled on Charlie Brown with the football? Well here's the political equivalent... right on schedule.

Chomsky on Israeli war crimes in Gaza

Naturally one shouldn't expect to see this issue explored anywhere in the American mainstream media hologram so, once again, Znet to the rescue.

The Boondocks checking in

Hat tip to Dennis Perrin for this one:

"I did say I was cautiously pessimistic about Obama's Presidency - but this is simply acknowledging the reality of an American Empire that is out of control and on the verge of collapse. Let us not forget that on the eve of the election, we witnessed a near-trillion dollar robbery of the US treasury. That robbery is still taking place. I do not blame President Obama, but I do not believe the financial and corporate interests that own and control this country will fold so easily. I do not question the integrity of the man as much as the power of his office - which I believe has greatly diminished over the years. I believe the Federal Reserve Bank, the Military Industrial Complex, and the massive corporate interests that run this country have more power than our new President. I hope I am wrong.

"After 9/11, I witnessed most of this country become obsessed with squashing dissent and silencing critics. I hope this election does not turn Black America towards this same, fascist mind state; but already I am starting to see it, and it saddens me greatly. I absolutely wish our new President and his family success and safety. But after all I have witnessed in my lifetime, and especially in the last eight years, I am not ready to lay down my skepticism or my outrage for this government. To do so would be unwise and, ironically enough, anti-American."

-Aaron McGruder ("Boondocks" comic creator)

Boom, boom, bada-boom...

... so begins Team Obama's march to war on Iran. The following time-line is courtesy of Don Bacon over at ATR:

Mar 2, 2007. . .Obama: The world must work to stop Iran’s uranium enrichment program and prevent Iran from acquiring nuclear weapons

National Intelligence Estimate, Dec 4, 2007 . . .. We judge with high confidence that in fall 2003, Tehran halted its nuclear weapons program

IAEA Report, May 26, 2008: "The Agency has been able to continue to verify the non-diversion of declared nuclear material in Iran."

July 25, 2008 . .Democratic Sen. Barack Obama, nearing the end of a fast-paced international campaign trip, warned Iran today, "don't wait for the next president" to take office before yielding to Western demands to dismantle its nuclear weapons program. . .Iran poses "an extraordinarily grave situation." He said the world must send "a clear message to Iran to end its illicit nuclear program."

NPT: "Nothing in this Treaty shall be interpreted as affecting the inalienable right of all the Parties to the Treaty to develop research, production and use of nuclear energy for peaceful purposes without discrimination and in conformity with articles I and II of this Treaty."

Sep 6, 2008 ...Iran is a “major threat” and it would be “unacceptable” for the rogue nation to develop a nuclear weapon, Barack Obama said

IAEA Report, September 15, 2008: "The Agency has been able to continue to verify the non-diversion of declared nuclear material in Iran. Iran has provided the Agency with access to declared nuclear material and has provided the required nuclear material accounting reports in connection with declared nuclear material and activities."

Oct 2, 2008 . . .Obama: "The American people weren't just failed by a President - they were failed by much of Washington. By a media that too often reported spin instead of facts. . .I will always tell the American people the truth."

Nov 7, 2008 ... U.S. President-elect Barack Obama said in Chicago on Friday that Iran's development of nuclear weapons is unacceptable.

IAEA Report on Iran, Nov 19, 2008 -- "The Agency has been able to continue to verify the non-diversion of declared nuclear material in Iran. Iran has provided the Agency with access to declared nuclear material and has provided the required nuclear material accounting reports in connection with declared nuclear material and activities."

Dec 7, 2008 . . .Obama: "We need to ratchet up tough but direct diplomacy with Iran, making very clear to them that their development of nuclear weapons would be unacceptable"

Jan 11, 2009 . . .Obama: "[Iran is] pursuing a nuclear weapon that could potentially trigger a nuclear arms race."

I don't know about any of you but I'm so loving the Prince of Hope and Change.

An Ernest Attempt

Israel tried to bump-off Cynthia Mckinney the other day in the event you hadn't heard about it... but then again how could you have heard about this incident and its proper context if the MSM is you source for "news"? Silly me.

The MSM, where the truth comes to die

Have you tired yet of the bullshit spin in the US MSM regarding Israel's ongoing war crimes in Gaza? I thought so. So without further ado let's get a peek at the straight dope from (as usual) Chris Floyd. Bare in mind that much of what you read in Floyd's piece is available from mainstream sources within Israel itself such as the leading daily Ha'aretz but not in the US. Another critical source of analysis on the wholly US-sponsored atrocity is from the Angry Arab.

Mere weeks to bliss

The inauguration is but a few short weeks away and all will be well again in the land of milk and honey. President Barack Obama will make it so, just you wait and see. American Leftist offers a brief refresher course for those who weren't following along closely as Team Obama worked their magic this past spring in this repost from July 10th of this year:

Thursday, July 10, 2008
Election Ennui

Nothing is more enervating for people that actually care about the substance of political and social issues than a presidential campaign year. During the primaries, the candidates, like circus magicians, purvey the illusion that the campaign is really about issues of importance, that we face electoral decisions of grave importance, even as they creatively repackage predictable positions.

