The Invisible Hand

In the 18th century Adam Smith, the father of modern economics, wrote that the free market produced the right amount and variety of goods guided by “the invisible hand” and in the process benefited all mankind. Furthermore, pursuing one's self- interest promoted the general welfare and allowed the”the invisible hand” to work. Thus, “greed is good”. Also the market has the natural ability to establish a price that promotes a fair return. Pursuing one's own interest is, therefore, good. But even Adam Smith recognized that owners of business often met to control or raise prices.

Thus, government regulation is necessary because we cannot rely on business owners not to stymie “the invisible hand” in order to increase profits. Making more money can be an addiction because more is never enough. So stealth becomes endemic.

Smith was very much opposed to price fixing monopolies and subsidies to business. He believed in liberty and justice as opposed to fraud and injustice with impunity.

The prelude to our present economic crisis was the Wall St. bubble that destroyed Enron, WorldCom and Tyco. All the CEO's of these firms are now languishing in jail. Many more were never indicted for their thievery. As of today, the cheating continues. No one else has been indicted.

For the past 25 years our government has adopted rules that favor the rich and powerful and taken away the protections for workers and retirees. The new rules were directed at the regulators. Every game requires rules but Wall St. wants to play the game without rules. They want to do whatever they damn well please at the expense of the middle class and the poor. They even steal from their own shareholders and investors.

Let's look now at some of the individuals who influenced our economic decisions in the last 25 years and prior. The following people lived in a world of illusion: Ayn Rand: the ultra conservative Libertarian, Alan Greenspan: her disciple, Milton Friedman: the No Regulation Chicago School of Economics and Ronald Reagan, the no nothing politician, all wedded to the trickle down theory of economics. Their belief in the invisible hand was a fantasy and the trickle down theory or supply side economics was a myth. Obviously it did not work. No regulation works only in your dreams. In fact, in real life it is a delusion. It is unbelievable.

Even Adam Smith, and this is usually ignored in his work, recognized the need for rules.  Despite "the invisible hand", he witnessed in own time business people applying for unneeded subsidies merely to increase their personal wealth.

A good example of a corporate executive illegally increasing his personal wealth was the stunt that Steve Jobs, the CEO of Apple Computer, pulled. Without the Board of Directors permission he was awarded stock options in the millions and then exchanged those options for stock in the hundreds of millions. It was fraud and the only person charged was the CFO in the amount of a $3.5 million fine. No action was taken against Jobs. Multiply this by the thousands of executives doing the same thing and we get an idea of the extent to which shareholders were robbed. It is pure and simple banditry for which no one is prosecuted. And any federal prosecutor who tried to get these guys was fired. So here you have the Justice Department aiding the cause of greed.

Alan Greenspan , the Chairman of the Federal Reserve since Ronald Reagan's administration, believed in no rules. He actually was convinced that Wall St. was run by honorable people who would protect the market from fraud. In short, regulation was unnecessary since the market could police itself.

Fast forward to a Congressional investigation where Alan Greenspan testified as to how mistaken and false was his economic theory. A theory that he believed for 40 years. He had to admit that he was wrong to believe in the self regulating power of the market.

Brooksley Born, the Chairman of the Commodity Futures Trading Commission (CFTC), the brilliant woman who saw the crises coming, warned Greenspan, Timothy Geithner and Lawrence Summers. She was told to shut up. Multiple times.

Until we reinstate regulatory controls on the banks and Wall St., financial crises will repeat, repeat and repeat. And the system will finally breakdown into total chaos.

But remember Wall St. and Goldman Sachs are doing God's work. Brothers and sisters, you will be saved by the “invisible hand” of Ronald Reagan.


References:

Front Line Documentary
Johnston, David Cay. Free Lunch
Wikipedia

Saving Afghanistan

The best way to save Afghanistan is to get out. But who are we saving Afghanistan from? Al Qaeda? Al Qaeda left long ago. They are in Pakistan, our nuclear ally. We are fighting in the wrong country. One Afghan official has said that Afghans do not accept the notion that foreign invaders are “fighting for our freedom.” Bringing freedom and democracy to a country at the point of a gun does not gain supporters. All it does is make the people “mad as hell”. They will not be satisfied until they throw the invaders out. Meanwhile the U.S. is wasting blood and treasure in another losing battle. Viet Nam and Iraq are good examples of stupid political decisions.

The U.S. decision makers are claiming that we must save the Afghan people from the Taliban. Firstly, the Taliban is not Al Qaeda. They are not terrorists. Secondly, they traditionally ruled the country. In 2001 by overthrowing the Taliban, the largest ethnic group in the country, we put in power the Tajiks, a smaller ethnic group of the North. Now we have set up the country for a civil war as the Taliban takes back its control. Similarly, we brought about a civil war in Iraq by causing ethnic conflict that resulted in the deaths of a million Iraqis. So far does it sound as though we are helping the Afghans.

Next, the President of Afghanistan, Hamid Karzai, was put in place by the Bush-Cheney administration to form a central government in a country that has no longing for a national government. Karzai is a puppet and his government is weak, incompetent and corrupt. He has no influence outside the capitol. And in the recent election he stole the victory with obvious ballot stuffing. Do we really want to support this guy with the bodies of our soldiers? It is a total disgrace and an embarrassment to President Obama.

So far our occupation of Afghanistan has been a total failure. For once the American people are right and are opposed to sending more troops there. We are not bringing peace to that country nor are we making ourselves more secure. We should plan on getting out in less than a year. Cheney has criticized Obama publicly for “dithering” on sending more troops. Biden’s reaction to Cheney’s remark was “Who cares?” It is not right to kill more soldiers and civilians in order to parry right wing political attacks. There is a morality here that needs to be considered.

Remember when President Reagan, the Republican Party icon, introduced the term “freedom fighters” to the political scene in connection with the Nicaraguan Contras which we supported with American dollars. What Reagan did was illegal and he came very close to impeachment.

