Saturday, September 4, 2010

Military Study Warns of a Potentially Drastic Oil Crisis

Editor's NOTE:

This purported leak of a German military document is consistent with what our own military command has intimated with respect to the possible depletion of fossil fuels over the next 2-4 decades. The US military utilizes a tremendous amount of fuel each year and barring a marked reduction in the size of our forces will need to find new sources of energy according to US military sources. For more see THIS...

There are those however who reject the entire concept of "peak oil" arguing that hydrocarbons are being continually created deep within the earth in a process which is termed abiogenic production. Certain Russian experts have made this argument among others. I do not know whether abiogenic oil production is merely theoretical or proven. Perhaps someone with expertise could comment. For more background see THIS...

--Dr. J. P. Hubert

'Peak Oil' and the German Government

By Stefan Schultz
Spiegel Online International HERE...


Suppose it runs out? Mishaps in oil and gas exploration are almost routine, and governments have now started to wonder about a future with dwindling fossil fuel.

A study by a German military think tank has analyzed how "peak oil" might change the global economy. The internal draft document -- leaked on the Internet -- shows for the first time how carefully the German government has considered a potential energy crisis.

The term "peak oil" is used by energy experts to refer to a point in time when global oil reserves pass their zenith and production gradually begins to decline. This would result in a permanent supply crisis -- and fear of it can trigger turbulence in commodity markets and on stock exchanges.

The issue is so politically explosive that it's remarkable when an institution like the Bundeswehr, the German military, uses the term "peak oil" at all. But a military study currently circulating on the German blogosphere goes even further.

The study is a product of the Future Analysis department of the Bundeswehr Transformation Center, a think tank tasked with fixing a direction for the German military. The team of authors, led by Lieutenant Colonel Thomas Will, uses sometimes-dramatic language to depict the consequences of an irreversible depletion of raw materials. It warns of shifts in the global balance of power, of the formation of new relationships based on interdependency, of a decline in importance of the western industrial nations, of the "total collapse of the markets" and of serious political and economic crises.

The study, whose authenticity was confirmed to SPIEGEL ONLINE by sources in government circles, was not meant for publication. The document is said to be in draft stage and to consist solely of scientific opinion, which has not yet been edited by the Defense Ministry and other government bodies.

The lead author, Will, has declined to comment on the study. It remains doubtful that either the Bundeswehr or the German government would have consented to publish the document in its current form. But the study does show how intensively the German government has engaged with the question of peak oil.

Parallels to activities in the UK

The leak has parallels with recent reports from the UK. Only last week the Guardian newspaper reported that the British Department of Energy and Climate Change (DECC) is keeping documents secret which show the UK government is far more concerned about an impending supply crisis than it cares to admit.

According to the Guardian, the DECC, the Bank of England and the British Ministry of Defence are working alongside industry representatives to develop a crisis plan to deal with possible shortfalls in energy supply. Inquiries made by Britain's so-called peak oil workshops to energy experts have been seen by SPIEGEL ONLINE. A DECC spokeswoman sought to play down the process, telling the Guardian the enquiries were "routine" and had no political implications.

The Bundeswehr study may not have immediate political consequences, either, but it shows that the German government fears shortages could quickly arise.

Part 2: A Litany of Market Failures

According to the German report, there is "some probability that peak oil will occur around the year 2010 and that the impact on security is expected to be felt 15 to 30 years later." The Bundeswehr prediction is consistent with those of well-known scientists who assume global oil production has either already passed its peak or will do so this year.

Market Failures and International Chain Reactions

The political and economic impacts of peak oil on Germany have now been studied for the first time in depth. The crude oil expert Steffen Bukold has evaluated and summarized the findings of the Bundeswehr study. Here is an overview of the central points:

  • Oil will determine power: The Bundeswehr Transformation Center writes that oil will become one decisive factor in determining the new landscape of international relations: "The relative importance of the oil-producing nations in the international system is growing. These nations are using the advantages resulting from this to expand the scope of their domestic and foreign policies and establish themselves as a new or resurgent regional, or in some cases even global leading powers."
  • Increasing importance of oil exporters: For importers of oil more competition for resources will mean an increase in the number of nations competing for favor with oil-producing nations. For the latter this opens up a window of opportunity which can be used to implement political, economic or ideological aims. As this window of time will only be open for a limited period, "this could result in a more aggressive assertion of national interests on the part of the oil-producing nations."
  • Politics in place of the market: The Bundeswehr Transformation Center expects that a supply crisis would roll back the liberalization of the energy market. "The proportion of oil traded on the global, freely accessible oil market will diminish as more oil is traded through bi-national contracts," the study states. In the long run, the study goes on, the global oil market, will only be able to follow the laws of the free market in a restricted way. "Bilateral, conditioned supply agreements and privileged partnerships, such as those seen prior to the oil crises of the 1970s, will once again come to the fore."
  • Market failures: The authors paint a bleak picture of the consequences resulting from a shortage of petroleum. As the transportation of goods depends on crude oil, international trade could be subject to colossal tax hikes. "Shortages in the supply of vital goods could arise" as a result, for example in food supplies. Oil is used directly or indirectly in the production of 95 percent of all industrial goods. Price shocks could therefore be seen in almost any industry and throughout all stages of the industrial supply chain. "In the medium term the global economic system and every market-oriented national economy would collapse."
  • Relapse into planned economy: Since virtually all economic sectors rely heavily on oil, peak oil could lead to a "partial or complete failure of markets," says the study. "A conceivable alternative would be government rationing and the allocation of important goods or the setting of production schedules and other short-term coercive measures to replace market-based mechanisms in times of crisis."
  • Global chain reaction: "A restructuring of oil supplies will not be equally possible in all regions before the onset of peak oil," says the study. "It is likely that a large number of states will not be in a position to make the necessary investments in time," or with "sufficient magnitude." If there were economic crashes in some regions of the world, Germany could be affected. Germany would not escape the crises of other countries, because it's so tightly integrated into the global economy.
  • Crisis of political legitimacy: The Bundeswehr study also raises fears for the survival of democracy itself. Parts of the population could perceive the upheaval triggered by peak oil "as a general systemic crisis." This would create "room for ideological and extremist alternatives to existing forms of government." Fragmentation of the affected population is likely and could "in extreme cases lead to open conflict."

The scenarios outlined by the Bundeswehr Transformation Center are drastic. Even more explosive politically are recommendations to the government that the energy experts have put forward based on these scenarios. They argue that "states dependent on oil imports" will be forced to "show more pragmatism toward oil-producing states in their foreign policy." Political priorities will have to be somewhat subordinated, they claim, to the overriding concern of securing energy supplies.

For example: Germany would have to be more flexible in relation toward Russia's foreign policy objectives. It would also have to show more restraint in its foreign policy toward Israel, to avoid alienating Arab oil-producing nations. Unconditional support for Israel and its right to exist is currently a cornerstone of German foreign policy.

The relationship with Russia, in particular, is of fundamental importance for German access to oil and gas, the study says. "For Germany, this involves a balancing act between stable and privileged relations with Russia and the sensitivities of (Germany's) eastern neighbors." In other words, Germany, if it wants to guarantee its own energy security, should be accommodating in relation to Moscow's foreign policy objectives, even if it means risking damage to its relations with Poland and other Eastern European states.

Peak oil would also have profound consequences for Berlin's posture toward the Middle East, according to the study. "A readjustment of Germany's Middle East policy … in favor of more intensive relations with producer countries such as Iran and Saudi Arabia, which have the largest conventional oil reserves in the region, might put a strain on German-Israeli relations, depending on the intensity of the policy change," the authors write.

When contacted by SPIEGEL ONLINE, the Defense Ministry declined to comment on the study.

Friday, September 3, 2010

US drone attacks kill 10 in Pakistan

Fri Sep 3, 2010 4:23PM

Two US drone attacks have killed at least ten people in Pakistan's northwestern tribal region amid growing discontent over climbing number of civilian casualties.

Security officials say the first strike hit a compound near Miranshah, the main town in North Waziristan district.

The missiles landed in an area where mainly Afghan refugees live. The identity of those killed is yet unknown.

"A US drone fired two missile on a house used by militants at a compound; six militants have been killed and three wounded in this attack" AFP quoted a regional security official as saying.

The second attack targeted a car travelling through a small town some 30 kilometers east of Miranshah.

"US drones fired three missiles at the car, killing at least four militants inside the car," the official added

The US has carried out numerous such attacks on Pakistan's tribal areas.

The aerial raids, initiated by former US President George W. Bush, have been escalated under President Barack Obama.

Washington claims the strikes target militants. However, the attacks, conducted by CIA in coordination with the Pentagon, have reportedly killed hundreds of civilians in Pakistan since 2008.

Islamabad has repeatedly condemned the attacks, saying they violate Pakistan's sovereignty.

The issue of civilian casualties has strained relations between Islamabad and Washington with the Pakistani government repeatedly objecting to the attacks.

Radical Zionist Congresswoman Increases Access to Media

The Harman's buy Newsweek

Non-Alligned Press Network
7 August 2010

For the token price of 1 U.S. dollar, business tycoon Sydney Harman and his wife bought Newsweek, assuming all the company’s obligations.

Sydney Harman amassed a fortune as manufacturer of high-fidelity equipment and chairman of Haman International Industries. He was President Carter’s Under-Secretary of Commerce in 1977 and 1978. At present, he is chairman of the Business Executives for National Security (BENS), chairman of the Aspen Institute, and a member of the Council on Foreign Relations.

He is married to Jane Harman, California Representative (the third richest member of Congress in the country). This ultra-conservative Democrat is the appointed spokesperson for the military-industrial complex and an all-out supporter of Israel. She used her influence to inhibit an investigation into espionnage activities attributed to the American Israeli Public Affairs Committee (AIPAC). Ultimately, the Bush Administration failed to press charges against her to obtain her support during the NSA warrantless surveillance controversy.

Thursday, September 2, 2010

Death By Globalism

Editor's NOTE:

Frequent readers will recognize that the editor has been posting many articles recently on the so-called US/Global economic crisis. This has been in an effort to understand what admittedly is a very difficult area of expertise. It seems that there are as many opionions as there are economists. This piece is excellent in that it compares and contrasts the major positions of the leading 2 schools of economic though; Keynesianism vs: Friedmanism for lack of better terms.