Once the nominees become apparent, however, the dialogue, such as it was, is even more circumscribed. Recognizing the power of the corporate media in regard to framing the issues and defining the candidates for a credulous public, any pretense of engaging the public about fundamental questions that affect our lives is abandoned. After all, a presidential campaign is primarily a media driven exercise in mythology. It is more important to present oneself to the media as innocuous, as yet another in a line of safe, conformist political figures, so that the media can, paradoxically, present the candidate as larger than life, capable of forging a profound emotional bound with the public so that he can comfortably assumes powers of near omnipotence.

This is what we observe transpiring on a daily basis with Barack Obama. He's getting tougher on Iran, he's signalling a willingness to be flexible about how he will withdraw US troops from Iraq, he's now for the death penalty even in instances without the loss of life and he wasn't willing to fight to prevent Congress from granting immunity to telecommunications companies that illegally wiretapped US citizens at the direction of the White House. It's all about showing how reasonable he is, you see. It's a long way from working as a community organizer in Chicago, but Obama probably draws upon similar skills to effectively disarm his media critics.

Obama closed the deal as they say when he willingly played the game of stigmatizing black men for social dysfunctionality found across the racial spectrum. Whites are allowed to have children out of wedlock without comment, but blacks are not, and Obama displayed his knowledge of this double standard, and the essential role that it plays in justifying racial bias towards African Americans. Tim Russert and his mentor, Daniel Patrick Moynihan, would have been proud.

For a brief period, there was an opening that suggested that this stale politics could be shattered, but Obama's defeat in Texas and Ohio, primarily at the hand of working class whites, closed it. It did not deny him the nomination, as I thought it would, but it did force him to abandon any radical notions that he may have had about transforming the US political system. Since then, Obama has scrupulously followed the rules, as he will do when he enters the White House. Obama recognizes that he cannot pursue even a palled progressive agenda of demilitarization, an agenda that is an unavoidable precondition to confronting the declining standard of living for middle income, lower middle income and poor Americans, if it is opposed by the proletarian base of the Democratic Party.

As for the rest of us, it means millions of more American foreclosed out of their houses, driven to the unemployment lines and pushed to the margins of this credit dependent economy, with an increasing likelihood that Obama will be just as willing to attack Iran as McCain to divert attention from this catastrophe. Because, having left the forces within this country dictating these interrelated outcomes unexposed and untouched, Obama will soon discover that he is just as much a prisoner of them as you and I. Like Bush, he will govern symbolically instead of realistically, because the alternative is politically suicidal in the absence of a social movement to support it.

-Richard Estes (American Leftist)

Feeling Like It

Just got through a rather busy stretch of my life that's taken me away from the blog as you may have noticed. On top of that the kids have both been under the weather a bit lately but I'm finally noticing shades of light at the other end of the tunnel so there'll be some interesting posts around here soon. Happy Holidays.

"What the Hell Bitch?"

Damn I wish I could write like this dude.

Coming Soon to an Economy Near You...

The Paulson Gang!

Obama Watch

Right on schedule Team Obama, right on schedule. Jeremy Scahill has compiled a superb reference list of The One's new team of Clintonistas and other assorted DLC hacks and it's all in accord with an agenda the President-Elect has been signaling since he wrapped up the nomination: to the center-right we go. Change? Silly chumps.

But, but those damn auto CEOs and their private jets...

Gotta love the spectacle of our congress critters and the MSM getting their shorts in a bunch over the auto chieftains having the nerve to use company jets for the purpose in which they were intended, namely to carry executives swiftly and safely to their destinations (presumably having to do with company business). Don't get me wrong, the Big Three need to address some structural issues with their business model but few can deny that they are integral to the real economy. Unlike Wall Street the US auto industry creates something of tangible value and utility as well as providing millions of American workers with living-wage jobs which then enables them to pay their mortgages, send their children to college, or otherwise participate in the economy. Losing the nation's most important domestic manufacturing component in the face of a quarter century of off-shoring that has all but de-industrialized what was once an industrial powerhouse is a systemic threat to our well-being as a nation.

One would be hard pressed to get this impression from MSM coverage of the proposed 25 billion dollar bridge loan to the US auto industry. Instead we get theater about private jets. Did it occur to anyone in Congress or the MSM to ask the same question of the Wall Street banksters who lined up one month ago for 700 billion in taxpayer obligations with no strings attached? I wonder what the odds are that the heads of Goldman Sachs, JP Morgan Chase, Morgan Stanley, Merrill Lynch, Bank of America, or Bank of New York Mellon fly commercial?