A well known comic satirist raised the following question: If crime fighters fight crime and fire fighters fight fires, what do freedom fighters fight? Think about it. Let’s get out of Afghanistan before we sink any deeper into the quagmire.


References:

George Carlin
Hightower Low Down
Znet

Web of Fraud

Let’s bring the economic crises up to date with facts rather than the B.S. spread by the mainstream media. According to one report foreclosures are up 23% over last year. That may very well be, however, the actual foreclosures are low compared to the number of delinquencies. And there is a reason for that. The banks have a new gimmick. They are not foreclosing. Why? Because once they do that they have to report the loss. So the banks have dishonestly changed the accounting rules and got Congress to cooperate. Now in order to pay the huge bonuses ($700,000 per employee) coming up at the end of the year, the bank must show huge profits. If your losses are less, your profits are more and as a result your bonuses go through the roof. This may be temporarily beneficial to the delinquent borrower since he can stay a little bit longer in his home but come the first quarter of the new year, his furniture may be on the sidewalk. Besides this is taxpayer money being paid out by the bushel. So what we have here is a “web of fraud.” As long as it lasts the banks are getting fat at the trough.

Another gimmick that banks pulled involved the appraisers. If the lender did not like the appraisal that came in he would fire the appraiser. If the appraisal was not high enough, out he went. According to a survey done in 2007, 90% of the appraisers reported intimidation by the lender to increase appraisals. So it was the lenders who were committing widespread fraud not the borrowers. There is only one reason to “inflate appraisals” and that is to commit fraud, according to a former bank regulator. Also white collar criminologists state that the lender is responsible for 80% of “mortgage fraud losses”.

The financial sector of our economy is so large it acts as a parasite. It wastes a huge portion of the national income. It produces no products or services useful to the economy. It acts only as a gambling casino for the benefit of Wall St. And what is even worse, this parasitic financial sector produced a criminal environment that resulted in a destructive mortgage “bubble”. Until we can regulate the Wall St. scam, fraud and corruption will continue. In that case we will be headed for another “bubble.” Keep in mind that Wall St. plays a zero sum game. If someone profits, someone else has to lose. There is no contribution to the economy. It does not create goods and services. It is just outright gambling for large stakes.

However, as one observer commented, “it’s never just a game when you are winning”.


References:

George Carlin
Democracy Now: William Black
New Deal 2.0

Corporate Capitalism

Perhaps you have noticed that we are no longer living in a democracy. But rather we are living under a system that is really corporate capitalism. Corporations are not democracies. Instead they are totalitarian in structure and control. Corporations are run from the top without regulation and workers have no say in their operation. Furthermore, corporations control legislature so that our vote counts for nothing. We voted for Obama and the democratic platform and they have been unable to pass any legislation of consequence.

Moreover if you think the administration is helping the economy, think again. Their antics are creating another bubble. The money that has been spent to save these mercenary corporations has been totally wasted. We will see more fraud and corruption. It is happening already. Foreclosures are continuing. The banks are not lending the money that we the taxpayers gave them. Instead they used the money to pay bonuses and dividends and/or to acquire other corporations. The banks are paying practically nothing in interest to its depositors. The FDIC that protects your deposits is in trouble because the banks are refusing to pay for it. In addition, no one has gone to jail for the perpetration of fraud and corruption. The corporations have bought off the Congress and the politicians either are refusing to help the poor and middle class or are totally powerless to pass legislation that might help. Thus corporate capitalism will bankrupt the country. If the banks fail again there will not be sufficient funds to bail them out.

In the meantime the corporatists and their lackeys will continue to slice and dice you and me while the 1% run off to their private, rich and splendid shelters with 99% of the gold. Someone once said, “politicians are like talking dogs in a circus, it is impressive that they exist, but no sane person would believe anything they say.”

Let’s look at some of the lies emanating from our representatives to make the economy look better when it is really getting worse. For example, do not count the workers who are unemployed but have stopped looking. Then there are those who want full time employment but can only get part-time work that doesn’t pay them a living wage. These are not counted either as unemployed. The unemployment rate looks quite a bit different when you include those people. It jumps from 10% to 20% and we are continuing to lose jobs.

Another lie is the CPI (Consumer Price Index). The government lowers the inflation rate by excluding certain products that tend to inflate and replacing them with products that do not change much. If the government ceased lying to us, the inflation rate would be 10%.

However there is hope. But don’t bet your unemployment check on it. Instead of waiting for the collapse there is something that the Federal government can do providing we can get the Democratic Congress to act. The government can create jobs in order to improve the infra-structure of the country in the same way that FDR did in the 30’s. Building and improving roads, parks, bridges, schools, sewer systems and anything else that is needed, will provide employment for the unemployed. Then as the tax revenues increase the debt will eventually become smaller and the economy will begin to flourish. In short, do not be concerned about increasing the debt temporarily because it will be paid down in the future providing workers are back to work.

Here’s a thought for the day: Would you say that by and large, language is a tool for concealing the truth? Check out Sarah Palin’s new book “Going Rogue”. The book is coming out in November. There are excerpts available but you might want to wait for the English edition.

References:

George Carlin
Chris Hedges
Robert Reich

The March of the Invertebrates

Turn over the rocks in front of the local Evangelical Church and you will find an army of invertebrates singing the praise of the Lord and marching to Armageddon. It is the Christian Right seeking to grab power in the future American Theocracy. Is this the American Dream? According to George Carlin, the reason they called it the American Dream is because you had to be asleep to believe it. But beware of the American Theocracy. You are awake, I hope. It is real and it is gonna getcha.

Do you know why? Because the Christian right intends to substitute Theocracy for the Constitution. That is its plan. We have now a serious economic crises and the Christian Right thrives on crisis. They are opposed to the government solving people’s problems because the movement thrives on solving those problems. It is in this way people in deep trouble e.g. depression, grief, drugs, alcohol, joblessness, unaffordable medical care, can be manipulated into accepting evangelical solutions. It is the application of Biblical teachings to their daily life, often known as “born again”. Once having joined the movement and are weeping in the presence of the reprehensible Pat Robertson they give up choice and are required to submit to the will of the leader. It is pure and simple demagoguery and hypocrisy. The followers join the march to the secular state.