Dr. Roberts concludes that the economics community as a whole has no answer to the current dilemma primarily because it has "bought into" the now discredited notion of "free-trade globalism" which has resulted in the off-shoring of almost all US manufacturing production and outsourcing of US jobs. As a nation we simply are unable to make anything tangible due to the slave labor wages against which our workers must compete.

--Dr. J. P. Hubert

Economists haven’t a clue

By Paul Craig Roberts

September 01, 2010 "Information Clearing House" ---Have economists made themselves irrelevant? If you have any doubts, have a look at the current issue of the magazine, International Economy, a slick endorsed by former Federal Reserve chairmen Paul Volcker and Alan Greenspan, by Jean-Claude Trichet, president of the European Central Bank, by former Secretary of State George Shultz, and by the New York Times and Washington Post, both of which declare the magazine to be “ahead of the curve.”

The main feature of the current issue is “The Great Stimulus Debate.” Is the Obama fiscal stimulus helping the economy or hindering it?

Princeton economics professor and New York Times columnist Paul Krugman and Moody’s Analytics chief economist Mark Zandi represent the Keynesian view that government deficit spending is needed to lift the economy out of recession. Zandi declares that thanks to the fiscal stimulus, “The economy has made enormous progress since early 2009,” an opinion shared by the President’s Council of Economic Advisors and the Congressional Budget Office.

The opposite view, associated with Harvard economics professor Robert Barro and with European economists, such as Francesco Giavazzi and Marco Pagano and the European Central Bank, is that government budget surpluses achieved by cutting government spending spur the economy by reducing the ratio of debt to Gross Domestic Product. This is the “let them eat cake school of economics.” (Editor's comment: Friedmanism after economist and Nobel laureate Milton Friedman)

Barro says that fiscal stimulus has no effect, because people anticipate the future tax increases implied by government deficits and increase their personal savings to offset the added government debt (Editor's comment: It seems that Barro denies the evidence that fiscal stimulus has the positive effect of increasing economic activity albeit short-lived). Giavazzi and Pagano reason that since fiscal stimulus does not expand the economy, fiscal austerity consisting of higher taxes and reduced government spending could be the cure for unemployment (Editor's comment: This strikes me as nonsensical and counterintuitive without a documented reference indicating evidence for the contention).

If one overlooks the real world and the need of life for sustenance, one can become engrossed in this debate. However, the minute one looks out the window upon the world, one realizes that cutting Social Security, Medicare, Medicaid, food stamps, and housing subsidies when 15 million Americans have lost jobs, medical coverage, and homes is a certain path to death by starvation, curable diseases, and exposure, and the loss of the productive labor inputs from 15 million people. Although some proponents of this anti-Keynesian policy deny that it results in social upheaval, Gerald Celente’s observation is closer to the mark: “When people have nothing left to lose, they lose it.”

The Krugman Keynesian school is just as deluded. Neither side in “The Great Stimulus Debate” has a clue that the problem for the U.S. is that a large chunk of U.S. GDP and the jobs, incomes, and careers associated with it, have been moved offshore and given to Chinese, Indians, and others with low wage rates. Profits have soared on Wall Street, while job prospects for the middle class have been eliminated.

The offshoring of American jobs resulted from (1) Wall Street pressures for “higher shareholder returns,” that is, for more profits, and from (2) no-think economists, such as the ones engaged in the debate over fiscal stimulus, who mistakenly associated globalism with free trade instead of with its antithesis--the pursuit of lowest factor cost abroad or absolute advantage, the opposite of comparative advantage, which is the basis for free trade theory. Even Krugman, who has some credentials as a trade theorist has fallen for the equation of globalism with free trade.

As economists assume, incorrectly according to the latest trade theory by Ralph Gomory and William Baumol, that free trade is always mutually beneficial, economists have failed to examine the devastatingly harmful effects of offshoring. The more intelligent among them who point it out are dismissed as “protectionists.” (Editor's Comment: that tired old cannard is as worn-out as labelling anyone an antisemite who objects to Israel's Zionist polices)

The reason fiscal stimulus cannot rescue the U.S. economy has nothing to do with the difference between Barro and Krugman. It has to do with the fact that a large percentage of high-productivity, high-value-added jobs and the middle class incomes and careers associated with them have been given to foreigners. What used to be U.S. GDP is now Chinese, Indian, and other country GDP. (Editor's comment: Excellent point)

When the jobs have been shipped overseas, fiscal stimulus does not call workers back to work in order to meet the rising consumer demand. If fiscal stimulus has any effect, it stimulates employment in China and India.

The “let them eat cake school” is equally off the mark. As investment, research, development, etc., have been moved offshore, cutting entitlements simply drives the domestic population deeper in the ground. Americans cannot pay their mortgages, car payments, tuition, utility bills, or for that matter, any bill, based on Chinese and Indian pay scales. Therefore, Americans are priced out of the labor market and become dependencies of the federal budget. “Fiscal consolidation” means writing off large numbers of humans.

During the Great Depression, many wage and salary earners were new members of the labor force arriving from family farms, where many parents and grandparents still supported themselves. When their city jobs disappeared, many could return to the farm.

Today farming is in the hands of agri-business. There are no farms to which the unemployed can return.

The “let them eat cake school” never mentions the one point in its favor. The U.S., with all its huffed up power and importance, depends on the U.S. dollar as reserve currency. It is this role of the dollar that allows America to pay for its imports in its own currency. For a country whose trade is as unbalanced as America’s, this privilege is what keeps the country afloat.

The threats to the dollar’s role are the budget and trade deficits. Both are so large and have accumulated for so long that the prospect of making good on them has evaporated. As I have written for a number of years, the U.S. is so dependent on the dollar as reserve currency that it must have as its main policy goal to preserve that role. Otherwise, the U.S., an import-dependent country, will be unable to pay for its excess of imports over its exports. (Editor's comment: What Dr. Robert's does not say here is that this is one of the biggest reasons why the United States is currently running a global empire and a state of constant war. The veiled threat is that the world should not seriously think about changing the world's reserve currency from the US dollar)

“Fiscal consolidation,” the new term for austerity, could save the dollar. However, unless starvation, homelessness and social upheaval are the goals, the austerity must fall on the military budget. America cannot afford its multi-trillion dollar wars that serve only to enrich those invested in the armaments industries. The U.S. cannot afford the neoconservative dream of world hegemony and a conquered Middle East open to Israeli colonization.

Is anyone surprised that not a single proponent of the “let them eat cake school” mentions cutting military spending? Entitlements, despite the fact that they are paid for by earmarked taxes and have been in surplus since the Reagan administration, are always what economists put on the chopping bloc.

Where do the two schools stand on inflation vs. deflation? We don’t have to worry. Martin Feldstein, one of America’s pre-eminent economist says: “The good news is that investors should worry about neither.” His explanation epitomizes the insouciance of American economists.

Feldstein says that there cannot be inflation because of the high rate of unemployment and the low rate of capacity utilization. Thus, “there is little upward pressure on wages and prices in the United States.” Moreover, “the recent rise in the value of the dollar relative to the euro and British pound helps by reducing import costs.”

As for deflation, no risk there either. The huge deficits prevent deflation, “so the good news is that the possibility of significant inflation or deflation during the next few years is low on the list of economic risks faced by the U.S. economy and by financial investors."

What we have in front of us is an unaware economics profession. There may be some initial period of deflation as stock and housing prices decline with the economy, which is headed down and not up. The deflation will be short lived, because as the government’s deficit rises with the declining economy, the prospect of financing a $2 trillion annual deficit evaporates once individual investors have completed their flight from the stock market into “safe” government bonds, once the hyped Greek, Spanish, and Irish crises have driven investors out of euros into dollars, and once the banks’ excess reserves created by the bailout have been used up in the purchase of Treasuries.

Then what finances the deficit? Don’t look for an answer from either side of The Great Stimulus Debate. They haven’t a clue despite the fact that the answer is obvious.

The Federal Reserve will monetize the federal government deficit. The result will be high inflation, possibly hyper-inflation and high unemployment simultaneously. (Editor's comment: Here he apparently means print more money since the interest rate for borrowing is effectively zero at present)

The no-think economics establishment has no policy response for economic armageddon, assuming they are even capable of recognizing it.

Economists who have spent their professional lives rationalizing “globalism” as good for America have no idea of the disaster that they have wrought.

Dr. Roberts was educated at Georgia Tech, the University of Virginia, the University of California, Berkeley, and Oxford University where he was a member of Merton College.. He is the author or coauthor of 9 books and has published many articles in journals of scholarship. He served in the Congressional staff and was Assistant Secretary of the U.S. Treasury. He was awarded the Treasury’s Silver Medal for “outstanding contributions to the formulation of U.S. economic policy.” In 1987 the President of France recognized him as “the artisan of a renewal of economic science and policy” and awarded him the Legion of Honor.

Roberts was associate editor of the Wall Street Journal and columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He was Senior Research Fellow at the Hoover Institution, Stanford University, and William E. Simon Chair of Political Economy, Center for Strategic and International Studies, Georgetown University. He has been a columnist for French, German, and Italian newspapers. Today he is followed worldwide over the Internet.

The Iraq War in Hindsight--Still Immoral

More War Lies

By David Swanson
Wed, 2010-09-01

Lies aren't used just to start wars, but also to escalate them, continue them, and even reduce or end them. And we got a pile of war lies from the president Tuesday evening.

Obama claimed the war on Iraq was initially a war to disarm a state. Really? And then "terrorist" Iraqis attacked our troops in their country. Yet if they had done that in our country, I suspect they would still be the terrorists. And then it became a civil war which we were innocently caught up in. Uh huh.

U.S. participants in this crime are heroes, always and everywhere. That's sacred. The troops' mission has involved protecting the Iraqi people, and by golly they've done a superb job, as long as we don't mention the complete devastation of Iraq, the million dead, the millions of refugees, and the intense resentment of those remaining toward our country for what we've done to theirs.

The Iraqi people now (dead, in exile, in a ruined nation) have a chance that they supposedly didn't have before we destroyed their country, a country that was actually a better place to live in in every way in 2003 than it is now, and in 1989 than in 2003. To hear President Obama, this war has been for the benefit of the Iraqi people, and these wars have been about al Qaeda and 9-11.

Obama slid into nonsense about al Qaeda after discussing Iraq and before mentioning Afghanistan, a Bushian maneuver if ever I saw one:

"No challenge is more essential to our security than our fight against al Qaeda."