For those of us who are still curious about what Hank Paulson and his merry band of Wall Street thieves have been up to while the MSM performs its primary function of distracting the public from issues of importance, Glen Ford has this gem to help us keep things in perspective:

The rule of law has been cast aside in the mad frenzy to loot the wealth of a nation before George Bush leaves office. "Wall Street has succeeded in establishing a kind of privatized martial law economic regime," in which trillions of dollars are secretly transferred to unnamed corporations.
 
Lawless Capital, Rushing to Armageddon

The fundamental law of capital - the system's need to extract by any means possible ever increasing returns on investment, or die - brought the world to the current catastrophe. Inevitably, despite all the noise about the need for transparency and tightening of regulations on the behavior of capital, the system's response to its crisis is to descend into even greater depths of lawlessness.

The frenzy of unchecked illegality pulsates outward from the chaotic center of crisis and criminality: Wall Street, which has succeeded in establishing a kind of privatized martial law economic regime in the waning months of the Bush kleptocracy. The $700 billion "bailout" is revealed as a brazen bait-and-switch bamboozlement, in which Goldman Sachs Family Don Hank Paulson, under color-of-law as Treasury Secretary, ignores the terms of congressional legislation to dispense mountains of public wealth to his bankster friends as he sees fit. In return for their cut of the loot, the banking mafia give the public - nothing! No recycling of the billions into loans to small business or college-bound students or any of the intended beneficiaries. Instead, the Lords of Capital hijack the people's money to expand their territory, buying up the turf of smaller banksters in order to make themselves more indispensable, more untouchable, more removed from the elementary rule of law. Paulson attaches no strings of public obligations to his gifts, demands no voting stakeholder position in the banks.

Then, the master criminal, in secrecy and with total contempt for a spineless and utterly compromised Congress, rewrites the laws of the land, to forgive $140 billion in taxes due from the banks' merger deals, accomplished with the public's money. But Congress fails to protest this theft of its core legislative duty: to make the laws that govern society. Paulson and his banksters are above the law - mega-thieves operating with total impunity.

Meanwhile, Paulson's partner in crime at the Federal Reserve, Ben Bernanke, has distributed two trillion dollars in "loans" to a list of corporations whose identities are secret, for purposes that are also secret. Even the billionaire Michael Bloomberg's news agency is in the dark, and has sued to find out where the two thousand billion dollars has gone. Few lawmakers on Capitol Hill seem to even want to know, fearing they would be blamed for the panic that might break out if the public were aware of who had pocketed their trillions.

If there is one person who possesses the moral capital to demand an accounting from the conspirators, it is Barack Obama. But the president-elect behaves as if it is none of his business if the Bush gang loots the national wealth on its way out. But then, Obama fought for the bailout, has had the kindest words for Paulson, and gets his economic advice from Robert Rubin, a former Goldman Sachs Godfather and Treasury Secretary, and Larry Summers, another former Treasury chief who teamed with Rubin during the Clinton administration to cast a cloak of silence over questions surrounding derivatives, the exotic financial instruments that finally wrecked the global system. Obama says he wants a "smooth transition." But his silence on the lawlessness at the heart of the transition calls his own motives, competence and integrity into question.

-Glen Ford

A time for selflessness & sacrifice

Now that President-Elect Barack Obama has done away with Maverick and the Snow Queen, he and his rapidly forming team can go about the important business of tamping down the expectations of his base. Yes, the poor suckers who've been drinking the O'laid for the past 21 months are in for a very rude awakening quite soon. The One hinted as much during his victory speech in Grant Park on Tuesday night, but for those not paying close attention the selection of brass-knuckle Zionist partisan and corporate-centrist Rahm Emanuel as Chief of Staff should have put them on notice. Sorry folks but given these difficult economic times it's critical that we accept that every promise made during the campaign, no matter how seemingly sincere, cannot possibly be met. It really does come down to addressing the right priorities.

Studs

Let's never forget him.

Bull Worship

The Wall Street faithful genuflect before the alter of greed.

Financial Crisis 101 (and what the Left can do about it)

It's really been fascinating the last few days to watch the highly paid clowns on CNBC mumble and stutter as the obvious bankruptcy of capitalism is further exposed. Their clown prince, Jim Cramer of Mad Money, has been especially entertaining. Trillions in theoretical wealth has vanished into the dark void of nothingness from whence it came and no one in elite circles really knows what to do. Every "remedy" that US Treasury Secretary Hank Paulson and his counterparts in Europe have implemented so far have had but one goal: rescuing insolvent financial institutions. Meanwhile, the real economy of productive work in which tangible things of value and utility are created is being left to die on the vine. The rot on Wall Street has not yet fully infected the real economy or "Main Street" in popular parlance, but that may change quickly if the buffoons now calling the shots are not reined in--and soon. Even hardcore self-professed conservatives and true believers of capitalism such as investment professional Karl Denninger are utterly disgusted with the Paulson Gang.

What I'm not seeing anywhere on bubble-vision or reading in the Wall Street Journal is criticism which fundamentally questions the efficacy of capitalism itself as the best means of addressing a modern society's needs. This should hardly be surprising given that the mainstream corporate media's primary function is maintaining the status quo while preaching the gospel of consumerism. No, as always one must look to other sources.

