By Patrick Lee
12/21/2008
Public Discourse: Ethics, Law and the Common Good
A recent story in Newsweek claimed that the only reasons for opposing same-sex “marriage” are religious. This is not true.
WASHINGTON, D.C. (Public Discourse), original HERE... - In the December 15th edition of Newsweek, both Jon Meacham in his editor’s note and religion editor Lisa Miller in her front-page article mock arguments from scripture. At the same time, they invoke that same Bible’s authority for a “more general” message of “inclusivity,” in order to lobby for making gay marriage a sacrament. Meacham and Miller paint all opposition to the radical re-definition of marriage as hateful bigotry, comparing it to racism, and labeling appeals to the authority of the Bible against homosexual “marriage” and homosexual acts as fundamentalism. Indeed Meacham goes further: it is “the worst kind of fundamentalism.” How much worse than suicide-bombings and beheadings he does not make clear.
Others can dissect the theological and factual howlers in these essays. Here I want to correct the assumption made by Meacham and Miller that the case against same-sex “marriage” must be a Biblical one. Instead, both by faith and by reason one can see that genuine marriage must be heterosexual, that sexual acts outside of marriage are immoral, and that the state, therefore, should not declare any same-sex unions “marriages,” nor actively encourage sexual acts outside of marriage.
Consider some facts.
In every society we find the following type of community: men and women committed to sharing their lives together, in the sort of community that would be naturally fulfilled by their conceiving, bearing, and raising children together. This is marriage. That such a community does exist in every society is indisputable.
In every culture men and women are attracted to each other, wish to commit to each other in a stable relationship, and perform sexual acts that might result in children. Hence every society encourages men and women—ideally, before they perform such sexual acts—to form the sort of community that will be a suitable environment both for the flourishing of their romantic love and for the flourishing of whatever children they may produce: marriage.
Sound philosophical reflection helps us identify what is going on here. The marital communion of the spouses is both good in itself (and so not a mere means to bearing and raising children) and at the same time intrinsically fulfilled by bearing and raising children together. Genuine marriage is sexual in nature and includes a bodily union: without sexual intercourse the marriage has not been consummated, that is, completed. But this sexual relationship is intrinsically linked, indeed, fulfilled, by the procreation, bearing, and raising of children.
By contrast, co-habiting same-sex couples form one relationship. If later they decide to collaborate in raising an adopted child, they form a new and distinct relationship, since there is no intrinsic link between their sexual relationship, on the one hand, and their cooperation to raise a child, on the other. Unique to marriage is the fact that the bodily, emotional, and volitional relationship between the man and the woman is intrinsically oriented to being prolonged and fulfilled by their becoming a family. It is the same community that begins between the spouses on their wedding day, and may be prolonged and enlarged by becoming a family later on.
Advocates of same-sex “marriage” often argue that since marriage is a community oriented to raising children, and same-sex couples sometimes do raise children, such couples should qualify as marriages. But if having the purpose of raising children were sufficient to qualify as marriage, then orphanages, and some groups of religious women or men, could also be labeled as “marriages,” which is absurd. Likewise, other arrangements are sometimes called “marriage,” but in reality these are different types of relationship. For example, men and women often cohabit and view children as an optional extra or as burdens to be avoided. Or two or more individuals sometimes form alliances for the sake of raising children (for example two sisters, or several celibate religious men or women). But neither of these relationships are marriages: they have distinct purposes or goals.
Other advocates of same-sex “marriage” view marriage as only an emotional relationship, and the sexual acts as extrinsic symbols of that emotional connection. Since same-sex couples can intend their sexual acts to symbolize their love or affection, these unions (they contend) qualify as marriages. But, as just noted, genuine marriage is in fact a multi-leveled relationship that encompasses the bodily, emotional, volitional, and intellectual aspects of the spouses.
In genuine marriage the bodily sexual acts are part of the marital union, not just extrinsic symbols. In sexual intercourse between a man and a woman (whether married or not), a real bodily union is established. Human beings are organisms, albeit of a particular type. In most actions—digesting, sensing, walking, and so on—individual male or female organisms are complete units. However, with respect to reproduction, the male and the female are incomplete. In reproductive activity the bodily parts of the male and the bodily parts of the female participate in a single action, coitus, which is oriented to procreation (though not every act of coitus actually reproduces), so that the subject of the action is the male and the female as a unit. Sexual intercourse is a unitary action in which the male and the female complete one another, and become really biologically one, a single organism. In marital intercourse, this bodily unity is an aspect of, a constitutive part of, the couple’s more comprehensive, marital communion.
When a couple have mutually consented to marriage—the kind of union that would be fulfilled by bearing and raising children together—then the biological unity realized in their sexual intercourse embodies that community. In sexual intercourse they unite (become one) precisely in that respect in which marriage is defined and naturally fulfilled. They have consented to a communion procreative in kind, so their acts that are procreative in kind embody their communion. In that way the loving sexual intercourse of a husband and wife realizes a basic aspect of human flourishing: the good of marital union.
Given the above considerations, it is clear that the charge that the denial of same-sex “marriage” is unjust discrimination, or hateful bigotry, is a canard. In order to be genuinely married, a couple—any couple—must: (a.) commit themselves to the type of personal union that would be fulfilled by bearing and raising children together; and (b.) perform the conduct by which they become biologically one, conduct that, with the addition of conditions extrinsic to that conduct, might result in procreation (and even if those extrinsic conditions do not obtain, as in infertile couples, their act has still biologically united them). (a.) and (b.) together constitute the beginning of a marriage and are necessary for consummated marriage. Any couple who is unable to fulfill those conditions is unable to marry. Not only same-sex couples, but opposite-sex couples who are too young to form a commitment and opposite-sex couples who (because of impotence) cannot consummate their union are unable to marry.
Along these same lines, we can also understand by reason that sexual acts outside marriage—including therefore homosexual acts—are immoral. Within marriage, sexual acts embody (consummate or renew) the marriage. By contrast, in non-marital sexual acts, either the participants do not become biologically one, or they have not committed to sharing their lives in a way that can be embodied by a sexual act. People build up friendships or personal communions by pursuing together a common good. In marital intercourse the common good is their marriage, embodied (consummated or renewed) in that sexual act.
But if a sexual act does not embody marriage, it does not embody any other community (sexual acts do not embody sports communities, scholarly communities, or generic friendships), and no genuine good is realized in the sexual act. (Pleasure alone cannot be the common good of their act, since pleasure is a genuine good only if it is attached to a condition or activity that is already genuinely fulfilling. Their experience of embodying union when they are not actually doing so is not a genuine good but is illusory.) Thus, in nonmarital sexual acts, the couple (or, in cases of polyamory, the group) instrumentalize their sexuality (their bodies-as-sexual) for the sake of a mere experience—either the experience of pleasure or the illusory experience of the bodily-personal union without its reality.
What does all of this mean for public policy? In a well-ordered society, the state should give legal recognition to real marriage, promote it, protect it, and privilege it over other sexual arrangements—as a good for the spouses and the children their union may form. The state has an essential interest in the health of marriage. Generally speaking, children will receive the best and most loving care if they are raised by their biological parents, who have formed a community aimed at providing the most suitable environment for any children they may help bring into being. Almost always, children can count on their mothers to care for them when they are young; the institution of marriage is dedicated to ensuring, as much as possible, that fathers also will fulfill their responsibilities to the children they help procreate, and to the mothers of their children. Furthermore, where the institution of marriage is strong, people’s sexual passions and energies—frequently difficult to control, often leading to self-centeredness and exploitation—are channeled toward intelligible goods, namely, marriage and family.
If the state declares same-sex unions to be equivalent to marriage, it will profoundly obscure the nature of marriage. In effect, it will send the message that marriage is centrally about the romantic attachment and sexual relationship of adults to each other rather than about a relationship which by its nature is oriented to and suited for becoming family. Doing that would almost certainly further weaken the institution of marriage.
These points are open for all to see, whatever faith one has, or if one has no faith at all. To pretend that only religious “fundamentalists” oppose the radical re-definition of marriage advanced by same-sex “marriage” advocates is doubly distorting: first, the biblical and theological cases are not fundamentalist; second, there are reasoned arguments that do not presuppose faith against that proposal as well.
NOTE:
Patrick Lee has provided an excellent review and discussion of the Traditional (Aristotelian/Thomistic) view of marriage grounded as it is and must be in the Natural Moral Law--the so-called "ought must be determined by the "is" despite the protestations of some "New Natural Lawyers."
Unfortunately, in light of the generalized "dumbing-down" of the American populace, his piece will likely be ignored in favor of the reigning Western gestalt--rank Utilitarianism. For more on this topic see my prior article:
HERE...
Wednesday, December 24, 2008
Wednesday, November 12, 2008
US May Lose Its 'AAA' Rating
By CNBC
November 12, 2008 "CNBC" -November 10, 2008 -- The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.
"The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.
"In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off," Hennecke told CNBC.
In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world.
As for a stimulus package, there is not much of an industry left to stimulate back into life, Hennecke said.
November 12, 2008 "CNBC" -November 10, 2008 -- The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.
"The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.
"In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off," Hennecke told CNBC.
In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world.
As for a stimulus package, there is not much of an industry left to stimulate back into life, Hennecke said.
Who are the Architects of Economic Collapse?
Will an Obama Administration Reverse the Tide?
By Michel Chossudovsky
Global Research, November 9, 2008
Most Serious Economic Crisis in Modern History
The October 2008 financial meltdown is not the result of a cyclical economic phenomenon. It is the deliberate result of US government policy instrumented through the Treasury and the US Federal Reserve Board.
This is the most serious economic crisis in World history.
The "bailout" proposed by the US Treasury does not constitute a "solution" to the crisis. In fact quite the opposite: it is the cause of further collapse. It triggers an unprecedented concentration of wealth, which in turn contributes to widening economic and social inequalities both within and between nations.
The levels of indebtedness have skyrocketed. Industrial corporations are driven into bankruptcy, taken over by the global financial institutions. Credit, namely the supply of loanable funds, which constitutes the lifeline of production and investment, is controlled by a handful of financial conglomerates.
With the "bailout", the public debt has spiraled. America is the most indebted country on earth. Prior to the "bailout", the US public debt was of the order of 10 trillion dollars. This US dollar denominated debt is composed of outstanding treasury bills and government bonds held by individuals, foreign governments, corporations and financial institutions.
"The Bailout": The US Administration is Financing its Own Indebtedness
Ironically, the Wall Street banks --which are the recipients of the bailout money-- are also the brokers and underwriters of the US public debt. Although the banks hold only a portion of the public debt, they transact and trade in US dollar denominated public debt instruments Worldwide.
In a bitter twist, the banks are the recipients of a 700+ billion dollar handout and at the same time they act as creditors of the US government.
We are dealing with an absurd circular relationship: To finance the bailout, Washington must borrow from the banks, which are the recipients of the bailout.
The US administration is financing its own indebtedness.
Federal, State and municipal governments are increasingly in a straight-jacket, under the tight control of the global financial conglomerates. Increasingly, the creditors call the shots on government reform.
The bailout is conducive to the consolidation and a centralization of banking power, which in turn backlashes on real economic activity, leading to a string of bankruptcies and mass unemployment.
Will an Obama Administration Reverse the Tide?
The financial crisis is the outcome of a deregulated financial architecture.
Obama has stated unequivocally his resolve to address the policy failures of the Bush administration and "democratize" the US financial system. President-Elect Barack Obama says that he is committed to reversing the tide:
"Let us remember that if this financial crisis taught us anything, it’s that we cannot have a thriving Wall Street while Main Street suffers. In this country, we rise or fall as one nation, as one people." (President-elect Barack Obama, November 4, 2008, emphasis added)
The Democrats casually blame the Bush administration for the October financial meltdown.
Obama says that he will be introducing an entirely different policy agenda which responds to the interests of Main Street:
"Tomorrow, you can turn the page on policies that put the greed and irresponsibility of Wall Street before the hard work and sacrifice of men and women all across Main Street. Tomorrow you can choose policies that invest in our middle class and create new jobs and grow this economy so that everybody has a chance to succeed, from the CEO to the secretary and the janitor, from the factory owner to the men and women who work on the factory floor.( Barack Obama, election campaign, November 3, 2008, emphasis added)
Is Obama committed to "taming Wall Street" and "disarming financial markets"?
Ironically, it was under the Clinton administration that these policies of "greed and irresponsibility" were adopted.
The 1999 Financial Services Modernization Act (FSMA) was conducive to the the repeal of the Glass-Steagall Act of 1933. A pillar of President Roosevelt’s "New Deal", the Glass-Steagall Act was put in place in response to the climate of corruption, financial manipulation and "insider trading" which resulted in more than 5,000 bank failures in the years following the 1929 Wall Street crash.
Under the 1999 Financial Services Modernization Act, effective control over the entire US financial services industry (including insurance companies, pension funds, securities companies, etc.) had been transferred to a handful of financial conglomerates and their associated hedge funds.
The Engineers of Financial Disaster
Who are the architects of this debacle?
In a bitter irony, the engineers of financial disaster are now being considered by President-Elect Barack Obama's Transition Team for the position Treasury Secretary:
Lawrence Summers played a key role in lobbying Congress for the repeal of the Glass Steagall Act. His timely appointment by President Clinton in 1999 as Treasury Secretary spearheaded the adoption of the Financial Services Modernization Act in November 1999. Upon completing his mandate at the helm of the US Treasury, he became president of Harvard University (2001- 2006).
Paul Volker was chairman of the Federal Reserve Board in the l980s during the Reagan era. He played a central role in implementing the first stage of financial deregulation, which was conducive to mass bankruptcies, mergers and acquisitions, leading up to the 1987 financial crisis.
Timothy Geithner is CEO of the Federal Reserve Bank of New York, which is the most powerful private financial institution in America. He was also a former Clinton administration Treasury official. He has worked for Kissinger Associates and has also held a senior position at the IMF. The FRBNY plays a behind the scenes role in shaping financial policy. Geithner acts on behalf of powerful financiers, who are behind the FRBNY. He is also a member of the Council on Foreign Relations (CFR)
Jon Corzine is currently governor of New Jersey, former CEO of Goldman Sachs.
At the time of writing, Obama's favorite is Larry Summers, front-runner for the position of Treasury Secretary.