Never mind that al Qaeda barely existed before these wars became recruiting tools. "We will disrupt, dismantle, and defeat al Qaeda" in Afghanistan, the president promised, even though al Qaeda isn't there. Troop reductions in Afghanistan will begin next August, he said, although the prepared transcript said July, and will be determined by conditions on the ground, even though Afghanistan is not yet as bad as Iraq is.

Obama modeled the future bloodletting in Afghanistan on the myth of the successful escalation in Iraq, ignoring factors that have contributed to the reduction of violence in Iraq, including the promise of complete withdrawal, the beginning of withdrawal, and prior to those factors the incredible level of death and displacement, negotiations and bribes. The test for a "surge" in Afghanistan failed in Marja, and Obama simply behaves as if it succeeded.

And here at home "it is time to turn the page." Never mind the commission of the supreme international crime of aggression. Never mind the mass murder. Obama said he talked with George W. Bush earlier in the day. Obama lied that the two of them had never agreed on the war, a war Obama voted to fund repeatedly in the Senate. And he lied that Bush was committed to U.S. security, knowing full well that this war has made us all less safe.

"There were patriots who supported this war, and patriots who opposed it. And all of us are united in appreciation for our servicemen and women, and our hope for Iraq's future."

Except for the majority of Americans who believe the war never should have begun, that it should be immediately ended, and that its architects -- starting at the top with Bush, not the bottom with the troops -- must be held criminally accountable. Participation in this crime is not a service to anyone.

The most honest part of the speech was this:

"We have spent over a trillion dollars at war, often financed by borrowing from overseas. This, in turn, has short-changed investments in our own people, and contributed to record deficits. For too long, we have put off tough decisions on everything from our manufacturing base to our energy policy to education reform. As a result, too many middle class families find themselves working harder for less, while our nation's long-term competitiveness is put at risk."

That's a remarkable point for the president to dare to make. But there was no mention of the hundreds of billions yet in the works to be wasted in Iraq and Afghanistan, not to mention Pakistan and numerous other countries deserving of our favors.

The big lie, of course, is that the combat mission is, once again, completed. The soldiers in Iraq and the mercenaries and contractors are there for combat. That there are fewer soldiers is movement very much in the right direction, and very much to be applauded, but pretending that those remaining are something else is not accurate. Many of them may see less combat, but I'll believe they're not there for combat when their weapons are taken away.

The big question, of course, is what will be done about the deadline of December 31, 2011. Here's what Obama said on this key point:

"Going forward, a transitional force of U.S. troops will remain in Iraq with a different mission: advising and assisting Iraq's Security Forces; supporting Iraqi troops in targeted counter-terrorism missions; and protecting our civilians. Consistent with our agreement with the Iraqi government, all U.S. troops will leave by the end of next year. As our military draws down, our dedicated civilians -- diplomats, aid workers, and advisors -- are moving into the lead to support Iraq as it strengthens its government, resolves political disputes, resettles those displaced by war, and builds ties with the region and the world. And that is a message that Vice President Biden is delivering to the Iraqi people through his visit there today. This new approach reflects our long-term partnership with Iraq -- one based upon mutual interests, and mutual respect. Of course, violence will not end with our combat mission."

Violence will not end. We just won't call it combat. It'll be an overseas contingency. But what about all U.S. troops leaving by the end of next year? Obama doesn't seem to hedge on this the way he does later in the speech on a future withdrawal from Afghanistan, saying that will be "subject to conditions on the ground." And that's a good thing. The same day as this speech, the war-loving Washington Post printed a column by Ryan Crocker, U.S. ambassador to Iraq from 2007 to 2009, which pushed for a longer occupation with these words:

"And it may be that a new Iraqi government will request a U.S. military presence beyond the end of 2011. If so, I hope we will listen carefully."

Maybe we should start listening very careful right now. The president speaks of a long-term partnership with Iraq. How do you have that if you're gone? The answer may be that you aren't gone, that you maintain a significant military force in the country consisting of mercenaries employed by the State Department.

Here's what the Bush-Maliki Unconstitutional Treaty says:

"All U.S. forces are to withdraw from all Iraqi territory, water and airspace no later than the 31st of December of 2011."

However, the same document, as Raed Jarrar pointed out to me, carefully defines U.S. forces to allow exceptions:

"Definition of Terms . . .

'U.S. Forces' refers to the entity that includes all the personnel of the American Armed Forces, the civilian personnel connected to them and all their possessions, installations and equipment present on Iraqi territory.

'Member of the U.S. Forces' refers to any person that belongs to the army of the United States, its navy, air force, marine force or coast guard.

'Civilian element member' refers to any civilian working for the U.S. Department of Defense. And this term does not include the personnel usually resident in Iraq."

The trick is that not all imaginable U.S. forces have to work for the so-called Department of Defense. If they work for any other department, they're in the clear. But Iraqis are in their gunsights.


Veterans For Peace
Obama's Re-branded Occupation Of Iraq

By Mike Ferner

September 01, 2010 "Information Clearing House" -- A veteran’s perspective makes it clear that two major points must be made in response to President Obama’s announcement regarding combat troops leaving Iraq.

First, there is no such thing as “non combat troops.” It is a contradiction in terms. It is internally inconsistent. It is illogical. It is simply not true.

Ask any of the millions of men and women who went through basic training and they can tell you that every U.S. troop anywhere in the world was indoctrinated and trained in the basics of combat. While in Iraq, the transition from mechanics or communications back to combat-ready soldier takes but an order. “Non-combat troops” is simply the latest in a long line of military euphemisms meant to obscure painful reality.

The second point can best be made by drafting a section of the President’s remarks for him. If Veterans For Peace were to do that it would read something like this:

“And now, fellow Americans, let us begin a new era of candor and honesty about the wars in Iraq and Afghanistan. Specifically, I’m referring to the true costs of war – something that must be considered if we are to judge if continued war is worth it.

You have seen that the cost to taxpayers of these wars has exceeded one trillion dollars, nearly all of which has been considered ‘off budget,’ appropriated by extraordinary or ‘supplemental’ spending bills. It may be hard to believe, but large though that figure may be, it is only the smaller portion of what we will spend in total.

We are already investing unprecedented amounts in Veterans Administration staff and facilities to try and cope with the millions of men and women who have cycled through a war zone deployment – and of course many have been through multiple deployments.

Our experience thus far tells us to expect literally hundreds of thousands of cases of PTSD and Traumatic Brain Injuries – injuries that are often difficult to diagnose at first and difficult to treat. These are, of course, in addition to the many thousands of visibly wounded who, at great expense, must go through rehabilitation and a lifetime of support in order to function to their fullest. Thousands more will require years, perhaps decades, of long-term care because their injuries have left them so broken they require round-the-clock attention.

But since we are initiating an era of candor, we go farther – and by that I mean the cost to families, communities and society as a whole. Volumes have literally been written on this point, but let me leave you with a brief example you can easily expand for yourself.

We have already heard of the abnormally high rate of suicides among returning veterans. The real number is undoubtedly higher since some will always remain a mystery. We’ve heard also of a growing tide of domestic violence that leaves families broken and terrorized.

Beyond the draining medical, psychological and emotional costs to the individuals directly involved, imagine the cost to the communities where this occurs: whole battalions of police, fire, EMT, courts, probation officers, social workers and sadly, prison guards will be needed to deal with the true costs of war. It is uncomfortable to admit, but this is indeed one area of the economy I can guarantee will grow significantly.

Then there is an exponentially greater cost borne by the people of Iraq and Afghanistan – greater in every way: emotionally, economically, in human suffering, in destroyed opportunities, in shattered lives and minds, in hearts that will remain forever broken. We can do precious little to repair much of that kind of damage. But I can tell you this, my fellow Americans, we must at least pay the bill to rebuild the roads, water and sewer plants, hospitals, schools and residences we have destroyed.

It is not pleasant to describe such things and indeed, these costs will continue to weigh heavily on our nation well into our grandchildren’s generation. But we cannot pretend otherwise.”


A Trillion-Dollar Catastrophe.
Yes, Iraq Was a Headline War

By Simon Jenkins

September 01, 2010 "The Guardian" -- - Today the Iraq war was declared over by Barack Obama. As his troops return home, Iraqis are marginally freer than in 2003, and considerably less secure. Two million remain abroad as refugees from seven years of anarchy, with another 2 million internally displaced. Ironically, almost all Iraqi Christians have had to flee. Under western rule, production of oil – Iraq's staple product – is still below its pre-invasion level, and homes enjoy fewer hours of electricity. This is dreadful.

Some 100,000 civilians are estimated to have lost their lives from occupation-related violence. The country has no stable government, minimal reconstruction, and daily deaths and kidnappings. Endemic corruption is fuelled by unaudited aid. Increasing Islamist rule leaves most women less, not more, liberated. All this is the result of a mind-boggling $751bn of US expenditure, surely the worst value for money in the history of modern diplomacy.

Most failed "liberal" interventions since the second world war at least started with good intentions. Vietnam was to defend a non-communist nation against Chinese expansionism. Lebanon was to protect a pluralist country from a grasping neighbour. Somalia was to repair a failed state.

In Iraq the casus belli was a lie, perpetrated by George Bush and his meek amanuensis, Tony Blair. Saddam Hussein was accused of association with 9/11, and of plotting further attacks with long-range weapons of "mass destruction". Since this was revealed as untrue, the fallback deployed by apologists for Bush and Blair is that Saddam was a bad man and so toppling him was good.

The proper way to assess any war is not some crude "before and after" statistic, but to conjecture the consequence of it not taking place. Anti-Iraq hysteria began in 1998 with Bill Clinton's Operation Desert Fox, a three-day bombing of Iraq's military and civilian infrastructure, to punish Saddam for inhibiting UN weapons inspectors. To most of the world, it was to deflect attention from Clinton's Lewinsky affair.

Most independent analysis believed that Iraq had ceased any serious nuclear ambitions at the end of the first Iraq war in 1991, a view confirmed by investigators since 2003. Even so, Desert Fox was claimed to have "successfully degraded Iraq's ability to manufacture and use weapons of mass destruction". Whether or not this was true, there was no evidence that such an ability had recovered by 2003. Among other things, the Iraq affair was an intelligence debacle.