Sj D'Arcy, a writer with whom I've only recently become aware, has laid out a compelling proposal for dealing with the crisis from a Left perspective and sees the current discrediting of capitalism at the systemic level as a unique opportunity for true progressives to leave the sidelines so to speak and get into the game. Infamous neo-liberal economist Milton Friedman once noted that during a crisis the ideas that are generally adopted to cope with it are the ones that "happen to be laying around". Naturally it helps if the ideas "laying around" were placed there by elites who are at or very near the levers of power. For the Right this has nearly always been the case over the past half century, however, the current crisis has the Right on the ropes, disoriented and reeling as opposed to the Left as is the usual pattern. Capitalism as a theory hasn't tumbled to these depths since 1930's--the last time the Left was resurgent in the US. This presents a unique opportunity for the Left to be relevant again in the US and shouldn't be squandered on sectarian squabbling (a Left staple).

D'Arcy's essay is a must read for those unfamiliar with the mechanics of this crisis and are unsure of how the Left fits in the present debate regarding a way forward.

[PS. The links that follow D'Arcy's essay are extremely valuable as well.]

"F" is for Failure

What follows is a recent TomDispatch post on the sorry Team Bush report card. They have so much with which to be proud:

On the brief occasions when the President now appears in the Rose Garden to "comfort" or "reassure" a shock-and-awed nation, you can almost hear those legions of ducks quacking lamely in the background. Once upon a time, George W. Bush, along with his top officials and advisors, hoped to preside over a global Pax Americana and a domestic Pax Republicana -- a legacy for the generations. More recently, their highest hope seems to have been to slip out of town in January before the you-know-what hits the fan. No such luck.
The rest...

The Crisis of Capitalism

Professor Richard D. Wolff of Amherst on Capitalism as it nears the cliff (courtesy of Lenin's Tomb).

The Meltdown Breakdown

I found this explication of the financial meltdown on Alternet and it may be the most layman-friendly I've found so far. Read it, then pass it on...

Running out of time, while good ideas languish

Stephen Lendman with a few cheerful words about the current crisis:

Since 9/11, the notion of an October surprise has been around. The idea going something like this. Another real or manufactured terror attack. The dominant media stokes fear. The public is again traumatized. The Bush administration pledges all effective measures to protect national security. Formerly seizes total power. Suspends the Constitution and declares martial law. Mass detentions follow. Beginning with dissenters and elements of the public considered "dangerous."
the rest...

Bankers Unchained

I recently stumbled upon the following essay by Rowan Wolf over at Cyrano’s Journal (Thomas Paine’s Corner) and, for the layman, it is by far the most assessable description I’ve found to date on the derivatives beast that threatens to swallow us whole. Of course this is all made possible by “our” elected representatives who would have us sit on the monster’s dinner plate in place of the Wall Street hustlers who nurtured and fed it.

[All credit to the great Elaine Meinel Supkis for this link]

The Anatomy of a Bubble

Until recently, most people had never even heard of derivatives; but in terms of money traded, these investments represent the biggest financial market in the world. Derivatives are financial instruments that have no intrinsic value but derive their value from something else. Basically, they are just bets. You can “hedge your bet” that something you own will go up by placing a side bet that it will go down. “Hedge funds” hedge bets in the derivatives market. Bets can be placed on anything, from the price of tea in China to the movements of specific markets.

“The point everyone misses,” wrote economist Robert Chapman a decade ago, “is that buying derivatives is not investing. It is gambling, insurance and high stakes bookmaking. Derivatives create nothing.” 1. They not only create nothing, but they serve to enrich non-producers at the expense of the people who do create real goods and services. In congressional hearings in the early 1990s, derivatives trading was challenged as being an illegal form of gambling. But the practice was legitimized by Fed Chairman Alan Greenspan, who not only lent legal and regulatory support to the trade but actively promoted derivatives as a way to improve “risk management.” Partly, this was to boost the flagging profits of the banks; and at the larger banks and dealers, it worked. But the cost was an increase in risk to the financial system as a whole.

2. Since then, derivative trades have grown exponentially, until now they are larger than the entire global economy. The Bank for International Settlements recently reported that total derivatives trades exceeded one quadrillion dollars - that’s 1,000 trillion dollars. 3. How is that figure even possible? The gross domestic product of all the countries in the world is only about 60 trillion dollars. The answer is that gamblers can bet as much as they want. They can bet money they don’t have, and that is where the huge increase in risk comes in...

The rest is worth reading in full.

Dean Baker on the Giveaway

Triumph of the Beasts

As predicted in many quarters the Wall Street cretins and their sycophants in Congress have succeeded in laying the ground work for the looting of our children's future. The Giveaway Plan sailed through the House after the Senate slathered honey & cream on Paulson's turd. Where will things go from here you wonder? Well London Banker paints a scenario that is frighteningly plausible [note: this was written before the House vote]:

Financial Eugenics: The Paulson Plan for Survivor Bias

By “London Banker”

As I write this I don’t know the outcome of the attempt to ram through legislation for looting the US Treasury of $700 billion before the end of the Bush administration.  I suspect that Congress will force the passage of the bill in some form because the media and political narrative on the necessity of the measure is unremitting and so horribly biased.