Harvard University Economics Professor Lawrence Summers served as Chief Economist for the World Bank (1991–1993). He contributed to shaping the macro-economic reforms imposed on numerous indebted developing countries. The social and economic impact of these reforms under the IMF-World Bank sponsored structural adjustment program (SAP) were devastating, resulting in mass poverty.
Larry Summer's stint at the World Bank coincided with the collapse of the Soviet Union and the imposition of the IMF-World Bank's deadly " economic medicine" on Eastern Europe, the former Soviet republics and the Balkans.
In 1993, Summers moved to the US Treasury. He initially held the position of Undersecretary of the Treasury for international affairs and later Deputy Secretary. In liaison with his former colleagues at the IMF and the World Bank, he played a key role in crafting the economic "shock treatment" reform packages imposed at the height of the 1997 Asian crisis on South Korea, Thailand and Indonesia.
The bailout agreements negotiated with these three countries were coordinated through Summers office at the Treasury in liaison with the Federal Reserve Bank of New York and the Washington based Bretton-Woods institutions. Summers worked closely with IMF Deputy Managing Director Stanley Fischer, who was later appointed Governor of the Central Bank of Israel.
Larry Summers became Treasury Secretary in July 1999. He is a protégé of David Rockefeller. He was among the main architects of the infamous Financial Services Modernization Act, which provided legitimacy to inside trading and outright financial manipulation.
"Putting the Fox in Charge of the Chicken Coop"
Summers is currently a Consultant to Goldman Sachs and managing director of a Hedge fund, the D.E. Shaw Group, As former Treasury Secretary and his contacts on Wall Street, Summers had valuable inside information on the movement of financial markets. Under the helm of Larry Summers and as a direct result of the financial meltdown, the D. E. Shaw Group made record profits. At the end of October 2008, at the height of the financial meltdown, the Shaw Group announced $7 billion in revenue, a 22 percent increase over the previous year, "with nearly three times more cash on hand than a year ago" (theadvocate.com, 31 October 2008).
Putting a Hedge Fund manager (with links to the Wall Street financial establishment) in charge of the Treasury is tantamount to putting the fox in charge of the chicken coop.
The Washington Consensus
Summers, Geithner, Corzine, Volker, Fischer, Phil Gramm, Bernanke, Hank Paulson, Rubin, not to mention Alan Greenspan, al al. are buddies, they play golf together; they have links to the Council on Foreign Relations and the Bilderberg; they act concurrently in accordance with the interests of Wall Street; they meet behind closed doors; they are on the same wave length; they are Democrats and Republicans.
While they may disagree on some issues, they are firmly committed to the Washington-Wall Street Consensus. They are utterly ruthless in their management of economic and financial processes. Their actions are profit driven. Outside of their narrow interest in the "efficiency" of "markets", they have little concern for "living human beings". How are people's lives affected by the deadly gamut of macro-economic and financial reforms, which is spearheading entire sectors of economic activity into bankruptcy.
The economic reasoning underlying neoliberal economic discourse is often cynical and contemptuous. In this regard, Lawrence Summers' economic discourse stands out. He is known among environmentalists for having proposed the dumping of toxic waste in Third World countries, because people in poor countries have shorter lives and the costs of labor are abysmally low, which essentially means that the market value of people in the Third World is much lower. According to Summers, this makes it far more "cost effective" to export toxic materials to impoverished countries. A controversial 1991 World Bank memo signed by of Chief Economist Larry Summers reads as follows (excerpts, emphasis added):
DATE: December 12, 1991 TO: Distribution FR: Lawrence H. Summers Subject: GEP
"'Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the Less Developed Countries? I can think of three reasons:
1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality.... From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.
2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I've always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.
3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. [the demand increases when income levels increase]. The concern over an agent that causes a one in a million change in the odds of prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is is 200 per thousand.... "
MORE...
Summers stance on the export of pollution to developing countries had a marked impact on US environmental policy:
In 1994, "virtually every country in the world broke with Mr. Summers' Harvard-trained "economic logic" ruminations about dumping rich countries' poisons on their poorer neighbors, and agreed to ban the export of hazardous wastes from OECD to non-OECD [developing] countries under the Basel Convention. Five years later, the United States is one of the few countries that has yet to ratify the Basel Convention or the Basel Convention's Ban Amendment on the export of hazardous wastes from OECD to non-OECD countries. (Jim Valette, Larry Summers' War Against the Earth, Counterpunch, undated)
The 1997 Asian Crisis: Dress Rehearsal for Things to Come
In the course of 1997, currency speculation instrumented by major financial institutions directed against Thailand, Indonesia and South Korea was conducive to the collapse of national currencies and the transfer of billions of dollars of central bank reserves into private financial hands. Several observers pointed to the deliberate manipulation of equity and currency markets by investment banks and brokerage firms.
While the Asian bailout agreements were formally negotiated with the IMF, the major Wall Street commercial banks (including Chase, Bank of America, Citigroup and J. P. Morgan) as well as the "big five" merchant banks (Goldman Sachs, Lehman Brothers, Morgan Stanley and Salomon Smith Barney) were "consulted" on the clauses to be included in the Asian bail-out agreements.
The US Treasury in liaison with Wall Street and the Bretton Woods institutions played a central role in negotiating the bailout agreements. Both Larry Summers and Timothy Geithner, were actively involved on behalf of the US Treasury in the 1997 bailout of South Korea:
[In 1997] "Messrs. Summers and Geithner worked to persuade Mr. Rubin to support financial aid to South Korea. Mr. Rubin was wary of such a move, worrying that providing money to a country in dire straits might be a losing proposition..." (WSJ, November 8, 2008)
What happened in Korea under advice from Deputy Treasury Secretary Summers et al, had nothing to do with "financial aid".
The country was literally ransacked. Undersecretary of the Treasury David Lipton was sent to Seoul in early December 1997. Secret negotiations were initiated. Washington had demanded the firing of the Korean Finance Minister and the unconditional acceptance of the IMF "bailout".
A new finance minister, who happened to be former IMF and World Bank official, was appointed and immediately rushed off to Washington for "consultations" with his former IMF colleague Deputy Managing Director Stanley Fischer.
"The Korean Legislature had met in emergency sessions on December 23. The final decision concerning the 57 billion dollar deal took place the following day, on Christmas Eve December 24th, after office hours in New York. Wall Street’s top financiers, from Chase Manhattan, Bank of America, Citicorp and J. P. Morgan had been called in for a meeting at the Federal Reserve Bank of New York. Also at the Christmas Eve venue, were representatives of the "big five" New York merchant banks including Goldman Sachs, Lehman Brothers, Morgan Stanley and Salomon Smith Barney. And at midnight on Christmas Eve, upon receiving the green light from the banks, the IMF was allowed "to rush 10 billion dollars to Seoul to meet the avalanche of maturing short-term debts".
The coffers of Korea’s central Bank had been ransacked. Creditors and speculators were anxiously waiting to collect the loot. The same institutions which had earlier speculated against the Korean Won were cashing in on the IMF bailout money. It was a scam. (See Michel Chossudovsky, The Recolonization of Korea, subsequently published as a chapter in The Globalization of Poverty and the New World Order, Global Research, Montreal, 2003.)
"Strong economic medicine" is the prescription of the Washington Consensus. "Short term pain for long term gain" was the motto at the World Bank during Lawrence Summers term of as World Bank Chief Economist. (See IMF, World Bank Reforms Leave Poor Behind, Bank Economist Finds, Bloomberg, November 7, 2000)
What we are dealing with is an entire " old boys network" of officials and advisers at the Treasury, the Federal Reserve, the IMF, World Bank, the Washington Think Tanks, who are in permanent liaison with leading financiers on Wall Street.
Whoever is chosen by Obama's Transition team will belong to the Washington Consensus.
The 1999 Financial Services Modernization Act
What happened in October 1999 is crucial.
In the wake of lengthy negotiations behind closed doors, in the Wall Street boardrooms, in which Larry Summers played a central role, the regulatory restraints on Wall Street’s powerful banking conglomerates were revoked "with a stroke of the pen".
Larry Summers worked closely with Senator Phil Gramm (1985-2002),chairman of the Senate Banking committee, who was the legislative architect of the the Gramm-Leach-Bliley Financial Services Modernization Act, signed into law on November 12, 1999. (For Complete text click US Congress: Pub.L. 106-102). As Texas Senator, Phil Gramm was closely associated with Enron.
In December 2000 at the very end of the Clinton mandate, Gramm introduced a second piece of legislation, the so-called Gramm-Lugar Commodity Futures Modernization Act, which paved the way for the speculative onslaught in primary commodities including oil and food staples.
"The act, he declared, would ensure that neither the SEC nor the Commodity Futures Trading Commission (CFTC) got into the business of regulating newfangled financial products called swaps—and would thus "protect financial institutions from over-regulation" and "position our financial services industries to be world leaders into the new century." (See David Corn, Foreclosure Phil, Mother Jones, July August 2008)
Phil Gramm was McCain's first choice for Secretary of the Treasury.
Under the FSMA new rules – ratified by the US Senate in October 1999 and approved by President Clinton – commercial banks, brokerage firms, hedge funds, institutional investors, pension funds and insurance companies could freely invest in each others businesses as well as fully integrate their financial operations.
A "global financial supermarket" had been created, setting the stage for a massive concentration of financial power. One of the key figures behind this project was Secretary of the Treasury Larry Summers, in liaison with David Rockefeller. Summers described the FSMA as "the legislative foundation of the financial system of the 21th century". That legislative foundation is among the main causes of the 2008 financial meltdown.
Financial Disarmament
There can be no meaningful solution to the crisis, unless there is a major reform in the financial architecture, implying inter-alia the freezing of speculative trade and the "disarming of financial markets". The project of disarming financial markets was first proposed by John Maynard Keynes in the 1940s as a means to the establishment of a multipolar international monetary system. (See J.M. Keynes, Activities 1940-1944, Shaping the Post-War World: The Clearing Union, The Collected Writings of John Maynard Keynes, Royal Economic Society, Macmillan and Cambridge University Press, Vol. XXV, London 1980, p. 57).
Main Street versus Wall Street
Where are Obama's "Main Street appointees"? Namely individuals who respond to the interest of people across America. There are no labor or community leaders on Obama's list for key positions.
The President-elect is appointing the architects of financial deregulation.
Meaningful financial reform cannot be adopted by officials appointed by Wall Street and who act on behalf of Wall Street.
Those who set the financial system ablaze in 1999, have been called back to turn out the fire.
The proposed "solution" to the crisis under the "bailout" is the cause of further economic collapse.
There are no policy solutions on the horizon.
The banking conglomerates call the shots. They decide on the composition of the Obama Cabinet. They also decide on the agenda of the Washington Financial Summit (November 15, 2008) which is slated to lay the groundwork for the establishment of a new "global financial architecture".
The Wall Street blueprint has already been discussed behind closed doors: the hidden agenda is to establish a unipolar international monetary system, dominated by US financial power, which in turn would be protected and secured by US military superiority.
Neo-liberal with a "Human Face"
There is no indication that Obama will break his ties to his Wall Street sponsors, who largely funded his election campaign.
Goldman Sachs, J. P. Morgan Chase, Citigroup, Bill Gates' Microsoft are among his main campaign contributors.
Warren Buffett, among the the world's richest individuals, not only supported Barak Obama's election campaign, he is a member of his transition team, which plays a key role deciding the composition of Obama's cabinet.
Unless there is a major upheaval in the system of political appointments to key positions, an alternative Obama economic agenda geared towards poverty alleviation and employment creation is highly unlikely.
What we are witnessing is continuity.
Obama provides a " human face" to the status quo. This human face serves to mislead Americans on the nature of the economic and political process.
The neoliberal economic reforms remain intact.
The substance of these reforms including the "bailout" of America's largest financial institutions ultimately destroys the real economy, while spearheading entire areas of manufacturing and the services economy into bankruptcy.
NOTE:
President-elect Barack Obama should strongly advocate for repeal of the 1999 Gramm-Leach-Bliley Financial Services Modernization Act and the Gramm-Lugar Commodity Futures Modernization Act. He should consider re-instituting a Glass-Steagall type of legislation designed to re-regulate the Banking Industry. Without these measures, it will continue to be business as usual with Wall Street high finance in control of the US economy including Main Street.
--Dr. J. P. Hubert
By Michel Chossudovsky
Global Research, November 9, 2008
Most Serious Economic Crisis in Modern History
The October 2008 financial meltdown is not the result of a cyclical economic phenomenon. It is the deliberate result of US government policy instrumented through the Treasury and the US Federal Reserve Board.
This is the most serious economic crisis in World history.
The "bailout" proposed by the US Treasury does not constitute a "solution" to the crisis. In fact quite the opposite: it is the cause of further collapse. It triggers an unprecedented concentration of wealth, which in turn contributes to widening economic and social inequalities both within and between nations.
The levels of indebtedness have skyrocketed. Industrial corporations are driven into bankruptcy, taken over by the global financial institutions. Credit, namely the supply of loanable funds, which constitutes the lifeline of production and investment, is controlled by a handful of financial conglomerates.
With the "bailout", the public debt has spiraled. America is the most indebted country on earth. Prior to the "bailout", the US public debt was of the order of 10 trillion dollars. This US dollar denominated debt is composed of outstanding treasury bills and government bonds held by individuals, foreign governments, corporations and financial institutions.
"The Bailout": The US Administration is Financing its Own Indebtedness
Ironically, the Wall Street banks --which are the recipients of the bailout money-- are also the brokers and underwriters of the US public debt. Although the banks hold only a portion of the public debt, they transact and trade in US dollar denominated public debt instruments Worldwide.
In a bitter twist, the banks are the recipients of a 700+ billion dollar handout and at the same time they act as creditors of the US government.
We are dealing with an absurd circular relationship: To finance the bailout, Washington must borrow from the banks, which are the recipients of the bailout.
The US administration is financing its own indebtedness.
Federal, State and municipal governments are increasingly in a straight-jacket, under the tight control of the global financial conglomerates. Increasingly, the creditors call the shots on government reform.
The bailout is conducive to the consolidation and a centralization of banking power, which in turn backlashes on real economic activity, leading to a string of bankruptcies and mass unemployment.