Meanwhile, the west's sanctions made Iraq a siege economy, eradicating its middle class and elevating Saddam to sixth richest ruler in the world, though he faced regular plots against his person. Western hostility may have shored him up, but opposition would have eventually delivered a coup, from the army or Shia militants backed by Iran.

Even had that not happened soon, Iraq was a nasty but stable secular state that no longer posed a serious threat even to its neighbours. It was contained by a no-fly zone that had rendered the oppressed Kurds de facto autonomy. It was not appreciably worse than Assad's Ba'athist Syria, and its oil production and energy supplies were improving, not deteriorating as now.

The Chilcot inquiry has been swamped with stories of the American-British occupation on a par with William the Conqueror's "harrying of the north". That any 21st-century bureaucracy could behave with such cruel and bloodthirsty incompetence beggars belief. The truth is it was blinded by a conviction in its neo-imperial omnipotence. However much we delude ourselves, the west is still run by leaders, especially generals, drenched in the glory of past triumphs: leaders who refuse to believe that other nations have a right to order their own affairs. The awfulness of Iraq in 2003 was not so grotesque as to be our business – even had we been able to build the pro-western, pro-Israeli, secular, capitalist utopia of neocon fantasy.

Germany, France, Russia and Japan did not go near this war. They did not believe the lies about Saddam's armoury and did not see any duty to liberate the Iraqi people from oppression. In his other-worldly performance before Chilcot, Blair offered only a glazed belief that he was revelling as a latter-day Richard the Lionheart.

All wars wander from their plan, since all armies are good at landings but bad at breakouts, and dreadful at occupations – known to every military manual long before Iraq. The truth is that this was always to be a headline war, fuelled by a desire to see what Bush celebrated as "mission accomplished" just when a nervous Pentagon was murmuring: "We don't do nation-building." It was a political invasion, not to win a battle or occupy territory but to score a point against Islamist militancy. That it meant toppling one of Asia's few secular regimes was another of its hypocrisies.

The overriding lesson of Iraq comes from that dejected goddess, humility. The dropping of thousands of bombs, the loss of 4,000 western troops and the spending of almost a trillion dollars still cannot overcome the AK-47, the roadside explosive device, the suicide bomber, and an aversion to occupation. Nations with different cultures cannot be ruled by seven years of soldiering. Bush and Blair thought otherwise.

The Iraq war will be seen by history as a catastrophe that did more than anything else to alienate Atlantic powers from the rest of the world and disqualify them as global policemen. It was a wild overreaction by a paranoid, overmilitarised American state to a single spectacular, but inconsequential, act of terrorism on 9/11. As such it illustrated how little international relations have advanced since the shooting of Archduke Ferdinand in Sarajevo. Its exponents are still blinded by incident.

All the UN's pomp cannot stop such incidents running amok. The UN is powerless in the face of glory-seeking statesmen, goaded by military-industrial interests of unprecedented potency. We might think that after history's mightiest lesson book – the 20th century – the west would be proof against repeating such idiocy. Yet when challenged to show prudence and maturity in response to terror, it plays the terrorist's game. It exploits the politics of fear.

The west is leaving Iraq in a pool of blood, dust and dollars. It remains wedded to Iraq's twin sister in folly, Afghanistan.


Take No Prisoners: Another proud moment in U.S. Military History.

U.S. Marines execute an Iraqi to the cheers of fellow marines


This video should only be viewed by a mature audience

The Greatest Covert Operation Ever

The Politics of Terror as the Business of Terror

By Douglas Valentine
Global Research
August 30, 2010

The politics of terror are the greatest covert operation ever.

In explaining why, I’ll begin by defining some terms, because, when discussing the covert op called “the politics of terror,” words and their management are all important.

How are politics and terror actually defined: how are these meanings manipulated; for what purposes, and by whom?

Terrorism is defined as "violence against civilians intended to obtain a political purpose." This is an ambiguous phrase, which begs the questions: what are politics and violence?

Politics is defined as “the process by which groups of people make collective decisions.” And violence is the use of force to compel a person or group to do or think something against their will. That includes the violence of words – of threatening to hurt - and of social structures, as well as the violence of deeds.

So, by definition, terrorism is political violence – hurting people, or threatening to hurt them, in order to make them govern themselves against their will.

In America, terrorism is always condemned by the government, and, accordingly, America is never a perpetrator of terrorism, but always the victims of it. The US war on terror is the ultimate expression of this principle: it is a military response to terrorism; violence is self-defense, not (ostensibly) violence for a political purpose.

That’s the official story – the assumption. But I’m going to show that America does engage in terrorism – violence against civilians for political purposes. This “state” terrorism, however, is covert, in so far as it is equated with national security, and thanks to that built-in ambiguity, it has both stated and unstated purpose.

The State and Unstated Policy in America

Politics is a process by which groups of people make collective decisions. But who really makes the overarching political decisions in America? Who governs us?

The two political parties represent the people and they compete for control of the government. Republicans generally favor business and Democrats favor labor. The political division is, generally, class based.

Now, the government can be controlled by either political party; but the state endures – “the state” being the nation’s indispensable industries and infrastructure (banking, auto industry, insurance, Microsoft), and the institutions which defend the nation’s enduring interests: the military, law enforcement, the intelligence & security services.

In Europe they often, cynically, refer to the state as “industry” or Big Business. In America we tend to call “the state” the Establishment – an ambiguous word that needs to be defined.

The dictionary defines Establishment as, “An exclusive group of powerful people who rule a government or society by means of private agreements and decisions.” I would venture to say that the interests of the state and the Establishment are the same, and that the definition of Establishment with a capital E is the pivotal phrase in discussing “state” terrorism.

Consider this: there is the politics of the two parties vying for control of the government, and there is the Establishment, the state, making the covert (ostensibly non-political) decisions that effectively govern America.

Many of those covert decisions concern national security: they are unstated policy.

Moreover, these covert policy decisions about national security are made by people who control the military, law enforcement, and intelligence & security services. These guardians of “the state” are collectively called the National Security Establishment.

Like the Establishment that secretly rules the “state,” the National Security Establishment is an exclusive group that is not accountable to the political whims of the people.

These professional guardians of the state – the Establishment - are assumed to be above partisan politics. Their loyalty is assumed to be to the law or national security. And that assumption is the Big Lie upon which state terrorism is based.

Yes, it is true that the National Security Establishment is not accountable to the people: and, in fact, it has built a series of ever-larger, concentric moats around itself called the National Security State, precisely to keep the people out of its business.

The National Security Establishment rules the National Security State with an iron fist, but it is pure propaganda that the National Security Establishment and State are not political.

In order to get inside the National Security Establishment, and rise to a position of authority within it, one must be born there (like Bush – make a billion like Gates), or submit to years of right-wing political indoctrination calibrated to a series of increasingly restrictive security clearances.

Political indoctrination – adopting the correct right-wing ideology – and security clearances represent the drawbridge across the moats.

The National Security State is the covert social structure of the Establishment, and it has as its job not just defending the Establishment from foreign enemies, but also expanding the Establishment’s economic and military influence abroad, while preserving its class prerogatives at home.

By “class prerogatives,” I mean the National Security State is designed to keep the lower class from exerting any political control over the state; especially, redistributing the Establishment’s private wealth.

To these unstated ends – imperialism abroad and repression at home - the National Security State engages in terrorism - political violence - on behalf of the Establishment.

Indeed, the National Security State is political violence, terrorism, in its purest form.

The Establishment and its National Security State as Terrorism

The lower classes in America have little voice in making government or state policy. Some are hopeless, others content: but in either case, voter turnout is a mere 54%.

Whether hopeless or content, they know they cannot fight conventional thinking. For example, when the Establishment exerts its influence, it is not considered politics; it is simply the status quo. The rich create jobs and must be accommodated with trillion dollar bailouts, paid for by workers taking furloughs.

That’s just the way it is. Politicians in the service of the Establishment, for over-arching reasons of national security, have to keep the capitalist financial system afloat.

It is the same thing with the National Security Establishment: America invaded Iraq, and there was nothing the people could do about it. The decision was made for them. Peace activists, least of all, had no voice in the decision, because they are assumed to have no stake in national security. You will not find peace activists in the National Security Establishment; and that political repression is covert state terrorism.

Likewise, if labor seeks to exercise influence, its efforts are described as exploiting the state for more than it deserves, because it does not have an enduring stake in the state.

It is a fact: only Establishment wealth – ownership - is equated with national security.

Consider the immortal words of Leona Helmsley: “Only the little people pay taxes.”

That injustice in the tax code is political repression and, in so far as it makes the people fearful, it is state terrorism. The Establishment fears losing its loopholes, while workers and the poor fear losing their homes: two types of terror, one for each class, one stated, one unstated.

The Establishment engages imperialism and political repression through propaganda (word management violence) and social structures. This state terrorism is unstated, covert.

Only when the people rebel and challenge the Establishment is the word terrorism applied.

Likewise, the military, police or intelligence causes of rebellion, or responses to it, are never called terrorism: they are national security.

And that’s how the management of words helps to repress the lower classes.

Language and the Psychology of State Terror

America’s industrial sized war machine was never said to terrorize Iraq; the invasion was not political - because the war machine is owned by the Establishment. The Establishment profiting from war is not politics; it is ideological neutral “profits.”

In fact, America exerts its unwanted political influence overseas, through the state terror of aircraft carrier fleets, bombers, nuclear subs, shock and awe invasions, pacification programs, the overthrow of governments, and support of repressive puppet regimes.

This state terrorism, which you never hear about, is the biggest covert psychological warfare operation of all time. This psywar operation depends on narrowly defining terrorism as a suicide bomber, a hijacked plane, the decapitated body of a collaborator: the “selective terrorism” of rebels and nationalists who, outgunned, and outlawed in their own country, have no other options, other than submission.

The purpose of selective terror is psychological: to isolate collaborators, while demonstrating to the people the ability of the rebels to strike at their oppressors. Shock and Awe, and brutal pacification cam­paigns – state terrorism - prevent people from making a living - selective terrorism does not. That’s a big, meaningful “class” difference.

The National Security Establishment understands that selective terror achieves political and psychological goals that state terror does not – that it rallies people to revolutionary ideals. So the National Security Establishment engages in selective terror too, by targeting the rebel, his family and friends in their homes.

This is the selective terror con­ducted by counter-terrorists. But don’t be confused: it is terrorism. All terror is psychological and political; state terror by immobilizing people and making them responsive, submissive, apathetic, and/or ostensibly “content.”

The National Security Establishment fully understands that once people have been terrorized, they have been politically defeated, without necessarily receiving bullets.

As former Director of Central Intelligence William Colby once said: “The implication or latent threat of terror was sufficient to insure that the people would comply."

This principle of the psychological use of “the implication or latent threat of terror” is what brings us back to America and the business of terror.

The Business of Terror

State terror – colonization abroad and political repression at home - is a key means of extracting profits and maintaining ownership of property. Ask the American Indian.

In its colonies, the US engages in state terrorism by removing all legal protections for rebels; detention, torture, and summary execution are the price for rebellion against US policy.

State terrorism overseas, imperialism, is never acknowledged by the media, because the media is a big business; indeed, two of the major networks are owned by defense contractors.

And state terrorism applied domestically to ensure “internal” security is never acknowledged - America says it has no political prisoners. But the National Security State is well thought out, by professionals in language management, and political and psychological warfare, aimed at you.

"Personal violence is for the amateur in dominance," says two-time Nobel Prize winner Johan Galtung, but "structural violence is the tool of the professional. The amateur who wants to dominate uses guns; the professional uses social structure. The legal criminality of the social system and its institutions, of government... is tacit violence. Structural violence is a structure of exploitation and social injustice."

As Colby said: “The implication or latent threat is enough to insure people will comply."

The war on terror and its domestic version “homeland security” are the law of the land – America 's new legally criminal social structure based on administrative detention, enshrined in The Patriot Act and a number of executive orders, some secret.

This lack of due process comes on top of a justice system already skewed to protect the propertied elite and pack the prisons with the poor, through "structural violence," mainly the drug wars.

The Establishment’s new anti-terror and anti-drug laws make the National Security State the most fearsome covert political and psywar machine the world has ever seen. And the National Security State is growing: the “Top Secret America” series in the Washington Post put it at 750,000 cadres.

This secret state within a state extends into the homeland’s critical infrastructure and beyond. For example, the arms industry provides good jobs, making American imperial aggression seem a positive value.

And this is how the psyched-out people become one of the moats.

As it is modeled on the totalitarian corporate paradigm, the National Security State in all its manifestations fits the classic definition of a fascist dictatorship. And we know what its intentions are. They have been stated.

In the days after 9-11, right wing Republican stalwart Kenneth W. Starr, the Clinton inquisitor, said the danger of terrorism requires "deference to the judgments of the political branches with respect to matters of national security."

But is there an on-going emergency that requires deference to the political branches, meaning the right-wing ideologues who rule the National Security State ? And what does it mean for Establishment opponents if due process is completely abandoned at home, and subjected to politics?

Michael Ledeen, a former counter-terror expert on Reagan's National Security Council, blamed 9-11 on Clinton "for failing to properly organize our nation's security apparatus." Ledeen's solution to the problem of those who sneered at security was "to stamp out" the "corrupt habits of mind." By which he means Liberalism.

In other words, the reactionary right wing that owns the National Security State wants to impose its total rule on the people in order to create a security conscious, uniform citizenry - marching in lock step, flags waving - that is necessary to win the war on terror. This is how the National Security professionals are incrementally creating the requisite fascist social structure - through terror, the best organizing principle ever. "This is time for the old motto, 'kill them all, let God sort 'em out.' New times require new people with new standards," Ledeen asserted. "The entire political world will understand it and applaud it. And it will give us a chance to prevail."

When Ledeen says “political” world he means the "owners of the business" of state terror, the right wing ideologues who pack the National Security State and the capitalist Establishment they serve.

And they have won the propaganda war, folks.

Wednesday, September 1, 2010

911, American Exceptionalism and Idolatry

Editor’s NOTE:

A reader of this blog who submitted the piece below is a person who is dedicated to knowing and testifying to the truth but for various reasons is currently unable/unwilling to be identified--a situation in these increasingly dark days which many readers should be able to empathize with.

This essay raises some extremely important issues such as the necessity of discussing who was really behind the 911 attacks and what the conspirator’s wished to accomplish. Americans of good will must not be ostracized for being willing to follow the evidence wherever it leads. A completely independent re-investigation of 911 is clearly needed.

Some readers of this site may be put-off by the author’s contention that “there is only one institution especially favored by God with an explicit mission for all humanity, only one indispensable and incarnation of divine goodness present now in the world: the Roman Catholic Church.” Or that “only the Catholic Church has a divine foundation and spirit, which, despite human sin and error, cannot be eradicated or changed.” The author is a Roman Catholic and has correctly stated the Traditional Catholic Church teaching. Clearly an attempt is being made to appeal to other Catholics as well as non-Catholics. However, one does not have to be Catholic to appreciate the arguments being made herein. We invite generous but courteous commentary.

--Dr. J. P. Hubert

“9/11 Denial” and the Idolatry of American Catholics

Bishop Williamson of the SSPX has not only been called a “holocaust denier,” but also a “9/11 denier,” in that he has said that 9/11 was an “inside-job,” a “false-flag” operation in which the World Trade Center buildings were brought down in a controlled demolition by criminal elements embedded in either the American or Israeli governments, or both. Is there a connection between his two denials? Most certainly. The Holocaust was the Jews’s Golgotha, and 9/11 was America’s Holocaust. Thus, 9/11 and the subsequent American “War on Terror” represent the crucifixion and resurrection of the now divine American Regime. Just like the Jews in Germany under Hitler, America, as the myth goes, was the sacrificial victim of absolute evil. And just like Israel is now justified and even righteous in its “defensive” wars of “survival,” as long as America claims to be fighting against that absolute evil, defending itself against being “wiped off the face of the map;” as long as it attempts to vanquish that evil for Americans’ sake and the sake of the whole world’s “freedom,” then America, like Israel, is not to be judged according to the moral law—for its very actions are what define good and evil—nationalized nominalist theology, as it were. When Israel murders Palestinian children and America murders Iraqi children, it is a good thing; for, Israeli rabbis and American Catholic neoconservative priests say it is.

What Bishop Williamson is saying in his “denial” is that 9/11 was a self-sacrificial act of violence, executed, perhaps, by the Mossad in conspiracy with a covert criminal network embedded in the American and global, new world order government. And those who inflicted this wound knew exactly the psychological and spiritual effects it would have on their victims, and what wonders it would permit them to do afterwards. Jews are now permitted to kill Palestinians en-masse with impunity because of the Holocaust; according to this insane logic, to deny the goodness of Israel’s actions is to implicitly deny the uniqueness and sacredness of the Jews’ suffering in the Holocaust. Analogously, Americans are now permitted to invade and occupy countries that never attacked them because of 9/11—“never again.” And to deny America’s right “to defend itself” is to implicitly deny the sacred status of American suffering in 9/11. In the remainder of this article, I would like to defend Williamson’s “9/11 denial,” and then suggest a reason why most Americans, and almost all Catholics, should be doing the same.

What’s debatable?

There are certain convictions that a traditional Catholic should never question. God is love, for example. No matter how much hatred and evil we encounter and experience in the world, we are never justified in seriously doubting this truth. By divine Faith, we are obliged to believe that every act of hatred and evil will somehow result, by God’s miraculous grace, in more love and good in the world than if these acts had never occurred. God is love, and all that happens, all that happens, are only the various expressions of His love for us. Of course, God does not will our hateful sins, but He transforms them and their effects into good. We might have a thousand difficulties in reconciling our subjective experience with this rather incredible truth, but these can never justify one single doubt.

The set of unquestionable truths includes not only supernatural ones like the aforementioned, but also self-evident, natural truths, as well as those truths directly derived from them, the truths of the natural law, and the truths of man’s universal and particular experience of the world and himself. That things are, and I can know them; that truth exists, and I can discover it; that I have an immortal soul, and that it will be judged; that one must do good and avoid evil; that something cannot be and not be at the same time in the same respect; that nothing in this created world can satisfy me; that the United States of America was founded in 1787; that the earth is round (though not necessarily revolving around the sun!—see the pioneering work of Solange Hertz and Robert Sungenis on this).

Then there are those truths that are, in a word, doubtable. Convictions about these matters should be held rather loosely, even when we are convinced of their truth, and they should be perpetually questioned, not because these are necessarily bad or false convictions, but because these are, unlike the self-evident or common sense truths and facts of nature, or the revealed supernatural truths of supernature, inherently debatable. These are the kinds of convictions we have regarding matters of human history, personal actions, and interpretation of particular experiences, such as the precise causes of historical events, the details of scientific theory, judgments of character, and deliberations of prudence. We may indeed have the right opinion on one or more of these sorts of issues, but it must be seen as just that—an opinion. There are simply no non-debatable, unassailable reasons to hold mere opinions to be non-negotiable and indisputably true, unless of course, they are transformed from opinions into knowledge (for the best analysis ever written on how this may occur, read Plato’s Republic). But until then, and some opinions will never make it to the realm of knowledge, there is no unimpeachable authority, including the authority of the opinions themselves, that obliges us to hold any of these opinion-level convictions without some level of epistemological doubt. On the contrary, it would be an act of disobedience and impiety to truth not to place these kinds of convictions under critical scrutiny and subjective doubt.

Unfortunately, it is just these types of convictions about which absolute certainty cannot be possessed, or at least with much more difficulty than one presumes, that are often held with the most intransigence and naïve fidelity by many Americans. In the remainder of this article, I would like to discuss two convictions that most Americans, and far too many Catholics, hold with a misplaced intransigence and naïveté. Though determining whether these convictions are true or false is, I would argue, essential to the welfare and even the very survival of our country, I will not attempt any determination of this here. For, I think the more important question to be asked about them is whether they are debatable?

Taking exception to American exceptionalism

The first conviction I would like to analyze in terms of debatableness is the belief in American exceptionalism. Many Catholics believe that America is special, but not special as all countries are special to their citizens, as my own mother is special because she is my mother, but especially special. Along with Israel, America, according to this idolatrous exceptionalism, has been chosen by God to be a sort of secular church with the mission of bringing peace and prosperity to the world. These maintain that America’s system of government and political culture is intrinsically superior to all others, for America is the nation marked out by God’s providence to bring God’s gift of freedom to the world. In short, not an insignificant number or Catholics hold in their heart of hearts, though they may be unaware of it and may deny it when it is made explicit, that America is, for all intents and purposes, equal in importance to the Holy Roman Catholic Church.

Now, it is not my intention to determine the truth of these convictions or any other ones in this essay; for, I only want to determine whether they are debatable. As far as I know, there is only one institution especially favored by God with an explicit mission for all humanity, only one indispensable and incarnation of divine goodness present now in the world: the Roman Catholic Church. Only the Catholic Church has a divine foundation and spirit, which, despite human sin and error, cannot be eradicated or changed. The Church is alone favored and chosen by God, for it is the new Israel it is His own body, and He infallibly brings goodness and truth to the world through her alone. The Church will never lose these divine attributes, and it will continue to display them visibly for all to see to the end of time (though often clouded by human error and sin) in its hierarchical and incarnate body and head This is undeniable and indubitable.

Therefore, it is impossible that any other institution could ever have these attributes in any way, or even approach them, for they are divine. Yet many attribute to the American regime some or all of these divine attributes! It may be an implicit or unconscious attribution, one that materializes itself only in emotional reactions and knee-jerk practical and political attitudes, but it is clear that too many Catholics have adopted to some extent a virtually religious belief in American exceptionalism.

Now, prescinding from the question of whether the American regime[1] is or is not actually “a force for good in the world” (as a certain intransigent Irish talk-show host from New Jersey likes to affirm incessantly) it is certainly the case that this question is debatable. One is, without doubt, morally permitted to demure from the Americanist narrative, to question its veracity, for it is the kind of conviction the truth of which can only be determined by a combination of philosophical and theological analysis and historical interpretation; and the latter, because it deals with changeable and ambiguous subject matter, renders it an intrinsically debatable conviction.

If my abstract arguments have not yet convinced the reader that American exceptionalism is a debatable conviction, then perhaps a little philosophical, theological, and historical analysis may help. The Enlightenment was in essence a secularization of the heresy of private judgment held by the Protestant revolutionaries, with both Protestantism and the Enlightenment a dialectical reaction to fourteenth-century nominalist theology. Not content merely to judge Christian revelation, completely independent of the authority of the Magisterium, the Enlightenment philosophers presumed to adjudicate reality itself, independent of any authority whatsoever, whether the deliverances of nature, the force of law, immemorial custom, or time-tested tradition. These claimed to obey “reason,” but as Nietzsche and the post-modernists have demonstrated (and this is perhaps the one salvageable truth in their otherwise satanic movement), all this talk of reason was just a cover for revolutionary will. The Enlightenment model of the ideal political order was one in which man’s will, disguised as “reason,” would be king.

To make a long historical story short, the most obvious concrete, historical incarnation of this Enlightenment, man-centered political order was the 1789 republic of France. But this wasn’t the first incarnation. The 1787 American Republic holds this dubious honor. It is not my intention here to argue this point against Michael Novakian hagiographers of the Founding Fathers, but I will point out one salient characteristic of the American regime in lieu of an argument. Even though one must accept that the American Founding had some godly influences, that it was pervaded in part by a Christian ethos, one must also recognize that the Holy Name of Our Lord Jesus Christ is nowhere to be found in its official documents, and unwillingness to utter the Holy Name in public is the unmistakable sign of Freemasonry, the archenemy of Catholicism.

Let us jump ahead a couple hundred years to present-day America. Tens of millions of unborn babies are being murdered by American “doctors” hired by the children’s own mothers; an innocent woman is starved to death by her husband in plain sight of everyone, including a “pro-life president,” and no one has the will or the power to stop it; a president and other operatives of an enormous, Leviathanian military-industrial complex conspire to lie to the American citizenry and the international community in order to attack and occupy a country that never attacked it, torturing many innocent citizens and murdering thousands of civilians, including women and children, in the process; the first black U.S. president is in favor of baby-murder—all in the name of God and freedom.

I hope that in light of the preceding, it is at least a little bit clearer now that the belief in America’s intrinsic, essential, and constitutive goodness, exceptionalism, and mission, although not demonstrably an untrue belief, is certainly debatable. Perhaps the American regime is morally superior to all other nations and always will be, but there is no authority, from history, reason or revelation, that morally obliges one to think so. Thus, there is no a-priori reason to judge the American regime, its governmental principles and practices, and its moral and political culture, to be qualitatively better or worse than any other nation. And one is certainly free to judge it qualitatively worse, culturally speaking, than other historical empires, such as the British and the Spanish. Is this out of the question? Is it unpatriotic? Is it un-American? Is it blasphemy? These aren’t the appropriate questions. The appropriate question is whether it is true. Now, whether America is blessed or cursed by God, or simply held in the same esteem that he holds any other created society of sinners, is certainly a pertinent question. But the question one must first ask is whether one’s conviction about the American regime’s moral and spiritual exceptionalism is debatable—and it is.

9/11 denial

We are now ready to discuss the second conviction I would argue is mistakenly considered by many Catholics to be non-debatable: that the September 11, 2001 attacks on the World Trade Center and the Pentagon were orchestrated and executed by Islamic terrorists from a foreign country. As I will try to show, there is a reasonable, though debatable, alternative explanation that is just as plausible, if not more so, than the explanation the U.S. Government has given us in the official 9/11 Commission report, and the main-stream media has echoed and supported. Before I describe what this alternative view is, and why I think it is plausible, let me explain why I am even bringing this “conspiracy” issue up in the first place.

I think that there has been a massive, concerted effort on the part of the U.S. and Israeli governments, the military-industrial complex, globalist interests, and the mass media, which is overwhelmingly Zionist controlled, to keep Americans in the cave, so to speak, with respect to what truly occurred on September 11, 2001. The Internet, interpersonal conversations, and courageous book and journal publishers are our only life-preservers in this veritable ocean of propaganda. The vast majority of the media, both right and left, are mere puppeteers and shadow-watchers.

Let me offer the reader some evidence that the official story of 9/11 might be a mass-produced delusional myth. How do you react to the idea that 9/11 may not be what you think it is, that it might indeed be an “inside job?” Is it with immediate disdain and disbelief at the mere possibility of a government cover up of this matter? If so, why? Think about your reaction. Is it logical? Is it coherent with your other beliefs? A government that protects the murder of babies and covers it up with propaganda is capable of lying about 3000 murders—don’t you think? Is it not capable of permitting and even orchestrating the murder of adults too, then, isn’t it? Bush sanctioned and permitted Israel’s murdering of innocent Lebanese a few years after 9/11, and Obama had “no comment” about the thousands of innocent Palestinians who were killed and injured by Israel. Is it absolutely unthinkable that powerful elements in our government would kill their own people if it meant securing and preserving their power? No, for they have done so already. That is certain.

There are, of course, many “conspiracy theorists” who think themselves safely out of the clutches of deception, but have only bound themselves more securely in it, through the chains of their fantasies. Nevertheless, false conspiracy theories can also be invented and imposed on society by those in public power, and just because they are de facto publicly authoritative does not make them any more non-conspiratorial and truthful than others. I am suggesting that the official story of 9/11 is just one of these debatable conspiracy theories, with factual and logical holes you can fly a Bowing 767 through.

Though one could marshal hundreds more empirical facts and several persuasive arguments that render the debatable conviction that 9/11 may have been a false-flag operation a plausible one, I will only mention a few here. As many engineers and scientists, such as Dr. Stephen Jones, as well as reputable commentators, such as Paul Craig Roberts, have insisted, the only plausible explanation for both towers collapsing into their footprints at virtually freefall speeds is controlled demolition, a process that would have taken weeks, if not months, to plan. Moreover, a number of the so-called hijackers are alive and have made their aliveness public. World Trade Building Seven was never hit by a plane, yet it collapsed at free-fall speed into its own footprint shortly after Larry Silverstein, its owner, who just happened to receive billions of dollars in insurance money because of its collapse, gave the order to “pull-it,” clearly meaning demolition (there is a you-tube interview where you can hear him say it clearly). In other words, logic dictates that the complex, time-controlled explosives were already carefully placed inside the building weeks before September 11. See THIS... for a professional quality, highly plausible documentary on the subject).

There is also historical evidence that the U.S. government is capable of massive lying, treachery, and murder. There is the recently declassified document available online called “Operation Northwoods” in which the Joint Chiefs of Staff outlined a plan in the 1960s to murder Americans and blame it on an “enemy,” Cuba, in order to provoke the public’s enthusiasm for war. Kennedy, in virtue of his Catholic conscience, however ill-formed it might have been, rightfully rejected this plan. Careful consideration of THIS document reveals that it is within the realm of possibility that 9/11 was a “false-flag terrorism” event. Of course, this doesn’t prove anything, but it at least shows that the U.S. government is capable of it. Consider also the fact that a government that allows the mass murder of its most innocent and helpless victims, unborn babies, for the sake of ideological consistency, mammon, and comfort, is capable of planning and executing the murder of a few thousand of its citizens for similar, self-serving motives. Granted, the idea that our own government might have either murdered its own citizens or deliberately permitted them to be murdered by others and covered it up so effectively is tremendously difficult to fathom, it is eminently debatable. If, as we have seen, there is no indisputable reason to consider the American regime intrinsically, essentially, and constitutively good, then there is no indisputable reason to consider its government incapable of deliberately permitting or committing a great act of evil.

The attack that occurred on September 11, 2001 was an act of enormous evil. Therefore, the government of the American regime, or at least, criminal, traitorous elements embedded in the U.S. government, being capable of enormous evil, may have deliberately permitted or committed the 9/11 attacks. One cannot deny the conclusion of this syllogism without denying either the major or the minor premise. The minor premise is undeniable, so that leaves only a denial of the major premise as the reason for not accepting the conclusion. For those who can’t or won’t recognize that the American regime may not be what its popular spokesmen claim it to be (the kind of claim one might hear on the Sean Hannity show or in a speech by the former president George W. Bush), it is impossible to recognize that 9/11 may not be what its popular spokesmen have claimed it to be, namely, an attack on America by Islamic terrorists who hate us because of our goodness and freedom. However, for those who can recognize the intrinsic debatableness of the major premise, it is impossible not to admit the intrinsic debatableness of the conviction that 9/11 may have been an “inside job,” what conspiracy theorists call a “false-flag operation.” In other words, it makes no sense to deny the possibility, and no amount of propaganda and political and cultural pressure can change this fact. Personally, I think the empirical data show that it is more than just a mere possibility that 9/11 was an inside job, but I leave that for the reader to discover on his own. My main point is that there is no a-priori rational reason for Catholics to refuse to consider the possibility that 9/11 was orchestrated and executed by criminal elements embedded in the United States government, and possibly in the government of Israel. See the work of Christopher Bollyn on this possibility HERE...

9/11 and the holocaust vs. Christ crucified

In conclusion, I want to explain why I think it is vitally important for Catholics to look at 9/11 with a more skeptical eye. Apart from the fact that if 9/11 were indeed an inside job, it would change drastically how one perceives the political and cultural landscape—it would give a whole new meaning to the “war on terror”—and this is certainly vitally important in itself, I think that if Catholics cannot even accept just the possibility that 9/11 was a self-inflicted wound, or a wound inflicted by “our democratic friends in the Middle East,” they are at risk of losing their Catholic Faith. As I have shown, the only reason one would not consider it a possibility that 9/11 was an inside job is because one does not believe the American government capable of that kind of grave, deliberate evil. And the only reason not to consider it possible that the American government could deliberately permit or commit grave evil is the belief that the American regime is an institution intrinsically, essentially, and constitutively good. But only the Catholic Church deserves this attribution.

Therefore, if one refuses to consider it even a possibility that 9/11 was an inside job, he, at least implicitly, denies the exclusive identity of the Roman Catholic Church as the only infallible and indefectible force for good in the world. I think it is an inescapable conclusion. The Roman Catholic Church—in its divine aspect, of course, and not in its eminently peccable human members—is the only institution incapable of doing any evil, let alone grave evil. America has no divine aspect whatsoever. Not to consider it possible that one’s government could do the unspeakable and murder its own citizens is to implicitly divinize one’s country (as perhaps many German Catholics did during the Hitler regime, leading to his not being stopped much earlier), and insofar as one identifies himself with his country, it is to divinize oneself. "I preach Christ crucified," St. Paul said. And he meant Christ crucified—and nothing else. Catholics must be integrally Pauline in this respect, or be of antichrist.

To get back to Bishop Williamson: The real issue here is the relative historical and spiritual status of the crucifixion of the God-man in relation to the historical suffering of Americans in 9/11 and Jews in the Holocaust. For those Jews and Americans under the spell of the 9/11 and Holocaust idols, however, the crucifixion is to be seen as ultimately irrelevant to history and to spirituality, and should be acknowledged as such by all, indeed, must be acknowledged as such, or else one is "anti-semitic" or “anti-American,” heretics deserving severe punishment. The Holocaust and 9/11 must replace the crucifixion as the dual-centers of historical and spiritual gravity, must be recognized as the loci of all evil and the true revelation of the Jewish and American divine victimhood. Either Jesus is the eternal victim of unrighteous violence, or the Jews and Americans are. There is no third man. The Church, regardless of its sympathy with Jewish and American suffering, and whether or not it accepts the sacred, mystical "six million," or that “the Muslims attacked us because of our freedom,” can never acknowledge the Jewish and Americanist dogma of divine self-victimhood, and so will always be the enemy to the unrepentant Jews and the Americanists, to anyone with an unrepentant, anti-logos, Jewish and Americanist consciousness.


[1] I say “American regime” to distinguish it from America the country or people. Here we are considering the merits of the philosophical and theological principles embedded in America’s government, institutions, and overall ethos and culture, America in a formal, not material, sense.

Tuesday, August 31, 2010

Can Anything Save the US Economy: No Monetary Policy Answer, What about further Fiscal Stimulus?

Editor's NOTE:

I provide below a short discussion of the way in which the federal government generally looks at the issue of "regulating" the economy. Briefly, there are 2 basic approaches, one, through changes in "Fiscal Policy" and two through Monetary Policy manipulations. Thereafter I briefly outline the approaches which have already been employed and some thoughts on how to proceed from here.

Fiscal Policy:

Fiscal policy can be thought of as the relationship between federal spending and tax revenue collection which often centers primarily on income taxes, employment taxes or other value added taxes and whether or not there is a rough balance between spending and tax revenue rather than for example a contraction (federal spending less than revenue collected) or an expansion (federal spending in excess of revenue collection). The latter is also known as "deficit spending."

A fiscal policy manipulation would be to change the income tax rates, to increase the size of the federal budget by raising the rate at which existing programs grow or to provide a so-called economic stimulus where the government engineers a one-time/short term increase in federal spending. Along with "Monetary Policy", "Fiscal Policy" is part of what the Federal Government uses to control/enhance economic activity.

Monetary Policy:

“Think money” specifically the interest rates charged for borrowing money and the ease with which the federal government "prints new money" (also referred to as "quantitative easing", Quantitative easing is sometimes colloquially described as "printing money" although in reality the money is simply created by electronically adding a number to an account.

Examples of economies where this policy has been used include Japan during the early 2000s, and the United States and United Kingdom during the global financial crisis of 2008–the present) and puts it into circulation. Both have directly to do with getting actual dollars into the hands of people so they can either spend or save them. In order for the federal government to print more money it must either raise available revenue from taxes or borrow it from foreign nations through the issuing of Treasury bonds which pay interest to the bond holders. Another option is to sell fixed assets such as interstate highways, toll bridges and other valued parts of the national infrastructure to raise money.

Quantitative Easing:

The term quantitative easing (QE) describes a monetary policy used by central banks to increase the supply of money by increasing the excess reserves of the banking system. A Central bank does this by first crediting its own account with money it has created ex nihilo "out of nothing"--i.e. printing money almost at will is possible for the US because the US dollar is the reserve currency. Other nations who must trade in dollars are forced to earn them through trade since they cannot print dollars. This naturally is very dissatisfying to them.

The Central bank then purchases financial assets, including government bonds, mortgage-backed securities and corporate bonds, from other banks and financial institutions in a process referred to as "open market operations." The purchases, by way of account deposits, give banks the excess reserves required for them to create new money, and thus a hopeful stimulation of the economy, by the process of deposit multiplication from increased lending in the fractional reserve banking system. Risks include the policy being more effective than intended, spurring hyperinflation, or the risk of not being effective enough, if banks opt simply to pocket the additional cash in order to increase their capital reserves in a climate of increasing defaults in their present loan portfolio --the current situation in the US.

"Quantitative" refers to the fact that a specific quantity of money is being created; "easing" refers to reducing the pressure on banks.
Source for Quantitative Easing: HERE...

Since the Central banks have already decreased the interest rate for borrowing money to virtually zero, and because the federal reserve has already engaged in unprecedented quantitative easing, it appears that there is little if anything more that can be done from the perspective of "Monetary Policy" despite what Federal Reserve chairman Ben Bernanke might say. This of course can be debated by any interested economists who wish to comment on this post.

Unfortunately, while raising income and other federal taxes might provide badly needed additional revenue, it is dangerous to do so during a recession (appears we have now entered the second phase of a double dip recession) and a high unemployment rate--the situation we now find ourselves in. Moreover, we have already significantly increased the budget deficit as a result of the almost $800 billion prior fiscal stimulus package enacted by President Obama and the US Congress only ~ 1/3 of which was actually stimulus in the traditional sense.

Thus, the debate we need to have is: what can be done now to help save the US economy and the millions of suffering American citizens?

Clearly, any approach which would significantly ruduce our budget deficit year to year and over the long run markedly decrease our national debt (currently almost equal to our GDP) would require a substantial reduction in government spending not simply an increase in total tax revenues. Barring a severe austerity program in which the non-discretionary portions of the budget (primarily social security and medicare/medicaid) are severely cut or curtailed we must look elsewhere.

Since the largest portion of the federal budget which is discretionary is the defense and intelligence budgets much of which is hidden, they must be radically reduced if we are to save the overall US fianancial ship of state. If we do not do so soon, foreign governments will be increasingly unwilling to lend us money (thereby markedly increasing the interest rates we will be forced to pay on our Treasury bonds). Ironically should Treasury bond interest rates begin to rise markedly, many of our foreign creditors concerned about our economic demise may begin to cash in their treasury bonds all at once creating a run on the US treasury with default of the US government as these same nations simultanesouly attempt to dethrone the dollar as the world's reserve currency. A persuasive argument can be made that the only thing stopping them from doing so now is that we are the uncontested global nuclear superpower. However, if we actually default as a nation, we will be unable to maintain our military or nuclear weapons threat.

In previous posts I have proposed the following answer to our current financial dilemma, an end to: 1) the occupations of Iraq and Afghanistan, 2) the American global empire of foreign military bases and a marked reduction in the "Defense" budget (in actual fact a "War" department budget) which in reality exceeds 1 trillion dollars per year. 3) This combined with a second short term stimulus would be capable of saving the US from financial insolvency while we work to regain our off-shored manufacturing base and out-sourced job market.

Unfortunately, the oligarchical Regime currently in power has no intention of ending the Empire, the wars or reclaiming our manufacturing/job base because the status quo is simply too financially lucrative short-term. Neither do the Democrats or the Republicans appear willing to pass another short term stimulus bill. What we have is the Hegelian dialectic in action where in this case the "synthesis" between the opposing economic approaches is to provide a lot of heat and no light that is, do nothing while "Rome burns." I invite commentary.

--Dr. J. P. Hubert


U.S. Government Prepares for 'Crisis'

By Jeff Nielson

Most market reporters, commentators and politicians continue to rely upon nothing but the same short-term "snapshots" which have caused them to be "surprised" by everything. However, it is a safe conclusion that even such rampant incompetence (combined with a strong "herd mentality"), could not and does not mean that the entire U.S. government remains in an oblivious state of ignorance regarding this re-acceleration of the collapse of the U.S. economy.

This begs an obvious question. Given that at least some elements of the U.S. government have known all along that the U.S. economy was not recovering and could not recover, why is it that only now are we hearing of tentative, new plans of more "life support" for the dying U.S. economy?

The answer is also obvious. As I pointed out when I originally denounced the Obama stimulus package, it was never anything more than a bad joke. The combination of the collapse of the U.S. housing sector, massive unemployment, and the largest credit-contraction in the history of the U.S. economy had combined to subtract approximately $2 trillion per year in consumer spending from this consumer economy.

The response of the Obama regime to this scenario was a one-time injection of $780 in stimulus, spread out over more than a year. Obviously, you can't replace $2 trillion with less than $800 billion and call it stimulus.

This sets the stage for another chaotic autumn for the global economy -- and even more chaos for markets. While I have outlined what I consider the most likely scenario, we are so close to the true collapse of the sickest economies that there are many dire scenarios possible.

The one scenario which I totally reject is another commodities meltdown which would come anywhere close to 2008. There are two reasons why this part of the pattern cannot repeat itself. To begin with, there is only a tiny amount of the "leverage" which existed in the rabidly bullish commodity markets of 2008. Secondly, the hyperinflationary consequences of more banker money-printing (and debt) are far more obvious today -- after two years of massive, deficit-spending have been factored into fiscal parameters.

The U.S. economy lurches closer and closer to the "hyperinflationary depression" which John Williams ( ) first predicted in 2003. The precise effect of this collapse on the global economy cannot be predicted -- only its eventual result. We are heading toward a Great Divide: a division of the global economy into winners and losers.

This is not a new phenomenon. What is new is that most of the losers will come from the "Old Guard" economies (i.e. the U.S. and Western Europe). The citizens of these "loser economies" must act now to shield their diminishing wealth from the death of Western banker-paper which is almost upon us. As always, I remind investors that (for hundreds of years) precious metals have represented the best "insurance" against the depravity of bankers (and their servants in government).


The Backward Slide into Recession

By Mike Whitney

August 30, 2010 "Information Clearing House" -- -Ongoing deleveraging has slowed personal consumption and trimmed 2nd quarter GDP to a revised 1.6%. The economy is sliding backwards into recession. As Obama's fiscal stimulus dries up and the private sector slashes spending, demand will continue to collapse pushing more businesses and households into default. The economy is now caught in a reinforcing downward cycle in which dwindling fiscal and monetary support is shrinking the money supply triggering a slowdown in activity in the broader economy.

Far right policymakers have shrugged off increasingly ominous economic data, choosing to pursue their political aims through obstructionism. Their goal is to block countercyclical measures that will boost activity, lower unemployment and narrow the output gap. By torpedoing the recovery, GOP leaders hope to take advantage of anti-incumbent sentiment and engineer a landslide victory in the midterm elections. But the timing could not be worse. The economy is in greater peril than most realize and badly in need of government intervention. As the current account deficit continues to widen, the global system inches closer to a major currency crisis. Ballooning trade imbalances signal that a disorderly unwinding of the dollar is becoming more probable. If the dollar drops precipitously, US demand for foreign exports will fall and the world will plunge into another deep slump.

The Fed ended its bond purchasing program (quantitative easing) at the end of March, but has promised to reinvest the proceeds from maturing bonds into mortgage-backed securities to keep its balance sheet from shrinking. But the Fed's action does not increase the money supply or reverse disinflation which is progressively edging towards outright deflation. The Central Bank is committed to providing additional resources to support the markets, but the Fed's primary policy tool--short-term interest rates---is already stuck at zero making the task more difficult. Without additional monetary stimulus, asset prices will tumble leading to another round of debt-liquidation and defaults. The housing market is already in full retreat. New and existing home sales have fallen to record levels clearing the way for steep price declines. Housing cannot recover without an uptick in employment which means that businesses need to see strong demand for their products. But product demand will remain weak until wages grow and struggling consumers dig their way out of the red. With personal consumption and business investment faltering, the government must step up its spending to avoid a return to recession.

The banks are not prepared for another wave of defaults, foreclosures and write-downs. Bank lending continues to shrink and the system is still fragile. A sudden turnaround in the equities markets would expose the banks to severe losses and force the Fed to provide emergency liquidity for wobbly financial institutions. The solvency of the banking system is largely public relations hype. The faux stress tests merely obfuscated critical details about the true, mark-to-market value of their assets. The nation's biggest banks are still wards of the state.

Much of the rot at the heart of the financial system remains hidden from view. Accounting sleight-of-hand, gigantic liquidity injections, and regulatory forbearance have all helped to perpetuate the fraud. The Fed continues to divert capital into zombie institutions which provide no tangible public benefit. Low interest rates, government guarantees on bonds, interest payments on reserves, the Fed's discount window, and the myriad lending facilities are some of the perks, subsidies, inducements and corporate welfare given to the banks at taxpayer expense. In return, the banks provide nothing; not even sufficient credit to generate another expansion. In its current configuration, the banking system is a net loss to society and a significant drag on growth.

Last week, 2nd quarter GDP was revised down to 1.6%. First quarter GDP was twice the size at 3.7%, while 4th quarter 2009 was higher still at 5%. The underlying trend is reasserting itself as growth turns to stagnation.

The Fed does not have the tools to fix the ailing economy. Quantitative easing can lower rates and keep asset prices inflated, but it cannot increase demand, reduce the output gap or lower unemployment. Only fiscal stimulus can do that and policymakers have rejected that option. The US is now facing a protracted period of high unemployment and subpar economic performance punctuated by infrequent stock market rallies and predictable bursts of optimism. The recovery is over.


Editor's NOTE:

An essay by a business leader in economic research, author and reader of this blog was submitted on this topic and presents a somewhat more contrarian view. His appeal for improvement in education particularly in the area of technology is important. His new book is: Dysfunctions of the Welfare State (Piscataway NJ; Transaction Publishing, 2010).

--Dr. J. P. Hubert

Can Anything Save the Economy:

By: Joel Clarke Gibbons Phd
September 1, 2010

The well known tools of stimulus are broken. Keynes is dead and the short run has run its course. To understand this it is necessary to make a clear distinction between recession and inefficiency. For “inefficiency” some would be tempted to say “poverty,” and it is very true that what is at stake is disappointment over the productivity of the American economy and the wealth of the nation, but it would not be accurate to speak of poverty. That would at this stage be more like the whining of a spoiled child, because we are rich. The problem is not poverty; the problem is just that the dreaded long run – the long run of which Keynes observed “In the long run, we’re all dead” – has arrived. He’s dead. We aren’t. But we have to do something different now.

Many measures of economic success coincide to imply that America has fallen behind in productivity over the last twenty years or so. Obviously, the trade deficit is one such indicator. We live well by consuming what we did not produce and living on the credit extended by developing nations. We exploit the reserve character of the dollar in world finance. That privileged position was the creation of American industry and of shrewd American financial management, with a big assist to the Second World War. But it is a wasting asset. It will not support a standard of living qualitatively higher than the one that the developing world enjoys today, which is what we have become used to.

It would be a mistake however to think that America is not more productive than she was when we were young. All the technological gifts of the microprocessor and the cheap access to computing have revolutionized modern life. If however we judge our prosperity by comparing us with the developing world, we see ourselves falling behind because in truth the developing world really is catching up. The microprocessor – perfected by Americans – has no nationality, and Russian and Chinese developers are working at the state of the art. In other essentially technologies – robotics, nuclear power, and railroads – we have fallen behind, but we are by no means out of the game and in any case they are not important in the economy as a whole to imply that we are behind. We’re just not confidently ahead any more. There is another aspect of development however in which we have lagged. There is a difference between prosperity of the American people and prosperity of America the nation.

The single biggest contributor to our national success has always been immigration. The periods of greatest prosperity coincide with the periods of most rapid immigration. That is just as true of the last twenty years as it was of the 1880s, although the new immigrants come from very different places than immigrants did then. Immigration is our single biggest national asset. But it also inevitably opens up a potential gap between the success of the “American people,” who at any given time are by definition the ones who were already here, and “America.” The successes of the last twenty years, and the prosperity that has rewarded them, are further evidence of the rewards the America reaps from immigration, and in things areas like the housing boom which has grown suburbia far out into the country, the profit has been shared by all. Nonetheless, the disparity between the success of recent immigrants and the stagnant prospects of the native has introduced a new sort of anxiety. It reinforces the fear that America is becoming two countries: America the Empire, with its own citizenship concentrated in North America but scattered all around the world, and America the Homeland.

The natural fear is that the really big money is with the Empire, and that as a result the demands of the citizens of the empire will take precedence over the desires of the homelanders. It is not a new insight that “Where your treasure is, there also will your heart be.” The very poor growth of personal incomes of the natives, poor performance of long standing, extending back to the days of the War in Viet Nam, through the 1970s, 80s, 90s, and so far this new century. As wages and salaries have failed to grow in real terms, investments have also stumbled after the bubble of the late 1990s. The S&P Index is no higher today than it was twelve years ago –it is actually somewhat lower – and the dividend yield over those years was only about 1½ %. On an inflation-adjusted basis, investors have lost money, and have done about as poorly as they did in the notorious 1970s. Those at the top by shocking contrast have profited tremendously, as evidenced by the incomes of the leaders of business and government. Even college and university faculty – occupations that thirty years ago paid very poorly – are now well paid, though the faculty earning those wages are disproportionately immigrants.

The point, to repeat because it bears repeating, is not resentment of immigrants. We’re all immigrants. The problem is the appearance of a two class society, in which entry to the privileged class is not open to the vast majority of the American people. The chairman of the board whose annual bonus dwarfs the wages of the work force is probably the descendent of impoverished Irish or Italian immigrants. That does nothing to relieve our anxiety that his generous salary and bonus owe far more to his warm relations with the governments of distant American allies than they do with his relations with the people of Michigan, or wherever his offices are located.

So, what can save us?

The foregoing outline attempts to identify in broad outline the sources of our problems, and the lesson it delivers is that there is no kind of Stimulus that is going to help. If it is stimulus of the traditional Keynesian sort, history has shown repeatedly that that is nothing but a sop to quiet the public, to put them back to sleep so to speak so that they will stop importuning the Congress and potentially disrupting the serious business of the Empire. The tools for raising the real productivity of the American people are available and are to a large extent well known. Education, and especially education in technical fields. The computer and the Internet and all kinds of modern technologies including robotics and nuclear power.

These tools will not however execute themselves. Technology isn’t that smart. We need a cultural revolution that empowers the American people to govern their own lives, starting perhaps with governing the schools that are supposed to serve their children. At this time they are ruled by – or rather, misruled by – a self-appointed elite not very different from the corrupt elite who have ruled Great Britain since the days of Milner. It has tried to impose a culture antithetical to the people. A culture of instant gratification. A culture of death. A culture without strong ties between men and women, ties based on the needs of men to earn the trust of women and the need of women to trust. We need, to repeat, a cultural revolution that puts the culture of America back into the hands of the American people who it is intended to serve. I can’t rightly say how stimulating this will seem; Americans are not excelled in their capacity to be absolutely trite and boring. But these are their lives and this is their country. They have a right to it.