No alternatives will be considered.

No constraints on the unilateral executive authority of Hank Paulson will be considered.

No assurances that funds will be used to unlock credit markets or promote lending to the real economy (as opposed to the financial robber barons) will be considered.

Instead, the bill will get laden with an additional 300 pages of pork to sway the dissenters, adding to the tab imposed on the American taxpayer.

Having listened to all 42 minutes of the late night Treasury briefing of investment banks on Sunday, there is no doubt in my mind that this legislation represents the sort of federal largesse for Goldman Sachs, Morgan Stanley, Citibank and JPMorgan Chase that the Iraq war provided for Halliburton and Blackwater.

The most cynical moment in the call is when the Treasury official confirms, ”our preference would be to help the healthy banks become even healthier” rather than helping troubled banks or illiquid banks.

America is now a centrally planned economy where the Treasury will determine which firms survive and prosper through allocation of scarce capital to an undercapitalised financial sector.

Clearly what is going on here has nothing to do with kick starting the credit markets or stabilising the equity markets or restoring depositor confidence in banks.  (Treasury official:  “No provision in the legislation that mandates re-lending.”)  What is going on here is a blatant attempt to provide government funds to a select cadre of firms (not all banks) which are chosen to be the survivors feasting off the carcasses of their less fortunate and less well-connected brethren as the downturn intensifies in the years to come.

The crash in equities will still happen.  The debt deflation of the economy leading to mass commercial and consumer credit defaults will still happen.  The collapse of many national, regional and local financial institutions will still happen.  The bankruptcy of many municipalities and shortfalls in state budgets will still happen.

This bill is about engineering survivor bias to friends of the Bush administration so that they profit disproportionately from the collapse of these markets using the funds provided by the taxpayer via the unreviewable and unconditional authority of the Secretary of the Treasury.

The basic plan is to set up a federal money laundering operation.  Bad assets come in, get laundered by the Treasury and put in a new AAA “wrapper” (as it’s termed on the call), and good assets go out, issued as Treasury guaranteed securities.  Whether the final value of the legislation this week is $700 billion or $150 billion is irrelevant as long as the laundering operation can accommodate the throughput, as that number is only a cap on total extensions at any one time.

The SEC will support the plan and survivor bias by relaxing FASB 157 on mark to market accounting.  If there is no agreement on what an asset is worth, it is worth whatever the firm holding it says in its Level 3 accounts or the Treasury Secretary accepts in buying it.

The Federal Reserve will support the plan by relaxing the definition of “control stake” in US banks and bank holding companies to allow secretive cabals to hold through private equity and offshore hedge funds.  No one knows the beneficial owners of these ill-transparent private equity investors, and so it is the ideal way to reward loyal and helpful insiders, legislators and officials – as well as cede further ownership of American assets to foreign stakeholders who would be politically unacceptable if publicly acknowledged.  Many foreign creditors are irate at the losses their funds, banks and pensioners have sustained from investments in the United States, and this plan provides a secret way to buy them off and keep them lending and investing as their own economies are roiled by the deflation to come.

For the past year the survivor bias has been orchestrated from the Federal Reserve, with its extension of innovative credit facilities and selectively engineered rescues or forced mergers.  That has been very useful, but that well is now dry.  The Fed has no more good assets to trade for the bad assets the banks can offer.  And the supply of bad assets just keeps growing as market illiquidity spreads further from the core of the mortgage backed securities market.  Instability is now leading to a realistic threat that the Fed and Treasury could lose control of the deflationary process.

Part of the reason the Paulson Plan is so attractive is that it recapitalises the Fed by promoting the unwinding of repos and lending facilities which left the Fed holding toxic assets.  As the repos and credit facilities gradually unwind, these toxic assets can now be taken back by the banks and exchanged for good cash.  The Fed gets its balance sheet Treasuries and cash back to restore its flexibility to intervene anew.

Favoured private equity and insiders who swap US dollars for equity in the banking system will presumably be aware of the survivor bias being engineered on their behalf.  Sovereign wealth funds, investment funds and private equity investors ripped off in the first round of recapitalisation may be willing to come back in once it is clear to them that the next round will benefit from official favouritism.  Warren Buffett’s timely stake in Goldman Sachs is clearly linked to his confidence the Paulson Plan will benefit them disproportionately.