Will an Obama Administration Reverse the Tide?
The financial crisis is the outcome of a deregulated financial architecture.
Obama has stated unequivocally his resolve to address the policy failures of the Bush administration and "democratize" the US financial system. President-Elect Barack Obama says that he is committed to reversing the tide:
"Let us remember that if this financial crisis taught us anything, it’s that we cannot have a thriving Wall Street while Main Street suffers. In this country, we rise or fall as one nation, as one people." (President-elect Barack Obama, November 4, 2008, emphasis added)
The Democrats casually blame the Bush administration for the October financial meltdown.
Obama says that he will be introducing an entirely different policy agenda which responds to the interests of Main Street:
"Tomorrow, you can turn the page on policies that put the greed and irresponsibility of Wall Street before the hard work and sacrifice of men and women all across Main Street. Tomorrow you can choose policies that invest in our middle class and create new jobs and grow this economy so that everybody has a chance to succeed, from the CEO to the secretary and the janitor, from the factory owner to the men and women who work on the factory floor.( Barack Obama, election campaign, November 3, 2008, emphasis added)
Is Obama committed to "taming Wall Street" and "disarming financial markets"?
Ironically, it was under the Clinton administration that these policies of "greed and irresponsibility" were adopted.
The 1999 Financial Services Modernization Act (FSMA) was conducive to the the repeal of the Glass-Steagall Act of 1933. A pillar of President Roosevelt’s "New Deal", the Glass-Steagall Act was put in place in response to the climate of corruption, financial manipulation and "insider trading" which resulted in more than 5,000 bank failures in the years following the 1929 Wall Street crash.
Under the 1999 Financial Services Modernization Act, effective control over the entire US financial services industry (including insurance companies, pension funds, securities companies, etc.) had been transferred to a handful of financial conglomerates and their associated hedge funds.
The Engineers of Financial Disaster
Who are the architects of this debacle?
In a bitter irony, the engineers of financial disaster are now being considered by President-Elect Barack Obama's Transition Team for the position Treasury Secretary:
Lawrence Summers played a key role in lobbying Congress for the repeal of the Glass Steagall Act. His timely appointment by President Clinton in 1999 as Treasury Secretary spearheaded the adoption of the Financial Services Modernization Act in November 1999. Upon completing his mandate at the helm of the US Treasury, he became president of Harvard University (2001- 2006).
Paul Volker was chairman of the Federal Reserve Board in the l980s during the Reagan era. He played a central role in implementing the first stage of financial deregulation, which was conducive to mass bankruptcies, mergers and acquisitions, leading up to the 1987 financial crisis.
Timothy Geithner is CEO of the Federal Reserve Bank of New York, which is the most powerful private financial institution in America. He was also a former Clinton administration Treasury official. He has worked for Kissinger Associates and has also held a senior position at the IMF. The FRBNY plays a behind the scenes role in shaping financial policy. Geithner acts on behalf of powerful financiers, who are behind the FRBNY. He is also a member of the Council on Foreign Relations (CFR)
Jon Corzine is currently governor of New Jersey, former CEO of Goldman Sachs.
At the time of writing, Obama's favorite is Larry Summers, front-runner for the position of Treasury Secretary.
Harvard University Economics Professor Lawrence Summers served as Chief Economist for the World Bank (1991–1993). He contributed to shaping the macro-economic reforms imposed on numerous indebted developing countries. The social and economic impact of these reforms under the IMF-World Bank sponsored structural adjustment program (SAP) were devastating, resulting in mass poverty.
Larry Summer's stint at the World Bank coincided with the collapse of the Soviet Union and the imposition of the IMF-World Bank's deadly " economic medicine" on Eastern Europe, the former Soviet republics and the Balkans.
In 1993, Summers moved to the US Treasury. He initially held the position of Undersecretary of the Treasury for international affairs and later Deputy Secretary. In liaison with his former colleagues at the IMF and the World Bank, he played a key role in crafting the economic "shock treatment" reform packages imposed at the height of the 1997 Asian crisis on South Korea, Thailand and Indonesia.
The bailout agreements negotiated with these three countries were coordinated through Summers office at the Treasury in liaison with the Federal Reserve Bank of New York and the Washington based Bretton-Woods institutions. Summers worked closely with IMF Deputy Managing Director Stanley Fischer, who was later appointed Governor of the Central Bank of Israel.
Larry Summers became Treasury Secretary in July 1999. He is a protégé of David Rockefeller. He was among the main architects of the infamous Financial Services Modernization Act, which provided legitimacy to inside trading and outright financial manipulation.
"Putting the Fox in Charge of the Chicken Coop"
Summers is currently a Consultant to Goldman Sachs and managing director of a Hedge fund, the D.E. Shaw Group, As former Treasury Secretary and his contacts on Wall Street, Summers had valuable inside information on the movement of financial markets. Under the helm of Larry Summers and as a direct result of the financial meltdown, the D. E. Shaw Group made record profits. At the end of October 2008, at the height of the financial meltdown, the Shaw Group announced $7 billion in revenue, a 22 percent increase over the previous year, "with nearly three times more cash on hand than a year ago" (theadvocate.com, 31 October 2008).
Putting a Hedge Fund manager (with links to the Wall Street financial establishment) in charge of the Treasury is tantamount to putting the fox in charge of the chicken coop.
The Washington Consensus
Summers, Geithner, Corzine, Volker, Fischer, Phil Gramm, Bernanke, Hank Paulson, Rubin, not to mention Alan Greenspan, al al. are buddies, they play golf together; they have links to the Council on Foreign Relations and the Bilderberg; they act concurrently in accordance with the interests of Wall Street; they meet behind closed doors; they are on the same wave length; they are Democrats and Republicans.
While they may disagree on some issues, they are firmly committed to the Washington-Wall Street Consensus. They are utterly ruthless in their management of economic and financial processes. Their actions are profit driven. Outside of their narrow interest in the "efficiency" of "markets", they have little concern for "living human beings". How are people's lives affected by the deadly gamut of macro-economic and financial reforms, which is spearheading entire sectors of economic activity into bankruptcy.
The economic reasoning underlying neoliberal economic discourse is often cynical and contemptuous. In this regard, Lawrence Summers' economic discourse stands out. He is known among environmentalists for having proposed the dumping of toxic waste in Third World countries, because people in poor countries have shorter lives and the costs of labor are abysmally low, which essentially means that the market value of people in the Third World is much lower. According to Summers, this makes it far more "cost effective" to export toxic materials to impoverished countries. A controversial 1991 World Bank memo signed by of Chief Economist Larry Summers reads as follows (excerpts, emphasis added):
DATE: December 12, 1991 TO: Distribution FR: Lawrence H. Summers Subject: GEP
"'Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the Less Developed Countries? I can think of three reasons:
1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality.... From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.
2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I've always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.
3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. [the demand increases when income levels increase]. The concern over an agent that causes a one in a million change in the odds of prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is is 200 per thousand.... "
MORE...
Summers stance on the export of pollution to developing countries had a marked impact on US environmental policy:
In 1994, "virtually every country in the world broke with Mr. Summers' Harvard-trained "economic logic" ruminations about dumping rich countries' poisons on their poorer neighbors, and agreed to ban the export of hazardous wastes from OECD to non-OECD [developing] countries under the Basel Convention. Five years later, the United States is one of the few countries that has yet to ratify the Basel Convention or the Basel Convention's Ban Amendment on the export of hazardous wastes from OECD to non-OECD countries. (Jim Valette, Larry Summers' War Against the Earth, Counterpunch, undated)
The 1997 Asian Crisis: Dress Rehearsal for Things to Come
In the course of 1997, currency speculation instrumented by major financial institutions directed against Thailand, Indonesia and South Korea was conducive to the collapse of national currencies and the transfer of billions of dollars of central bank reserves into private financial hands. Several observers pointed to the deliberate manipulation of equity and currency markets by investment banks and brokerage firms.
While the Asian bailout agreements were formally negotiated with the IMF, the major Wall Street commercial banks (including Chase, Bank of America, Citigroup and J. P. Morgan) as well as the "big five" merchant banks (Goldman Sachs, Lehman Brothers, Morgan Stanley and Salomon Smith Barney) were "consulted" on the clauses to be included in the Asian bail-out agreements.
The US Treasury in liaison with Wall Street and the Bretton Woods institutions played a central role in negotiating the bailout agreements. Both Larry Summers and Timothy Geithner, were actively involved on behalf of the US Treasury in the 1997 bailout of South Korea:
[In 1997] "Messrs. Summers and Geithner worked to persuade Mr. Rubin to support financial aid to South Korea. Mr. Rubin was wary of such a move, worrying that providing money to a country in dire straits might be a losing proposition..." (WSJ, November 8, 2008)
What happened in Korea under advice from Deputy Treasury Secretary Summers et al, had nothing to do with "financial aid".
The country was literally ransacked. Undersecretary of the Treasury David Lipton was sent to Seoul in early December 1997. Secret negotiations were initiated. Washington had demanded the firing of the Korean Finance Minister and the unconditional acceptance of the IMF "bailout".
A new finance minister, who happened to be former IMF and World Bank official, was appointed and immediately rushed off to Washington for "consultations" with his former IMF colleague Deputy Managing Director Stanley Fischer.
"The Korean Legislature had met in emergency sessions on December 23. The final decision concerning the 57 billion dollar deal took place the following day, on Christmas Eve December 24th, after office hours in New York. Wall Street’s top financiers, from Chase Manhattan, Bank of America, Citicorp and J. P. Morgan had been called in for a meeting at the Federal Reserve Bank of New York. Also at the Christmas Eve venue, were representatives of the "big five" New York merchant banks including Goldman Sachs, Lehman Brothers, Morgan Stanley and Salomon Smith Barney. And at midnight on Christmas Eve, upon receiving the green light from the banks, the IMF was allowed "to rush 10 billion dollars to Seoul to meet the avalanche of maturing short-term debts".
The coffers of Korea’s central Bank had been ransacked. Creditors and speculators were anxiously waiting to collect the loot. The same institutions which had earlier speculated against the Korean Won were cashing in on the IMF bailout money. It was a scam. (See Michel Chossudovsky, The Recolonization of Korea, subsequently published as a chapter in The Globalization of Poverty and the New World Order, Global Research, Montreal, 2003.)
"Strong economic medicine" is the prescription of the Washington Consensus. "Short term pain for long term gain" was the motto at the World Bank during Lawrence Summers term of as World Bank Chief Economist. (See IMF, World Bank Reforms Leave Poor Behind, Bank Economist Finds, Bloomberg, November 7, 2000)
What we are dealing with is an entire " old boys network" of officials and advisers at the Treasury, the Federal Reserve, the IMF, World Bank, the Washington Think Tanks, who are in permanent liaison with leading financiers on Wall Street.
Whoever is chosen by Obama's Transition team will belong to the Washington Consensus.
The 1999 Financial Services Modernization Act
What happened in October 1999 is crucial.
In the wake of lengthy negotiations behind closed doors, in the Wall Street boardrooms, in which Larry Summers played a central role, the regulatory restraints on Wall Street’s powerful banking conglomerates were revoked "with a stroke of the pen".
Larry Summers worked closely with Senator Phil Gramm (1985-2002),chairman of the Senate Banking committee, who was the legislative architect of the the Gramm-Leach-Bliley Financial Services Modernization Act, signed into law on November 12, 1999. (For Complete text click US Congress: Pub.L. 106-102). As Texas Senator, Phil Gramm was closely associated with Enron.
In December 2000 at the very end of the Clinton mandate, Gramm introduced a second piece of legislation, the so-called Gramm-Lugar Commodity Futures Modernization Act, which paved the way for the speculative onslaught in primary commodities including oil and food staples.
"The act, he declared, would ensure that neither the SEC nor the Commodity Futures Trading Commission (CFTC) got into the business of regulating newfangled financial products called swaps—and would thus "protect financial institutions from over-regulation" and "position our financial services industries to be world leaders into the new century." (See David Corn, Foreclosure Phil, Mother Jones, July August 2008)
Phil Gramm was McCain's first choice for Secretary of the Treasury.
Under the FSMA new rules – ratified by the US Senate in October 1999 and approved by President Clinton – commercial banks, brokerage firms, hedge funds, institutional investors, pension funds and insurance companies could freely invest in each others businesses as well as fully integrate their financial operations.
A "global financial supermarket" had been created, setting the stage for a massive concentration of financial power. One of the key figures behind this project was Secretary of the Treasury Larry Summers, in liaison with David Rockefeller. Summers described the FSMA as "the legislative foundation of the financial system of the 21th century". That legislative foundation is among the main causes of the 2008 financial meltdown.
Financial Disarmament
There can be no meaningful solution to the crisis, unless there is a major reform in the financial architecture, implying inter-alia the freezing of speculative trade and the "disarming of financial markets". The project of disarming financial markets was first proposed by John Maynard Keynes in the 1940s as a means to the establishment of a multipolar international monetary system. (See J.M. Keynes, Activities 1940-1944, Shaping the Post-War World: The Clearing Union, The Collected Writings of John Maynard Keynes, Royal Economic Society, Macmillan and Cambridge University Press, Vol. XXV, London 1980, p. 57).
Main Street versus Wall Street
Where are Obama's "Main Street appointees"? Namely individuals who respond to the interest of people across America. There are no labor or community leaders on Obama's list for key positions.
The President-elect is appointing the architects of financial deregulation.
Meaningful financial reform cannot be adopted by officials appointed by Wall Street and who act on behalf of Wall Street.
Those who set the financial system ablaze in 1999, have been called back to turn out the fire.
The proposed "solution" to the crisis under the "bailout" is the cause of further economic collapse.
There are no policy solutions on the horizon.
The banking conglomerates call the shots. They decide on the composition of the Obama Cabinet. They also decide on the agenda of the Washington Financial Summit (November 15, 2008) which is slated to lay the groundwork for the establishment of a new "global financial architecture".
The Wall Street blueprint has already been discussed behind closed doors: the hidden agenda is to establish a unipolar international monetary system, dominated by US financial power, which in turn would be protected and secured by US military superiority.
Neo-liberal with a "Human Face"
There is no indication that Obama will break his ties to his Wall Street sponsors, who largely funded his election campaign.
Goldman Sachs, J. P. Morgan Chase, Citigroup, Bill Gates' Microsoft are among his main campaign contributors.
Warren Buffett, among the the world's richest individuals, not only supported Barak Obama's election campaign, he is a member of his transition team, which plays a key role deciding the composition of Obama's cabinet.
Unless there is a major upheaval in the system of political appointments to key positions, an alternative Obama economic agenda geared towards poverty alleviation and employment creation is highly unlikely.
What we are witnessing is continuity.
Obama provides a " human face" to the status quo. This human face serves to mislead Americans on the nature of the economic and political process.
The neoliberal economic reforms remain intact.
The substance of these reforms including the "bailout" of America's largest financial institutions ultimately destroys the real economy, while spearheading entire areas of manufacturing and the services economy into bankruptcy.
NOTE:
President-elect Barack Obama should strongly advocate for repeal of the 1999 Gramm-Leach-Bliley Financial Services Modernization Act and the Gramm-Lugar Commodity Futures Modernization Act. He should consider re-instituting a Glass-Steagall type of legislation designed to re-regulate the Banking Industry. Without these measures, it will continue to be business as usual with Wall Street high finance in control of the US economy including Main Street.
--Dr. J. P. Hubert
Saturday, November 8, 2008
U.S Gap Between Rich and Poor Widening!
By Bob Kendall
October 31, 2008 "Information Clearinghouse" -- "PC" -- Now that the U.S.A. has discovered that only Mexico and Turkey had poverty rates higher than the 30-country study by the Organization for Economic Cooperation and Development, what if anything will be done to help the U.S. poor obtain health care?
Politicians, during campaigns, loudly proclaim "The U.S.A. is the greatest nation on earth and the richest."
With the largest, almost incomprehensible national debt in the world, exceeding all prior national debts combined since the U.S. was founded, recent political rants have avoided claiming the U.S.A. to be the richest nation in the world! However, the persistent claim to greatness has been much used in the current election campaigns (rest assured).
Mary Reynolds-Gilmore of Northport, N.Y. in her October 24 Letter to the Editors of the New York Times hit the problem of U.S. health care precisely, stating:
"The problem is cost and access. We will never be first until all Americans have basic health care, health and malpractice executives stop pocketing such a high percentage of our premiums, and we institute a system of medical-specialist juries to control the malpractice frenzy. More money for evidence-based research is not the answer."
Stanley R. Bermann of Santa Fe, New Mexico had this to say in his letter of the same day to the Times:
"What needs to happen is that we have a universal health care program for all Americans. Nothing else will do!
"No American should have to suffer medically and then suffer financially."
Bruce Leff of Baltimore, also writing the same day in the Times, is an Associate Professor of Medicine at John Hopkins University School of Medicine. He explains succinctly:
"The evidence base for most interventions in medicine is lacking, especially so in the area of how to deliver quality care to the most costly patients, the elderly with multiple chronic conditions.
"Improvements in the evidence will be ineffective if they come in the absence of health care payment reform that obliterates the perverse incentives that favor specialty care and glitzy idolatry over diligent primary care and care coordination.
"A vast overhaul of medical education must be aligned with any reforms to achieve success."
This professor's opinion reflects a recent survey of students entering the schools of medicine at U.S. universities, where only 2% wanted to become primary care physicians. The reason? Because the specialty fields of medicine pay much more.
John McCain's much vaunted health care plan is almost amusing if it wasn't so absurd. The Republican health care plan allows a $5,000 tax consideration for health insurance. With almost all health insurance policies $12,000 top $15,000 a year, that doesn't help very much. But even worse is the accompanying nonsense of having to pay taxes on any health insurance coverage supplied by one's place of employment.
After hearing for years the boast about the U.S.A. being the richest nation in the world, possibly the recent survey of 30 nations by the Economic Cooperation and Development study, placing the U.S. above only Mexico and Turkey will bring us down to earth.
Arnold S. Cohen, president of Partnership for the Homeless in New York City in his October 23 letter to the Times touches base with reality:
"During these fragile and uncertain economic times, we'll certainly be seeing thousands upon thousands more people teetering on the precipice, falling into homelessness.
"Just think back to the days of the 2001 economic slump when homelessness in New York City dramatically increased.
"By the fall of 2003, more than 16,000 children were living in homeless shelters.
"The shrinking economy will undoubtedly mean less public financing for critical services and fewer jobs for our neighbors in need. But deep budget cuts -- which may appear on their face prudent -- have historically proved to be fiscally unwise.
"It only manages to push people further into poverty and homelessness, costing taxpayers millions more."
While 45 million Americans lack health care coverage, this Republican-led administration goes on spending $10 billion a month in Iraq. Meanwhile on the business front, U.S. CEO's have the highest salaries in the world!
October 31, 2008 "Information Clearinghouse" -- "PC" -- Now that the U.S.A. has discovered that only Mexico and Turkey had poverty rates higher than the 30-country study by the Organization for Economic Cooperation and Development, what if anything will be done to help the U.S. poor obtain health care?
Politicians, during campaigns, loudly proclaim "The U.S.A. is the greatest nation on earth and the richest."
With the largest, almost incomprehensible national debt in the world, exceeding all prior national debts combined since the U.S. was founded, recent political rants have avoided claiming the U.S.A. to be the richest nation in the world! However, the persistent claim to greatness has been much used in the current election campaigns (rest assured).
Mary Reynolds-Gilmore of Northport, N.Y. in her October 24 Letter to the Editors of the New York Times hit the problem of U.S. health care precisely, stating:
"The problem is cost and access. We will never be first until all Americans have basic health care, health and malpractice executives stop pocketing such a high percentage of our premiums, and we institute a system of medical-specialist juries to control the malpractice frenzy. More money for evidence-based research is not the answer."
Stanley R. Bermann of Santa Fe, New Mexico had this to say in his letter of the same day to the Times:
"What needs to happen is that we have a universal health care program for all Americans. Nothing else will do!
"No American should have to suffer medically and then suffer financially."
Bruce Leff of Baltimore, also writing the same day in the Times, is an Associate Professor of Medicine at John Hopkins University School of Medicine. He explains succinctly:
"The evidence base for most interventions in medicine is lacking, especially so in the area of how to deliver quality care to the most costly patients, the elderly with multiple chronic conditions.
"Improvements in the evidence will be ineffective if they come in the absence of health care payment reform that obliterates the perverse incentives that favor specialty care and glitzy idolatry over diligent primary care and care coordination.
"A vast overhaul of medical education must be aligned with any reforms to achieve success."
This professor's opinion reflects a recent survey of students entering the schools of medicine at U.S. universities, where only 2% wanted to become primary care physicians. The reason? Because the specialty fields of medicine pay much more.
John McCain's much vaunted health care plan is almost amusing if it wasn't so absurd. The Republican health care plan allows a $5,000 tax consideration for health insurance. With almost all health insurance policies $12,000 top $15,000 a year, that doesn't help very much. But even worse is the accompanying nonsense of having to pay taxes on any health insurance coverage supplied by one's place of employment.
After hearing for years the boast about the U.S.A. being the richest nation in the world, possibly the recent survey of 30 nations by the Economic Cooperation and Development study, placing the U.S. above only Mexico and Turkey will bring us down to earth.
Arnold S. Cohen, president of Partnership for the Homeless in New York City in his October 23 letter to the Times touches base with reality:
"During these fragile and uncertain economic times, we'll certainly be seeing thousands upon thousands more people teetering on the precipice, falling into homelessness.
"Just think back to the days of the 2001 economic slump when homelessness in New York City dramatically increased.
"By the fall of 2003, more than 16,000 children were living in homeless shelters.
"The shrinking economy will undoubtedly mean less public financing for critical services and fewer jobs for our neighbors in need. But deep budget cuts -- which may appear on their face prudent -- have historically proved to be fiscally unwise.
"It only manages to push people further into poverty and homelessness, costing taxpayers millions more."
While 45 million Americans lack health care coverage, this Republican-led administration goes on spending $10 billion a month in Iraq. Meanwhile on the business front, U.S. CEO's have the highest salaries in the world!
The Promised Land?
Obama, Emanuel and Israel
By JOHN V. WHITBECK
November 07, 2008 "Counterpunch" -- -- In the first major appointment of his administration, President-elect Barack Obama has named as his chief of staff Congressman Rahm Emanuel, an Israeli citizen and Israeli army veteran whose father, according to the Israeli newspaper Haaretz, was a member of Menachem Begin's Irgun forces during the Nakba and named his son after "a Lehi combatant who was killed" -- i.e., a member of Yitzhak Shamir's terrorist Stern Gang, responsible for, in addition to other atrocities against Palestinians, the more famous bombing of the King David Hotel and assassination of the UN peace envoy Count Folke Bernadotte.
In rapid response to this news, the editorial in the next day's Arab News (Jeddah) was entitled "Don't pin much hope on Obama -- Emanuel is his chief of staff and that sends a message". This editorial referred to the Irgun as a "terror organization" (a judgment call) and concluded: "Far from challenging Israel, the new team may turn out to be as pro-Israel as the one it is replacing."
That was always likely. Obama repeatedly pledged unconditional allegiance to Israel during his campaign, most memorably in an address to the AIPAC national convention which Israeli peace activist Uri Avnery characterized as "a speech that broke all records for obsequiousness and fawning", and America's electing a black president has always been more easily imagined than any American president's declaring his country's independence from Israeli domination.
Still, one of the greatest advantages for the United States in electing Barack Hussein Obama was the prospect that the world's billion-plus Muslims, who now view the United States with almost universal loathing and hatred, would be dazzled by the new president's eloquence, life story, skin color and middle name, would think again with open minds and would give America a chance to redeem itself in their eyes and hearts -- not incidently, drastically shortening the long lines of aspiring jihadis eager to sacrifice their lives while striking a blow against the evil empire.
The profound loathing and hatred of the Muslim world toward the United States, which has always had its roots for America's unconditional support for the injustices inflicted and still being inflicted on the Palestinians, can fairly be considered the core of the primary foreign policy and "national security" problems confronting the United States in recent years. Why would Obama, a man of unquestioned brilliance, have chosen to send such a contemptuous message to the Muslim world with his first major appointment? Why would he wish to disabuse the Muslim world of its hopes (however modest) and slap it across the face at the earliest opportunity?
A further contemptuous message is widely rumored to be forthcoming -- the naming as "Special Envoy for Middle East Peace" of Dennis Ross, the notorious Israel-Firster who, throughout the 12 years of the Bush the First and Clinton administrations, ensured that American policy toward the Palestinians did not deviate one millimeter from Israeli policy and that no progress toward peace could be made and who has since headed the AIPAC spin-off "think tank", the Washington Institute for Near East Policy.
Nevertheless, since it is almost always constructive to seek a silver lining in the darkest clouds, a silver lining can be found and cited. For decades, the Palestinian leadership has been "waiting for Godot" -- waiting for the U.S. Government to finally do the right thing (if only in its own obvious self-interest) and to force Israel to comply with international law and UN Resolutions and permit them to have a decent mini-state on a tiny portion of the land that once was theirs.
This was never a realistic hope. It has not happened, and it will never happen. So it may well be salutary not to waste eight more days (let alone eight more years) playing along and playing the fool while more Palestinian lands are confiscated and more Jewish colonies and Jews-only bypass roads are built on them, clinging to the delusion that the charming Mr. Obama, admirable though he may be in so many other respects, will eventually (if only in a second term, when he no longer has to worry about reelection) see the light and do the right thing. It is long overdue for the Palestinians themselves to seize the initiative, to reset the agenda and to declare a new "only game in town".
Furthermore, in February, Israel will elect a new Knesset. Bibi Netanyahu, who, most polls and coalition-building calculations suggest, is most likely to emerge as the next prime minister, has one (if only one) great virtue. He is absolutely honest in not professing any desire (however insincere) to see the creation of any Palestinian "state" (whether decent or less-than-a-Bantustan in nature) or to engage in any talks (even never-ending and fraudulent ones) ostensibly about that possibility. His return to power would definitively slam the door on the illusion of a "two-state solution" somewhere over an ever-receding horizon.
This would constitute a blessing and a liberation for Palestinian minds and Palestinian aspirations. Their leadership(s) could then return, after a long, costly and painful diversion, to fundamental principles, to pursuing the goal of a democratic, nonracist and nonsectarian state in all of Israel/Palestine with equal rights for all who live there.
This just goal could and should be pursued by strictly nonviolent means. If the goal is to convince a determined and powerful settler-colonial movement which wishes to seize your land, settle it and keep it (eventually cleansing it of you and your fellow natives) that it should cease, desist and leave, nonviolent forms of resistance are suicidal. If, however, the goal were to be to obtain the full rights of citizenship in a democratic, nonracist state (as was the case in the American civil rights movement and the South African anti-apartheid movement), then nonviolence would be the only viable approach. Violence would be totally inappropriate and counterproductive. The morally impeccable approach would also be the tactically effective approach. The high road would be the only road.
No American president -- least of all Barack Obama -- could easily support racism and apartheid and oppose democracy and equal rights, particularly if democracy and equal rights were being pursued by nonviolent means. No one anywhere could easily do so. The writing would be on the wall, and the clock would be running out on the tired game of using a perpetual "peace process" as an excuse to delay decisions (while building more "facts on the ground") forever.
Democracy and equal rights would not come quickly or easily. Forty years passed between when, on the night before his assassination, Dr. Martin Luther King cried out that he had been to the mountain top and had seen the promised land and when Barack Obama was elected as president of the United States. (The Bible suggests a similar waiting period in the wilderness for Moses.) Forty-six years passed between the installation of a formal apartheid regime in South Africa and the election of Nelson Mandela as president of a fully democratic and nonracist "rainbow nation".
While it may be be hoped that the transformation would be significantly quicker in Israel/Palestine, it is clear that many who already qualify as "senior citizens" will not live to see the promised land. However, if the promised land of a democratic state with equal rights for all is correctly and clearly perceived and persistently and peacefully pursued, there is ample reason for confidence that Israel/Palestine will one day experience the tearful exaltation of a "Mandela Moment" or an "Obama Moment", restoring hope in the moral potential both of a nation and of mankind, and that the Jews, Muslims and Christians who live there will finally reach their promised land.