The Christian Right is a movement seeking political power and control of the state. It is not really a religious movement. It calls for the submission of will by its followers to the will of its leaders. Any questioning of the leaders will is blamed on Satan. It is the cult of masculinity. The male leaders are not questioned because they speak for God. Facts are treated as thought they were only opinions. Thus, lies become truth. The religious claptrap is spurious and is used only for control.

It is true that people believe what they want to believe but once they have surrendered and are under control submission is required. In the end submission is to a demagogic leader who envisions a totalitarian political state. In order to achieve his goal he creates an alliance with powerful right wing corporate interests. This comes appallingly close to the European Fascism of the 1930’s. Say good-bye to your vaunted democracy.

However, as one comic put it, would you really want to be a member of a group whose symbol is a man nailed to two pieces of wood? Think about it.

References:

Max Blumenthal
George Carlin
Chris Hedges

Idiot’s Delight

Well, folks, stupidity and ignorance continue unabated. Let’s look at CNBC, the financial TV channel. This channel represents Wall St. Maria Bartiromo is a financial news anchor on this show. She analyzes investments for her viewers. She was interviewing a Democratic legislator about health care reform. He was well informed. She, on the other hand, was attacking government managed health care in the US because it would, in her opinion, lower the quality of medical care. The legislator pointed out that we already have government managed health care and it is called Medicare. Anyone who has Medicare coverage will testify that the quality of medical care is excellent and that they are very well satisfied with the program. Her reply was, “If it is so great, why don’t you have it? I don’t see you using that plan.” The Congressman answered that he was not old enough. He said that he was only 44 and the eligibility age is 65. She laughed disbelievingly and commented, “Yeah…c’mon." Now here is an American working in the center of the main stream media and who should be well informed but does not know or believe that Medicare is for 65 year olds. Is this a tragic joke, or what?

Now let’s take a look at a Town Hall meeting. This man is afraid that the government is going to take away his constitutional rights probably to bear arms. So he is standing by a sign that says “Save the USS Constitution”. Now this confounded individual does not know that the USS Constitution is not the basic principles and laws of our nation but rather the fighting ship called “Old Ironsides” employed in the War of 1812. So what can we say? At this point all one can really say is to quote George Carlin, “Think how stupid the average person is and realize that half of them are stupider than that”.

Now we realize that some of the people raising hell at Town Hall Meetings are “goon squads” sent in by right wing Republicans just to create chaos and make it impossible for anyone to learn anything about health care changes proposed by the administration. But then there are also a large group of right wing Christians, followers of Pat Robertson, who are deluded enough to believe that they speak for God and can carry out the will of God. And they believe that prayer and fasting will save their butts because to them delusion is reality. Now, how does this mistaken reality apply to health care which is the major topic at the meetings? It’s very simple. You do not need health insurance because Jesus will cure you. If you have lost your job, there is no need to worry, because God will take care of you. And according to the “gospel of prosperity”, God will make you materially wealthy.

And it is in this way that a link is forged between the corporations, i.e. the insurance industry, the drug industry, and the for profit health care industry, and the Christian right wing that prevents any change that would improve the lot of the poor and the middle class.

So as a droll wit once said, “You can’t have everything, where would you put it?”


References:

Carlin, George.
Hedges, Chris, Democracy Now.
Huffington Post.

Another Cuckoo

Suddenly Newt Gingrich appears on the main stream media defending Sarah Palin. We hadn’t heard from him for some time but he is now planning a run for President in 2012. So he is gearing up.

He is defending her opposition to the so-called “death panel” and “euthanasia” which she claims are part of the Obama health care plan. The fact that last year (2008) she endorsed end of life counseling is ignored. Her reversal just turns her into a bigger hypocrite. Death panels and euthanasia are lies. There are no such fantasies in the health care bill. The lies are used to scare hell out of senior citizens so that they will not support any change in health care. .

Living wills have been available in most states for years and they describe certain life prolonging treatments for patients with terminal illness or in a vegetative state. The decisions are made by the family and the doctor accepts whatever they decide. To twist this commendable option into euthanasia and compare it the policies of an insane Hitler is just vile and outrageous. Sen. Grassley is spreading the same crap and he should be censured or worse by the Senate for his lies. Incidentally, he also in 2003 voted for end of life counseling.

Since Gingrich is presenting himself as a Palin political tutor, let’s take a look at Newt’s character. He is well known for his mendacity, hypocrisy, political trickery, a belief in family values except when his first wife was dying of cancer, he was philandering. In fact he has a history of philandering and prays to God for forgiveness but admittedly can’t stop. God might forgive him if he would stop presenting himself as a believer in family values. Stop lying, Newt. God has spoken.

His advice to Sarah to make a run for President in 2012 is to first write a book which she is about to do. Next make three different speeches. Put in some television time and work hard. This has worked for Newt and he believes it will make her a political personality forever.

The problem is that most people, and it is growing, believe she is a flake and as the Democratic Party consultant, Paul Bergala, has said, she is “about half a wack job”. Intellectually she is not just a light weight but rather a no weight.

If Newt and Sarah coalesce in 2012, run, run, run for your life.


References:

Google
Huffington Post
Wikipedia.

A Proliferation of Crackpots

How did ignorance and stupidity become virtuous traits? It began with the selection of Sarah Palin as VP candidate for the Republican Party. Carl Bernstein calls this half-baked Alaskan “an ignorant demagogue.” Now the Republicans are grooming this airhead for a Presidential run in 2012. Since she was an American Idol beauty contestant, it would appear that she is as qualified to be President as Bush was. She mouths imbecilic drivel and since she has a Right Wing following, aided and abetted by the mainstream media, she has become a threat to a democratic society. Sarah is for saving the economy by putting back what we had before with no change. Don’t change anything and when things collapse again just come to Alaska and drill, baby, drill. Produce our own gas and oil and when that runs out, which it will do, go some place else in the world and destroy another frontier. According to her brand of nonsense, there are plenty of frontiers, just grab one. But Sarah is not the only problem.

Our society is divided between the right wing blockheads who talk gibberish and those voters who support the present administration. For example, we now have a deployment of insects called the “Birthers” that have crawled out from an overturned rock. They claim that Obama is not a citizen and that his birth certificate is a forgery. And he has managed through some gigantic conspiracy to get himself elected to the highest office in the land. These pinheads continue their ravings despite the assurances of the state of Hawaii that Obama’s birth certificate is authentic.

Now let’s consider the truck driver, James David Adkisson, who entered a Unitarian Church in Knoxville, Tennessee with a rifle and proceeded to shoot up the place killing two people and injuring six. Fortunately, he was grabbed by several members of the church and prevented from doing any more harm. This man lost his job and is running out of food stamps. He believes that the liberals are responsible for his problems and since he couldn’t get to the liberals in power he went to a church that had a liberal reputation to kill the voters who put the liberals in power. Get it? He believes that all liberals should be killed because they are ruining the country. He believes that his perception is reality. In his blind ignorance he doesn’t know that the liberals are supporting legislation that would assist people like himself. Instead he turns it around and kills them.

So what is the source of this inane perception? In his house the police found books by Sean Hannity, Bill O’Reilly and Michael Savage. All have viciously attacked liberals and outspokenly mandated their disappearance. Glenn Beck who is another nut case must be included since he was actually shown on his TV show trying to decide whether he should kill Michael Moore.

The Dept. of Homeland Security has issued a report in which it is stated that the right wing extremists groups are using the poor economy and the first black President as recruiting tools. Right wing talk radio and Fox News has an audience of more than 35 million listening or viewing hate talk. I would think that the malicious talk spewed by these hypocrites presumably plays a role in the killings that have occurred. Do you?


References:

Bill Moyer’s Journal
Jon Stewart. The Daily Show
Naomi Klein. Progressive Magazine.

The Economy is Sound

When Wall St. is in trouble, we are always reassured with the statement that the “fundamentals are sound”. We hear it repeatedly on the financial channels of our TV. We need to recognize the spin for what it is. Obviously there is nothing fundamentally sound about our current economic crisis.

So we need to point out repeatedly that billions of dollars for the Pentagon and the armaments industry are really not intended for “national security” but rather to keep the economy from collapsing. The present economic crisis is an indication of possible over-all collapse because some of the huge Wall St. investment banks that had over-leveraged for outrageous profit needed injections of cash to prevent their collapse. So the Secty of Treasury, Hank Paulsen, appointed by Bush, came up with a scam known as the TARP. He himself was former head of Citi bank and it was in deep yogurt. He needed a cash injection for that bank. But since it would not be appropriate to just save that bank, he proposed to Congress that he needed 700 billion dollars to save all the banks. And Congress bought it. Well, it happens that all the banks did not need saving, only a greedy few on Wall St.

Now some banks are giving back the money because it isn’t needed and as long as they keep it, since it is our money, they are required to accept regulations that they do not want. We are still out 200-300 billion dollars that were gifts to banks. On top of that 2-3 trillion dollars is being spent on the military and it is all borrowed money. A number of pundits believe that this cannot continue and it is an economic crisis that will lead eventually to bankruptcy. It could be the end of the capitalist system as we know it.

The neocons may revel in the power of an “American Empire” But the empire is no longer supportable. We are hugely in debt; we cannot raise sufficient taxes and we cannot pay for the troops required to maintain the empire. Japan and China are keeping our economy functioning by lending huge amounts to our Treasury. In addition we spend outrageous sums on war and the military in order to maintain the growth of the economy.

There is no question that the Defense budget is a jobs program and military research that develops new weapons systems and new military technologies produce billions of dollars for corporations and their lobbyists. In this way does the military-industrial complex encourage militarism and the need for continuing wars. It is true that there have been some technological advances derived from military research that have become civilian industries. However, weapons spending far out weighs any other expenditures in the Pentagon budget. Furthermore, it is politically very difficult to trim munitions spending once the program is entrenched. There are far too many politicians and their constituents benefiting from the program.


References:

Johnson, Chalmers. Nemesis. 2006
Galbraith, John Kenneth. The Great Crash 1929. 1997.
Wikipedia

Weapons and War

Believe it or not there are those who are still asking, why did we invade Iraq? Some pundits are still saying that they really don’t know. As soon as we ran into a stone wall looking for WMDs, there were those who believed there was a link between Saddam Hussein and Osama bin Laden. And, of course, there was no link. In fact, they hated each other. So Bush and his coterie, Cheney, Rumsfeld and Perle decide to invade Iraq despite there being no connection between Iraq and 9/11. In fact, 15 of the 19 hi-jackers were Saudi citizens. No one mentioned attacking Saudi Arabia since we were getting huge amounts of oil from our long time ally and selling highly profitable military weapons to them.

Next the Israel Lobby was presented as the force behind the invasion of Iraq in order to make Israel more secure. It certainly was true that the Israel Lobby was very active in Congress garnering support for war but to make Israel more secure was really a bogus argument, pure unadulterated spin since Israel is very strong militarily. Spreading democracy in the Middle East was a pure fantasy that became a total disaster. So what is left? There is only one possibility and that is U.S. domination of the oil resources of that region. And directly linked to that natural resource is the build-up of a war machine as a source of power, military prowess and most important huge profits.

Many wars are fought over natural resources but the U.S. has fought a number of wars where there was no vital resource as the reason for the hostilities. Vietnam is a good example. That country had no resource that the U.S. needed for its own security. The reason given for the war was to prevent the take-over of South East Asia by the communists was just another bogus argument. That war from beginning to end was based on lies.

The only reason for the confrontations small and large that occurred during the cold war, e.g. Panama, Grenada, Dominican Republic, Yugoslavia and others, was not for natural resources but rather to justify the continuing production of military weapons to enhance our position of power in the world and to provide huge profits for the military-industrial complex. The neo-conservative war hawks, i.e. Cheney, Rumsfeld, Feith, and Perle, were and are constantly spinning and lobbying for continuing wars for this purpose. To ignore the power of the corporations that produce military weaponry for overwhelming profit is a huge mistake, for it is these corporations, such as Haliburton, KBR, Norton, Lockheed-Martin and others that provided the rational for the invasion of Iraq.

Although the Israel lobby was pushing very hard for invasion, there are those pundits who believe that the invasion would have happened even without the help of the lobby. The neocons were determined to invade and had been for a decade.

References:

Mearsheimer and Walt. The Israel Lobby. 2007
Scheer, Robert. The Pornography of Power. 2008
Wikipedia

Israeli Morality

In 1917 Arthur Balfour issued a statement of policy from the British Government stating that the British favor the establishment of a national home for the Jewish people in Palestine and nothing shall be done to prejudice the civil and religious rights of existing non-Jewish communities in Palestine. And therein is the rub. The local population of Arabs who had been living on this land since the Ottoman Empire and possibly before did not approve of the establishment of a Jewish homeland on their land. The rights of the Palestinians were not in the least considered. As far as the Jews were concerned God, as stated in the Old Testament Bible, gave them that land and were told to force out anyone who was there. That alone was a violation of the Balfour declaration. So the Jews took the land and by 1967 they were settling on the West Bank and Gaza. Now we have another problem. The Israelis are not really settlers, they are in fact colonizers. “They are living on someone else’s land.”

The all-knowing God apparently was not familiar with the real estate laws of Palestine. It happens that the Palestinians legally own that land and have the deeds to prove it. It was plain and simple thievery. By 2003 400,000 Jews were occupying the land in direct violation of Article 49 of the Geneva Conventions, which specifically prohibits an occupying power from deporting or transferring “parts of its own civilian population into the territory it occupies.”

Unfortunately Israeli politicians suffer from an overwhelming flaw and that is the inability to recognize the humanity of the Palestinians. As a result, they force Palestinians off the land, destroy their home and continue the colonization of the land. The Palestinians are then forced to move into unhygienic slums. Yet the U.S. supports Israel on moral grounds. First it is assumed that Israel is weak and surrounded by enemies. Next Israel’s moral behavior is superior to that of the Palestinians. The Jews were victims in Europe but in the Middle East they are victimizers. They have victimized and are continuing to victimize the Palestinians.

In the wars that Israel fought starting in 1947 against the Palestinians and later the Arabs Israel was never weak. It won both wars and all subsequent conflicts because it had superior firepower and manpower, was better organized and had better leadership. And this was despite that it was outnumbered. The Israeli army was an overwhelming force. No Arab army would ever attempt to attack Israel today and survive. Don’t forget Israel also has nuclear weapons paid for by the U.S.

As for the Israel’s moral behavior toward the Palestinians, it was hardly benevolent. During the 40 years of military occupation of the West Bank and Gaza the Israelis used brutal beatings and torture to repress protests. The troops were issued truncheons and encouraged to break the bones of Palestinians. Approximately 30,000 children needed medical treatment for beatings suffered at the hands of Israeli troops. The children were under 10 years of age and some cases under 5. The children sustained head injuries and fractures. 6000 to 8000 children suffered gunshot wounds. And most of the children were not participating in any protest demonstrations. Some were actually shot in their homes. As time goes on the Israeli troops are ever more brutal, killing and wounding larger numbers of Palestinians. Israel’s conduct is shocking, disgraceful and patently immoral.


References:

Fisk, Tom. The Great War for Civilization. 2005
Mearsheimer and Walt. The Israel Lobby. 2007
Wikipedia.

Greed and Stupidity

It is often said that we are incapable of learning from history. In fact, one acerbic wit said that history does not enlighten the petrified mind. If we learn anything from history, it is that we do not learn from history. However, the inability to learn from history is not really the point.

To make changes necessary to prevent recurring crises requires that we limit the power of the corporatists. These are the brokers of power that operate and control the financial institutions behind the façade of constitutional government. The people vote for the legislative representatives but the power brokers, the corporatists, control the legislative branch. They are the military-industrial complex in collusion with bank financed speculation pursuing insane profit. In fact, Senator Durbin recently stated that bankers own the U.S. Congress. And there are those who believe that bank financed speculation may eventually destroy capitalism. The present day economic crisis is an indication of how close we have come. We have survived several economic bubbles in the last 30 years but none were as serious as this one and those in power do not want change.

The shocking lack of regulatory control over the financial institutions, of course, was a major contributing factor to our present economic crisis. In addition the corruption of our legislative branch of government due to the control of lobbyists who represent the military, the industrialists, and the financial institutions is destroying the checks and balances written into the Constitution. As a result, the Congress has very little control over the expanded power of the Presidency. This was particularly true under the Bush administration. Whether this will continue to occur under the present administration will require that we wait and see.

What will likely continue to occur is the control of the lobbyists and the payoffs for favors. Bribes to legislators in the guise of campaign contributions will no doubt continue. Greed and stupidity is endemic in all political systems.

One of the more scandalizing operations of the ace lobbyist, Jack Abramoff, who was eventually convicted of a number of counts of fraud and is now languishing in jail, was the one in which he and Tom Delay, Texas Congressman, lobbied Congress to prevent the passing of a minimum wage law on Saipan in the Mariana Islands. Sweat shops owned by U.S. Chinese industrialists paid Abramoff $10 million to defeat the bill. Thousands of women work for practically nothing to produce high priced clothing for big name companies, such as Nordstrom, Liz Claiborne, Reebok, Eddie Bauer and many others.

Another one of the tactics used by lobbyists to gain approval of a particular bill is to stress the number of jobs that the legislation will provide for the Congressman’s constituency. This strategy is often used to pass a weapons bill for the military, whether it is a useful weapon or not. The main concern is to get that Pentagon money into the local community. The initial payoff is again called a campaign contribution.

Does anyone think Obama can break up this entrenched corruption?


References:

Galbraith, John Kenneth. A Short History of Financial Euphoria. 1994
Johnson, Chalmers. Nemesis. 2006
Wikipedia

Imperial Bankruptcy

Many of us are not aware of how inevitably and speedily our imperial capitalist economy is moving toward bankruptcy. We are sailing on a magnificent yacht that is moving downstream toward an immense waterfall and we are deaf to the crashing sounds of falling water.

The money we spend on the military, not just in Iraq and Afghanistan, but world wide far exceeds the TARP bail out funds. But if you include the cost of Iraq, now 2-3 trillion dollars, on top of Tarp which Geithner, the Secretary of the Treasury, says we may need 2 trillion dollars to fix Wall St. and the banks, we are looking at an economic crisis that cannot continue. Keep in mind that all this money is borrowed. Income tax is insufficient to cover the expense. Bush did not raise taxes for his imperial war, he lowered them. We are borrowing from China, Japan and other Asian countries. Add the service on the debt and you feel as though you are becoming mentally unsound. It cannot be real. Oh, but it is.

Now let’s consider what we actually manufacture for export. Guess? It’s weaponry. We don’t manufacture much of anything else. We produce more arms and munitions than anyone else in the world and we ship this weaponry to 730 American military bases throughout the world, actually in 130 countries. The money spent also includes global communications, espionage installations, military operations, nuclear weapons, construction, pension, hospitalization and disability payments for veterans and much, much more.

We are now at the point where we may not raise enough money to pay for all of this. We cannot continue to rely on massive spending for armies and weapons to keep the economy afloat and prevent collapse. It is not productive. It is dead end spending. Furthermore, an economy based on war leads to the destruction of the human spirit. We tend to think of war only in terms of victory or defeat when in reality “it is about death and the infliction of death.” We do not consider our adversary as people and we kill without conscience. As a result, we also kill unarmed civilians and we establish secret prisons where our soldiers torture the inmates. Torture was permissible because Attorney General Gonzalez decreed that the Geneva Conventions prohibiting torture was obsolete. It happens that this prohibition was a ratified treaty signed by the U.S. and was therefore a law. According to our Constitution a ratified treaty is a law of the land. Gonzalez had no power or authority to nullify it. Bush then issued a memo stating that captives from the battlefields are not POWs but rather are “illegal combatants.” There is no such term in International Law. Bush’s attorneys made it up.

Thus the Geneva Conventions in regard to POWs did not apply, according to Bush, Gonzalez and John Yoo in the Office of Legal Counsel. Troops were then free to torture.

Those responsible for torture should be prosecuted. It is a violation of the law. The subject is not debatable.


References: .
Fisk, Tom. The Great War for Civilization. 2005.
Johnson, Chalmers. Nemesis. 2006.
Stiglilitz, J. and Bilmes, L. The 3 Trillion Dollar War. 2008.

Israel and the United States

Despite the Israel Lobby’s indoctrination of Congress, it is recognized by almost 40 % of Americans that the incredible anti-Americanism experienced all over the world is caused mainly by the US support of Israel. It is also true that Israel’s influence on the Bush administration was a primary cause for the invasion of Iraq and the constant pressure on Congress and the present administration to start another war this time against Iran. Furthermore, if it is real, the so-called “war on terror” certainly is not aided by our alliance with Israel nor is our relationship with our allies around the world strengthened by our constant praise of Israeli policies in the Middle East. Our support of Israel is promoted primarily by the political power of the Lobby and has no strategic value. In fact that support is not in our national interest and is actually in the end harmful to Israel.

What are some of the arguments used in America for the support of Israel? The moral argument is quite effective. For example, Israel is weak and encircled by those who want to demolish it; Jews have suffered persecution in Europe; Jews are “morally superior” to the Palestinians. Except for European persecution these arguments are pure and simple myths. Moreover, Jews are no longer the victims rather Jews instead have become the persecutors. The treatment of Palestinians has been brutal. The Israel Defense Forces since 2006 have been striking Palestinian civilian targets killing men, women and children by the thousands.

Under these circumstances Israel is hardly the underdog. It is not weak and has always been militarily superior to the Palestinians going back to the first war, the War for Independence in 1948. The Israelis have “superior firepower, manpower, organization and command.” No Arab army would consider invading the Israeli state. They would be wiped out.

America quite often uses the argument for support of Israel that it is a democracy surrounded by dictatorships. It is the only democracy in the Middle East and America supports democracies. That isn’t always true since there are democracies in the world that we do not support. But more importantly Israel’s democratic values are a little different than ours. In the U.S. people of any race, color or religion enjoy equal rights. In Israel Arabs do not enjoy equal rights. In fact Palestinian Arabs are treated in a highly discriminatory manner and it is accepted by most Israeli Jews that Arabs be unequally treated. The excuses used are that they are dirty and smell bad, they are ignorant and uneducated. The average Jew ignores the fact that Palestinians are kept in poverty by Israeli law. Evicting Palestinian families from their homes is a continuing policy that forces them to live in slums.

Special interest groups of all kinds actively influence members of Congress and have for decades. A particularly powerful interest group is the Israel Lobby which is made up of Jewish organizations, registered lobbyists and wealthy or not so wealthy Jewish individuals. This lobby is a “loose coalition” that strives to influence U.S. foreign policy in favor of Israel. It is extremely effective in supporting policies in the Middle East that often have no strategic or moral value for the U.S. The organization that has the most influence in Congress and is the core of the Israel Lobby is the American-Israel Public Affairs Committee (AIPAC). This committee’s effectiveness in Congress is overpowering. When an issue comes up involving Israel, there is never any debate. The critics are silent. Every other issue whether it is education, energy, abortion, gay rights, you name it, the debate is always brisk and animated. There is an extended exchange of views. But when the issue involves Israel, there is very little dialogue or none. And any Congressman or Senator that takes an adversarial position in regard to an Israel issue supported by AIPAC usually ends up persona non grata. The motto is: “Cross AIPAC, you play with fire.”

Now as for the Palestinians, it will not be easy but there are a number of things we can do. According to some experts in international affairs, we could encourage other countries to “isolate Israel as we did in the case of South Africa.” We could aid the Palestinians economically to help develop their own state. Of course, they would have to stop all violence against Israel. And Israel would have to stop its violence against the Arabs.

Continuing the present policy just makes things worse and destroys our reputation in the world. Opinion polls indicate that the American people would support pressing Israel to settle. At the moment the hard line lobby stands in the way.


References:

Mearsheimer and Walt. The Israel Lobby. 2007
Fisk, Robert. The Great War For Civilization. 2005.
Wikipedia

Bank Fraud

Let’s start with a definition of fraud. Fraud is the intentional perversion of the truth in order to induce another to part with something of value or to surrender a legal right. It involves deceit, trickery or misrepresentation. And of course fraud is a criminal act.

So who committed this fraud? You may find this hard to believe but the deceit was coldly planned by those in charge of the major banks and lending institutions in the country. The CEOs, CFOs and members of the boards are guilty of fraud. They have not been prosecuted and they have not been found guilty but that is what they were about. To make themselves personally rich they deliberately made bad loans because bad loans pay extremely well. These loans were called “liar’s loans”. That means that nothing is documented. A borrower applies for a mortgage and the lender does not verify the borrower’s job, his income or his assets. He is encouraged to misrepresent, i.e. lie about his finances. This kind of deception can only lead to disaster. For example, the bank known as Indy Mac in Los Angeles went down because it had made $80 billion (!) worth of “liar’s loans”.

The complicated financial instruments such as CDOs (collateralized debt obligations) that were created to deceive buyers, i.e. institutional investors, were made up of liar’s loans and given AAA ratings by the rating agencies without even looking at them. AAA means “zero credit risk”. But in fact these instruments had overwhelming risk. One trader said that “the banks knew they were selling crap”. And that is how these investments became toxic. When the original mortgages foreclosed, the banks became insolvent. That is where we are today. But the government is covering up the insolvency of the banks saying it will take 2 trillion taxpayers’ dollars to solve the problem. But at the same time the banks are claiming they are fully capitalized, i.e. solvent. What is the truth? The real solution is to close the banks, put them in receivership and fire the executives who caused the problems which means that a person is appointed to manage the corporation during the reorganization. It is not nationalization and it was done during the S & L debacle in the 80’s.It was also done during the Great Depression in the 30’s. It happens to be legally mandated and it is being disregarded. By the way the FDIC will protect your deposits during the re-org. So don’t panic if it ever comes to that.

Primarily we need to get rid of the people at the top who committed the fraud and caused the problem If they remain in charge, we will never find out how the fraud was perpetrated, who was responsible and what are the assets (if any) really worth. We can’t expect the guys who did it to tell us anything. Dump these guys and put in new people we can trust. In short, uncover the cover-up and then regulate.


References:

Black, William K, Bill Moyers Journal 4/3/09
Common Dreams.

The Wall St. Bookies

In order to understand the present economic crisis, more needs to be explained as to what the Wall St. “financial wizards” were up to.

First, let’s begin with the simple example of betting at the race track. You pick a horse that you think will win. The owner of the horse bets to win. You also bet to win even though you don’t own the horse. This is known as a side bet. You can make the bet at the track or off the track through a bookie. In either case there is money to back up the bet so if you win you will be paid.

Now on Wall St. a side bet is called a derivative. It is a financial investment that also does not require that you own the investment. For example, you can bet on interest rates going up or down, a stock index going up or down or whether a mortgage owner will default on his mortgage. These are all side bets that do not require that you own the investment. Betting on mortgage defaults were called “credit default swaps” (CDS) and it was these bets that caused the crisis. “Swaps” were sold by investment banks, were unregulated by law and no money was required to back them. Credit default swaps were actually insurance policies that protected the investor in the event the bet went bad. But why would it go bad? Housing prices continued to go up. No one could lose. Anyway you weren’t really buying protection because you were just placing a side bet. And remember you did not have to own the investment. So the three big investment banks i.e. Bear Stearns, Lehman Bros and AIG accepted bets that they could not pay off when the mortgage market went south and, as a result, those investment banks, the largest on Wall St., failed. It was “illegal gambling” that had been made legal by Congress in the year 2000. The bank lobbyists managed to persuade Congress with argument and large amounts of cash to pass a bill that removed derivatives and credit default swaps from regulation.

You see, a conventional insurance company that conforms to established standards by law has to set aside sufficient funds to pay off losses. So the “insurance” that the banks were selling weren’t insurance but rather another side bet, the credit default swap. It was a swap because you were swapping the default risk to a supposed insurer. But when the bubble burst there was no money to pay the loser. It was bye-bye baby. Now it’s in the US taxpayer’s lap. Unfortunately the whole world is suffering because of Wall St. greed.

One particular company should take the major blame and it has been brought to its knees. It is AIG, the largest insurance company in the world with offices all over the world. The former CEO, the man who built the company, was responsible for the move from insurance to credit default swaps making it possible to credit endless risk with no regulation. As a result, the loss to the company was $100 billion and the destruction of the corporation. The Feds are still pouring our money into it to save it. One economist calls it “lemon socialism”, i.e. losses are socialized and profits are privatized.

References:

The Baseline Scenario
Krugman, Paul
Wikipedia

The Plunderers

Who are they? You can be sure that they are not the pirates of yore. No, they are the corrupt pirates of Wall Street that devour the small to medium investors and leave them penniless. It takes a Madoff to leave the rich penniless.

Before 1980 corporations were able to get credit from commercial banks relatively easily. After 1980 the rise in interest rates forced corporations to seek out other sources of credit. As a result investment banks reappeared on Wall Street and became the controlling source of corporate money. Earnings projections had to be met or the stock price declined and their ratings dropped. This opened the corporation to a “hostile takeover” and further upset. In order to survive a corporation had to be highly competitive and able to bring a technology to the market that appeared “indispensable”. So in order to obtain venture capital, the corporation had to convince the source of money that it had the skills and talent to provide a high return to the investors. Once a capital institution was convinced, huge amounts of money became available and the new young entrepreneur became instantly and phenomenally rich.

What was the difference between the entrepreneurs of old and the new leaders of business? The “old boys” were hard workers, concerned about the customers and the company’s share of the market. All of this took time and effort. The new young entrepreneur was rich before the business was successful. All he needed to convince the venture capitalist to invest was a viable business plan, sometimes an innovative patent and the right connections. The money then rolled in the door. And since the CEO of this potentially successful business had no self-image problems, he paid himself a huge salary. Instead of pursuing the interests of the company, i.e. the welfare of the customers, employees and shareholders, the CEO looked upon himself as “numero uno”. He was the only one that counted. In short, every man for himself became the pattern. CEOs moved from one company to another attracted by higher salaries and bonuses. Their riches were shameful.

However, in order to maintain that style of life, companies resorted to cooking the books, fraud, corruption and criminality. The company became for some CEOs an unlimited ATM machine, brazenly availing themselves of millions. It was pure and simple looting. They looted their own corporations and the corporation under their leadership looted their employees, their customers and their shareholders. The end result was that everyone except the CEO wound up penniless. Some of the tragic examples are Enron, Tyco and WorldCom. No one blew the whistle, neither the reputable accounting firms nor the rating agencies.

The belief that corporations and financial institutions are capable of policing themselves is a fantasy. Regulators’ refusal to regulate opened the doors to looting for private profit and eventual criminality. Jeff Skilling, former CEO of Enron with a Harvard Masters Degree in Business Administration, was convicted of multiple counts of fraud and was sentenced to 24 years in prison. He fought aggressively against government regulation.

Here’s some “breaking news” that will shock your socks: The CEO of Merrill Lynch, while the company was seeking financial help, was paying his chauffeur $230,000 a year and was redecorating his office at a cost of $1.2 million which included a $35,000 elevated commode. And this was going on at the time of huge layoffs at Merrill Lynch. The purchase of Merrill Lynch by the Bank of America has caused a major crisis for the bank. The stock price has dropped precipitously and the dividend will probably be cut. This will force the price even lower.

Now the CEO of Merrill Lynch has been asked to leave by the CEO of Bank of America because of additional losses not revealed at the time of the merger. And the shareholders of the B of A are now considering forcing the CEO of B of A out because of lack of due diligence.

One wonders how A.P. Giannini (1870-1949), the founder of the Bank of America, originally called the Bank of Italy (1904) would react to the SOBs of Wall Street who are crippling his bank. It was the first bank in the early 20th century to offer banking services to the middle class rather than only the rich.

References:

Galbraith, James. The Predator State. 2008.
Wikipedia

The Supreme Irony

There is a good deal of praise at the moment regarding Obama’s selection of a cabinet. The phrase “the best and the brightest” has surfaced once again as a description of those selected. You may recall that term as the title of a prize winning book by David Halberstam (1972) describing the Vietnam quagmire and those responsible.

Two of the best and brightest were Robert McNamara and McGeorge Bundy. McNamara was Secretary of Defense and Bundy was National Security Advisor. These were the “whiz kids”, men of overweening self-confidence, highly educated at the best eastern schools, top of their class, plutocratic ideologues and a paranoid fear of communism. They believed that communism was monolithic, that all the countries in Southeast Asia would adopt authoritarian communism (Stalinism) and would prevent western corporate investors from developing the natural resources of the areas. The potential loss of profit was an issue.

After all, the cold war was at its height and the best and brightest mistakenly assumed that the Soviets and China intended to control Southeast Asia. Another mistake was the failure to recognize that the Vietnam conflict was a civil war and we had no cause to interfere. Finally, McBundy in particular failed to comprehend the “endurance of the enemy” and that a guerrilla war could not be won by large numbers of mechanized combat troops. Does this sound familiar? (Iraq)

McNamara in his memoir and in the film “Fog of War” admitted that he was “wrong, terribly wrong” about every aspect of the war. And Bundy when questioned whether he agreed said that “it was very unlikely that we were right.”

Another blind spot on the part of our brilliant leaders was the inability to recognize that the communist ideology had split into totalitarian communism and democratic socialism. In the 60’s and 70’s there were a number of third world countries experimenting with social democracy because it was clear to them that socialism could not sustain itself without democracy. A good example in 1970 was Chile where Salvador Allende, a social democrat, not a Stalinist, ran for election to the office of President and won overwhelmingly. It was a mixed economy where major corporations were nationalized and privatization of smaller business continued to exist. The success of the government frightened the power elite, viz. Nixon and Kissinger. Kissinger informed Nixon that the spread of social democracy would endanger our control of the natural resources of these countries and potential world markets. So in order to kill Allende’s government, Kissinger labeled it a Marxist dictatorship, followed with a military coup aided by the CIA and placed Pinochet, a brutal fascist dictator, in Allende’s place. Allende tragically died in the takeover.

Today democratic socialism has once again surfaced particularly in Latin-America. It does not make Washington very happy but there really isn’t much the administration can do about it this time around. We can hardly invade every country now controlled by popular uprisings. And besides our problems at home are overwhelming.

It is ironical that the Obama advisors are claiming that the appointees are the “best and brightest” One observer wryly commented that obviously they “had not read the end of the book.” Can Obama get us out of the current quagmire?


References:

Klein, Naomi. The Shock Doctrine.
Truthdig. Blight, James.
Wikipedia