A factor which is probably critical but has received little discussion is that literally thousands of Bush administration apparatchiks will need jobs come January, and a fair selection of GOP House and Senate legislators and their aides too.  What better way to enahance their CVs in their final months in power than to distribute $700 billion or so in pre-Christmas largesse to the most remunerative employers in the world?  And what better way to ensure the corporate largesse is returned to the GOP to win back the White House and Congress in 2012 as the recession fuels public anger?
And then there is a huge arbitrage opportunity as well so that everyone makes money.  According to the conference call, the pricing on offer from the Treasury will be a bit below Level 3 pricing.  The toxic assets will be repackaged and resold with a new AAA wrapper, possibly priced well below what the Treasury paid, assuring a huge profit on both immediate liquidation by the banks and ultimate maturity by investors.  The Fed gets its cash and Treasuries back; the banks make huge profits; the foreigners and off-shore tax avoiders get disguised ownership of the American financial system; the taxpayer gets ripped off.  What’s not to love?

Think back to Fisher’s Theory of Debt Deflation in Great Depressions.  Dollars become “bigger” as deflation takes hold because each dollar can buy more assets as assets deflate.  That means that as these clowns crash the markets, their $700 billion of liquid cash funnelled to their friends and recycled through the Treasury laundrymat can progressively buy up the rest of the pieces on the gameboard at low discount prices.  Game over with those who caused the crash and robbed the bank winning.

Deflation is going to happen – globally.  Either we can use the course of deflation to shape healthy economies that will provide growth and employment and productive returns on investment in future, or we can allow deflation to further enrich those miscreants whose irresponsible policies led to the violent financial collapse we are about to experience.

There is a fundamentally healthy economy in America – somewhere underneath all the financial excess and chicanery and all the financial/oil/military/healthcare/developer corruption of local, state and federal politics.  It will be a painful and slow process to kill off the metastasising cancerous growths on the economy, but if Americans achieved that, they could embrace a healthier and more productive and more prosperous future.

I would like to believe Americans expressed the courage to change over last weekend when they 25 to 1 rejected an unconstrained and unconditional bailout of Wall Street in favour of cold turkey deleveraging of the economy.  I wish I could believe that it mattered in the political calculus, but the result of the House vote on the bill will tell us that.

Fight the survivor bias.  It’s not your survival they’re engineering.

More Common Sense

The following is another interesting take on Paulson's shenanigans from a thread over at Common Dreams:

Paulson’s Great Depression:

It is difficult to believe that Paulson is not intentionally destroying the world economy, since his company, Goldman Sachs has been so intimately involved in setting the stage for this fiasco.

Goldman Sachs was involved in many sub-prime securitizations, and then was instrumental in setting up the ABX index, which Goldman then shorted to death after selling the index to its clients. By shorting the ABX index, Goldman not only made huge profits, but also eliminated all financing for real estate securities by spreading the notion that they had no resale value, because the value “indicated” by the ABX index was so low. The notion of “toxic securities” was sold to the world by Goldman and their confederates. Once new real estate lending was substantially restricted, a broad decline in real estate prices was a certainty, and recently adopted “mark-to-market” accounting rules forced lenders to report balance sheet losses even for loans that were current.
Goldman also helped develop and sell complex securities, that have magnified the extent of the damage done. Collateralized debt obligations and credit default swaps can magnify any actual loss, since there are many more credit default swaps sold than actual loans made. A $1 actual loan loss can become $10 or more of losses to one side of the swap transaction, and $10 or more of gain to the other side of the transaction.
Paulson has made the financial crisis much worse by his publicly stated intention to “punish” some companies. While Bear Stearns was “bailed out”, Lehman was allowed to fail. Fannie and Freddie were “rescued” in a way that arbitrarily removed $10 to $15 billion of capital from banks that had invested in the preferred stock, which then reduced those banks’ lending capacity by $100 billion, making the “credit crisis” much more severe than it was before the “rescue”. Instead of stopping a run on Washington Mutual by providing cash loans, Washington Mutual was unnecessarily liquidated, to demonstrate the urgency to authorize $700 billion to Paulson’s Treasury.

Of course because of credit default swaps sold around the world, financial institutions’ losses on the Washington Mutual liquidation are vastly larger than the cost of keeping Washington Mutual open as an independent entity.

Now we come to the $700 billion. If this is used SOLELY to purchase whole loans, then the institutions now holding those loans do not experience losses that get magnified by credit default securities, and the government is in a position to rework the loans with affordable payment terms, so that people keep their homes, and the government recovers its entire investment. If this money is used to purchase “downstream securities”, such as securitization interests, CDOs, and credit default swaps, then vastly more money is required, and homeowners still lose their homes.

Why would Paulson seek the authority to buy “downstream securities”? Could it be that Goldman and its confederates hold these securities, and make vastly more money at taxpayer expense by selling these securities than by allowing people to remain in their homes, eliminating the defaults that make these credit default swaps so valuable to one side of the contract, and so costly to the other side of the contract, the US taxpayer, if Paulson gets his way.


Let's work to kill this damn bill.

In a nutshell...