By JOHN V. WHITBECK
November 07, 2008 "Counterpunch" -- -- In the first major appointment of his administration, President-elect Barack Obama has named as his chief of staff Congressman Rahm Emanuel, an Israeli citizen and Israeli army veteran whose father, according to the Israeli newspaper Haaretz, was a member of Menachem Begin's Irgun forces during the Nakba and named his son after "a Lehi combatant who was killed" -- i.e., a member of Yitzhak Shamir's terrorist Stern Gang, responsible for, in addition to other atrocities against Palestinians, the more famous bombing of the King David Hotel and assassination of the UN peace envoy Count Folke Bernadotte.
In rapid response to this news, the editorial in the next day's Arab News (Jeddah) was entitled "Don't pin much hope on Obama -- Emanuel is his chief of staff and that sends a message". This editorial referred to the Irgun as a "terror organization" (a judgment call) and concluded: "Far from challenging Israel, the new team may turn out to be as pro-Israel as the one it is replacing."
That was always likely. Obama repeatedly pledged unconditional allegiance to Israel during his campaign, most memorably in an address to the AIPAC national convention which Israeli peace activist Uri Avnery characterized as "a speech that broke all records for obsequiousness and fawning", and America's electing a black president has always been more easily imagined than any American president's declaring his country's independence from Israeli domination.
Still, one of the greatest advantages for the United States in electing Barack Hussein Obama was the prospect that the world's billion-plus Muslims, who now view the United States with almost universal loathing and hatred, would be dazzled by the new president's eloquence, life story, skin color and middle name, would think again with open minds and would give America a chance to redeem itself in their eyes and hearts -- not incidently, drastically shortening the long lines of aspiring jihadis eager to sacrifice their lives while striking a blow against the evil empire.
The profound loathing and hatred of the Muslim world toward the United States, which has always had its roots for America's unconditional support for the injustices inflicted and still being inflicted on the Palestinians, can fairly be considered the core of the primary foreign policy and "national security" problems confronting the United States in recent years. Why would Obama, a man of unquestioned brilliance, have chosen to send such a contemptuous message to the Muslim world with his first major appointment? Why would he wish to disabuse the Muslim world of its hopes (however modest) and slap it across the face at the earliest opportunity?
A further contemptuous message is widely rumored to be forthcoming -- the naming as "Special Envoy for Middle East Peace" of Dennis Ross, the notorious Israel-Firster who, throughout the 12 years of the Bush the First and Clinton administrations, ensured that American policy toward the Palestinians did not deviate one millimeter from Israeli policy and that no progress toward peace could be made and who has since headed the AIPAC spin-off "think tank", the Washington Institute for Near East Policy.
Nevertheless, since it is almost always constructive to seek a silver lining in the darkest clouds, a silver lining can be found and cited. For decades, the Palestinian leadership has been "waiting for Godot" -- waiting for the U.S. Government to finally do the right thing (if only in its own obvious self-interest) and to force Israel to comply with international law and UN Resolutions and permit them to have a decent mini-state on a tiny portion of the land that once was theirs.
This was never a realistic hope. It has not happened, and it will never happen. So it may well be salutary not to waste eight more days (let alone eight more years) playing along and playing the fool while more Palestinian lands are confiscated and more Jewish colonies and Jews-only bypass roads are built on them, clinging to the delusion that the charming Mr. Obama, admirable though he may be in so many other respects, will eventually (if only in a second term, when he no longer has to worry about reelection) see the light and do the right thing. It is long overdue for the Palestinians themselves to seize the initiative, to reset the agenda and to declare a new "only game in town".
Furthermore, in February, Israel will elect a new Knesset. Bibi Netanyahu, who, most polls and coalition-building calculations suggest, is most likely to emerge as the next prime minister, has one (if only one) great virtue. He is absolutely honest in not professing any desire (however insincere) to see the creation of any Palestinian "state" (whether decent or less-than-a-Bantustan in nature) or to engage in any talks (even never-ending and fraudulent ones) ostensibly about that possibility. His return to power would definitively slam the door on the illusion of a "two-state solution" somewhere over an ever-receding horizon.
This would constitute a blessing and a liberation for Palestinian minds and Palestinian aspirations. Their leadership(s) could then return, after a long, costly and painful diversion, to fundamental principles, to pursuing the goal of a democratic, nonracist and nonsectarian state in all of Israel/Palestine with equal rights for all who live there.
This just goal could and should be pursued by strictly nonviolent means. If the goal is to convince a determined and powerful settler-colonial movement which wishes to seize your land, settle it and keep it (eventually cleansing it of you and your fellow natives) that it should cease, desist and leave, nonviolent forms of resistance are suicidal. If, however, the goal were to be to obtain the full rights of citizenship in a democratic, nonracist state (as was the case in the American civil rights movement and the South African anti-apartheid movement), then nonviolence would be the only viable approach. Violence would be totally inappropriate and counterproductive. The morally impeccable approach would also be the tactically effective approach. The high road would be the only road.
No American president -- least of all Barack Obama -- could easily support racism and apartheid and oppose democracy and equal rights, particularly if democracy and equal rights were being pursued by nonviolent means. No one anywhere could easily do so. The writing would be on the wall, and the clock would be running out on the tired game of using a perpetual "peace process" as an excuse to delay decisions (while building more "facts on the ground") forever.
Democracy and equal rights would not come quickly or easily. Forty years passed between when, on the night before his assassination, Dr. Martin Luther King cried out that he had been to the mountain top and had seen the promised land and when Barack Obama was elected as president of the United States. (The Bible suggests a similar waiting period in the wilderness for Moses.) Forty-six years passed between the installation of a formal apartheid regime in South Africa and the election of Nelson Mandela as president of a fully democratic and nonracist "rainbow nation".
While it may be be hoped that the transformation would be significantly quicker in Israel/Palestine, it is clear that many who already qualify as "senior citizens" will not live to see the promised land. However, if the promised land of a democratic state with equal rights for all is correctly and clearly perceived and persistently and peacefully pursued, there is ample reason for confidence that Israel/Palestine will one day experience the tearful exaltation of a "Mandela Moment" or an "Obama Moment", restoring hope in the moral potential both of a nation and of mankind, and that the Jews, Muslims and Christians who live there will finally reach their promised land.
Silence on War Crimes
By Andy Worthington
November 04, 2008 "fff"(Future of Freedom Foundation)--- November 3, 2008 -- - Last week, Bill Kovach, former Washington Bureau Chief of the New York Times and the founding chairman of the Committee of Concerned Journalists, blasted the U.S. media for its failure to ask tough questions of both presidential candidates regarding their opinions of the Bush administration’s unprecedented adherence to the controversial “unitary executive theory” of government.
The theory, which became prominent in the Reagan administration, but has peppered U.S. history, contends that, when he wishes, the president is entitled to act unilaterally, without interference from Congress or the judiciary. This is in direct contravention of the separation of powers on which the United States was founded, and critics have long contended that it is nothing less than an attempt by the executive to seize the dictatorial powers that the Constitution was designed to prevent.
Under the cover of the wartime powers granted in the wake of the 9/11 attacks, and with encouragement from lawyers including, in particular, Vice President Dick Cheney’s chief of staff (and former legal counsel) David Addington, President Bush has pursued the theory relentlessly, issuing a record number of “signing statements” to laws passed by Congress, designed to prevent the nation’s politicians from interfering in the executive’s quest for unchecked power.
He has also approved a number of secret memos, which, in conjunction with various “signing statements,” have authorized what numerous critics of the administration regard as war crimes. These include detaining prisoners seized in the “war on terror” as “illegal enemy combatants” and holding them without charge or trial, dismissing the protections of the Geneva Conventions, redefining torture and approving its use by the U.S. military and the CIA, and authorizing “extraordinary rendition” and the use of secret prisons.
As if to prove what he was saying, Bill Kovach’s speech to a meeting of international journalists in Washington, D.C., went unreported in the U.S. media (and I located it only on the website of a Jamaican newspaper). And yet in many ways Kovach could have gone further, and could also have asked why the presidential candidates themselves have been silent about the current administration’s crimes.
The answer, sadly, is that the executive’s thirst for unfettered executive power is not a priority for voters, even when it spills out of foreign wars and offshore prisons and onto the U.S. mainland. Too many Americans, it seems, are unconcerned or unaware that the president can even hold U.S. citizens and legal residents as “enemy combatants” and can imprison them indefinitely on the U.S. mainland without charge or trial, as the cases of Jose Padilla and Ali al-Marri reveal in horrific detail.
As a result, gross abuses of power in the name of the “war on terror,” and the dictatorial theory that underpins them, have largely been ignored on the campaign trail.
Over the past two years, Senator Barack Obama repeatedly declared his support for habeas corpus, a cornerstone of American law, inherited from the English, which prohibits arbitrary imprisonment and grants all prisoners the right to know why they are being held. He defended habeas corpus while resisting the Military Commissions Act of 2006, a poisonous piece of legislation, which not only stripped the Guantánamo prisoners of their habeas rights, but also reinforced the president’s right to seize and detain indefinitely anyone he regarded as an “illegal enemy combatant,” and attempted to grant immunity to the president and his minions for any actions that might one day be regarded as war crimes.
Senator Obama has also stated that he will “reject torture without exception,” and last August delivered a speech in which, touching on all the administration’s law-shredding excesses, he declared,
As President, I will close Guantánamo, reject the Military Commissions Act, and adhere to the Geneva Conventions. Our Constitution and our Uniform Code of Military Justice provide a framework for dealing with the terrorists … The separation of powers works. Our Constitution works. We will again set an example to the world that the law is not subject to the whims of stubborn rulers, and that justice is not arbitrary.
In June this year, when the Supreme Court (which had granted the Guantánamo prisoners statutory habeas corpus rights in June 2004) rejected the habeas-stripping provisions of the Military Commissions Act and its predecessor, the Detainee Treatment Act of 2005, and ruled that the prisoners’ habeas corpus rights were constitutional, Senator Obama was swift to congratulate the justices, calling the ruling “an important step toward reestablishing our credibility as a nation committed to the rule of law, and rejecting a false choice between fighting terrorism and respecting habeas corpus.”
Since then, however, the Obama campaign has gone silent on executive power and the administration’s war crimes, and Senator Obama has only spoken out publicly on one occasion in September, in response to an assertion by Sarah Palin, at the Republican conference, that “Al-Qaeda terrorists still plot to inflict catastrophic harm on America and he's worried that someone won't read them their rights.”
Senator Obama responded by telling supporters in Michigan that habeas corpus was “the foundation of Anglo-American law,” which “says very simply: If the government grabs you, then you have the right to at least ask, ‘Why was I grabbed?’ And say, ‘Maybe you've got the wrong person.’” He explained that it was an essential safeguard, “because we don't always have the right person. We may think it's Mohammed the terrorist, but it might be Mohammed the cab driver. You might think it's Barack the bomb-thrower, but it might be Barack the guy running for president.” His conclusion drove the argument back to where it should have been, but it has sadly not been repeated since: “Don't mock the Constitution. Don't make fun of it. Don't suggest that it's not American to abide by what the founding fathers set up. It's worked pretty well for over 200 years.”
Another reason for disappointment is that, by refusing to raise these issues, Senator Obama has allowed John McCain to comfortably maintain the Republicans’ “traditional” role as protectors of national security, without having the basis of that assumption challenged, and has also failed to exploit Senator McCain’s shameful hypocrisy, as he has drifted to the right to appeal to the Republican base.
Even before the campaign became all-consuming, Senator McCain (an outspoken opponent of torture, as the result of his own experiences in Vietnam) had a spotty record on the abuse of executive power — and even on the prevention of torture by U.S. forces. Although he attempted to introduce a ban on torture by all U.S. personnel in the Detainee Treatment Act, he allowed himself to be bullied by Dick Cheney into excluding the CIA from the act’s provisions, and the following year he willingly endorsed the Military Commissions Act.
This year, however, Senator McCain’s flight from his own convictions has accelerated alarmingly. In February, he conveniently shelved his lifelong opposition to torture by voting against a bill banning the use of torture by the CIA, and after the Supreme Court’s habeas ruling in June, he declared that it was “one of the worst decisions in the history of this country,” even though, in 2005, he had told NBC’s Meet the Press that the problem with Guantánamo was that the prisoners continued to be held without “any adjudication of their cases.”
However, the main reasons for being disappointed that the crimes of a rogue administration have barely been mentioned as the election approaches are these: firstly, that I can only wonder, in spite of Senator Obama’s fine words, whether the Democrats in general, who famously ruled impeachment “off the table” when they gained a political majority two years ago, would in fact be unwilling to cede power if it was theirs to wield; and secondly (and most significantly), because it allows those responsible for the long list of egregious crimes that have soiled America’s name to leave office unchallenged. Donald Rumsfeld may be long gone, and George W. Bush nothing more than a shadow, but in the office of the vice president, Dick Cheney and David Addington, the architects of this unprecedented assault on the Constitution, the Bill of Rights, the UN Convention Against Torture, the War Crimes Act and the Geneva Conventions have been allowed to maintain their dangerous delusions, nurtured through decades of support for executive overreach in the administrations of Richard Nixon, Ronald Reagan, and George H. W. Bush.
As law professor Scott Horton explained to the New Yorker’s Jane Mayer for an in-depth analysis of Addington in 2006, the mission of the vice president’s closest adviser “and a small group of administration lawyers who share his views” has been to “overturn two centuries of jurisprudence defining the limits of the executive branch. They’ve made war a matter of dictatorial power.”
In conclusion, then, I can only note that it’s a sad indictment of a country’s state of mind when the ruling administration has been devoted to dictatorial powers and war crimes, but an election campaign comes and goes as though it had never happened.
November 04, 2008 "fff"(Future of Freedom Foundation)--- November 3, 2008 -- - Last week, Bill Kovach, former Washington Bureau Chief of the New York Times and the founding chairman of the Committee of Concerned Journalists, blasted the U.S. media for its failure to ask tough questions of both presidential candidates regarding their opinions of the Bush administration’s unprecedented adherence to the controversial “unitary executive theory” of government.
The theory, which became prominent in the Reagan administration, but has peppered U.S. history, contends that, when he wishes, the president is entitled to act unilaterally, without interference from Congress or the judiciary. This is in direct contravention of the separation of powers on which the United States was founded, and critics have long contended that it is nothing less than an attempt by the executive to seize the dictatorial powers that the Constitution was designed to prevent.
