Nuclear expert Arnie Gundersen explains:
What’s REALLY Going On At the Nuclear Storage Site In New Mexico? was originally published on Washington's Blog
So now we (or at least the 0.03% of us who care to hunt for it) discover that U.S. military spending is not actually being cut at all, but increasing. Also going up: U.S. nuclear weapons spending. Some of the new nukes will violate treaties, but the entire program violates the Nuclear Nonproliferation Treaty, which requires disarmament, not increased armament. The U.S. policy of first-strike and the U.S. practice of informing other nations that “all options are on the table” also violate the U.N. Charter’s ban on threatening force.
But do nuclear weapons, by the nature of their technology, violate the U.S. Constitution? Do they violate the basic social contract and all possibility of self-governance? Thus argues a new book called Thermonuclear Monarchy: Choosing Between Democracy and Doom by Elaine Scarry. It’s not unheard of for people to see out-of-control nuclear spending as a symptom of out-of-control military spending, itself a symptom of government corruption, legalized bribery, and a militaristic culture. Scarry’s argument suggests a reversal: the root of all this evil is not the almighty dollar but the almighty bomb.
The argument runs something like this. The primary purpose of the social contract is to create peace and prevent war and other injury. The U.S. Constitution (Article I, Section 8, clause 11) bans the making of war without the approval of both houses of Congress. This approval was to be required not just for an existing military to attack another country, but for a military to be raised at all — standing armies not being anticipated. And it was understood that an army would not be raised and deployed into war unless the citizen-soldiers went willingly, their ability to dissent by desertion not needing to be spelled out (or, let us say, their ability to dissent by mass-desertion, as desertion in the war that led to the Constitution was punished by death).
And yet, because this point was so crucial to the entire governmental project, Scarry argues, it was in fact spelled out — in the Second Amendment. Arms — that is 18th century muskets — were to be freely distributed among the people, not concentrated in the hands of a king. “Civilian” control over the military meant popular control, not presidential. The decision to go to war would have to pass through the people’s representatives in Congress, and through the people as a whole in the form of soldiers who might refuse to fight. By this thinking, had the Ludlow Amendment, to create a public referendum before any war, passed in the 1930s, it would have been redundant.
Before the 1940s were over, in Scarry’s view, a Ludlow Amendment wouldn’t have been worth the paper it was written on, as the existence of nuclear weapons erases Constitutional checks on war. With nuclear weapons, a tiny number of people in a government — be it 1 or 3 or 20 or 500 — hold the power to very quickly and easily kill millions or billions of human beings, and other species, and very likely themselves in the process. “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both,” said Louis Brandeis. We may have democracy, or we may have thermonuclear bombs, but we can’t have both, says Elaine Scarry.
Each of the series of presidents beginning with Truman and running up through Nixon is known to have repeatedly come close to choosing to use nuclear bombs, something the public has learned of, each time, only decades after the fact. No more recent president has said he didn’t come close; we may very well learn their secrets on the usual schedule. When you add to that insanity, the long string of accidents, mistakes, and misunderstandings, the damage of the testing and the waste, and the repeated ability of ploughshares activists (and therefore anybody else) to walk right up to U.S. nuclear weapons to protest them, it’s amazing that life exists on earth. But Scarry’s focus is on what the new ability to kill off a continent at the push of a button has done to presidential power.
While wars since World War II have been non-nuclear, apart from depleted uranium weapons, they have also been endless and undeclared. Because presidents can nuke nations, they and Congress and the public have assumed that a president on his or her own authority can attack nations with non-nuclear weapons too. Now, I suspect that the military industrial complex, corrupt elections, and nuclear thinking all feed off each other. I don’t want a single person who’s trying to clean up election spending or halt fighter-jet production to stop what they’re doing. But the possible influence of nuclear thinking on U.S. foreign policy is intriguing. Once a president has been given more power than any king has ever had, one might expect some people to do exactly what they’ve done and treat him like a king in all but name.
Scarry believes that we’re suffering from the false idea that we’re in a permanent emergency, and that in an emergency there’s no time to think. In fact, the Constitutional constraints on war were intended precisely for emergencies, Scarry argues, and are needed precisely then. But an emergency that can be dealt with by raising an army is perhaps different from an emergency that will leave everyone on earth dead by tomorrow either with or without the U.S. government having the opportunity to contribute its measure of mass-killing to the general apocalypse. The latter is, of course, not an emergency at all, but an insistence on glorified ignorance to the bitter end. An emergency that allows time to raise an army is also different from an emergency involving 21st century “conventional” weapons, but not nearly as different as we suppose. Remember the desperate urgency to hit Syria with missiles last September that vanished the moment Congress refused to do it? The mad rush to start a war before anyone can look too closely at its justifications does, I think, benefit from nuclear thinking — from the idea that there is not time to stop and think.
So, what can we do? Scarry believes that if nukes were eliminated, Congress could take charge of debates over wars again. Perhaps it could. But would it approve wars? Would it approve public financing, free air time, and open elections? Would it ban its members from profiting from war? Would people killed in a Congressionally declared war be any less dead?
What if the Second Amendment as Scarry understands it were fulfilled to some slight degree, that is if weapons were slightly more equitably distributed as a result of the elimination of nukes? The government would still have all the aircraft carriers and missiles and bombs and predator drones, but it would have the same number of nukes as the rest of us. Wouldn’t compliance with the Second Amendment require either the madness of giving everybody a missile launcher or the sanity of eliminating non-nuclear weapons of modern war-making along with the nuclear ones?
I think the historical argument that Scarry lays out against the concentration of military power in the hands of a monarch is equally a case either for distributing that power or for eliminating it. If large standing armies are the greatest danger to liberty, as James Madison supposed on his slave plantation, isn’t that an argument against permanently stationing troops in 175 nations with or without nukes, as well as against militarizing local police forces at home? If unjustified war and imprisonment are the greatest violations of the social contract, must we not end for-profit mass incarceration by plea bargain along with for-profit mass-murder?
I think Scarry’s argument carries us further in a good direction than she spells out in the book. It’s a thick book full of extremely lengthy background information, not to say tangents. There’s a wonderful account of the history of military desertion. There’s a beautiful account of Thomas Hobbes as peace advocate. Much of this is valuable for its own sake. My favorite tangent is a comparison between Switzerland and the United States. Switzerland decided that air-raid shelters would help people survive in a nuclear war. While opposing and not possessing nuclear weapons, Switzerland has created shelters for more than the total number of people in the country. The United States claimed to have concluded that shelters would not work, and then spent more on building them exclusively for the government than it spent on all variety of needs and services for the rest of us. The nuclear nation has behaved as a monarchy, while the non-nuclear nation may preserve a remnant of humanity to tell the tale.
Scarry ends her book by stating that Article I and the Second Amendment are the best tools she’s found for dismantling nuclear weapons, but that she’d like to hear of any others. Of course, mass nonviolent action, education, and organizing are tools that will carry any campaign beyond the confines of legal argumentation, but as long as we’re within those confines, I’ll throw out a proposal: Comply with the Kellogg-Briand Pact. It is far newer, clearer, and less ambiguous than the Constitution. It is, under the Constitution, unambiguously the Supreme Law of the Land as a treaty of the U.S. government. It applies in other nations as well, including a number of other nuclear weapons nations. It clarifies our thinking on the worst practice our species has developed, one that will destroy us all, directly or indirectly, if not ended, with or without nuclear: the practice of war.
The treaty that I recommend remembering bans war. When we begin to think in those terms, we won’t see torture as the worst war crime, as Scarry suggests, but war itself as the worst crime of war. We won’t suggest that killing is wrong because it’s “nonbattlefield,” as Scarry does at one point. We might question, as Scarry seems not to, that Hawaii was really part of the United States in 1941, or that U.S. torture really ended when Obama was elected. I’m quibbling with tiny bits in a large book, but only because I want to suggest that the arguments that best reject nuclear weaponry reject all modern war weaponry, its possession, and its use.
The powers-that-be often use agent provocateurs to disrupt protests and paint protesters as violent and unlikeable.
For example, violent provocateurs were deployed:
- At the G20 protests in London
- In Cairo
- At the Occupy protests
- In Burma
- And in many other places
There is a related type of false flag operation commonly used to create chaos and discredit regimes or protesters: snipers.
- Unknown snipers reportedly killed both Venezuelan government and opposition protesters in the attempted 2002 coup
- Unknown snipers fired during Thailand’s 2010 protests
- Unknown snipers allegedly have created bedlam in Syria
- A Russian general alleges that – during Yeltsin’s protest in front of the Russian parliament – sniper fire came from the roof of the American Embassy
- And the Estonian foreign minister claims that the new Ukranian coalition deployed snipers to discredit the former government of Ukraine
Brutal … but effective and cheap.
Because it doesn’t cost much to hire one or a handful of snipers to access rooftops or bridge overpasses, create chaos, and then quietly disappear.
Snipers Are Commonly Used as “False Flag” Terrorists was originally published on Washington's Blog
It’s Now Mainstream Economics that Runaway Inequality Hurts the Economy … But Corrupt Government Policy Is Still Pouring Gasoline On the Fire and Dramatically INCREASING Inequality
A who’s who of prominent liberal and conservative economists in government and academia have now said that runaway inequality harms economic growth, including:
- Current Fed chair Janet Yellen
- Federal Reserve chairman from 1934 to 1948, Marriner S. Eccles
- Former FDIC Chair Sheila Bair
- Nobel prize winning economist Joseph Stiglitz
- Nobel prize winning economist Paul Krugman
- One of America’s leading economists, Robert Shiller
- Former chief IMF economist Raghuram Rajan
- Former U.S. Secretary of Labor and UC Berkeley professor Robert Reich
- Stanford University professor John Taylor
- University of Oregon professor Mark Thoma
- University of California professor Emmanuel Saez
- Paris School of Economics professor Thomas Piketty
- Famed economist John Kenneth Galbraith
- Harvard Business School professor David Moss
- Paris School of Economics professor Romain Rancière
- London School of Economics professor Robert Wade
- University of Notre Dame professor David Ruccio
- Harvard professor Lawrence Katz
- Arkansas State University professor Christopher Brown
- Global economy and development division director at Brookings and former economy minister for Turkey, Kemal Dervi
- Societe Generale investment strategist and former economist for the Bank of England, Albert Edwards
- Michael Niemira, chief economist at the International Council of Shopping Centers
- Scott Brown, chief economist at Raymond James
- Marie Schofield, Chief Economist at Columbia Management
- Former executive director of the Joint Economic Committee of Congress, senior policy analyst in the White House Office of Policy Development, and deputy assistant secretary for economic policy at the Treasury Department, Bruce Bartlett
- World Bank economist Branko Milanovic
- Deputy Division Chief of the Modeling Unit in the Research Department of the IMF, Michael Kumhof
- IMF economist Charalambos Tsangarides
- And many others
Even the father of free market economics – Adam Smith – didn’t believe that inequality should be a taboo subject.
Numerous investors and entrepreneurs agree that runaway inequality hurts the economy, including:
- More than half of all international investors polled by Bloomberg
- Billionaire and legendary investment adviser Jeremy Grantham
- Billionaire and hedge fund manager Stanley Druckenmiller
- Billionaire Bill Gates
- Billionaire Warren Buffet
- Billionaire Nick Hanauer
So how bad is it, really?
Inequality in America today is twice as bad as in ancient Rome, worse than it was in Tsarist Russia, Gilded Age America, modern Egypt, Tunisia or Yemen, many banana republics in Latin America, and worse than experienced by slaves in 1774 colonial America. (More stunning facts.)It’s Not an Accident … It’s Policy
Extreme inequality helped cause the Great Depression, the current financial crisis … and the fall of the Roman Empire . Bad government policy – which favors the fatcats at the expense of the average American – is largely responsible for our runaway inequality.
And yet the powers-that-be in Washington and Wall Street are accelerating the redistribution of wealth from the lower, middle and more modest members of the upper classes to the super-elite.
Defenders of the status quo pretend that this inequality is something outside of our control … like a force of nature. They argue that it’s due to technological innovation or something else outside of policy-makers’ control.
In reality, inequality is rising due to bad policy.
Nobel prize winning economist Joe Stiglitz said recently:
Inequality is not inevitable. It is not … like the weather, something that just happens to us. It is not the result of the laws of nature or the laws of economics. Rather, it is something that we create, by our policies, by what we do.
We created this inequality—chose it, really—with [bad] laws …Gaming the System to Pillage and Loot
The world’s top economic leaders have said for years that inequality is spiraling out of control and needs to be reduced. Why is inequality soaring even though world economic leaders have talked for years about the urgent need to reduce it?
Because they’re saying one thing but doing something very different. And both mainstream Democrats and mainstream Republicans are using smoke and mirrors to hide what’s really going on.
And it’s not surprising … Nobel winner Stiglitz says that inequality is caused by the use of money to shape government policies to benefit those with money. As Wikipedia notes:
A better explainer of growing inequality, according to Stiglitz, is the use of political power generated by wealth by certain groups to shape government policies financially beneficial to them. This process, known to economists as rent-seeking, brings income not from creation of wealth but from “grabbing a larger share of the wealth that would otherwise have been produced without their effort”
Rent seeking is often thought to be the province of societies with weak institutions and weak rule of law, but Stiglitz believes there is no shortage of it in developed societies such as the United States. Examples of rent seeking leading to inequality include
- the obtaining of public resources by “rent-collectors” at below market prices (such as granting public land to railroads, or selling mineral resources for a nominal price in the US),
- selling services and products to the public at above market prices (medicare drug benefit in the US that prohibits government from negotiating prices of drugs with the drug companies, costing the US government an estimated $50 billion or more per year),
- securing government tolerance of monopoly power (The richest person in the world in 2011, Carlos Slim, controlled Mexico’s newly privatized telecommunication industry).
One big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy …. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.
Wealth begets power, which begets more wealth …. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.
Former Sectretary of Labor Robert Reich recently noted:
When so much wealth accumulates at the top, with money comes the capacity to control politics… It’s not that people are rich, it’s that they abuse their wealth … The wealthy contribute to political candidates and the access that their contributions buy entrenches inequality by securing subsidies, bailouts and policies that lead to even greater inequality.
The financial industry spends hundreds of millions of dollars every election cycle on campaign donations and lobbying, much of which is aimed at maintaining the subsidy [to the banks by the public]. The result is a bloated financial sector and recurring credit gluts.
Two leading IMF officials, the former Vice President of the Dallas Federal Reserve, and the the head of the Federal Reserve Bank of Kansas City, Moody’s chief economist and many others have all said that the United States is controlled by an “oligarchy” or “oligopoly”, and the big banks and giant financial institutions are key players in that oligarchy.
The chairman of the Department of Economics at George Mason University says that it is inaccurate to call politicians prostitutes. Specifically, he says that they are more correct to call them “pimps”, since they are pimping out the American people to the financial giants.
Economics professor Randall Wray writes:
Thieves … took over the whole economy and the political system lock, stock, and barrel.
No wonder the government has saved the big banks at taxpayer expense, chosen the banks over the little guy, and said no to helping Main Street … while continuing to throw trillions at the giant banks.
No wonder crony capitalism has gotten even worse under Obama than under Bush.
No wonder the big banks continue to manipulate every market and commit crime after crime and … and profit handsomely from it, while law-abiding citizens slide further and further behind.
Economist Steve Keen says:
“This is the biggest transfer of wealth in history”, as the giant banks have handed their toxic debts from fraudulent activities to the countries and their people.
Stiglitz said in 2009 that Geithner’s toxic asset plan “amounts to robbery of the American people”.
And economist Dean Baker said in 2009 that the true purpose of the bank rescue plans is “a massive redistribution of wealth to the bank shareholders and their top executives”.
Without the government’s creation of the too big to fail banks (they’ve gotten much bigger under Obama), the Fed’s intervention in interest rates and the markets (most of the quantitative easing has occurred under Obama), and government-created moral hazard emboldening casino-style speculation (there’s now more moral hazard than ever before) … things wouldn’t have gotten nearly as bad.
As we wrote in March 2009:
The bailout money is just going to line the pockets of the wealthy, instead of helping to stabilize the economy or even the companies receiving the bailouts:
- Bailout money is being used to subsidize companies run by horrible business men, allowing the bankers to receive fat bonuses, to redecorate their offices, and to buy gold toilets and prostitutes
- A lot of the bailout money is going to the failing companies’ shareholders
- Indeed, a leading progressive economist says that the true purpose of the bank rescue plans is “a massive redistribution of wealth to the bank shareholders and their top executives”
- The Treasury Department encouraged banks to use the bailout money to buy their competitors, and pushed through an amendment to the tax laws which rewards mergers in the banking industry (this has caused a lot of companies to bite off more than they can chew, destabilizing the acquiring companies)
As we pointed out in 2008:
The game of capitalism only continues as long as everyone has some money to play with. If the government and corporations take everyone’s money, the game ends.The fed and Treasury are not giving more chips to those who need them: the American consumer. Instead, they are giving chips to the 800-pound gorillas at the poker table, such as Wall Street investment banks. Indeed, a good chunk of the money used by surviving mammoth players to buy the failing behemoths actually comes from the Fed.Quantitative Easing
The Federal Reserve has been doing quantitative easing for 5 years … and inequality has shot up over the last 5 years. It’s not a coincidence.Subsidies to Giant, Wealthy Corporations
The average American family pays $6,000/year in subsidies to giant corporations.
This is a direct transfer of wealth from the little guy to the big guy … which increases inequality.Goosing the Stock Market
Robert Reich has noted:
Some cheerleaders say rising stock prices make consumers feel wealthier and therefore readier to spend. But to the extent most Americans have any assets at all their net worth is mostly in their homes, and those homes are still worth less than they were in 2007. The “wealth effect” is relevant mainly to the richest 10 percent of Americans, most of whose net worth is in stocks and bonds.
The recovery has been the weakest and most lopsided of any since the 1930s.After previous recessions, people in all income groups tended to benefit. This time, ordinary Americans are struggling with job insecurity, too much debt and pay raises that haven’t kept up with prices at the grocery store and gas station. The economy’s meager gains are going mostly to the wealthiest.
Workers’ wages and benefits make up 57.5 percent of the economy, an all-time low. Until the mid-2000s, that figure had been remarkably stable — about 64 percent through boom and bust alike.
David Rosenberg points out:
The “labor share of national income has fallen to its lower level in modern history … some recovery it has been – a recovery in which labor’s share of the spoils has declined to unprecedented levels.”
The above-quoted AP article further notes:
Stock market gains go disproportionately to the wealthiest 10 percent of Americans, who own more than 80 percent of outstanding stock, according to an analysis by Edward Wolff, an economist at Bard College.
Indeed, as we reported in 2010:
As of 2007, the bottom 50% of the U.S. population owned only one-half of one percent of all stocks, bonds and mutual funds in the U.S. On the other hand, the top 1% owned owned 50.9%.***
(Of course, the divergence between the wealthiest and the rest has only increased since 2007.)
Professor G. William Domhoff demonstrated that the richest 10% own 98.5% of all financial securities, and that:
The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.
Tyler Durden notes:
In today’s edition of Bloomberg Brief, the firm’s economist Richard Yamarone looks at one of the more unpleasant consequences of Federal monetary policy: the increasing schism in wealth distribution between the wealthiest percentile and everyone else. … “To the extent that Federal Reserve policy is driving equity prices higher, it is also likely widening the gap between the haves and the have-nots….The disparity between the net worth of those on the top rung of the income ladder and those on lower rungs has been growing. According to the latest data from the Federal Reserve’s Survey of Consumer Finances, the total wealth of the top 10 percent income bracket is larger in 2009 than it was in 1995. Those further down have on average barely made any gains. It is likely that data for 2010 and 2011 will reveal an even higher percentage going to the top earners, given recent increases in stocks.” Alas, this is nothing new, and merely confirms speculation that the Fed is arguably the most efficient wealth redistibution, or rather focusing, mechanism available to the status quo. This is best summarized in the chart below comparing net worth by income distribution for various percentiles among the population, based on the Fed’s own data. In short: the richest 20% have gotten richer in the past 14 years, entirely at the expense of everyone else.
Lastly, nowhere is the schism more evident, at least in market terms, than in the performance of retail stocks:
Saks chairman Steve Sadove recently remarked, “I’ve been saying for several years now the single biggest determinant of our business overall, is how’s the stock market doing.” Privately-owned Neiman- Marcus reported “In New York City, business at Bergdorf Goodman continues to be extremely strong.”
In contrast, retail giant Wal-Mart talks of its “busiest hours” coming at midnight when food stamps are activated and consumers proceed through the check-outs lines with baby formula, diapers, and other groceries. Wal-Mart has posted a decline in same-store sales for eight consecutive quarters.
As CNN Money pointed out in 2011, “Wal-Mart’s core shoppers are running out of money much faster than a year ago …” This trend has only gotten worse: The wealthy are doing great … but common folks can no longer afford to shop even at Wal-Mart, Sears, JC Penney or other low-price stores.
Durden also notes:
Another indication of the increasing polarity of US society is the disparity among consumer confidence cohorts by income as shown below, and summarized as follows: “The increase in equity prices has raised consumer spirits, particularly among higher-income consumers. The Conference Board’s Consumer Confidence index for all income levels bottomed in February/March of 2009. The recovery since then has been notable across the board, but nowhere as much as for those making $50,000 or more.”
Business Week notes:
Barry Ritholtz, [CIO of Ritholtz Wealth, and popular financial blogger], says millions of potential investors may conclude, as they did after the Great Depression, that the market is a rigged game for insiders. Such seismic shifts in popular sentiment can have lasting effects. The Dow Jones industrial average didn’t regain its September 1929 peak of 355.95 until 1954. “You’re going to lose a generation of investors,” says Ritholtz. “And that’s how you end up with a 25-year bear market. That’s the risk if people start to think there is no economic justice.”
Americans know that the system is rigged against them. See this. We know that the government is giving Wall Street crooks a pass. 70% of Americans know that the government’s economic policies have thrown money at the banks and hosed the people.
In such an environment, the average American has largely gotten out of stocks and other investments.Over-Financialization
When a country’s finance sector becomes too large finance, inequality rises. As Wikipedia notes:
[Economics professor] Jamie Galbraith argues that countries with larger financial sectors have greater inequality, and the link is not an accident.
Government policy has been encouraging the growth of the financial sector for decades:
(Economist Steve Keen has also shown that “a sustainable level of bank profits appears to be about 1% of GDP”, and that higher bank profits leads to a ponzi economy and a depression).Unemployment and Underemployment
A major source of inequality is unemployment, underemployment and low wages.
The“jobless recovery” that the Bush and Obama governments have engineered is a redistribution of wealth from the little guy to the big boys.
The New York Times notes:
Economists at Northeastern University have found that the current economic recovery in the United States has been unusually skewed in favor of corporate profits and against increased wages for workers.
In their newly released study, the Northeastern economists found that since the recovery began in June 2009 following a deep 18-month recession, “corporate profits captured 88 percent of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1 percent” of that growth.
The study, “The ‘Jobless and Wageless Recovery’ From the Great Recession of 2007-2009,” said it was “unprecedented” for American workers to receive such a tiny share of national income growth during a recovery.
The share of income growth going to employee compensation was far lower than in the four other economic recoveries that have occurred over the last three decades, the study found.
And the jobs that have been created have been low-wage jobs.
For example, the New York Times noted in 2011:
The median pay for top executives at 200 big companies last year was $10.8 million. That works out to a 23 percent gain from 2009.
Most ordinary Americans aren’t getting raises anywhere close to those of these chief executives. Many aren’t getting raises at all — or even regular paychecks. Unemployment is still stuck at more than 9 percent.
“What is of more concern to shareholders is that it looks like C.E.O. pay is recovering faster than company fortunes,” says Paul Hodgson, chief communications officer for GovernanceMetrics International, a ratings and research firm.
According to a report released by GovernanceMetrics in June, the good times for chief executives just keep getting better. Many executives received stock options that were granted in 2008 and 2009, when the stock market was sinking.
Now that the market has recovered from its lows of the financial crisis, many executives are sitting on windfall profits, at least on paper. In addition, cash bonuses for the highest-paid C.E.O.’s are at three times prerecession levels, the report said.
The average American worker was taking home $752 a week in late 2010, up a mere 0.5 percent from a year earlier. After inflation, workers were actually making less.
AP pointed out that the average worker is not doing so well:
Unemployment has never been so high — 9.1 percent — this long after any recession since World War II. At the same point after the previous three recessions, unemployment averaged just 6.8 percent.
– The average worker’s hourly wages, after accounting for inflation, were 1.6 percent lower in May than a year earlier. Rising gasoline and food prices have devoured any pay raises for most Americans.
– The jobs that are being created pay less than the ones that vanished in the recession. Higher-paying jobs in the private sector, the ones that pay roughly $19 to $31 an hour, made up 40 percent of the jobs lost from January 2008 to February 2010 but only 27 percent of the jobs created since then.
Alan Greenspan noted:
Large banks, who are doing much better and large corporations, whom you point out and everyone is pointing out, are in excellent shape. The rest of the economy, small business, small banks, and a very significant amount of the labour force, which is in tragic unemployment, long-term unemployment – that is pulling the economy apart.Money Being Sucked Out of the U.S. Economy … But Big Bucks Are Being Made Abroad
Actually, many American companies are — just maybe not in your town. They’re hiring overseas, where sales are surging and the pipeline of orders is fat.
The trend helps explain why unemployment remains high in the United States, edging up to 9.8% last month, even though companies are performing well: All but 4% of the top 500 U.S. corporations reported profits this year, and the stock market is close to its highest point since the 2008 financial meltdown.
But the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9%, says Robert Scott, the institute’s senior international economist.
“There’s a huge difference between what is good for American companies versus what is good for the American economy,” says Scott.
Many of the products being made overseas aren’t coming back to the United States. Demand has grown dramatically this year in emerging markets like India, China and Brazil.
Government policy has accelerated the growing inequality. It has encouraged American companies to move their facilities, resources and paychecks abroad. And some of the biggest companies in America have a negative tax rate … that is, not only do they pay no taxes, but they actually get tax refunds.
And a large percentage of the bailouts went to foreign banks (and see this). And so did a huge portion of the money from quantitative easing. More here and here.Capital Gains and Dividends
According to a 2013 study published by a researcher at the U.S. Congressional Research Service:
The largest contributor to increasing income inequality…was changes in income from capital gains and dividends.
Business Insider explains:
Drastic income inequality growth in the United States is largely derived from changes in the way the U.S. government taxes income from capital gains and dividends, according to a new study by Thomas Hungerford of the non-partisan Congressional Research Service.
Essentially, what Democrats have been saying about income inequality — that it’s in a large part due to favorable taxation and deduction policies for high income Americans — is largely right
The study … conclusively found that the wealthy benefitted from low tax rates on investment income, which in turn caused their wealth to grow faster.
Essentially, taxing capital gains as ordinary income would make the playing field more fair, and reduce over time income inequality.
Joseph Stiglitz noted in 2011:
Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride.
Indeed, the Tax Policy center reports that the top 1% took home 71% of all capital gains in 2012.
Ronald Reagan’s budget director, assistant secretary of treasury, and domestic policy director all say that the Bush tax cuts were a huge mistake. See this and this.
It’s Now Mainstream Economics that Runaway Inequality Hurts the Economy … But Corrupt Government Policy Is Still Pouring Gasoline On the Fire and Dramatically INCREASING Inequality was originally published on Washington's Blog
Why is our government so incompetent? Short answer: because incompetence has been fully institutionalized in every branch, every agency and every nook and cranny of the state.
Though many may reckon the U.S. government (and its Deep State) are not so much incompetent as merely evil, I suggest incompetence sows the seeds of evil consequences.
It’s easy to lay the responsibility for the state’s incompetence on its staggering size and complexity, and there is much truth in the notion that no system of this scale and complexity can possibly be governable or accountable.
But I think we owe it to ourselves to dig a bit deeper than this to understand why our visible government (executive, Congress, regulatory agencies, the Federal Reserve, etc.) and the Deep State (everything that’s decided and run behind closed doors) is so monumentally incompetent.
The policies and decisions of the past 15 years can be reduced to three catastrophic blunders: the discretionary war in Iraq and “nation-building” in Afghanistan; allowing those responsible for the 2008 financial meltdown to become even more invulnerable and predatory, i.e. enabling a “too big to fail” banking sector, and Obamacare, the Orwellian-named Affordable Care Act (ACA).
Each of these policy decisions has been enormously destructive to the nation, and the opportunities lost in their wake are irreversible.
I have covered the systemic reasons for incompetence and failure many times.These boil down to the accumulating sclerosis of bureaucracy and the ratchet effect.
I have addressed The Lifecycle of Bureaucracy on a number of occasions:
Our Legacy Systems: Dysfunctional, Unreformable (July 1, 2013)
The Way Forward (April 25, 2013)
When Escape from a Previously Successful Model Is Impossible (November 29, 2012)
Complexity: Bureaucratic (Death Spiral) and Self-Organizing (Sustainable) (February 17, 2011)
The ratchet effect can also be visualized as a rising wedge, in which costs and inefficiencies continue rising until any slight decrease in funding collapses the organization.
Dislocations Ahead: The Ratchet Effect, Stick-Slip and QE3 (February 14, 2011)
The Ratchet Effect: Fiefdom Bloat and Resistance to Declining Incomes (August 23, 2010)
I think we can add a few other factors:
1. That which is cheap and abundant will be squandered until it is no longer cheap or abundant. Our default programming is to squander what is easily available and abundant. This is true not just of resources such as food and energy but of health, trust, power and all sorts of other intangibles.
For example, when the Soviet Union collapsed, the U.S. was left with an abundance of soft and hard power on the global stage. The natural response was to squander it on misadventures instead of investing it wisely.
When we’re young and healthy, we squander this reservoir of vitality rather than invest it wisely in habits that will maintain our health as we age.
There are countless examples of this dynamic. The irony of this dynamic is tragic: by the time we realize we’ve squandered an irreplaceable resource, it’s too late.
2. The prime directive of any bureaucracy is to eliminate all accountability. The raison d’etre of bureaucracy, the very reason for its existence, is not to manage complex affairs but to dissipate accountability into a formless cloud so that no member of the bureaucracy will ever face any consequences for his/her actions.
In other words, the prime directive of any bureaucracy is to enforce the perfection of moral hazard, i.e. those making decisions suffer no consequences when the decisions are disastrous.
The entire structure of a bureaucracy boils down to this: we followed the rules, and therefore we are blameless.
Obamacare and the Pentagon are both perfections of this purposeful loss of accountability. I recently saw a video clip of a journalist who had asked 12 different government functionaries who was in charge of implementing the Obamacare website before its flawed launch and he’d received 12 different answers.
In other words, accountability had already been extinguished well before the site was even launched.
3. Bureaucracies are intrinsically prone to group-think. The more closed the bureaucracy, the greater this tendency to eliminate skeptics, heretics, independent thinkers, etc.: Who Gets Thrown Under the Bus in the Next Financial Crisis? (March 3, 2014).
The foundational group-think concepts behind each of the three policy disasters listed above have all been discredited, but only after group-think insured the destruction of vital national interests: for example, the neo-conservative “failed-state” concept that guided a decade of foreign policy misadventures: The Rise and Fall of the Failed-State Paradigm: Requiem for a Decade of Distraction (Foreign Affairs).
4. As correspondent Lew G. has pointed out, bureaucracies are not designed to be fail-safe; their complexity and lack of accountability lead not to resilience but to fragility and vulnerability.
5. One systems-level consequence of tightly connected, interactive complex systems is that they generate routinely failures known as “normal accidents,” catastrophes that result from seemingly small miscalculations and miscues that cascade into systemic crises. When accountability has been lost, there are no feedback loops left to correct these “normal accidents,” so the damage piles up within the organization until it collapses in a supernova model of accumulated incompetence.
6. The moral-hazard-riddled leadership of bureaucracies will choose whatever short-term politically expedient fix reduces the immediate political pain (also known as “kicking the can down the road”) rather than risk shaking up the organization by imposing accountability and clearing out the deadwood. This dependence on short-term politically expedient “fixes” that ignore the real problems piles up more moral hazard, failed policies, ineffective deadwood and cost, increasing the system’s fragility and vulnerability to any shock that cannot be dissolved with another short-term can-kicking “fix.”
Why is our government so incompetent? Short answer: because incompetence has been fully institutionalized in every branch, every agency and every nook and cranny of both the visible state and the Deep State.
Why Is Our Government (and Deep State) So Incompetent? was originally published on Washington's Blog
The entire idea of safe nuclear energy has arguably been a cover for nuclear weapons production … at the expense of our health and the environment.
Moreover, governments have been covering up meltdowns for more than 50 years.
As a History Chanel special notes, a nuclear meltdown occurred at the world’s first commercial reactor only 30 miles from downtown Los Angeles, and only 7 miles from the community of Canoga Park and the San Fernando Valley area of Los Angeles.
Specifically, in 1959, there was a meltdown of one-third of the nuclear reactors at the Santa Susana field laboratory operated by Rocketdyne, releasing – according to some scientists’ estimates – 240 times as much radiation as Three Mile Island.
But the Atomic Energy Commission lied and said only there was only 1 partially damaged rod, and no real problems. In fact, the AEC kept the meltdown a state secret for 20 years.
There were other major accidents at that reactor facility, which the AEC and Nuclear Regulatory Commission covered up as well. See this.
Two years earlier, a Russian government reactor at Kyshtm melted down in an accident which some claim was even worse than Chernobyl.
The Soviet government hid the accident, pretending that it was creating a new “nature reserve” to keep people out of the huge swath of contaminated land.
Journalist Anna Gyorgy alleges that the results of a freedom of information act request show that the CIA knew about the accident at the time, but kept it secret to prevent adverse consequences for the fledgling American nuclear industry.
1980s Studies and Hearings
In 1982, the House Committee on Interior and Insular Affairs received a secret report received from the Nuclear Regulatory Commission called “Calculation of Reactor Accident Consequences 2″.
In that report and other reports by the NRC in the 1980s, it was estimated that there was a 50% chance of a nuclear meltdown within the next 20 years which would be so large that it would contaminate an area the size of the State of Pennsylvania, which would result in huge numbers of a fatalities, and which would cause damage in the hundreds of billions of dollars (in 1980s dollars).
Those reports were kept secret for decades.
Well-known writer Alvin Toffler pointed out in Powershift (page 156):
At least thirty times between 1957 and 1985—more than once a year—the Savannah River nuclear weapons plant near Aiken, South Carolina, experienced what a scientist subsequently termed “reactor incidents of greatest significance.” These included widespread leakage of radioactivity and a meltdown of nuclear fuel. But not one of these was reported to local residents or to the public generally. Nor was action taken when the scientist submitted an internal memorandum about these “incidents.” The story did not come to light until exposed in a Congressional hearing in 1988. The plant was operated by E. I. du Pont de Nemours & Company for the U.S. government, and Du Pont was accused of covering up the facts. The company immediately issued a denial, pointing out that it had routinely reported the accidents to the Department of Energy.
At this point, the DoE, as it is known, accepted the blame for keeping the news secret.
And former soviet leader Mikhail Gorbachev said on camera for a Discovery Network special (the must-watch “The Battle of Chernobyl“) that the Soviets and Americans have each hidden a number of nuclear accidents from the public:Government Has Been Covering up Radiation Danger for 69 Years
The U.S. tried to cover up the destructive nature of radiation produced by nuclear weapons 71 years ago. As Democracy Now reports:
The army was well aware in 1943 of the enormous potential for radiation dangers to civilians and military personnel as a result of the use of radioactive weapons ….
[The New York Times] was essentially putting out the official government narrative [regarding the bombing of Hiroshima and Nagasaki], which is that atomic radiation is not harmful, is not a major byproduct of the nuclear weapons program. You know, it’s only the blast that has essentially a very short impact. The reason that this has importance is that for really a half century, this narrative became the government’s response to all protests against nuclear power, the nuclear weapons programs of the 1950s and 1960s and the Cold War. So, [The New York Times] essentially set the table that the government was to occupy for the next half century as they disputed any attempt to rein in, you know, the rapid acceleration of nuclear weapons and power programs.
Beverly Deepe Keever notes:
Sixty years ago on March 1, 1954, in the heart of the Pacific Ocean, the United States detonated the most powerful nuclear weapon in its history…. The 15-megaton hydrogen bomb was 1,000 times more powerful than the atomic bomb that devastated Hiroshima …. Unlike Hiroshima’s A-bomb, Bravo was laced with plutonium …. And, unlike the atomic airburst above Hiroshima, Bravo was a shallow-water ground burst. It vaporized three of the 23 islands of tiny Bikini Atoll, 2,600 miles southwest of Hawaii, and created a crater that is visible from space.
Wafting eastward, the cloud powdered 236 islanders on Rongelap and Utrik atolls and 28 U.S. servicemen. The islanders played with, drank and ate the snowflake-like particles for days and began suffering nausea, hair loss, diarrhea and skin lesions when they were finally evacuated to a U.S. military clinic.
Within days after the Bravo explosion, the U.S. cover-up had secretly taken a more menacing turn. In an injustice exposing disregard for human health, the Bravo-exposed islanders were swept into a top-secret project in which they were used as human subjects to research the effects of radioactive fallout.
A week after Bravo, on March 8, at the Navy clinic on Kwajalein, E.P. Cronkite, one of the U.S. medical personnel dispatched there shortly after the islanders’ arrival, was handed a “letter of instruction” establishing “Project 4.1.” It was titled the “Study of Response of Human Beings Exposed to Significant Beta and Gamma Radiation Due to Fallout from High Yield Weapons.”
To avoid negative publicity, the document had been classified as “Secret Restricted Data” until 1994, four years after the end of U.S. responsibilities for its trusteeship at the U.N. and when the Clinton Administration began an open-government initiative.
It would be 40 years before islanders learned the true nature of Project 4.1. Documents declassified since 1994 show that four months before the Bravo shot, on Nov. 10, 1953, U.S. officials had listed Project 4.1 to research the effects of fallout radiation on human beings as among 48 experiments to be conducted during the test, thus seeming to indicate that using islanders as guinea pigs was premeditated.
However, an advisory commission appointed by President Bill Clinton in 1994 indicated “there was insufficient evidence to demonstrate intentional human testing on Marshallese.”
For this human-subject research, the islanders had neither been asked nor gave their informed consent — which was established as an essential international standard when the Nuremberg code was written following the war crimes convictions of German medical officers.
Under Project 4.1, the exposed Rongelapese were studied yearly and so were the Utrik Islanders after thyroid nodules began appearing on them in 1963. The islanders began complaining they were being treated like guinea pigs in a laboratory experiment rather than sick humans deserving treatment.
A doctor who evaluated them annually came close to agreeing when he wrote 38 years after Bravo, “In retrospect, it was unfortunate that the AEC [Atomic Energy Commission], because it was a research organization, did not include support of basic health care of populations under study.”
During this time, Bravo-dusted islanders developed one of the world’s highest rates of thyroid abnormalities; one third of the Rongelapese developed abnormalities in the thyroid, which controls physical and mental growth, and thus resulted in some cases of mental retardation, lack of vigor and stunted development. Islanders complained of stillborn births, cancers and genetic damage.
Seven weeks after Bravo, on April 21, Cronkite recommended to military officials that exposed Marshallese generally “should be exposed to no further radiation” for at least 12 years and probably for the rest of their natural lives.
Yet, three years later, U.S. officials returned the Rongelapese to their radioactive homeland after they had spent three months at the Kwajalein military facility and at Ejit Island. Besides being Bravo-dusted, their homeland by 1957 had accumulated radioactivity from some of the 34 prior nuclear explosions in the Marshall Islands. Utrik Islanders were returned home by the U.S. shortly after their medical stay on Kwajalein.
For 28 years the Rongelapese lived in their radioactive homeland until 1985. Unable to get answers to their questions, they discounted U.S. assurances that their island was safe.
Failing to provide the Rongelapese “information on their total radiation condition, information that is available, amounts to a coverup,” according to a memo dated July 22, 1985, written by Tommy McCraw of the U.S. Department of Energy’s Office of Nuclear Safety.Cover Up Continues to This Day
Nothing has changed. Governments worldwide continue to this day to cover up the risk of a nuclear accident, and the amount – and health effects – of radiation released by military and energy facilities. And see this, this, and this.
The Government Has Engaged In a Series of Nuclear Cover-Ups Ever Since Hiroshima was originally published on Washington's Blog
Russia Today anchor Abby Martin slammed Putin’s actions in Crimea:
And RT anchor Liz Wahl resigned on air over Putin’s actions:
Indeed, Greenwald points out:
Both Donahue and Arnett were fired because of their opposition to the U.S. war. Arnett was fired instantly by NBC after he made critical comments about the war effort on Iraqi television, while a memo from MSNBC executives made clear they were firing Donahue despite his show being the network’s highest-rated program because he would be “a difficult public face for NBC in a time of war”.
During that same time, MSNBC’s rising star Ashleigh Banfield was demoted and then fired after she delivered a stinging rebuke of misleading pro-war TV coverage by U.S. outlets, while Jessica Yellin, at MSNBC during the time of the war, admitted in 2008 that “the press corps was under enormous pressure from corporate executives, frankly, to make sure that this was a war that was presented in a way that was consistent with the patriotic fever in the nation and the president’s high approval ratings” and that executives would change stories to make them more pro-war.
And Kevin Gostzola points out that U.S. news anchors similarly resigned in the run up to the Iraq war.
In any event, because we are for press freedom all over the world, we commend Martin and Wahl for having the courage of their convictions and speaking their truth.
Russia Today Anchors Slam Putin’s Actions In Crimea was originally published on Washington's Blog
Estonian Foreign Minister Accuses NEW Ukranian Government of Being Behind Sniper Attacks Which Led to Ouster of OLD Ukranian Government
The foreign minister of Etonia – after visiting Ukraine – told the EU foreign affairs chief that the NEW Ukranian government was behind the snipers who bumped off both protesters and Ukranian police.
In other words, the Estonian minister is alleging that event which led to the overthrow of the old Ukranian regime was a false flag.
We have no idea if the Estonian minister is right or not.
American analyst and writer William Engdahl goes even further in his allegations. Specifically, Engdahl claims that intelligence sources tell him that NATO is behind the snipers, as part of a “Gladio” campaign of false flag destabilization.
By way of background, the former Italian Prime Minister, an Italian judge, and the former head of Italian counterintelligence admit that NATO, with the help of the Pentagon and CIA, carried out terror bombings in Italy and other European countries in the 1950s and blamed the communists, in order to rally people’s support for their governments in Europe in their fight against communism. The code name for this campaign was “Gladio”.
As one participant in the formerly-secret Gladio program stated: “You had to attack civilians, people, women, children, innocent people, unknown people far removed from any political game. The reason was quite simple. They were supposed to force these people, the Italian public, to turn to the state to ask for greater security” (and see this)(Italy and other European countries subject to the terror campaign had joined NATO before the bombings occurred). And watch this BBC special.
FBI whistleblower Sibel Edmonds alleges that Gladio is continuing to this day. And Edmonds previously told Washington’s Blog:
For the past 11 years I have been emphasizing that my State Secrets Privilege & Gag Orders had to do with the FBI files (covering period 1996-2002 February) on covert-terrorist operations in Caucasus and Central Asia backed, managed and armed by US actors. These US-NATO directed operations in the region involved Bin-Laden and mainly Zawahiri …..
The FBI documents contained damning evidence (audio and written) collected between 1996-2002 tying these terror operations directly to the U.S. persons in the State Department/CIA and Pentagon. Also, how the State Department got Congress to grant huge amounts of funds to “front’ NGOs and businesses (mainly Turkish companies in US-listed/members of ATC) to funnel money to the terrorist cells in this region.
We don’t know whether Edmonds or Engdahl are right, either.
But one thing is certain: the Ukranian situation is not as simple and one-sided as the American politicians and media would have you believe.
CIA Spies On Senate Intelligence Committee In Effort to Block Senate Report On Disastrous CIA Torture Program
A devastating and secret report by the Senate Intelligence Committee documents in detail how the C.I.A.’s brutalization of terror suspects during the Bush years was unnecessary, ineffective, and deceptively sold to Congress, the White House, Justice Department, and the public.
The CIA has long fought to keep the report secret.
And that the CIA’s torture program ended up deceiving the 9/11 Commission. Specifically, the 9/11 Commission Report was largely based on third-hand accounts of what tortured detainees said, with two of the three parties in the communication being government employees. The 9/11 Commissioners were not allowed to speak with the detainees, or even their interrogators. Instead, they got their information third-hand. The Commission itself didn’t really trust the interrogation testimony … yet published it as if it were Gospel.
New York Times investigative reporter Philip Shenon Newsweek noted in a 2009 essay in Newsweek that the 9/11 Commission Report was unreliable because most of the information was based on the statements of tortured detainees.
As NBC News reported:
- Much of the 9/11 Commission Report was based upon the testimony of people who were tortured
- At least four of the people whose interrogation figured in the 9/11 Commission Report have claimed that they told interrogators information as a way to stop being “tortured.”
- One of the Commission’s main sources of information was tortured until he agreed to sign a confession that he was NOT EVEN ALLOWED TO READ
- The 9/11 Commission itself doubted the accuracy of the torture confessions, and yet kept their doubts to themselves
Indeed, the type of torture used by the U.S. on the Guantanamo suspects was of a “special” type. Senator Levin revealed that the the U.S. used Communist torture techniques specifically aimed at creating false confessions. And see these important reports from McClatchy, New York Times, CNN and Huffington Post.CIA Goes to Great Lengths to Cover Up Torture
The CIA has already gone to great lengths to cover up the torture … and the unreliability of the testimony published by the 9/11 Commissions. For example, the CIA videotaped the interrogation of 9/11 suspects, but falsely told the 9/11 Commission that there were no videotapes or other records of the interrogations, and then illegally destroyed all of the tapes and transcripts of the interrogations.
9/11 Commission co-chairs Thomas Keane and Lee Hamilton wrote:
Those who knew about those videotapes — and did not tell us about them — obstructed our investigation.
Government officials decided not to inform a lawfully constituted body, created by Congress and the president, to investigate one the greatest tragedies to confront this country. We call that obstruction.
(The chairs of both the 9/11 Commission and the Official Congressional Inquiry into 9/11 said that Soviet-style government “minders” obstructed the investigation into 9/11 by intimidating witnesses. We believe that some of the minders were from the CIA.)Spying On Its Overseers In Washington
In the last 24 hours, the New York Times and McClatchy have published stories revealing that the CIA is spying on the Senate Intelligence Committee, as part of its efforts to block release of its torture report.
Just Security points out:
The CIA Inspector General has reportedly requested the Justice Department to investigate the case as a criminal matter.
As Tech Dirt notes:
In many ways, the idea that the CIA is directly spying on the Senate Committee charged with its own oversight is a bigger potential scandal than many of the Snowden NSA revelations so far.
We partially agree … although we believe that the NSA has also been spying on – and blackmailing – its “overseers” in Washington.
All those focusing on the West’s lack of leverage are forgetting that the Empire retains multiple way of striking back.
Many observers have focused on the relative paucity of the West’s diplomatic and military options in Ukraine. Others focus on Russia’s sources of leverage: cutting off natural gas to western Ukraine and Europe and/or dumping its reserves of U.S. dollars:Putin Adviser Urges Dumping US Bonds In Reaction to Sanctions.
That applying such leverage could backfire on Russia receives less coverage. Does anyone doubt the Federal Reserve’s ability to print $200 billion to buy the entire Russian holdings of Treasuries? What’s another $200 billion on top of $4 trillion?
Recall that Russia holds those Treasuries/U.S. dollars as reserves for its own benefit. Dumping the dollars simply creates the need for an immediate replacement, especially as the ruble craters.
All those focusing on the West’s lack of leverage are forgetting that the Empire retains multiple way of striking back. For example, bringing the costs of misadventure home to Russia’s politically influential 1/10th of 1%.
A knowledgeable correspondent submitted these observations:
1. After Edward Snowden the entire “intelligence community” is looking for major payback. Here is a heavy weight added to Ukraine’s side of the scales. This is leading edge satellite and electronic intelligence, plus a detailed order of battle on actual Russian forces available and their locations. NATO can also provide access to advanced command and control facilities and advanced battle planning cells. In addition to numbers and morale the Ukraine will be able to mass their forces at the right spots and ignore unthreatened areas.2. Are you a heavy hitter 0.1%’er New Russian supporting Vladimir Putin? Your entire financial and personal history could soon appear on internet social media, too. In Russian.
US and British agencies have collected many millions of dirty selfies almost by accident. Imagine what they’ve collected on purpose against major intelligence targets. For instance, every member of the Russian Duma, the cabinet and all their top staffers.
3. Precision guided financial and visa sanctions applied throughout the entire western world. This is not the USSR in 1979 anymore. The entire upper strata of Russia’s elite, including all of Putin’s United Russia Party, are now extremely international. They and their extended families travel frequently to all the world class watering holes to sun, dine and shop. They have offshore bank accounts and credit cards (as witnessed in Cyprus). They own vacation homes in Spain, Miami, Italy, the Greek Aegean Islands et al. Their children by the tens of thousands attend western universities on student visas. They have massive investments in stock and real estate throughout the entire ‘west’.
As a result, they are personally vulnerable to sanctions pressure in a way the Soviet nomenklatura never was. This Ukrainian adventure could carry uniquely painful and personal high price tags.
The media would not be alerted; the targets will simply start getting messages like this:
“Your passport and visa are invalid for entry. Please follow this officer…”
“I’m sorry ma’am, your credit card was declined.”
“Invalid PIN number.”
“User ID & Password are invalid. Please reenter correct user ID and password”.
Massive materialism and corruption is the basis of Putin’s elite domestic support. Once he can’t deliver the goodies anymore they’ll drop him.
The EU previewed this class of soft weapon when it began compiling blacklists of Ukrainian officials deemed responsible for the shootings on the Maidan in late February.
Consider the massive personal financial corruption on Yanukovych’s part that was subsequently exposed. It seems likely the tailored sanctions threat played a major role in disaffecting his key political lieutenants and allies. That band of thieves also all had significant offshore assets at stake.
Yanukovych’s government was a scale model of Putin’s own political patronage and government system. It is more robust but has many of the same weaknesses.
Thank you, A.C. Discussions of modern warfare often revolve around asymmetric warfare in which the side with few conventional assets is able to leverage unconventional assets against a conventionally superior force. There are all sorts of asymmetric advantages that can be pressed home, and those targeting the wealthy will not be mentioned in speeches.
This is not to suggest this kind of asymmetric leverage is being applied or will be applied or should be applied; I am simply pointing out that it could be applied, and with very little fanfare or effort.
Others have referenced the same capabilities: U.S. has options for Russia’s declaration of war on Ukraine.
JPMorgan Chase Engaged in Mortgage Fraud: The Securitization Scheme that Collapsed the Housing Market
By Ellen Brown.
In a nearly $13 billion settlement with the US Justice Department in November 2013, JPMorganChase admitted that it, along with every other large US bank, had engaged in mortgage fraud as a routine business practice, sowing the seeds of the mortgage meltdown. JPMorgan and other megabanks have now been caught in over a dozen major frauds, including LIBOR-rigging and bid-rigging; yet no prominent banker has gone to jail. Meanwhile, nearly a quarter of all mortgages nationally remain underwater (meaning the balance owed exceeds the current value of the home), sapping homeowners’ budgets, the housing market and the economy. Since the banks, the courts and the federal government have failed to give adequate relief to homeowners, some cities are taking matters into their own hands.
Gayle McLaughlin, the bold mayor of Richmond, California, has gone where no woman dared go before, threatening to take underwater mortgages by eminent domain from Wall Street banks and renegotiate them on behalf of beleaguered homeowners. A member of the Green Party, which takes no corporate campaign money, she proved her mettle standing up to Chevron, which dominates the Richmond landscape. But the banks have signaled that if Richmond or another city tries the eminent domain gambit, they will rush to court seeking an injunction. Their grounds: an unconstitutional taking of private property and breach of contract.
How to refute those charges? There is a way; but to understand it, you first need to grasp the massive fraud perpetrated on homeowners. It is how you were duped into paying more than your house was worth; why you should not just turn in your keys or short-sell your underwater property away; why you should urge Congress not to legalize the MERS scheme; and why you should insist that your local government help you acquire title to your home at a fair price if the banks won’t. That is exactly what Richmond and other city councils are attempting to do through the tool of eminent domain.
The Securitization Fraud That Collapsed the Housing Market
One settlement after another has now been reached with investors and government agencies for the sale of “faulty mortgage bonds,” including a suit brought by Fannie and Freddie that settled in October 2013 for $5.1 billion. “Faulty” is a euphemism for “fraudulent.” It means that mortgages subject to securitization have “clouded” or “defective” titles. And that means the banks and real estate trusts claiming title as owners or nominees don’t actually have title – or have standing to enjoin the city from proceeding with eminent domain. They can’t claim an unconstitutional taking of property because they can’t prove they own the property, and they can’t claim breach of contract because they weren’t the real parties in interest to the mortgages (the parties putting up the money).
“Securitization” involves bundling mortgages into a pool, selling them to a non-bank vehicle called a “real estate trust,” and then selling “securities” (bonds) to investors (called “mortgage-backed securities” or “collateralized debt obligations”). By 2007, 75% of all mortgage originations were securitized. According to investment banker and financial analyst Christopher Whalen, the purpose of securitization was to allow banks to avoid capitalization requirements, enabling them to borrow at unregulated levels.
Since the real estate trusts were “off-balance sheet,” they did not count in the banks’ capital requirements. But under applicable accounting rules, that was true only if they were “true sales.” According to Whalen, “most of the securitizations done by banks over the past two decades were in fact secured borrowings, not true sales, and thus potential frauds on insured depositories.” He concludes, “bank abuses of non-bank vehicles to pretend to sell assets and thereby lower required capital levels was a major cause of the subprime financial crisis.”
In 1997, the FDIC gave the banks a pass on these disguised borrowings by granting them “safe harbor” status. This proved to be a colossal mistake, which led to the implosion of the housing market and the economy at large. Safe harbor status was finally withdrawn in 2011; but in the meantime, “financings” were disguised as “true sales,” permitting banks to grossly over-borrow and over-leverage. Over-leveraging allowed credit to be pumped up to bubble levels, driving up home prices. When the bubble collapsed, homeowners had to pick up the tab by paying on mortgages that far exceeded the market value of their homes. According to Whalen:
[T]he largest commercial banks became “too big to fail” in large part because they used non-bank vehicles to increase leverage without disclosure or capital backing. . . .
The failure of Lehman Brothers, Bear Stearns and most notably Citigroup all were largely attributable to deliberate acts of securities fraud whereby assets were “sold” to investors via non-bank financial vehicles. These transactions were styled as “sales” in an effort to meet applicable accounting rules, but were in fact bank frauds that must, by GAAP and law applicable to non-banks since 1997, be reported as secured borrowings. Under legal tests stretching from 16th Century UK law to the Uniform Fraudulent Transfer Act of the 1980s, virtually none of the mortgage backed securities deals of the 2000s met the test of a true sale.
. . . When the crisis hit, it suddenly became clear that the banks’ capital was insufficient.
Today . . . hundreds of billions in claims against banks arising from these purported “sales” of assets remain pending before the courts.
Eminent Domain as a Negotiating Tool
Investors can afford high-powered attorneys to bring investor class actions, but underwater and defaulting homeowners usually cannot; and that is where local government comes in. Eminent domain is a way to bring banks and investors to the bargaining table.
Professor Robert Hockett of Cornell University Law School is the author of the plan to use eminent domain to take underwater loans and write them down for homeowners. He writes on NewYorkFed.org:
[In] the case of privately securitized mortgages, [principal] write-downs are almost impossible to carry out, since loan modifications on the scale necessitated by the housing market crash would require collective action by a multitude of geographically dispersed security holders. The solution . . . Is for state and municipal governments to use their eminent domain powers to buy up and restructure underwater mortgages, thereby sidestepping the need to coordinate action across large numbers of security holders.
The problem is blowback from the banks, but it can be blocked by requiring them to prove title to the properties. Securities are governed by federal law, but real estate law is the domain of the states. Counties have a mandate to maintain clean title records; and legally, clean title requires a chain of “wet” signatures, from A to B to C to D. If the chain is broken, title is clouded. Properties for which title cannot be established escheat (or revert) to the state by law, allowing the government to start fresh with clean title.
New York State law governs most of the trusts involved in securitization. Under it, transfers of mortgages into a trust after the cutoff date specified in the Pooling and Servicing Agreement (PSA) governing the trust are void.
For obscure reasons, the REMICs (Real Estate Mortgage Investment Conduits) claiming to own the properties routinely received them after the closing date specified in the PSAs. The late transfers were done throu gh the fraudulent signatures-after-the-fact called “robo-signing,” which occurred so regularly that they were the basis of a $25 billion settlement between a coalition of state attorneys general and the five biggest mortgage servicers in February 2012. (Why all the robo-signing? Good question. See my earlier article here.)
Until recently, courts have precluded homeowners from raising the late transfers into the trust as a defense to foreclosure, because the homeowners were not parties to the PSAs. But in August 2013, in Glaski v. Bank of America, N.A., 218 Cal. App. 4th 1079 (July 31, 2013), a California appellate court ruled that the question whether the loan ever made it into the asset pool could be raised in determining the proper party to initiate foreclosure. And whether or not the homeowner was a party to the PSA, the city and county have a clear legal interest in seeing that the PSA’s terms were complied with, since the job of the county recorder is to maintain records establishing clean title.
Before the rise of mortgage securitization, any transfer of a note and deed needed to be recorded as a public record, to give notice of ownership and establish a “priority of liens.” With securitization, a private database called MERS (Mortgage Electronic Registration Systems) circumvented this procedure by keeping the deeds as “nominee for the beneficiary,” obscuring the property’s legal owner and avoiding the expense of recording the transfer (usually about $30 each). Estimates are that untraceable property assignments concealed behind MERS may have cost counties nationwide billions of dollars in recording fees. (See my earlier article here.)
Counties thus have not only a fiduciary but a financial interest in establishing clean title to the properties in their jurisdictions. If no one can establish title, the properties escheat and can be claimed free and clear. Eminent domain can be a powerful tool for negotiating loan modifications on underwater mortgages; and if the banks cannot prove title, they have no standing to complain.
The End of “Too Big to Fail”?
Richmond’s city council is only one vote short of the supermajority needed to pursue the eminent domain plan, and it is seeking partners in a Joint Powers Authority that will make the push much stronger. Grassroots efforts to pursue eminent domain are also underway in a number of other cities around the country. If Richmond pulls it off successfully, others will rush to follow.
The result could be costly for some very large banks, but they have brought it on themselves with shady dealings. Christopher Whalen predicts that the FDIC’s withdrawal of “safe harbor” status for the securitization model may herald the end of “too big to fail” for those banks, which will no longer have the power to grossly over-leverage and may have to keep their loans on their books.
Wall Street banks are deemed “too big to fail” only because there is no viable alternative – but there could be. Local governments could form their own publicly-owned banks, on the model of the state-owned Bank of North Dakota. They could then put their revenues, their savings, and their newly-acquired real estate into those public utilities, to be used to generate interest-free credit for the local government (since it would own the bank) and low-cost credit for the local community. For more on this promising option, which has been or is being explored in almost half the state legislatures in the US, see here.
Ellen Brown is an attorney, president of the Public Banking Institute, and a candidate for California State Treasurer running on a state bank platform. She is the author of twelve books including the best-selling Web of Debt and her latest book, The Public Bank Solution, which explores successful public banking models historically and globally.
I love Reddit …
I’ve been a Redditor for 6 years and – at one time – had one of the highest “Karma” scores at the site.
But Reddit seems to be turning into “Eddit” … as in censoring the most controversial stories, and censoring discussions about censorship itself.
And as Ward Harkavy – former editor and writer at the Village Voice – Tweets:
These Reddit censors sound worse than some of the censorious numbnut top-level editors I worked for — and worked hard to oust.
Side Note: Washington’s Blog reader AnnOnaMice coined the term “Eddit”.
We at Washington’s Blog love a good meme. For example, on February 6th, we ran a story based upon Anthony Freda’s word “Glassholes” (and his related artwork) to describe people who wear Google Glasses to spy on others. Less than 2 weeks later, Google itself told its users “Don’t Be a Glasshole”. (Of course, we don’t know whether Google read our story or saw Freda’s artwork … or it was just part of the collective Zeitgeist.)
The giant r/Worldnews and r/News Reddits (5 million and 2 million subscribed readers, respectively) still haven’t allowed links to Glenn Greenwald’s report on government control, infiltration, manipulation and warping of online discourse.
However, we’re all upset that the moderators of the biggest Reddits are censoring Greenwald’s original story:
- TechDirt’s write up on censorship is here
- The Redditor who posted the Examiner’s story slams Reddit censorship here
- And our post on the censorship – written before the links to TechDirt, Examiner and our site were allowed - can be read here
Ironically, our post on censorship has itself repeatedly been deleted by Reddit moderators. In the week since I wrote it, I have repeatedly seen traffic coming from a Reddit link to the story, and then the traffic has suddenly stopped.
Redditors not affiliated with Washington’s Blog have repeatedly submitted the story, and it has been deleted every time.
As one example, yesterday the story jumped to the front page of Reddit over the course of 2 hours:
This shows that there is tremendous interest among Redditors themselves to discuss censorship. But the moderators keep shutting down discussion.
This isn’t the first time the Reddit community has tried to fight back against censorship. There has been a long and growing outrage over the issue, especially given the history of Digg’s “Bury Brigade” destroying that site:
Postscript: We don’t have any opinion about whether or not moderators should keep removing our story on censorship. We are, frankly, too biased to be objective.
We are, instead, focusing on the fact that there is tremendous pent-up desire among Redditors to discuss censorship.
In other words, the story is not that our post was deleted (again) yesterday. It’s that Redditors quickly pushed it to the front page because there is such an overwhelming desire to discuss censorship.
And the other story is that the big Reddits are still not linking directly to Glenn Greenwald’s reports.
Reddit Passionately Wants to Discuss Censorship … But Moderators Keep Censoring Such a Discussion was originally published on Washington's Blog
Scrape away the media sensationalism and geopolitical posturing and it boils down to a simple dynamic: follow the energy.
Though many seem to believe that internal politics and geopolitical posturing in Ukraine are definitive dynamics, I tend to think the one that really counts is energy: not only who has it and who needs it, but where the consumers can get it from.
Let’s cut to the chase and declare a partition along long-standing linguistic and loyalty lines a done deal. Let’s also dispense with any notions that either side can impose a military solution in the other’s territory.
Media reports on the weakness of Ukrainian military forces abound (for example, Ukraine Finds Its Forces Are Ill Equipped to Take Crimea Back From Russia), but Russia’s ability to project power and hold territory isn’t so hot, either.
A knowledgeable correspondent submitted these observations:
RE: Russian Army. Effective draft evasion is running 80%. Morale is low, training is very poor and poorly funded. The Russian army has also gone through 22 years of near continuous contraction.And this standing army has heavy commitments in the Caucasus and Far East Siberia. Moreover, at least half of these Russian ground troops are short term 12 month conscripts. I don’t think these kids will produce many usable and motivated troops. The low morale recently seen in the Ukrainian Berkut and other police will be multiplied by at least 10x.
Russian speaking Ukrainian bands are rumored to already be crossing the borders into Russia territory. They’re to be ready to sabotage bridges and infrastructure and generally retaliate. Fluent Russian speakers with many years experience of living in Russia. Who can say for sure if this has already happened or is just being threatened? We can say this is a very real danger. These people look just like “Russians.”
And we can also say this threat will seriously complicate Russian rear area security and logistics. And speaking of logistics, the distances in south Ossetia and Abkhazia were very short and the populations were entirely friendly. Neither condition prevails in the Ukraine outside the Crimea.
Supplying moving armored units over hundreds of miles of occupied country is very difficult logistically. The logistics for air assault helicopter units are just as bad. These helo units look mobile but they’re a lot like a yoyo being twirled around your head on the string. They only go fast within a fixed radius anchored by logistics that are about as heavy to move as an armored division’s supply columns. That is years in the 101st Airborne Division talking. The fuel consumption rates are immense. Stuff starts breaking down fast.
Conclusion: a de facto partition is already baked in because neither side can force a re-unification. Various jockeying and posturing will undoubtedly continue for some time, but the basic end-game is already visible: de facto partition.
Let’s move on to correspondent A.C.’s observations about energy.
This map rounds out the European energy Rosetta Stone. When they hear that Italian fighter jets are over Tripoli, or that the French Foreign Legion has returned to the deep Sahara Desert, they can can better understand the reasons and real objectives of such operations.
Many have noted that the Russia economy is critically dependent on oil and gas exports to the EU. It should be noted that the converse is less true every day about EU dependence on Russian oil and gas. The Wall Street Journaleven had a line about an EU proposal to push natural gas EAST to the Ukraine. It’s hard to understand that passage or where the natural gas could come from unless one understands the North Africa to southern Europe gas pipelines.
The factors bringing the conflict in Ukraine to a head are:
1. The natural gas discoveries in eastern Poland and western Ukraine played the largest role.
2. The reduced importance of the gas pipeline running through the Ukraine to Europe as compared to 2009. Since that time the Nordstream lines have been finished and Gazprom acquired commercial control of the Belarus pipeline. The South Stream lines are well along in development.
3. Fast developing liquid natural gas (LNG) seaport terminal infrastructure.
Events in Libya, Mali and Algeria are not hermetically isolated from this. They are part of a comprehensive energy policy problem being dealt with by the same leaderships. It increasingly looks like a series of peripheral Energy Wars that are being fought out for control of Europe.
LNG exports are going to become a weapon in the struggle for geopolitical influence and control.
This highlights another problem for Russia/Gazprom. Its present natural gas advantage in Europe now rests mainly on its pipeline infrastructure. This advantage is fading due to the current and proposed pipeline projects running through Turkey to Europe, plus LPG terminal & ship developments, plus the five trans-Mediterranean pipelines from Libya, Algeria and Morocco to southern Europe, plus local shale gas plays…
The Ukraine is not the only country becoming less systemically important to Europe for natural gas supply. So is Russia. Current events will only accelerate everyone’s efforts to diversify away from such an unstable and apparently dangerous supplier.
I think the long-term fallout from the Ukrainian Crisis will be similar to China’s attempt to exploit its temporary low price monopoly position in rare earth metals a few years ago. The result is rare earth metals are becoming less rare by the day as alternate mines outside China are opened and reopened.
Thank you, A.C. Scrape away the media sensationalism and geopolitical posturing and it boils down to a simple dynamic: follow the energy.
The Americans’ Fear of Islamic Terrorists Has Worn Off, So the Government Pulls Out the EVIL RUSSIAN Card Again
Preface: I’m not siding with Putin on the Ukrainian dispute. I don’t like Communism. I was born in the U.S. and have lived here all of my life. I hate Stalin with a passion – a man who killed countless protesters, and sent numerous others away to insane asylums – and have railed against the “useful idiots” who naively supported the Soviets. I also think that Putin is a corrupt kleptocrat. I’m just pointing out that the U.S. Government is completely overreacting and fear-mongering. This is taking place on the other side of the world, and doesn’t effect America’s national security (although we may have heavily invested in the outcome).
Fear of terrorists made the American public afraid, gullible and easy to manipulate for more than a decade.
But now – despite the best efforts of the military-industrial complex to intentionally whip up an exaggerated hysteria of Islamic terrorists - Americans are starting to wake up from our fear-induced haze:
- For the first time since 9/11, we value privacy more than anti-terror protections
So how can the poor lads in the military industrial complex keep the gravy train going?
The evil Russians! That worked last time … it’ll work again!
All they have to do is re-demonize the Russians. How long can it take to scrub the images of the peaceful Olympics – and Putin’s prevention of war against Syria – out of people’s minds, and re-instill the fear of the old Red Menace?
After all, in the 1970s, Cheney and Rummy generated fake intelligence exaggerating the Soviet threat in order to undermine coexistence between the U.S. and Soviet Union, which conveniently justified huge amounts of cold war spending. And see this. That worked like a charm!
Surely, a few misrepresentations about Putin’s intention to start the next world war and take over the world will scare the daylights out of the American people!
Ahhh, the sweet smell of success …
The American press portrays Putin as being the bad guy and the aggressor in the Ukraine crisis.
Putin is certainly no saint. A former KGB agent, Putin’s net worth is estimated at some $40 billion dollars … as he has squeezed money out of the Russian economy by treating the country as his own personal fiefdom. And all sides appear to have dirt on their hands in the Russia-Ukraine crisis.
But we can only see the bigger picture if we take a step back and gain a little understanding of the history underlying the current tensions.
Indeed, the fact that the U.S. has allegedly paid billions of dollars to anti-Russian forces in Ukraine – and even purportedly picked the Ukrainian president – has to be seen in context.
Veteran New York Times reporter Steven Kinzer notes at the Boston Globe:
From the moment the Soviet Union collapsed in 1991, the United States has relentlessly pursued a strategy of encircling Russia, just as it has with other perceived enemies like China and Iran. [Background here, here and here.] It has brought 12 countries in central Europe, all of them formerly allied with Moscow, into the NATO alliance. US military power is now directly on Russia’s borders.
“I think it is the beginning of a new cold war,” warned George Kennan, the renowned diplomat and Russia-watcher, as NATO began expanding eastward. “I think the Russians will gradually react quite adversely, and it will affect their policies.”
Stephen Cohen – professor emeritus at New York University and Princeton University who has long focused on Russia – explained this weekend on CNN:
We are witnessing as we talk the making possibly of the worst history of our lifetime. We are watching the descending of a new cold war divide between west and east, only this time, it is not in far away Berlin, it’s right on Russia’s borders through the historical civilization in Ukraine. It’s a crisis of historic magnitude. If you ask how we got in it, how we got into the crisis, and how therefore do we get out, it is time to stop asking why Putin – why Putin is doing this or that, but ask about the American policy, and the European Union policy that led to this moment.
I don’t know if you your listeners or views remember George Kennan. He was considered [a] great strategic thinker about Russia among American diplomats but he warned when we expanded NATO [under Bill Clinton], that this was the most fateful mistake of American foreign policy and that it would lead to a new Cold War. George lived to his hundreds, died a few years ago, but his truth goes marching on. The decision to move NATO beginning in the 90′s continuing under Bush and continuing under Obama, is right now on Russia’s borders.
And if you want to know for sure, and I have spent a lot of time in Moscow, if you want to know what the Russian power elite thinks Ukraine is about, it is about bringing it into NATO. One last point, that so-called economic partnership that Yanukovych, the elected president of Ukraine did not sign, and that set off the streets – the protests in the streets in November, which led to this violence in and confrontation today, that so-called economic agreement included military clauses which said that Ukraine by signing this so called civilization agreement had to abide by NATO military policy. This is what this is about from the Russian point of view, the ongoing western march towards post Soviet Russia.
Jonathan Steele writes at the Guardian
Both John Kerry’s threats to expel Russia from the G8 and the Ukrainian government’s plea for Nato aid mark a dangerous escalation of a crisis that can easily be contained if cool heads prevail. Hysteria seems to be the mood in Washington and Kiev, with the new Ukrainian prime minister claiming, “We are on the brink of disaster” as he calls up army reserves in response to Russian military movements in Crimea.
Were he talking about the country’s economic plight he would have a point. Instead, along with much of the US and European media, he was over-dramatising developments in the east, where Russian speakers are understandably alarmed after the new Kiev authorities scrapped a law allowing Russian as an official language in their areas. They see it as proof that the anti-Russian ultra-nationalists from western Ukraine who were the dominant force in last month’s insurrection still control it. Eastern Ukrainians fear similar tactics of storming public buildings could be used against their elected officials.
Kerry’s rush to punish Russia and Nato’s decision to respond to Kiev’s call by holding a meeting of member states’ ambassadors in Brussels today were mistakes. Ukraine is not part of the alliance, so none of the obligations of common defence come into play. Nato should refrain from interfering in Ukraine by word or deed. The fact that it insists on getting engaged reveals the elephant in the room: underlying the crisis in Crimea and Russia’s fierce resistance to potential changes is Nato’s undisguised ambition to continue two decades of expansion into what used to be called “post-Soviet space”, led by Bill Clinton and taken up by successive administrations in Washington. At the back of Pentagon minds, no doubt, is the dream that a US navy will one day replace the Russian Black Sea fleet in the Crimean ports of Sevastopol and Balaclava.
Vladimir Putin’s troop movements in Crimea, which are supported by most Russians, are of questionable legality under the terms of the peace and friendship treaty that Russia signed with Ukraine in 1997. But their illegality is considerably less clear-cut than that of the US-led invasion of Iraq, or of Afghanistan, where the UN security council only authorised the intervention several weeks after it had happened. [Indeed, top American leaders admit that the Iraq war was for reasons different than publicly stated. And the U.S. military sticks its nose in other countries' business all over the world. And see this.] And Russia’s troop movements can be reversed if the crisis abates. That would require the restoration of the language law in eastern Ukraine and firm action to prevent armed groups of anti-Russian nationalists threatening public buildings there.
Again, we don’t believe that there are angels on any side. But we do believe that everyone has to take a step back, look at the bigger picture, calm down and reach a negotiated diplomatic resolution.
And see this, this, this and this (interview with a 27-year CIA veteran, who chaired National Intelligence Estimates and personally delivered intelligence briefings to Presidents Ronald Reagan and George H.W. Bush and the Joint Chiefs of Staff).
NATOWikipedia: The North Atlantic Treaty Organization, also called the Atlantic Alliance, is an intergovernmental military alliance based on the North Atlantic Treaty which was signed on 4 April 1949. →
The Backstory to the Russia-Ukraine Confrontation: The U.S. and NATO Encirclement of Russia was originally published on Washington's Blog
Are the American People FINALLY Starting to Stand Up to Those Who Are Trying to Take Away Our Liberties?
Americans are starting to wake up from our fear-induced haze:
- For the first time since 9/11, we value privacy more than anti-terror protections
Indeed, the American people are starting to actively push back against those who want to strip us of our basic freedoms.
University of Tennessee law professor Glenn Harlan Reynolds wrote last week at USA Today:
America’s ruling class has been experiencing more pushback than usual lately. It just might be a harbinger of things to come.
First, in response to widespread protests last week, the Department of Homeland Security canceled plans to build a nationwide license plate database.
But the proposal was suddenly withdrawn last week, with the unconvincing explanation that it was all a mistake. I’m inclined to agree with TechDirt’s Tim Cushing, who wrote: “The most plausible explanation is that someone up top at the DHS or ICE suddenly realized that publicly calling for bids on a nationwide surveillance system while nationwide surveillance systems are being hotly debated was … a horrible idea.”
On Friday, after more public outrage, the Federal Communications Commission withdrew a plan to “monitor” news coverage at not only broadcast stations, but also at print publications that the FCC has no authority to regulate.
How this program appeared was, like the DHS program, a bit of a mystery: FCC Commissioner Ajit Pai said: “This has never been put to an FCC vote; it was just announced.” But the blowback was sufficient to stop it for now.
Though people have taken to the streets from Egypt, to Ukraine, to Venezuela to Thailand, many have wondered whether Americans would ever resist the increasing encroachments on their freedom. I think they’ve begun.
Similarly, Mike Lofgren – a former GOP congressional staff member with the powerful House and Senate Budget Committees – points out that the American people are starting to push back against the Deep State which has operated without regard for the Constitution or the good of the people for far too long:
There are signs of resistance to the Deep State and its demands. In the aftermath of the Snowden revelations, the House narrowly failed to pass an amendment that would have defunded the NSA’s warrantless collection of data from US persons. Shortly thereafter, the president, advocating yet another military intervention in the Middle East, this time in Syria, met with such overwhelming congressional skepticism that he changed the subject by grasping at a diplomatic lifeline thrown to him by Vladimir Putin.
Has the visible, constitutional state, the one envisaged by Madison and the other Founders, finally begun to reassert itself against the claims and usurpations of the Deep State? To some extent, perhaps. The unfolding revelations of the scope of the NSA’s warrantless surveillance have become so egregious that even institutional apologists such as Senator Dianne Feinstein have begun to backpedal — if only rhetorically — from their knee-jerk defense of the agency. As more people begin to waken from the fearful and suggestible state that 9/11 created in their minds, it is possible that the Deep State’s decade-old tactic of crying “terrorism!” every time it faces resistance is no longer eliciting the same Pavlovian response of meek obedience. And the American people, possibly even their legislators, are growing tired of endless quagmires in the Middle East.
But there is another more structural reason the Deep State may have peaked in the extent of its dominance. While it seems to float above the constitutional state, its essentially parasitic, extractive nature means that it is still tethered to the formal proceedings of governance. The Deep State thrives when there is tolerable functionality in the day-to-day operations of the federal government. As long as appropriations bills get passed on time, promotion lists get confirmed, black (i.e., secret) budgets get rubber-stamped, special tax subsidies for certain corporations are approved without controversy, as long as too many awkward questions are not asked, the gears of the hybrid state will mesh noiselessly. But when one house of Congress is taken over by tea party Wahhabites, life for the ruling class becomes more trying.
If there is anything the Deep State requires it is silent, uninterrupted cash flow and the confidence that things will go on as they have in the past. It is even willing to tolerate a degree of gridlock: Partisan mud wrestling over cultural issues may be a useful distraction from its agenda. But recent congressional antics involving sequestration, the government shutdown and the threat of default over the debt ceiling extension have been disrupting that equilibrium. And an extreme gridlock dynamic has developed between the two parties such that continuing some level of sequestration is politically the least bad option for both parties, albeit for different reasons. As much as many Republicans might want to give budget relief to the organs of national security, they cannot fully reverse sequestration without the Democrats demanding revenue increases. And Democrats wanting to spend more on domestic discretionary programs cannot void sequestration on either domestic or defense programs without Republicans insisting on entitlement cuts.
So, for the foreseeable future, the Deep State must restrain its appetite for taxpayer dollars. Limited deals may soften sequestration, but agency requests will not likely be fully funded anytime soon. Even Wall Street’s rentier operations have been affected: After helping finance the tea party to advance its own plutocratic ambitions, America’s Big Money is now regretting the Frankenstein’s monster it has created. Like children playing with dynamite, the tea party and its compulsion to drive the nation into credit default has alarmed the grown-ups commanding the heights of capital; the latter are now telling the politicians they thought they had hired to knock it off.
The House vote to defund the NSA’s illegal surveillance programs was equally illustrative of the disruptive nature of the tea party insurgency. Civil liberties Democrats alone would never have come so close to victory; tea party stalwart Justin Amash (R-MI), who has also upset the business community for his debt-limit fundamentalism, was the lead Republican sponsor of the NSA amendment, and most of the Republicans who voted with him were aligned with the tea party.
Evidence is accumulating that Silicon Valley is losing billions in overseas business from companies, individuals and governments that want to maintain privacy. For high tech entrepreneurs, the cash nexus is ultimately more compelling than the Deep State’s demand for patriotic cooperation. Even legal compulsion can be combatted: Unlike the individual citizen, tech firms have deep pockets and batteries of lawyers with which to fight government diktat.
This pushback has gone so far that on January 17, President Obama announced revisions to the NSA’s data collection programs, including withdrawing the agency’s custody of a domestic telephone record database, expanding requirements for judicial warrants and ceasing to spy on (undefined) “friendly foreign leaders.” Critics have denounced the changes as a cosmetic public relations move, but they are still significant in that the clamor has gotten so loud that the president feels the political need to address it.
When the contradictions within a ruling ideology are pushed too far, factionalism appears and that ideology begins slowly to crumble. Corporate oligarchs such as the Koch brothers are no longer entirely happy with the faux-populist political front group they helped fund and groom. Silicon Valley, for all the Ayn Rand-like tendencies of its major players, its offshoring strategies and its further exacerbation of income inequality, is now lobbying Congress to restrain the NSA, a core component of the Deep State. Some tech firms are moving to encrypt their data. High tech corporations and governments alike seek dominance over people though collection of personal data, but the corporations are jumping ship now that adverse public reaction to the NSA scandals threatens their profits.
The outcome of all these developments is uncertain. The Deep State, based on the twin pillars of national security imperative and corporate hegemony, has until recently seemed unshakable and the latest events may only be a temporary perturbation in its trajectory. But history has a way of toppling the altars of the mighty.
The tide may be starting to shift …
Charles Hugh Smith has written a series of fascinating articles on the Deep State recently. Smith explains that – unless we understand the history and drives of the Deep State – we will not be able to understand politics, world events, or the future.
Mike Lofgren – a former GOP congressional staff member with the powerful House and Senate Budget Committees – gives his own analysis of the Deep State in a must-read essay, and in a must-watch interview with Bill Moyers:
The speculative excesses and political power of Wall Street pose a strategic threat to the Deep State, and as a result a showdown between the Deep State and the surface machinery of governance that has been captured by Wall Street is looming.
The basic idea of the Deep State is that the visible machinery of governance–electoral politics and the Federal Reserve–doesn’t set strategic policy, it ratifies and implements decisions made behind closed doors. In Mike Lofgren’s definition, the Deep State is “effectively able to govern the United States without reference to the consent of the governed as expressed through the formal political process.”
In my analysis, the Deep State is the National Security State which enables a vast Imperial structure that incorporates hard and soft power–military, diplomatic, intelligence, finance, commercial, energy, media, higher education–in a system of global domination and influence.
The Dollar and the Deep State (February 24, 2014)
Ukraine: A Deep State Analysis (February 27, 2014)
Like any other bureaucracy, the Deep State is prone to group-think, the tendency to join the prevailing “herd” in accepting a dominant paradigm and narrative that identifies key dynamics and sets priorities.
Group-think responds to both success and failure. In the case of the Deep State, key elements of the neo-conservative paradigm have been discredited. The Rise and Fall of the Failed-State Paradigm: Requiem for a Decade of Distraction (Foreign Affairs)
(Anyone seeking a public reflection of the current thinking within the Deep State would do well to read Foreign Affairs, with an emphasis on reading between the lines.)
For the sake of argument, let’s assume the leaders of the U.S. Deep State are not complete morons. Granted, that is quite a stretch, given that these are the people who gambled the lives of thousands of American troops and trillions of dollars in treasure on discretionary wars in Iraq and Afghanistan.
But it is also reasonable to assume that the neo-conservatives who naively assumed that residents of Baghdad would not only welcome their foreign liberators with baskets of flowers but would magically reconstruct the social institutions that had been systemically destroyed by Saddam over the previous 30 years–yes, those neo-con nincompoops– have been quietly put to pasture on their mini-estates in Northern Virginia.
In other words, it is reasonable to assume that the Deep State has accepted that “mistakes were made” and flushed those responsible for the previous decade’s disasters.
The Deep State undoubtedly has its own niceties and protocols, but it is by necessity ruthlessly Darwinian: failure is not only always an option, it is inevitable as a systems-level consequence of tightly connected, interactive complex systems; such failures are known as “normal accidents,” catastrophes resulting from seemingly small miscalculations and miscues that cascade into systemic crises.
As a result, incompetence cannot be rewarded lest the Deep State itself suffer the consequences.
The Deep State’s prime directive is to preserve the Deep State itself and the nation it depends on for its survival. My analysis starts by identifying the vectors of dependency. (To the best of my knowledge, I am the first to use this term in this context.) The Deep State depends on the survival of the U.S. nation-state, but the nation-state does not depend on the Deep State for its survival, despite the certainty within the Deep State that “we are the only thing keeping this thing together.”
Strategy is one thing, responding to crisis is another. The surface government (elected officials, regulatory agencies, the Federal Reserve, etc.) responds to crisis in two basic ways: it chooses whatever short-term politically expedient fix reduces the immediate political pain (also known as “kicking the can down the road”) and it sacrifices the interests of politically weak groups to protect its cronies and fiefdoms.
This crisis-response triage requires that somebody gets thrown under the bus. In the 2008 financial crisis, the Fed threw savers and the bottom 95% under the bus to funnel hundreds of billions of dollars–what was previously paid in interest–to the banks to rebuild their broken balance sheets. The Fed also provided limitless liquidity to bank trading desks and financiers to skim billions from carry trades, effectively channeling the nation’s financial resources to enrich its cronies, the top 1/10th of 1%.
The Deep State must take a longer view, and make strategic triage decisions. All sorts of people, groups and policies are routinely tossed under the bus–foreign leaders, resistance groups, civil liberties, etc.–as the Deep State adjusts to long-term developments and crises with strategic consequences.
Many Deep State decisions and policies are barely noticed, even though they are completely public. For example, the U.S. Deep State recognized that the dissolution of the Soviet Union opened an extremely dangerous door to nuclear weapons falling into non-state hands. So the U.S. spent tens of billions of dollars helping secure the thousands of Soviet nuclear weapons left in limbo after the breakup.
Though the Deep State’s institutional bias is to focus on conventional national security issues, it must also monitor potential strategic threats created by issues such as climate change, immigration and Peak Cheap Oil. The financial crisis was apparently an unexpected and unwelcome distraction from the geopolitical Great Game, and the response of the Deep State was muted.
while the surface policies of the Federal Reserve and Federal government appear to serve the interests of the financial Elites, I am beginning to discern the possibility of a strategic Deep State response to the next (and inevitable) financial crisis.
This crisis is simple to summarize: the paper claims on wealth so far exceed actual wealth that something’s gotta give. These claims include trillions of dollars in shadow-banking bets (derivatives and other leveraged claims all teetering on a tiny base of real collateral) and trillions of dollars in debt-based claims on future income.
Simply put, the vast majority of these claims will have to be zeroed out, i.e. these phantom-claim “assets” will be voided and declared worthless. This leads to the key question: who will the Deep State throw under the bus to preserve itself and the nation-state?
Once again, identifying the vectors of dependency clarifies the strategic priorities.As I pointed out in The Dollar and the Deep State, the pre-eminence of both the Deep State and the U.S. nation-state depend on the U.S. dollar remaining the key reserve currency in the global economy.
The collapse of the U.S. dollar would destroy the foundation of both the Deep State and the U.S. nation-state, hence my conclusion that the Deep State will not enable that collapse.
As for all the financial claims on real wealth that will have to go to zero value, let’s identify the operative vector of dependency with a question: which scenario most threatens the Deep State: 50 million hungry Americans taking to the streets shouting, “we’re mad as hell and we’re not going to take it any more!” or 10,000 financiers losing a couple trillion dollars in phantom wealth?
In other words, the phantom financier claims of Wall Street now pose a strategic threat to the integrity of the U.S. and its Deep State.
The Deep State needs a functioning U.S. nation-state, and a mass uprising arising from the collapse of the state cannot be suppressed with a few whiffs of grapeshot. The collapse of global pre-eminence and state financing of food stamps and other social welfare programs directly threaten the Deep State.
The collapse of financier fortunes? While that would hurt some Yalie cronies, the Deep State is not Wall Street; it attracts those who prefer power to wealth and strategy to trading. I have no doubt whatsoever that the leadership of the Deep State would have no qualms about throwing bankers and financiers under the bus once they pose a strategic threat to the U.S. dollar and other financial interests vital to the Deep State, for example, keeping 300 million Americans distracted, placated and docile.
It’s certainly not lost on the Deep State that a palpable hatred of bankers, financiers and the Federal Reserve is taking root across the land. I know this is outside the mainstream, but I think it is increasingly likely that the financial system’s skimmers and swindlers are being recognized as potential strategic threats to the Deep State.
What is essential to the Deep State’s survival and supremacy and what is not essential? Are 10,000 obscenely wealthy financiers essential? No. Between saving the U.S. dollar and making whole the $100 trillion in nominal-value bets made by financiers in offshore shadow-banking accounts–there’s no contest.
Conventional wisdom has it that Wall Street dominates the state and the Fed. To the degree that these formal surface institutions can be influenced by lobbying, campaign contributions and plum positions, this is true. But these surface institutions only ratify and implement Deep State directives.
I know this sounds “impossible” within conventional narratives, but I am increasingly confident that the financiers’ phantom claims on real wealth will be thrown under the bus in the next global financial crisis. Look at it this way: there’s essentially nothing left to stripmine from the bottom 80%; most have been reduced to neofeudal debt-serfdom. Since the survival of the nation-state depends on the 80% remaining either passive or productive, the Deep State has a vital strategic interest in both the U.S. dollar and in maintaining the social welfare programs that enable the bottom 80%’s survival.
The Three-and-a-Half Class Society (October 22, 2012)
The Deep State also needs the top 20% to remain productive to maintain U.S. soft and hard power. Transferring trillions of dollars in real wealth to make good the claims of the financier class would require the stripmining of the whatever assets the top 20% still hold. This transfer would directly threaten both the nation-state and the Deep State.
The dominance of Wall Street over the formal, visible machinery of governance has persuaded many that Wall Street is the Deep State. I believe this is a serious misread of the real Deep State. As I noted in The Dollar and the Deep State, to even discern the outlines of the Deep State requires a senior military position or national-security civilian equivalent.
Those writing knowledgeably about Wall Street and finance typically show near-zero knowledge of high-echelon U.S. military and national-security assets, policies and networks, so this blind spot is understandable.
It’s widely assumed that Wall Street rules the roost in both the mainstream financial media and in the alternative financial blogosphere. In my view, the speculative excesses and political power of Wall Street pose a strategic threat to the Deep State, and as a result a showdown between the Deep State and the surface machinery of governance that has been captured by Wall Street is looming.
Though everyone who is convinced the U.S. dollar will go to zero is confident that Wall Street will emerge victorious from the next financial crisis, I am convinced of the opposite: the Deep State will do whatever it takes to eliminate strategic threats to the integrity of the Deep State and the nation it depends on for its power and survival. In a financial crisis that threatens the dollar and the Deep State, the phantom claims of Wall Street’s financier skimmers, scammers and swindlers will be tossed under the bus with few qualms. The triage might even be performed with a certain relish.
Put another way: we’ve reached Peak Wall Street and it’s all downhill from here.
Who Gets Thrown Under the Bus in the Next Financial Crisis? was originally published on Washington's Blog