The following comments are courtesy of a poster over at the New Republic blog and it is perhaps the clearest and most accessible synopsis yet of the Wall Street debacle and what's at stake:

(September 30, 2008 9:07 AM)

Very few people in or out of government understand what this crisis is about.  The simple  answer is that highly levered financial companies that participate in the credit/money supply have lost their equity due to the market decline in their mortgage-backed assets and related derivative contracts.  That freezes the flow of credit/money supply.  So, something needs to be done if the economy is not going to tip into sharp recession because credit/money are essential lubricants for transactions.

However, there is a correct and visceral negative reaction to the notion that the best or only way to stabilize the credit system is for the public to eat the losses generated by rapacious finance types by buying up their bad paper at above market values -- which is what the Paulson plan is about.  Dress it up how you will, it is nothing more than a giant handout to the very people who are to blame for the problem at the expense of everyone else.

It is simply unnecessary to do this in order to stabilize the system.  The right way to do it is a variation on what has occurred at AIG and WaMu, which is that the investors, both debt for money borrowed and equity, get wiped out in the course of the recapitalization of the operating assets.  It isn't even necessary to wipe out the debt and equity.  They can be left in a position to realize the full value, and more, of what they own today.  How can this be done?

It can be accomplished with a law that, by fiat, removes from the books of the operating companies their bad assets, their indebtedness for borrowed-money, and their derivative contracts (which combine both an asset and a liability) and spins them off to a parent or trust that is free to realize them as a pass-through tax entity (meaning there is no taxation at that level, only at the level of the ultimate owners).  The trade/operating liabilities (deposits, customer accounts, and such) are left undisturbed.  The owners and investors have exactly the same pool of assets and liabilities that they did before this maneuver, but now there is an unlevered operating subsidiary that is free to do business, borrow money, and raise capital without the burden of past mistakes.  In those cases where the operating entity is still under-capitalized (too many liabilities for its good assets), THEN the Treasury can be authorized to inject capital by purchasing a combination of preferred stock and warrants (the same deal Warren Buffet got at Goldman).

In this manner, the investors are left free to realize the pool of assets, liabilities, and fresh equity that they hold, but without invading the capital of the new subsidiary to do it.  They are no worse off in financial terms, other than the fact they they cannot liquidate the operating company, and are likely better off as the market as a whole returns to equilibrium.  They can hold instruments to maturity for their cash flow, sell them in the market, sell the equity of the subsidiary, whatever they want, without clogging up the flow of credit.  It reorganizes the situation so that it is the shareholders and investors who bear the losses, not the operating entity, as if, for example, the shareholders of Lehman had gone bankrupt, not Lehman itself.  Best of all, this "recapitalization on the fly" does not redistribute losses from those who produced them to anyone else.

Now, you tell me why the Bush administration prefers just to hand out money to the very people who caused the problem -- the dying gasp of the Bush kleptocracy.  People may not understand the intricacies, but their visceral negative reaction to the Bush/Paulson plan is spot on.  It is a pity that the Dems seem to have no one who can figure out what is wrong with the Bush plan and how to fix it.
-roidubouloi

Cut it, paste it and pass it along.

The Plot Thickens

It would appear that in one last dying grasp the Banksters are attempting to blackmail Congress and the rest of the country into signing off on the Paulson/Wall Street Heist of the century. The so-called "liquidity crisis" is in fact a shabbily disguised insolvency issue in which the reckless are demanding that the taxpayer pay the price. As always on Wall Street, their profits are their profits but their losses are our losses. Mike Whitney explains further...

Change We Can Believe In

Only fools blinded by irrational fear of change and progress make the claim that there's no fundamental difference between Obama and McCain on the issues.

Finally!

Visible backbone sighting in Washington.

Heads Up! Falling Bankers!

Lehman Brothers survived the Panic of 1857, The Civil War, the Panics of 1873, 1893, 1907, and the Great Depression. But it couldn't survive the Bush presidency.
— Robert Hammer, Pittsboro, NC
Oh the horror!

Random Notes on Georgia

Chomsky with the straight dope as usual...

Dems in Danger

Oh no! The presumptive crown appears to slip ever so slightly from St. Obama's blessed head. Beads of sweat now grace his brow and frankly the faithful are worried. They should be. The Barockstar can't shake McCrazy and Sarah "The Diplomat" Palin no matter how much he panders to the right wing crowd which the polls seem to now confirm.

We've all seen this movie before of course. The Democratic wing of the Business Party would rather wither and die than inspire a class revolution, but then you knew that of course. Unsurprisingly the GOP knows how to play this game, how to tap into America's inner crazy and they're off to a fine start. The problem is largely twofold really. First, the Democratic Party is collaborationist in every sense not an agent of fundamental change and, secondly as IOZ points out, huge swaths of the American population ain't ready for no chang'in.

Welcome to the USSRA

Economist Nouriel Roubini works up a righteous anger over the recent nationalization of Freddie/Fannie. Well it's about time.