Under the cover of the wartime powers granted in the wake of the 9/11 attacks, and with encouragement from lawyers including, in particular, Vice President Dick Cheney’s chief of staff (and former legal counsel) David Addington, President Bush has pursued the theory relentlessly, issuing a record number of “signing statements” to laws passed by Congress, designed to prevent the nation’s politicians from interfering in the executive’s quest for unchecked power.
He has also approved a number of secret memos, which, in conjunction with various “signing statements,” have authorized what numerous critics of the administration regard as war crimes. These include detaining prisoners seized in the “war on terror” as “illegal enemy combatants” and holding them without charge or trial, dismissing the protections of the Geneva Conventions, redefining torture and approving its use by the U.S. military and the CIA, and authorizing “extraordinary rendition” and the use of secret prisons.
As if to prove what he was saying, Bill Kovach’s speech to a meeting of international journalists in Washington, D.C., went unreported in the U.S. media (and I located it only on the website of a Jamaican newspaper). And yet in many ways Kovach could have gone further, and could also have asked why the presidential candidates themselves have been silent about the current administration’s crimes.
The answer, sadly, is that the executive’s thirst for unfettered executive power is not a priority for voters, even when it spills out of foreign wars and offshore prisons and onto the U.S. mainland. Too many Americans, it seems, are unconcerned or unaware that the president can even hold U.S. citizens and legal residents as “enemy combatants” and can imprison them indefinitely on the U.S. mainland without charge or trial, as the cases of Jose Padilla and Ali al-Marri reveal in horrific detail.
As a result, gross abuses of power in the name of the “war on terror,” and the dictatorial theory that underpins them, have largely been ignored on the campaign trail.
Over the past two years, Senator Barack Obama repeatedly declared his support for habeas corpus, a cornerstone of American law, inherited from the English, which prohibits arbitrary imprisonment and grants all prisoners the right to know why they are being held. He defended habeas corpus while resisting the Military Commissions Act of 2006, a poisonous piece of legislation, which not only stripped the Guantánamo prisoners of their habeas rights, but also reinforced the president’s right to seize and detain indefinitely anyone he regarded as an “illegal enemy combatant,” and attempted to grant immunity to the president and his minions for any actions that might one day be regarded as war crimes.
Senator Obama has also stated that he will “reject torture without exception,” and last August delivered a speech in which, touching on all the administration’s law-shredding excesses, he declared,
As President, I will close Guantánamo, reject the Military Commissions Act, and adhere to the Geneva Conventions. Our Constitution and our Uniform Code of Military Justice provide a framework for dealing with the terrorists … The separation of powers works. Our Constitution works. We will again set an example to the world that the law is not subject to the whims of stubborn rulers, and that justice is not arbitrary.
In June this year, when the Supreme Court (which had granted the Guantánamo prisoners statutory habeas corpus rights in June 2004) rejected the habeas-stripping provisions of the Military Commissions Act and its predecessor, the Detainee Treatment Act of 2005, and ruled that the prisoners’ habeas corpus rights were constitutional, Senator Obama was swift to congratulate the justices, calling the ruling “an important step toward reestablishing our credibility as a nation committed to the rule of law, and rejecting a false choice between fighting terrorism and respecting habeas corpus.”
Since then, however, the Obama campaign has gone silent on executive power and the administration’s war crimes, and Senator Obama has only spoken out publicly on one occasion in September, in response to an assertion by Sarah Palin, at the Republican conference, that “Al-Qaeda terrorists still plot to inflict catastrophic harm on America and he's worried that someone won't read them their rights.”
Senator Obama responded by telling supporters in Michigan that habeas corpus was “the foundation of Anglo-American law,” which “says very simply: If the government grabs you, then you have the right to at least ask, ‘Why was I grabbed?’ And say, ‘Maybe you've got the wrong person.’” He explained that it was an essential safeguard, “because we don't always have the right person. We may think it's Mohammed the terrorist, but it might be Mohammed the cab driver. You might think it's Barack the bomb-thrower, but it might be Barack the guy running for president.” His conclusion drove the argument back to where it should have been, but it has sadly not been repeated since: “Don't mock the Constitution. Don't make fun of it. Don't suggest that it's not American to abide by what the founding fathers set up. It's worked pretty well for over 200 years.”
Another reason for disappointment is that, by refusing to raise these issues, Senator Obama has allowed John McCain to comfortably maintain the Republicans’ “traditional” role as protectors of national security, without having the basis of that assumption challenged, and has also failed to exploit Senator McCain’s shameful hypocrisy, as he has drifted to the right to appeal to the Republican base.
Even before the campaign became all-consuming, Senator McCain (an outspoken opponent of torture, as the result of his own experiences in Vietnam) had a spotty record on the abuse of executive power — and even on the prevention of torture by U.S. forces. Although he attempted to introduce a ban on torture by all U.S. personnel in the Detainee Treatment Act, he allowed himself to be bullied by Dick Cheney into excluding the CIA from the act’s provisions, and the following year he willingly endorsed the Military Commissions Act.
This year, however, Senator McCain’s flight from his own convictions has accelerated alarmingly. In February, he conveniently shelved his lifelong opposition to torture by voting against a bill banning the use of torture by the CIA, and after the Supreme Court’s habeas ruling in June, he declared that it was “one of the worst decisions in the history of this country,” even though, in 2005, he had told NBC’s Meet the Press that the problem with Guantánamo was that the prisoners continued to be held without “any adjudication of their cases.”
However, the main reasons for being disappointed that the crimes of a rogue administration have barely been mentioned as the election approaches are these: firstly, that I can only wonder, in spite of Senator Obama’s fine words, whether the Democrats in general, who famously ruled impeachment “off the table” when they gained a political majority two years ago, would in fact be unwilling to cede power if it was theirs to wield; and secondly (and most significantly), because it allows those responsible for the long list of egregious crimes that have soiled America’s name to leave office unchallenged. Donald Rumsfeld may be long gone, and George W. Bush nothing more than a shadow, but in the office of the vice president, Dick Cheney and David Addington, the architects of this unprecedented assault on the Constitution, the Bill of Rights, the UN Convention Against Torture, the War Crimes Act and the Geneva Conventions have been allowed to maintain their dangerous delusions, nurtured through decades of support for executive overreach in the administrations of Richard Nixon, Ronald Reagan, and George H. W. Bush.
As law professor Scott Horton explained to the New Yorker’s Jane Mayer for an in-depth analysis of Addington in 2006, the mission of the vice president’s closest adviser “and a small group of administration lawyers who share his views” has been to “overturn two centuries of jurisprudence defining the limits of the executive branch. They’ve made war a matter of dictatorial power.”
In conclusion, then, I can only note that it’s a sad indictment of a country’s state of mind when the ruling administration has been devoted to dictatorial powers and war crimes, but an election campaign comes and goes as though it had never happened.
Friday, October 24, 2008
Death of the American Empire
America is self-destructing & bringing the rest of the world down with it
by Tanya Cariina Hsu
Global Research, October 23, 2008
I believe that banking institutions are more dangerous to our liberties than standing armies. (Thomas Jefferson, US President; 1743 - 1826)
America is dying. It is self-destructing and bringing the rest of the world down with it.
Often referred to as a sub-prime mortgage collapse, this obfuscates the real reason. By associating tangible useless failed mortgages, at least something 'real' can be blamed for the carnage. The problem is, this is myth. The magnitude of this fiscal collapse happened because it was all based on hot air.
The banking industry renamed insurance betting guarantees as 'credit default swaps' and risky gambling wagers were called 'derivatives'. Financial managers and banking executives were selling the ultimate con to the entire world, akin to the snake-oil salesmen from the 18th century but this time in suits and ties. And by October 2009 it was a quadrillion-dollar (that's $1,000 trillion) industry that few could understand.
Propped up by false hope, America is now falling like a house of cards.
It all began in the early part of the 20th century. In 1907 J.P. Morgan, a private New York banker, published a rumor that a competing unnamed large bank was about to fail. It was a false charge but customers nonetheless raced to their banks to withdraw their money, in case it was their bank. As they pulled out their funds the banks lost their cash deposits and were forced to call in their loans. People now therefore had to pay back their mortgages to fill the banks with income, going bankrupt in the process. The 1907 panic resulted in a crash that prompted the creation of the Federal Reserve, a private banking cartel with the veneer of an independent government organization. Effectively, it was a coup by elite bankers in order to control the industry.
When signed into law in 1913, the Federal Reserve would loan and supply the nation's money, but with interest. The more money it was able to print, the more 'income' for itself it generated. By its very nature the Federal Reserve would forever keep producing debt to stay alive. It was able to print America's monetary supply at will, regulating its value. To control valuation however, inflation had to be kept in check.
The Federal Reserve then doubled America's money supply within five years, and in 1920 it called in a mass percentage of loans. Over five thousand banks collapsed overnight. One year later the Federal Reserve again increased the money supply by 62%, but in 1929 it again called the loans back in, en-masse. This time, the crash of 1929 caused over sixteen thousand banks to fail and an 89% plunge on the stock market. The private and well-protected banks within the Federal Reserve system were able to snap up the failed banks at pennies on the dollar.
The nation fell into the Great Depression and in April 1933 President Roosevelt issued an executive order that confiscated all gold bullion from the public. Those who refused to turn in their gold would be imprisoned for ten years, and by the end of the year the gold standard was abolished. What had been redeemable for gold became paper 'legal tender', and gold could no longer be exchanged for cash as it had once been.
Later, in 1971, President Nixon removed the dollar from the gold standard altogether, therefore no longer trading at the internationally fixed price of $35. The US dollar was now worth whatever the US decided it was worth because it was 'as good as gold'. It had no standard of measure, and became the universal currency. Treasury bills (short-term notes) and bonds (long-term notes) replaced gold as value, promissory notes of the US government and paid for by the taxpayer. Additionally, because gold was exempt from currency reporting requirements it could not be traced, unlike the fiduciary (i.e. that based upon trust) monetary systems of the West. That was not in America's best interest.
After the Great Depression private banks remained afraid to make home loans, so Roosevelt created Fannie Mae. A state supported mortgage bank, it provided federal funding to finance home mortgages for affordable housing. In 1968 President Johnson privatized Fannie Mae, and in 1970, Freddie Mac was created to compete with Fannie Mae. Both of them bought mortgages from banks and other lenders, and sold them onto new investors.
The post World War II boom had created an America flush with cash and assets. As a military industrial complex, war exponentially profited the US and, unlike any empire in history, it shot to superpower status. But it failed to remember that, historically, whenever empires rose they fell in direct proportion.
Americans could afford all the modern conveniences, exporting its manufactured goods all over the world. After the Vietnam War, the US went into an economic decline. But people were loath to give up their elevated standard of living despite the loss of jobs, and production was increasingly sent overseas. A sense of delusion and entitlement kept Americans on the treadmill of consumer consumption.
In 1987 the US stock market plunged by 22% in one day because of high-risk futures trading, called derivatives, and in 1989 the Savings & Loan crisis resulted in President George H.W. Bush using $142 billion in taxpayer funds to rescue half of the S&L's. To do so, Freddie Mac was given the task of giving sub-prime (below prime-rate) mortgages to low-income families. In 2000, the "irrational exuberance" of the dot-com bubble burst, and 50% of high-tech firms went bankrupt wiping $5 trillion from their over-inflated market values.
After this crisis, Federal Reserve Chairman Alan Greenspan kept interest rates so low they were less than the rate of inflation. Anyone saving his or her income actually lost money, and the savings rate soon fell into negative territory.
During the 1990s, advertisers went into overdrive, marketing an ever more luxurious lifestyle, all made available with cheap easy credit. Second mortgages became commonplace, and home equity loans were used to pay credit card bills. The more Americans bought, the more they fell into debt. But as long as they had a house their false sense of security remained: their home was their equity, it would always go up in value, and they could always remortgage at lower rates if needed. The financial industry also believed that housing prices would forever climb, but should they ever fall the central bank would cut interest rates so that prices would jump back up. It was, everyone believed, a win-win situation.
Greenspan's rock-bottom interest rates let anyone afford a home. Minimum wage service workers with aspirations to buy a half million-dollar house were able to secure 100% loans, the mortgage lenders fully aware that they would not be able to keep up the payments.
So many people received these sub-prime loans that the investment houses and lenders came up with a new scheme: bundle these virtually worthless home loans and sell them as solid US investments to unsuspecting countries who would not know the difference. American lives of excess and consumer spending never suffered, and were being propped up by foreign nations none the wiser.
It has always been the case that a bank would lend out more than it actually had, because interest payments generated its income. The more the bank loaned, the more interest it collected even with no money in the vault. It was a lucrative industry of giving away money it never had in the first place. Mortgage banks and investment houses even borrowed money on international money markets to fund these 100% plus sub-prime mortgages, and began lending more than ten times their underlying assets.
After 9/11, George Bush told the nation to spend, and during a time of war, that's what the nation did. It borrowed at unprecedented levels so as to not only pay for its war on terror in the Middle East (calculated to cost $4 trillion) but also pay for tax cuts at the very time it should have increased taxes. Bush removed the reserve requirements in Fannie Mae and Freddie Mac, from 10% to 2.5%. They were free to not only lend even more at bargain basement interest rates, they only needed a fraction of reserves. Soon banks lent thirty times asset value. It was, as one economist put it, an 'orgy of excess'.
It was flagrant overspending during a time of war. At no time in history has a nation gone into conflict without sacrifice, cutbacks, tax increases, and economic conservation.
And there was a growing chance that, just like in 1929, investors would rush to claim their money all at once.
To guarantee, therefore, these high risk mortgages, the same financial houses that sold them then created 'insurance policies' against the sub-prime investments they were selling, marketed as Credit Default Swaps (CDS). But the government must regulate insurance policies, so by calling them CDS they remained totally unregulated. Financial institutions were 'hedging their bets' and selling premiums to protect the junk assets. In other words, the asset that should go up in value could also have a side-bet, just in case, that it might go down. By October 2008, CDS were trading at $62 trillion, more than the stock markets of the whole world combined.
These bets had absolutely no value whatsoever and were not investments. They were just financial instruments called derivatives - high stakes gambling, 'nothing from nothing' - or as Warren Buffet referred to them, 'Weapons of Financial Mass Destruction'. The derivatives trade was 'worth' more than one quadrillion dollars, or larger than the economy of the entire world. (In September 2008 the global Gross Domestic Product was $60 trillion).
Challenged as being illegal in the 1990s, Greenspan legalized the derivatives practice. Soon hedge funds became an entire industry, betting on the derivatives market and gambling as much as they wanted. It was easy because it was money they did not have in the first place. The industry had all the appearances of banks, but the hedge funds, equity funds, and derivatives brokers had no access to government loans in the event of a default. If the owners defaulted, the hedge funds had no money to pay 'from nothing'. Those who had hedged on an asset going up or down would not be able to collect on the winnings or losses.
The market had become the largest industry in the world, and all the financial giants were cashing in: Bear Stearns, Lehman Brothers, Citigroup, and AIG. But homeowners, long maxed out on their credit, were now beginning to default on their mortgages. Not only were they paying for their house but also all the debt amassed over the years for car, credit card and student loans, medical payments and home equity loans. They had borrowed to pay for groceries and skyrocketing health insurance premiums to keep up with their bigger houses and cars; they refinanced the debt they had for lower rates that soon ballooned. The average American owed 25% of their annual income to credit card debts alone.
In 2008, housing prices began to slide precipitously downwards and mortgages were suddenly losing value. Manufacturing orders were down 4.5% by September, inventories began to pile up, unemployment was soaring and average house foreclosures had increased by 121% and up to 200% in California.
The financial giants had to stop trading these mortgage-backed securities, as now their losses would have to be visibly accounted for. Investors began withdrawing their funds. Bear Stearns, heavily specialized in home loan portfolios, was the first to go in March.
Just as they had done in the 20th century, JP Morgan swooped in and picked up Bear Stearns for a pittance. One year prior Bear Stearns shares traded at $159 but JP Morgan was able to buy in and take over at $2 a share. In September, Washington Mutual collapsed, the largest bank failure in history. JP Morgan again came in and paid $1.9 billion for assets valued at $176 billion. It was a fire sale.
Relatively quietly over the summer Freddie Mac and Fannie Mae, the publicly traded companies responsible for 80% of the home mortgage loans, lost almost 90% of their value for the year. Together they were responsible for half the outstanding loan amounts but were now in debt $80 to every $1 in capital reserves.
To guarantee they would stay alive, the Federal Reserve stepped in and took over Freddie Mac and Fannie Mae. On September 7th 2008 they were put into "conservatorship": known as nationalization to the rest of the world, but Americans have difficulty with the idea of any government run industry that required taxpayer increases.
What the government was really doing was handing out an unlimited line of credit. Done by the Federal Reserve and not US Treasury, it was able to bypass Congressional approval. The Treasury Department then auctioned off Treasury bills to raise money for the Federal Reserve's own use, but nonetheless the taxpayer would be funding the rescue. The bankers had bled tens of billions from the system by hedging and derivative gambling, and triggered the portfolio inter-bank lending freeze, which then seized up and crashed.
The takeover was presented as a government funded bailout of an arbitrary $700 billion, which does nothing to solve the problem. No economists were asked to present their views to Congress, and the loan only perpetuates the myth that the banking system is not really dead.
In reality, the damage will not be $700 billion but closer to $5 trillion, the value of Freddie Mac and Fannie Mae's mortgages. It was nothing less than a bailout of the quadrillion dollar derivatives industry which otherwise faced payouts of over a trillion dollars on CDS mortgage-backed securities they had sold. It was necessary, said Treasury Secretary Henry Paulson, to save the country from a "housing correction". But, he added, the $700 billion taxpayer funded takeover would not prevent other banks from collapsing, in turn causing a stock market crash.
In other words Paulson was blackmailing Congress in order to lead a coup by the banking elite under the false guise of necessary legislation to stop the dyke from flooding. It merely shifted wealth from one class to another, as it had done almost a century prior. No sooner were the words were out of Paulson's mouth before other financial institutions began imploding, and with them the disintegration of the global financial system - much modeled after the lauded system of American banking.
In September the Federal Reserve, its line of credit assured, then bought the world largest insurance company, AIG, for $85 billion for an 80% stake. AIG was the largest seller of CDS, but now that it was in the position of having to pay out, from collateral it did not have, it was teetering on the edge of bankruptcy.
In October the entire country of Iceland went bankrupt, having bought American worthless sub-prime mortgages as investments. European banks began exploding, all wanting to cash in concurrently on their inflated US stocks to pay off the low interest rate debts before rates climbed higher. The year before the signs had been evident, when the largest US mortgage lender Countrywide fell. Soon after, the largest lender in the UK, Northern Rock, went under - London long having copied Wall Street creative financing. Japan and Korea's auto manufacturing nosedived by 37%, global economies contracting. Pakistan is on the edge of collapse too, with real reserves at $3 billion - enough to only buy a month's supply of food and oil and attempting to stall payments to Saudi Arabia for the 100,000 barrels of oil per day it provides to the country. Under President Musharraf, who left office in the nick of time, Pakistan's currency lost 25% of its value, its inflation running at 25%.
Meanwhile energy costs had soared, with oil reaching a peak of almost $150 per barrel in the summer. The costs were immediately passed on to the already spent homeowner, in rising heating and fuel, transport and manufacturing costs. Yet 30% of the cost of a barrel of oil was based upon Wall Street speculators, climbing to 60% as a speculative fear factor during the summer months. As soon as the financial crisis hit, suddenly oil prices slid down, slicing oil costs to $61 from a high of $147 in June and proving that the 60% speculation factor was far more accurate. This sudden decline also revealed OPEC's lack of control over spiraling prices during the past few years, almost squarely laid on the shoulders of Saudi Arabia alone. When OPEC, in September, sought to maintain higher prices by cutting production, it was Saudi Arabia who voted against such a move at the expense of its own revenue.
Europe then decided that no more would it be ruined by the excess of America. 'Olde Europe' may have had enough of being dictated to by the US, who refused to compromise on loans lent to their own broken nations after WWII. On October the 13th, the once divided EU nations unilaterally agreed to an emergency rescue plan totaling $2.3 trillion. It was more than three times greater than the US package for a catastrophe America alone had created.
By mid October, the Dow, NASDAQ and S&P 500 had erased all the gains they made over the previous decade. Greenspan's pyramid scheme of easy money from nothing resulted in a massive over-extension of credit, inflated housing prices, and incredible stock valuations, achieved because investors would never withdraw their money all at once. But now it was crashing at break-neck speed and no solution in sight. President Bush said that people ought not to worry at all because "America is the most attractive destination for investors around the globe."
Those who will hurt the most are the very men and women who grew the country after WWII, and saved their pensions for retirement due now. They had built the country during the war production years, making its weapons and arms for global conflict. During the Cold War the USSR was the ever-present enemy and thus the military industrial complex continued to grow. Only when there is a war does America profit.
Russia will not tolerate a new cold war build-up of ballistic missiles. And the Middle East has seen its historical ally turn into its worst nightmare, be it militarily or economically. No longer will these nations continue to support the dollar as the world's currency. The world's economy is no longer America's to control and the US is now indebted to the rest of the world. No more will the US be able to demand its largest Middle Eastern oil supplier open up its banking books so as to be transparent and free from corruption and terrorist connections lest there be consequences - the biggest act of criminal corruption in history has just been perpetrated by the United States.
It was the best con game in town: get paid well for selling vast amounts of risk, fail, and then have governments fix the problem at the expense of the taxpayers who never saw a penny of shared wealth to begin with.
There is no easy solution to this crisis, its effects multiplying like an infectious disease.
Ironically, least affected by the crisis are Islamic banks.
They have largely been immune to the collapse because Ilamic banking prohibits the acquisition of wealth via gambling (or alcohol, tobacco, pornography, or stocks in armaments companies), and forbids the buying and selling of a debt as well as usury. Additionally, Shari'ah banking laws forbid investing in any company with debts that exceed thirty percent.
"Islamic banking institutions have not failed per se as they deal in tangible assets and assume the risk" said Dr. Mohammed Ramady, Professor of Economics at King Fahd University of Petroleum & Minerals. "Although the Islamic banking sector is also part of the global economy, the impact of direct exposure to sub-prime asset investments has been low" he continued. "The liquidity slowdown has especially affected Dubai, with its heavy international borrowing. The most negative effect has been a loss of confidence in the regional stock markets." Instead, said Dr. Ramady, oil surplus Arab nations are "reconsidering overseas investments in financial assets" and speeding up their own domestic projects.
Eight years ago, in May 2000, Saudi Islamic banker His Highness Dr. Nayef bin Fawaaz ibn Sha'alan publicly gave a series of economic lectures in Gulf states. At the time his research showed that Arab investments in the US, to the tune of $1.5 trillion, were effectively being held hostage and he recommended they be pulled out and reinvested in the tangibles of the Arab and Islamic markets. "Not in stocks however because the stock market could be manipulated remotely, as we have seen in the last couple of years in the Arab market where trillions of dollars evaporated" he said.
He warned then that it was a certainty that the US economic system was on the verge of collapse because of its cumulative debts, ever-increasing deficit and the interest on that debt. "When the debts and deficits come due, they just issue new Treasury bonds to cover the old bonds due, with their interest and the new deficit too." The cycle cannot be stopped or the debt canceled because the US would no longer be able to borrow. The consequence of relieving this cycle would be a total collapse of their economic system as opposed to the partial, albeit massive, crash of 2008.
"Islamic banking", said Dr. Al-Sha'alan, "always protects the individuals' wealth while putting a cap on selfishness and greed. It has the best of capitalism - filtering out its negatives - and the best of socialism - filtering out its negatives too." Both systems inevitably had to fail. Additionally, Europe and Japan did not need to be held accountable and indebted to America anymore for protection against the Soviets.
"The essential difference between the Islamic economic system and the capitalist system", he continued "is that in Islam wealth belongs to God - the individual being only its manager. It is a means, not a goal. In capitalism, it is the reverse: money belongs to the individual, and is a goal in and of itself. In America especially, money is worshiped like God."
In sum, the crash of the entire global economic system is a result of America's fiscal arrogance based upon one set of rules for itself and another for the rest of the world. Its increased creative financing deluded its people into a false sense of security, and now looks like the failure of capitalism altogether.
The whole exercise in democracy by force against Arab Muslim nations has almost bankrupted the US. The Cold War is over and the US has nothing to offer: no exports, no production, few natural resources, and no service sector economy.
The very markets that resisted US economic policies the most, having curbed foreign direct investments into America, are those who will fare best and come out ahead.
But not before having paid a very high price.
by Tanya Cariina Hsu
Global Research, October 23, 2008
I believe that banking institutions are more dangerous to our liberties than standing armies. (Thomas Jefferson, US President; 1743 - 1826)
America is dying. It is self-destructing and bringing the rest of the world down with it.
Often referred to as a sub-prime mortgage collapse, this obfuscates the real reason. By associating tangible useless failed mortgages, at least something 'real' can be blamed for the carnage. The problem is, this is myth. The magnitude of this fiscal collapse happened because it was all based on hot air.
The banking industry renamed insurance betting guarantees as 'credit default swaps' and risky gambling wagers were called 'derivatives'. Financial managers and banking executives were selling the ultimate con to the entire world, akin to the snake-oil salesmen from the 18th century but this time in suits and ties. And by October 2009 it was a quadrillion-dollar (that's $1,000 trillion) industry that few could understand.
Propped up by false hope, America is now falling like a house of cards.
It all began in the early part of the 20th century. In 1907 J.P. Morgan, a private New York banker, published a rumor that a competing unnamed large bank was about to fail. It was a false charge but customers nonetheless raced to their banks to withdraw their money, in case it was their bank. As they pulled out their funds the banks lost their cash deposits and were forced to call in their loans. People now therefore had to pay back their mortgages to fill the banks with income, going bankrupt in the process. The 1907 panic resulted in a crash that prompted the creation of the Federal Reserve, a private banking cartel with the veneer of an independent government organization. Effectively, it was a coup by elite bankers in order to control the industry.
When signed into law in 1913, the Federal Reserve would loan and supply the nation's money, but with interest. The more money it was able to print, the more 'income' for itself it generated. By its very nature the Federal Reserve would forever keep producing debt to stay alive. It was able to print America's monetary supply at will, regulating its value. To control valuation however, inflation had to be kept in check.
The Federal Reserve then doubled America's money supply within five years, and in 1920 it called in a mass percentage of loans. Over five thousand banks collapsed overnight. One year later the Federal Reserve again increased the money supply by 62%, but in 1929 it again called the loans back in, en-masse. This time, the crash of 1929 caused over sixteen thousand banks to fail and an 89% plunge on the stock market. The private and well-protected banks within the Federal Reserve system were able to snap up the failed banks at pennies on the dollar.
The nation fell into the Great Depression and in April 1933 President Roosevelt issued an executive order that confiscated all gold bullion from the public. Those who refused to turn in their gold would be imprisoned for ten years, and by the end of the year the gold standard was abolished. What had been redeemable for gold became paper 'legal tender', and gold could no longer be exchanged for cash as it had once been.
Later, in 1971, President Nixon removed the dollar from the gold standard altogether, therefore no longer trading at the internationally fixed price of $35. The US dollar was now worth whatever the US decided it was worth because it was 'as good as gold'. It had no standard of measure, and became the universal currency. Treasury bills (short-term notes) and bonds (long-term notes) replaced gold as value, promissory notes of the US government and paid for by the taxpayer. Additionally, because gold was exempt from currency reporting requirements it could not be traced, unlike the fiduciary (i.e. that based upon trust) monetary systems of the West. That was not in America's best interest.
After the Great Depression private banks remained afraid to make home loans, so Roosevelt created Fannie Mae. A state supported mortgage bank, it provided federal funding to finance home mortgages for affordable housing. In 1968 President Johnson privatized Fannie Mae, and in 1970, Freddie Mac was created to compete with Fannie Mae. Both of them bought mortgages from banks and other lenders, and sold them onto new investors.
The post World War II boom had created an America flush with cash and assets. As a military industrial complex, war exponentially profited the US and, unlike any empire in history, it shot to superpower status. But it failed to remember that, historically, whenever empires rose they fell in direct proportion.
Americans could afford all the modern conveniences, exporting its manufactured goods all over the world. After the Vietnam War, the US went into an economic decline. But people were loath to give up their elevated standard of living despite the loss of jobs, and production was increasingly sent overseas. A sense of delusion and entitlement kept Americans on the treadmill of consumer consumption.
In 1987 the US stock market plunged by 22% in one day because of high-risk futures trading, called derivatives, and in 1989 the Savings & Loan crisis resulted in President George H.W. Bush using $142 billion in taxpayer funds to rescue half of the S&L's. To do so, Freddie Mac was given the task of giving sub-prime (below prime-rate) mortgages to low-income families. In 2000, the "irrational exuberance" of the dot-com bubble burst, and 50% of high-tech firms went bankrupt wiping $5 trillion from their over-inflated market values.
After this crisis, Federal Reserve Chairman Alan Greenspan kept interest rates so low they were less than the rate of inflation. Anyone saving his or her income actually lost money, and the savings rate soon fell into negative territory.
During the 1990s, advertisers went into overdrive, marketing an ever more luxurious lifestyle, all made available with cheap easy credit. Second mortgages became commonplace, and home equity loans were used to pay credit card bills. The more Americans bought, the more they fell into debt. But as long as they had a house their false sense of security remained: their home was their equity, it would always go up in value, and they could always remortgage at lower rates if needed. The financial industry also believed that housing prices would forever climb, but should they ever fall the central bank would cut interest rates so that prices would jump back up. It was, everyone believed, a win-win situation.
Greenspan's rock-bottom interest rates let anyone afford a home. Minimum wage service workers with aspirations to buy a half million-dollar house were able to secure 100% loans, the mortgage lenders fully aware that they would not be able to keep up the payments.
So many people received these sub-prime loans that the investment houses and lenders came up with a new scheme: bundle these virtually worthless home loans and sell them as solid US investments to unsuspecting countries who would not know the difference. American lives of excess and consumer spending never suffered, and were being propped up by foreign nations none the wiser.
It has always been the case that a bank would lend out more than it actually had, because interest payments generated its income. The more the bank loaned, the more interest it collected even with no money in the vault. It was a lucrative industry of giving away money it never had in the first place. Mortgage banks and investment houses even borrowed money on international money markets to fund these 100% plus sub-prime mortgages, and began lending more than ten times their underlying assets.
After 9/11, George Bush told the nation to spend, and during a time of war, that's what the nation did. It borrowed at unprecedented levels so as to not only pay for its war on terror in the Middle East (calculated to cost $4 trillion) but also pay for tax cuts at the very time it should have increased taxes. Bush removed the reserve requirements in Fannie Mae and Freddie Mac, from 10% to 2.5%. They were free to not only lend even more at bargain basement interest rates, they only needed a fraction of reserves. Soon banks lent thirty times asset value. It was, as one economist put it, an 'orgy of excess'.
It was flagrant overspending during a time of war. At no time in history has a nation gone into conflict without sacrifice, cutbacks, tax increases, and economic conservation.
And there was a growing chance that, just like in 1929, investors would rush to claim their money all at once.
To guarantee, therefore, these high risk mortgages, the same financial houses that sold them then created 'insurance policies' against the sub-prime investments they were selling, marketed as Credit Default Swaps (CDS). But the government must regulate insurance policies, so by calling them CDS they remained totally unregulated. Financial institutions were 'hedging their bets' and selling premiums to protect the junk assets. In other words, the asset that should go up in value could also have a side-bet, just in case, that it might go down. By October 2008, CDS were trading at $62 trillion, more than the stock markets of the whole world combined.
These bets had absolutely no value whatsoever and were not investments. They were just financial instruments called derivatives - high stakes gambling, 'nothing from nothing' - or as Warren Buffet referred to them, 'Weapons of Financial Mass Destruction'. The derivatives trade was 'worth' more than one quadrillion dollars, or larger than the economy of the entire world. (In September 2008 the global Gross Domestic Product was $60 trillion).
Challenged as being illegal in the 1990s, Greenspan legalized the derivatives practice. Soon hedge funds became an entire industry, betting on the derivatives market and gambling as much as they wanted. It was easy because it was money they did not have in the first place. The industry had all the appearances of banks, but the hedge funds, equity funds, and derivatives brokers had no access to government loans in the event of a default. If the owners defaulted, the hedge funds had no money to pay 'from nothing'. Those who had hedged on an asset going up or down would not be able to collect on the winnings or losses.
The market had become the largest industry in the world, and all the financial giants were cashing in: Bear Stearns, Lehman Brothers, Citigroup, and AIG. But homeowners, long maxed out on their credit, were now beginning to default on their mortgages. Not only were they paying for their house but also all the debt amassed over the years for car, credit card and student loans, medical payments and home equity loans. They had borrowed to pay for groceries and skyrocketing health insurance premiums to keep up with their bigger houses and cars; they refinanced the debt they had for lower rates that soon ballooned. The average American owed 25% of their annual income to credit card debts alone.
In 2008, housing prices began to slide precipitously downwards and mortgages were suddenly losing value. Manufacturing orders were down 4.5% by September, inventories began to pile up, unemployment was soaring and average house foreclosures had increased by 121% and up to 200% in California.
The financial giants had to stop trading these mortgage-backed securities, as now their losses would have to be visibly accounted for. Investors began withdrawing their funds. Bear Stearns, heavily specialized in home loan portfolios, was the first to go in March.
Just as they had done in the 20th century, JP Morgan swooped in and picked up Bear Stearns for a pittance. One year prior Bear Stearns shares traded at $159 but JP Morgan was able to buy in and take over at $2 a share. In September, Washington Mutual collapsed, the largest bank failure in history. JP Morgan again came in and paid $1.9 billion for assets valued at $176 billion. It was a fire sale.
Relatively quietly over the summer Freddie Mac and Fannie Mae, the publicly traded companies responsible for 80% of the home mortgage loans, lost almost 90% of their value for the year. Together they were responsible for half the outstanding loan amounts but were now in debt $80 to every $1 in capital reserves.
To guarantee they would stay alive, the Federal Reserve stepped in and took over Freddie Mac and Fannie Mae. On September 7th 2008 they were put into "conservatorship": known as nationalization to the rest of the world, but Americans have difficulty with the idea of any government run industry that required taxpayer increases.
What the government was really doing was handing out an unlimited line of credit. Done by the Federal Reserve and not US Treasury, it was able to bypass Congressional approval. The Treasury Department then auctioned off Treasury bills to raise money for the Federal Reserve's own use, but nonetheless the taxpayer would be funding the rescue. The bankers had bled tens of billions from the system by hedging and derivative gambling, and triggered the portfolio inter-bank lending freeze, which then seized up and crashed.
The takeover was presented as a government funded bailout of an arbitrary $700 billion, which does nothing to solve the problem. No economists were asked to present their views to Congress, and the loan only perpetuates the myth that the banking system is not really dead.
In reality, the damage will not be $700 billion but closer to $5 trillion, the value of Freddie Mac and Fannie Mae's mortgages. It was nothing less than a bailout of the quadrillion dollar derivatives industry which otherwise faced payouts of over a trillion dollars on CDS mortgage-backed securities they had sold. It was necessary, said Treasury Secretary Henry Paulson, to save the country from a "housing correction". But, he added, the $700 billion taxpayer funded takeover would not prevent other banks from collapsing, in turn causing a stock market crash.
In other words Paulson was blackmailing Congress in order to lead a coup by the banking elite under the false guise of necessary legislation to stop the dyke from flooding. It merely shifted wealth from one class to another, as it had done almost a century prior. No sooner were the words were out of Paulson's mouth before other financial institutions began imploding, and with them the disintegration of the global financial system - much modeled after the lauded system of American banking.
In September the Federal Reserve, its line of credit assured, then bought the world largest insurance company, AIG, for $85 billion for an 80% stake. AIG was the largest seller of CDS, but now that it was in the position of having to pay out, from collateral it did not have, it was teetering on the edge of bankruptcy.
In October the entire country of Iceland went bankrupt, having bought American worthless sub-prime mortgages as investments. European banks began exploding, all wanting to cash in concurrently on their inflated US stocks to pay off the low interest rate debts before rates climbed higher. The year before the signs had been evident, when the largest US mortgage lender Countrywide fell. Soon after, the largest lender in the UK, Northern Rock, went under - London long having copied Wall Street creative financing. Japan and Korea's auto manufacturing nosedived by 37%, global economies contracting. Pakistan is on the edge of collapse too, with real reserves at $3 billion - enough to only buy a month's supply of food and oil and attempting to stall payments to Saudi Arabia for the 100,000 barrels of oil per day it provides to the country. Under President Musharraf, who left office in the nick of time, Pakistan's currency lost 25% of its value, its inflation running at 25%.
Meanwhile energy costs had soared, with oil reaching a peak of almost $150 per barrel in the summer. The costs were immediately passed on to the already spent homeowner, in rising heating and fuel, transport and manufacturing costs. Yet 30% of the cost of a barrel of oil was based upon Wall Street speculators, climbing to 60% as a speculative fear factor during the summer months. As soon as the financial crisis hit, suddenly oil prices slid down, slicing oil costs to $61 from a high of $147 in June and proving that the 60% speculation factor was far more accurate. This sudden decline also revealed OPEC's lack of control over spiraling prices during the past few years, almost squarely laid on the shoulders of Saudi Arabia alone. When OPEC, in September, sought to maintain higher prices by cutting production, it was Saudi Arabia who voted against such a move at the expense of its own revenue.
Europe then decided that no more would it be ruined by the excess of America. 'Olde Europe' may have had enough of being dictated to by the US, who refused to compromise on loans lent to their own broken nations after WWII. On October the 13th, the once divided EU nations unilaterally agreed to an emergency rescue plan totaling $2.3 trillion. It was more than three times greater than the US package for a catastrophe America alone had created.
By mid October, the Dow, NASDAQ and S&P 500 had erased all the gains they made over the previous decade. Greenspan's pyramid scheme of easy money from nothing resulted in a massive over-extension of credit, inflated housing prices, and incredible stock valuations, achieved because investors would never withdraw their money all at once. But now it was crashing at break-neck speed and no solution in sight. President Bush said that people ought not to worry at all because "America is the most attractive destination for investors around the globe."
Those who will hurt the most are the very men and women who grew the country after WWII, and saved their pensions for retirement due now. They had built the country during the war production years, making its weapons and arms for global conflict. During the Cold War the USSR was the ever-present enemy and thus the military industrial complex continued to grow. Only when there is a war does America profit.
Russia will not tolerate a new cold war build-up of ballistic missiles. And the Middle East has seen its historical ally turn into its worst nightmare, be it militarily or economically. No longer will these nations continue to support the dollar as the world's currency. The world's economy is no longer America's to control and the US is now indebted to the rest of the world. No more will the US be able to demand its largest Middle Eastern oil supplier open up its banking books so as to be transparent and free from corruption and terrorist connections lest there be consequences - the biggest act of criminal corruption in history has just been perpetrated by the United States.
It was the best con game in town: get paid well for selling vast amounts of risk, fail, and then have governments fix the problem at the expense of the taxpayers who never saw a penny of shared wealth to begin with.
There is no easy solution to this crisis, its effects multiplying like an infectious disease.
Ironically, least affected by the crisis are Islamic banks.
They have largely been immune to the collapse because Ilamic banking prohibits the acquisition of wealth via gambling (or alcohol, tobacco, pornography, or stocks in armaments companies), and forbids the buying and selling of a debt as well as usury. Additionally, Shari'ah banking laws forbid investing in any company with debts that exceed thirty percent.
"Islamic banking institutions have not failed per se as they deal in tangible assets and assume the risk" said Dr. Mohammed Ramady, Professor of Economics at King Fahd University of Petroleum & Minerals. "Although the Islamic banking sector is also part of the global economy, the impact of direct exposure to sub-prime asset investments has been low" he continued. "The liquidity slowdown has especially affected Dubai, with its heavy international borrowing. The most negative effect has been a loss of confidence in the regional stock markets." Instead, said Dr. Ramady, oil surplus Arab nations are "reconsidering overseas investments in financial assets" and speeding up their own domestic projects.
Eight years ago, in May 2000, Saudi Islamic banker His Highness Dr. Nayef bin Fawaaz ibn Sha'alan publicly gave a series of economic lectures in Gulf states. At the time his research showed that Arab investments in the US, to the tune of $1.5 trillion, were effectively being held hostage and he recommended they be pulled out and reinvested in the tangibles of the Arab and Islamic markets. "Not in stocks however because the stock market could be manipulated remotely, as we have seen in the last couple of years in the Arab market where trillions of dollars evaporated" he said.
He warned then that it was a certainty that the US economic system was on the verge of collapse because of its cumulative debts, ever-increasing deficit and the interest on that debt. "When the debts and deficits come due, they just issue new Treasury bonds to cover the old bonds due, with their interest and the new deficit too." The cycle cannot be stopped or the debt canceled because the US would no longer be able to borrow. The consequence of relieving this cycle would be a total collapse of their economic system as opposed to the partial, albeit massive, crash of 2008.
"Islamic banking", said Dr. Al-Sha'alan, "always protects the individuals' wealth while putting a cap on selfishness and greed. It has the best of capitalism - filtering out its negatives - and the best of socialism - filtering out its negatives too." Both systems inevitably had to fail. Additionally, Europe and Japan did not need to be held accountable and indebted to America anymore for protection against the Soviets.
"The essential difference between the Islamic economic system and the capitalist system", he continued "is that in Islam wealth belongs to God - the individual being only its manager. It is a means, not a goal. In capitalism, it is the reverse: money belongs to the individual, and is a goal in and of itself. In America especially, money is worshiped like God."
In sum, the crash of the entire global economic system is a result of America's fiscal arrogance based upon one set of rules for itself and another for the rest of the world. Its increased creative financing deluded its people into a false sense of security, and now looks like the failure of capitalism altogether.
The whole exercise in democracy by force against Arab Muslim nations has almost bankrupted the US. The Cold War is over and the US has nothing to offer: no exports, no production, few natural resources, and no service sector economy.
The very markets that resisted US economic policies the most, having curbed foreign direct investments into America, are those who will fare best and come out ahead.
But not before having paid a very high price.
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