Surge Fables

I would be remiss if I didn't share some notes from Professor Juan Cole on the "surge" that has been so prominently featured in the calculations of both challengers in the race for Chief Imperial Manager. Though this essay is from way back in July of this year, every word of it is still highly relevant today. In fact, It would behoove you to refer to it whenever you next encounter some hack blathering on about the success of the surge. The comments section of this piece contains some very good analysis as well. Read on...

The Irresistible Centrifugal Force of Power

Yes, there can be little doubt that Obama and the powerful elite sector which supports and funds his campaign are feeling good about their chances this November. Why shouldn't they? Hasn't McCain foolishly staked his run on the thoroughly discredited Team Bush agenda of aggressive militarism abroad and rapacious, winner-take-all, the devil gets the hindmost, "free-market" capitalism at home that has embarrassingly revealed itself in our cratering financial sector and imploding housing market? Of course Team Barack Obama (hereafter, Team B.O.) has no serious fundamental or moral objection to this agenda per se, however, they do raise tactical objections about its execution by the outgoing team. It is here where Team B.O. has sought to distinguish itself from the Bushistas. So, you'll hear nothing from Obama's camp that seriously addresses the desire of perhaps 90% of Iraqis that US occupying forces and accompanying mercenaries leave their decimated lands. Team B.O. has every intention of maintaining the 14 massive mega-bases and the Vatican City-sized "embassy" that garrison this illegally occupied country. Furthermore, Obama has been explicit in his determination to expand the war in Afghanistan and Pakistan. Is there anyone who seriously thinks that Team B.O., filled to the brim with free-market true believers, will work to rescind NAFTA and the other investor rights agreements that have decimated the labor movement (and the worker protections and living wages that went with it) both here and abroad? Let's grow up people.

Even knowing all of this It's still gratifying when one is surreptitiously given a peek inside the citadel of power by an insider. What follows is an important essay by a contributer to Joe Bageant's wonderful blog. This political insider wisely chooses to remain anonymous (and thus employable):

By an anonymous political consultant

Over the last many weeks we have all been subjected to endless news stories about Senator Obama's campaign "Move to the Center". Leaving aside the political illiteracy which underlines this phrase, the use of it reveals important clues about the rhetoric of electoral campaigns, whom they target and what they are trying to communicate.
Put simply, what "Moving to the Center," means is: moving towards power and money...

The rest

California Dreaming

I wonder what conservation in California would look like under a McCain/Palin administration. Do you? Given the fact that both of the crackpots bearing the GOP standard are unabashed supporters of oil drilling in the ecologically sensitive Arctic National Wildlife Refuge (ANWR) for crude that, for starters, doesn't come close to sustaining America's rate of consumption and, in any event, wouldn't come on line for another decade--at stupendous cost to the environment--we probably shouldn't be encouraged. As it turns out California, the nation's most populated state and the WORLD'S sixth largest economy, faces an existential threat to its continued viability due to a combination of short-sighted water-management policies, extreme population growth, and climate change. Try visualizing McCain in the White House as the following challenges to California and the southwest region in general evolve:

The Silence of Collapse
by Rachel Olivieri

There is no landmass on Earth quite like California. Here one finds the world’s most ancient trees, bristlecone pines, more than 4,700 years old, in the White Mountains; the tallest and largest trees, the coast redwood and giant sequoia, respectively; the highest point in the lower 48 states, Mount Whitney; the lowest and hottest place in the Western Hemisphere, Death Valley; the largest western hemisphere estuary, the Bay Delta; an 800-mile coastline; the most irrigated acres; the most endangered species in the U.S.; the most diverse geology and biodiversity in the U.S.; and the greatest, most ecologically destructive water projects on Earth...

The rest

America's Global Empire of Bases

For a country that "doesn't do empire" the US has an awful lot of forward military bases garrisoning the globe which would seem to belie this assertion. Tom Engelhardt of TomDispatch.com has the disturbing details [Note: be sure to follow the Mother Jones links at the end]:

Going on an Imperial Bender
How the U.S. Garrisons the Planet and Doesn't Even Notice
By Tom Engelhardt

Here it is, as simply as I can put it: In the course of any year, there must be relatively few countries on this planet on which U.S. soldiers do not set foot, whether with guns blazing, humanitarian aid in hand, or just for a friendly visit. In startling numbers of countries, our soldiers not only arrive, but stay interminably, if not indefinitely. Sometimes they live on military bases built to the tune of billions of dollars that amount to sizeable American towns (with accompanying amenities), sometimes on stripped down forward operating bases that may not even have showers. When those troops don't stay, often American equipment does -- carefully stored for further use at tiny "cooperative security locations," known informally as "lily pads" (from which U.S. troops, like so many frogs, could assumedly leap quickly into a region in crisis).

At the height of the Roman Empire, the Romans had an estimated 37 major military bases scattered around their dominions. At the height of the British Empire, the British had 36 of them planetwide. Depending on just who you listen to and how you count, we have hundreds of bases. According to Pentagon records, in fact, there are 761 active military "sites" abroad...

The rest.

Open Mic Night

Courtesy of Barry Crimmins: