Tuesday, October 7, 2008
When a people agree to form themselves into a republic (they) mutually resolve and pledge themselves to each other, rich and poor alike, to support this rule of equal justice among them....A republic, properly understood, is a sovereignty of justice, in contradistinction to a sovereignty of will."
Since its founding, America was never governed by Paine's principles. Never less so or more disgracefully than under George Bush.
This article follows from an earlier one titled Grand Theft America. On the crime of the century. The greatest one ever. Unbridled excess gone awry. An economic system built on a foundation of greed and fraud. Threatening the country with insolvency and ruin. World economies with it. Plundering the national treasury to save it. Bailing out criminal bankers. Rewarding fraudsters with public funds. Making the world safe again for capital (or trying to) and heading it for an even greater calamity ahead. Maybe next time (or this one) one no financial engineering can fix.
An Update on the "Bailout": The Emergency Economic Stabilization Act (EESA)
EESA defrauds the public. Fleeces the treasury to reward criminal bankers. Arranged secretly behind closed doors. The $700 billion is just for starters. Another $150 billion was just added to it (discussed below). Trillions will be pilfered for this scheme. Millions of innocent people will suffer grievously. Crumbs at best are in it for them.
This goes way beyond a subprime crisis as author Ellen Brown explains. The real problem is a "black hole of ($180 trillion in bank-held) derivatives." If enough of them implode, so will world economies. The "bailout" and various other schemes hope to prevent it, but there's no guarantee anything will work. That's the real dilemma.
Public pronouncements about EESA were deceitful on their face. George Bush calling it a plan for Main Street, not Wall Street. Nancy Pelosi saying that "All of this was done in a way to insulate Main Street and everyday Americans from the crisis on Wall Street," and added: "The party is over. No longer will taxpayers be forced to bail out reckless investors." That's precisely what they're being forced to do.
Both presidential candidates endorse the plan and voted for it. Most party leaders as well. A bipartisan conspiracy to compound the fraud. Reward criminals with public money. Empower the Treasury secretary as a financial czar. With unlimited authority to dispense public money. Direct it as he wishes. Stipulate the terms. Conceal the plan's true purpose from the public. To save Wall Street and big banks. The entire financial system. Industrial capitalism in trouble. And make ordinary people pay for it.
The Senate passed EESA on October 1 - by a 74 - 25 vote. The same body that (on September 26) rejected a $56 billion stimulus plan that would have extended unemployment benefits, increased food aid, and funded new construction projects to create jobs at a time the economy is in a deepening recession.
After first rejecting EESA, the House reversed itself (263 - 171) on October 3. Global markets reacted convulsively. Plunging on September 29. Soaring the next day. Plunging again. Continuing the same volatile pattern begun last fall. From the crisis-level weakness of major banks worldwide and the effect on global economies. The possibility that nothing proposed will work. The likelihood that only mass worldwide infusions of public funds and recapitalizations have a chance.
Ignoring the core reason for the crisis. The extraordinary amount of criminal fraud. Rewarding and not prosecuting the fraudsters. Compounding the enormity of their crime. Looting the national treasury for it. Rejecting emergency measures with proven past success. Recapitalizing banks through government interest-bearing loans with guaranteed repayment provisions out of future profits. Temporarily nationalizing troubled banks. Letting governments take over weak ones until things stabilize. Restarting credit flows now frozen. Then designing a whole new system to replace the current failed one.
The present crisis shows industrial capitalism's failure. Financialization-based. Speculative finance. Frankenstein finance. Unfettered. Unregulated. Greed-based. Rewarding fraud and harming people. The government - business partnership behind it. The inevitability that nothing this pernicious is sustainable. The naked truth about an ugly system.
EESA's hidden details make the prima facie case. Besides add-ons, it's little different from its initial version. It:
-- directs the original $700 billion to Wall Street and big banks;
-- lets the Treasury buy unlimited amounts of junk assets (some worthless or close to it) but hold no more than $700 billion at one time; pay whatever prices it chooses; hold-to-maturity prices if it wishes for toxic waste;
-- includes whole mortgages in the program, not just securitized asset pools;
-- compounds fraud by rewarding it;
-- beyond tokenism and disingenuous rhetoric, provides no relief for beleaguered homeowners;
-- excludes a measure to allow bankruptcy judges to amend mortgage terms to help homeowners avoid foreclosure;
-- another one that would have allotted 20% of any government bank assets resale profit to a housing fund; set aside for the public;
-- also a bank-imposed fee to compensate the government for buying junk assets at inflated prices;
-- leaves executive compensation, golden parachutes, and lavish benefits unrestricted by inserting toothless provisions against them;
-- establishes a fake independent oversight panel consisting of the Treasury secretary, Fed chairman, SEC chairman, Federal Home Finance Agency director, and Housing and Urban Development (HUD) secretary;
-- an equally fraudulent Congressional Oversight Board composed of House and Senate leadership-chosen bankers and big investors - called "financial experts;" fraudsters to manage the "bailout;" business and government foxes in charge of the looting the national treasury;
-- includes a provision authorizing the SEC to suspend GAAP (Generally Accepted Accounting Principles) standards requiring mark-to-market valuations to let banks (on their balance sheets) carry toxic assets at purchased prices, not fair market value, and be able to conceal their losses; and
-- another providing tax breaks for companies holding Fannie Mae and Freddie Mac preferred shares.
The White House, Paulson and House and Senate leadership scrambled after EESA's defeat. Cobbled together a revised plan. Kept the original's core provisions unchanged, and added new ones:
-- temporarily (maybe permanently) increases FDIC insurance per account to $250,000;
-- lets FDIC borrow unlimited amounts from the Fed to protect against bank runs; thus exempts banks from paying premiums for additional deposit insurance;
-- another provision to exempt the bill from constitutional challenge;
-- includes about $150 billion in tax cuts and so-called "extenders"; provisions to renew or extend expiring tax breaks;
-- $78 billion for business as well as extending current business tax breaks for renewable energy efforts;
-- $8 billion for hurricane and other natural disaster relief; and
-- another $65 billion extension for Alternative Minimum Tax relief; mostly to high-income earners.
The plan ballooned from its original 3-page version to the House's 106 pages. Then to the final 451 pages (not likely written in 48 hours) with various additional earmarks for:
-- film and television productions;
-- wooden arrows for children;
-- Exxon Valdez oil spill litigants;
-- Virgin Island and Puerto Rican rum;
-- auto racing tracks;
-- wool research and more.
In addition, Section 128's Acceleration of Effective Date refers to Section 203 of the Financial Services Regulatory Relief Act of 2006. EESA moved up its original effective date from October 1, 2011 to October 1, 2008, and thereby changed the United States Code Title 12 - Banks and Banking, Chapter 3 - Federal Reserve System, Subchapter XIV - Bank Reserves. The measure is solely to help banks. Foreign ones included. The changes:
-- no longer require banks to maintain cash reserves to cover deposits;
-- abolished the Fed's Earnings Participation Account for the supplemental reserve fees it charges banks; meaning the Fed can retain them; and
-- lets the Fed create its own rules for distributing earnings as well as payments to foreign banks.
EESA greatly expands Treasury and Federal Reserve powers. Rewards fraudsters and does nothing for beleaguered homeowners. Both presidential candidates voted for the bill. Obama hypocritically saying that the plan is "our best and only way to prevent an economic catastrophe (and be able to help families) on Main Street." McCain pretty much agreed in a bipartisan show of homage to their big Wall Street backers.
Ignored is their criminal fraud. The harmful fallout to many millions, and the fact that $700 billion (now $850 billion) is a down payment with trillions more to come. A systematic looting of public funds. Nearly all of it to fraudsters.
Ahead of EESA's initial defeat, the American Bankers Association (ABA) was pleased with the plan. Its chief executive, Ed Yingling, called the financial crisis "like a big Category 4 hurricane." Unleashed an army of lobbyists on Congress. To assure final legislation contained wanted measures and excluded ones bankers opposed.
In the end, the ABA prevailed. It got nearly everything it asked for. So did Wall Street, but they're far from out of the woods. Nonetheless, big banks are taking advantage by devouring smaller and some big ones. Weaker ones on the cheap. Merrill Lynch to Bank of America. Bear Stearns and Washington Mutual to JP Morgan Chase, and Wachovia's retail banking operations (including $400 billion in deposits) to Citigroup for $1 a share. Then Wells Fargo trumped Citi for most of Wachovia for $7 a share. A deal now held up after New York Supreme Court Justice Charles Ramos blocked it temporarily.
The above acquisitions were giveaways under planned creative destruction. Enabling greater consolidation in the hands of fewer giant players. The result is less competition and a fundamentally unfair system less fair.
The announced deals are for starters. Many more will follow as a powerful industry concentrates into few, larger hands. But providing no help for distressed households. Nor relief for over-indebted homeowners facing foreclosure. Rejecting better, fairer ways to recapitalize banks in crisis. Measures proved effective in the past yet unconsidered.
Also unaddressed are severe money market stresses and unwillingness of banks to lend to each other. Resume a free flow of credit. It shows in unprecedented spreads on unsecured inter-bank lending. Only confidence can change that. Something no government can legislate. It can make good policy as a way to start building it.
On September 30, the Financial Times columnist Martin Wolf headlined his commentary: "Congress decides it is worth risking depression" and said "We are watching the disintegration of the financial system." Such a "dire outcome is no longer impossible." The free flow of credit is frozen and unless thawed "no modern economy can survive. Yet that is now threatened."
We're experiencing a "downward spiral of panic." What economist Hyman Minsky called "revulsion." A "Minisky Moment." The final stage of bubble deflation when cheap credit ends or is frozen like now. Investors dump assets. Any bad news roils markets, and it's infectious. Quickly turning euphoria into "revulsion" and creating downward momentum much greater and faster than the upside.
Wolf has mixed feeling about EESA. Calls it flawed and directed by the wrong man. A "titan of high finance charged with bailing out Wall Street," but worrying mostly about Congress doing nothing and causing "ruin." He wants something passed and much more. Ensuring "liquidity needs are fully met during this period." Europeans addressing the same issue. Worrying about a greater crisis ahead, yet ending with a hopeful thought. Winston Churchill's words that "The United States invariably does the right thing, after having exhausted every other alternative." The greater issue now is a deepening crisis so great that no constructive intervention can work.
Events are fast-moving and changing almost daily. So far in an intensifying contracting cycle. A perfect storm of:
-- rising unemployment;
-- public trauma;
-- failing banks;
-- frozen credit;
-- multi-trillions in toxic debt;
-- the worst housing slump since the Great Depression; spilling over into commercial real estate as well;
-- millions of homeowners threatened with foreclosure;
-- trillions of eroded household wealth;
-- hugely over-indebted consumers; and
-- contagion spreading everywhere and the danger that it may be uncontainable.
Fleecing the American Dream
This article explores other ways a government - business partnership gains power and wealth. Harms the public. Heads the nation toward insolvency, tyranny and in the end ruin. Political theorist Sheldon Wolin refers to our "managed democracy (and) inverted totalitarianism." Our "wielding total power without appearing to." With no jack boots in the streets or concentration camps. Nor "enforcing ideological uniformity, or forcibly suppressing" dissent. America's genius is that it appears to be a democratic showcase. Fooling most of the people most of the time to believe it. So far.
In charge - powerful corporate giants and the rich. Feeding at the public trough. Protected by the military-industrial complex. Single-mindedly pursuing profits. Dismissive of public welfare. Socially democratic institutions. Elements of social progressivism. New Deal political and other gains. Purposely aiming to dismantle them. Everything benefitting people to further corporate power and privilege.
Partnered with government to do it. One of its choosing. Pursuing a policy of empire. Doling out largesse. Transferring wealth to the privileged. Exploiting people without their even noticing. Waging wars for profit. Privatizing everything. Getting around democracy through subterfuge. Making believe it's real when it's fantasy. Heading toward when all pretense will be gone. Remaining public revenue as well unless boundless profligacy can be curbed. So far it's growing. Unsustainably toward a very unpleasant future. Because people empowered are fleecing America. Strip-mining it toward demise. Hollowing it out. Mindless to the lessons of history showing empires, militarism, and extremism can't endure. Eventually will understand when it's too late to matter.
Corporate Dominance in America
Corporate giants rule America and the world as the dominant institution of our time. Their influence is pervasive and profound. Over every facet of our lives. What we eat and drink. What we wear. Where we live. What we're taught. How we get our essential services. Where our main sources of information come from. How we think. Who'll govern and for whose benefit.
With no constitutional empowerment. Self-empowered collaboratively with Congress and the courts. To "invest, speculate, trade, and accumulate wealth," according to Michael Parenti. To maximize shareholder equity by increasing sales and profits. Gaining new markets, resources, and growing in size or risk being left behind. Benefitting hugely at the public's expense.
They're run by wealthy and powerful figures. The elitist top 1%. Owning over one-third of the nation's wealth. Stocks, bonds, land, natural resources, business assets and other investments. In the most unequal of world developed countries. Rigidly class structured. Plagued by racism and inequality. Mocking the notion of a land of opportunity for everyone.
Squandering our national resources. Exploiting and underpaying labor. Dismantling the social safety net. Impoverishing millions of people. Revealing America's dark side. The failure of our "democracy." Government's unaccountability to the public. To provide essential services. Consumer safety. Social justice. Concern for the environment. Closing the gap between haves and have-nots. Having enough compassion to care.
Instead, defending the rich against the poor. Siding one-sidedly with business. Through tax breaks. Huge subsidies. Export ones. Price supports. Loan guarantees. R & D grants. Free use of the public broadcasting spectrum. Bailouts. All sorts of other measures to redistribute wealth upward to the top. Providing legal protections and empowerment. Depriving the many for the few. Socialism for the rich. Free-market capitalism for most others. Sink or swim, on our own, with a disappearing social safety net for those who can't. Redefining "justice" to mean "just us."
Militarism and Wars for Profit - Spending Ourselves Toward Insolvency and Ruin
Since WW II, America was unchallengeable. With no external enemies or threats, the Soviet Union notwithstanding. Yet according to the Center for Defense Information, 60 years of military expenditures (in constant dollars) since 1945 totaled an astonishing $21 trillion. And since 2001, annual defense spending more than doubled under George Bush.
Christopher Hellman, Military Budget Analyst for the Center for Arms Control and Nonproliferation, refers to a "runaway military budget" with core allocations and add-ons. Including all defense categories, FY 2008 exceeds $1 trillion for the first time. More than the rest of the world combined. Including war supplementals, budgets expanded dramatically since the mid-1990s and are at the highest level since WW II.
Here's analyst Robert Higgs' breakdown for FY 2006 in billions, and FY 2009 proposed numbers are several hundred billions higher:
-- Department of Defense: $499.4; for FY 2008, it's $623 billion with supplemental add-ons for Iraq and Afghanistan; proposed for FY 2009, it's $711 billion by the same calculation; other estimates place it over $760 billion;
-- Department of Energy: $16.6
-- Department of State: $25.3
-- Department of Veterans Affairs: $69.8
-- Department of Homeland Security: $69.1
-- Department of Justice (including FBI, DEA and other federal law enforcement agencies): $1.9
-- Department of the Treasury (for Military Retirement Fund): $38.5
-- NASA: $7.6, and
-- Net interest attributable to past debt-financed defense outlays: $206.7.
A total of $934.9 billion. Higgs estimated FY 2007 at $1.028 trillion, and each year the numbers grow to more out-of-control levels. Unsustainable, and those reported exclude black budgets for CIA, NSA and other off-the-books operations amounting to tens of billions more. In nominal totals and as a percent of GDP, he calls it nonsensical. Insanity for others. A death wish for the economy at this unsustainable level.
Higgs and others also cite the unreliability of official numbers. He believes it's more accurate to take the Pentagon's basic budget and double it because as much as 40% of it is black or hidden. Concealing secret projects. Now under the most secretive administration in our history. Also, the more powerful the Pentagon becomes, the more spending benefits accrue to congressional districts, and less willing Congress is to hold it accountable.
The Department of Defense's 2007 Base Structure Report shows how large the Pentagon has become. Even with important information left out:
-- DOD is the world's largest landlord with over 577,500 (reported) facilities (buildings, structures and linear structures) on more than 5300 sites covering 32 million acres and 2.4 billion square feet of space in the US, its territories and overseas; these numbers are way understated and are, in fact, much higher.
-- including undisclosed ones, over 1000 overseas bases in over 150 countries; additional secret ones shared with or leased from host countries; of varying sizes and importance, including the largest Main Operating Bases (MOBs) for permanent combat troops; extensive infrastructure; command and control headquarters; and extensive accommodations in many places for families, including hospitals, schools and recreational facilities;
-- about 6000 homeland bases and military warehouses, and
-- from a DOD March 31, 2008 active duty personnel strength report, a total worldwide force of 1,373,000. Of that, 1,083,000 are US-based and in its territories; another 290,000 are abroad, and 195,000 are "in and around Iraq as of March 31, 2008, includ(ing) deployed Reserve/National Guard" forces; another 31,000 are in Afghanistan, including Reserves and National Guard; the US National Guard is a joint US Army - Air Force reserve component that numbered 460,000 as of December 31, 2007, according to the Congressional Research Service.
In his 1961 farewell address, Eisenhower warned about the "military-industrial complex." Its "grave implications" evident nearly 50 years ago. A "coalition of the military and industrialists who profit by manufacturing arms and selling them to government." The need to "guard against the acquisition of unwarranted influence....by the military industrial complex....The potential for the disastrous rise of (its) misplaced power...."
After the Vietnam War, its resurgence under Ronald Reagan. A prelude to George Bush's aggressive militarism. Ideologically driven. Waging "Global Wars on Terrorism." Exploiting 9/11 fears to pursue them. Disregarding budgeting constraints. Spending on all sorts of new weapons systems. The way Ian Mount, Matthew Maier and David Freedom described it on March 1, 2003 in Business 2.0 magazine. They called it "The New Military Industrial Complex To arm for the digital-age war, the Pentagon has turned to a new generation of defense contractors. The hardware is impressive. It's also deadly." The Pentagon refers to a "revolution in military affairs (RMA)." Building an unchallengeable high-tech arsenal. A new military-industrial complex.
The old one remains and gets huge contracts for new and more traditional weapons. The result of an influential "iron triangle" of Congress, the Pentagon and defense industry. Conservative think tanks also like:
-- the Project for a New American Century (PNAC); its "Rebuilding America's Defenses" scheme for US global hegemony;
-- the Center for Security Policy (CSP) headed by super-hawk Frank Gaffney; promoting a policy of "Peace through Strength" and perpetual wars for perpetual peace;
-- the Committee on the Present Danger (CPD); its hard right leadership and members; "fighting terrorism and the ideologies that drive it;"
-- the National Institute for Public Policy (NIPP); its focus on defense issues; ties to the nuclear weapons industry; and
-- the Center for Strategic and International Studies (CSIS); emphasizing national security and "advancing (US) global interests;" specializing in crisis management and connected to the highest levels in government and the Pentagon.
Another element is hugely important and destructive to a free society. The nation's 16 intelligence agencies, including CIA, NSA, DIA (Defense Intelligence Agency), FBI, Army, Navy and Air Force Intelligence, DHS (Department of Homeland Security), and Department of State. A multi-billion dollar funded, largely off-the-books, clandestine anti-democratic network. Interconnected with thousands of private contractors. Tied to world governments and their intelligence services. Hugely expensive. Powerful. A force unto themselves. Secretive by the nature of their work, and gaining strength from their own momentum.
Together they comprise a government-military-industrial-intelligence service-think tank colossus. Heading the nation toward insolvency, tyranny and ruin. Wrecking the remnants of a free society. Looting the public treasury. Pursuing a single-minded drive for empire. Mindless to its harmful effects. Masking it behind a democratic facade. Plagued by the same dynamic that doomed past empires unwilling to change.
For Chalmers Johnson: "perpetual war, the collapse of constitutional government, endemic official lying and disinformation, isolation, overstretch, the uniting of local and global forces opposed to imperialism, and in the end bankruptcy." Tyranny and ruin as well. The loss of personal freedom, and vital social safety net essentials. An ugly America few today can imagine. Arriving at flank speed after eight disastrous years under George Bush with scant hope for change under a new administration, Republican or Democrat.
Ruinous militarization is wrecking the nation. The insane amounts of spending on it. Military Keynesianism. A permanent war economy. Institutionalized after WW II. The current "Global Wars on Terrorism." The misguided notion that they promote sustainable economic growth. Mindless to their destructive effects. Eroding our social fabric. The national and human infrastructure. Looting the national treasury. Diverting productive economic efforts to war making. Ignoring vital re-industrialization needs. Instead doing the opposite. Losing our competitiveness. Eroding our political credibility, and leading the world solely in military might and the recklessness to use it.
It shows in waging perpetual wars. Allowing the destruction of our manufacturing base. Letting malls replace factories as the nation's engine. Amassing unsustainable current account and budget deficits. The former approaching $900 billion. The latter to exceed $400 billion, according to a September CBO Congressional Budget Office estimate. It excludes around $300 billion from the Social Security "Trust Fund." Without it, the deficit is $700 billion. Then add expected hundreds of billions of "bailout" dollars, and the total for FY 2009 skyrockets. Will way exceed $1 trillion.
Economist John Williams says the above numbers are grossly understated. Based on Generally Accepted Accounting Practices (GAAP), he calculates the FY 2007 budget deficit at $1.2 trillion. Down from $4.6 trillion in 2006 because of one-time actuarial assumption changes. It includes the year-to-year changes in the net present value of unfunded liabilities in programs like Social Security, Medicare and Medicaid. Washington calculations are by "cash accounting" with no provisions for future payouts in years when they accrue.
By GAAP estimates, Williams also says that total federal debt obligations rose to $59.8 trillion in 2007 from $58.6 trillion the previous year and that FY 2008 numbers will be higher. He reverse engineers data. Reveals administration and congressional bookkeeping gimmicks, and gives what he believes is a more accurate picture of the nation's financial health. In deep trouble by all his measures, and reckless military Keynesianism is why. It's heading the nation toward insolvency and getting progressively closer each year.
According to Williams, America is already bankrupt, and Bush administration policies get much of the blame. The official national debt was under $1 trillion in 1981. In January 2001, it was $5.7 trillion. It jumped to $9 trillion for 2007. Williams, however, puts it at $14.7 trillion, up from $14.1 trillion in 2006. It'll easily top $15 trillion (by his calculation) for 2008 and go far higher in future years.
The culprit - unsustainable military spending. All the worse because of the productive investment lost. Sacrificed for unneeded weaponry and militarism. To pursue an imperial agenda and enrich war profiteers. At the expense of advancing the greater good. The public interest long ago abandoned. Any pretext that "we the people" matter. The ones who do are them, not us.
Transferring Wealth to the Rich
It's been long-standing but became policy under Ronald Reagan. Shifting wealth upward. Mainly to the top 1% and major corporations. Less substantially to another 10% from over 90 million middle-class, lower-earning and poor households. By what anthropologist David Harvey calls "accumulation by dispossession." It shows in the decline of organized labor from a 1950s 34.7% high to around 12% overall today and only 7% in the private sector. The lowest percentage since the mass unionization struggles of the 1930s and in the private sector in over 100 years.
The result of a bipartisan antipathy to workers. A one-sided pro-corporate agenda. Allowing the dismantling of the nation's manufacturing base. Along with it the outsourcing of high-paying jobs. Professional ones also. Wage and benefit losses as a result. Allowing essential government services to erode. Replacing permanent jobs with lower-cost part-time and temporary ones. Creating a reserve army of labor to hold down wages and benefits. An unfair tax code restructured for the wealthy and large companies. Forcing workers to bear a greater burden. Using devious ways to do it. One discussed below by the 1980s Greenspan Commission.
Establishing globalized market-based rules. Embodying them in repressive trade agreements like NAFTA, DR-CAFTA, and an alphabet soup from the WTO. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The General Agreement on Trade Services (GATS). The Agreement on Agriculture (AoA) and others for one purpose. To establish uniform global trade rules favoring capital over people. To privatize and commoditize everything and strip-mine the planet for profit.
America's 130 million working class families have suffered. Militarism and financialization replaced productive investments. Lower-paying service jobs in place of higher-paying ones. People now work longer for less pay, adjusted for inflation, and are increasingly denied benefits. Peoples' overall standard of living declined. Two household earners are commonplace. Struggling to get by. College degrees are more expensive. For many unaffordable and are no longer an assurance of good jobs and a bright future.
Wealth today is more unequally distributed than ever. Poverty levels are rising. Millions of households are affected. The 37 million US Census Bureau figure masks the real problem. Now exacerbated by today's financial crisis touching many millions more. The near-certainty that conditions will worsen before stabilizing and improving. In the meantime, a permanent underclass is growing. In the richest country in the world. Heartless and mindless to the problem. One-sidely supporting capital. Rewarding criminals for their crimes. Allowing the middle class to erode. The poor to suffer grievously, and millions of homeowners to lose everything and maybe hope.
For a generation or more, an astonishing wealth transfer up occurred and is ongoing. Income and benefit reductions. Payroll tax increases. Loss of pensions and now savings. Well over $1 trillion annually accruing to the rich. And without most people even noticing. The result is an unprecedented and growing wealth disparity. An engineered enrichment of society's richest minority.
Tax cuts for the rich. In Bush's first term, over $4 trillion. Ballooning to $11 trillion if his cuts become permanent. Well over another $1 trillion to corporations. For working Americans - eroding welfare, lost opportunity, and for many any hope for a better future. Compounded by letting trillions in wealth be stashed in offshore tax havens from the Caribbean to Cyprus to South Asia to the Pacific.
Neither party objects. Nor to letting corporations pay less than their fair share. From 28% of federal revenues in the 1950s. To 21% in the 1960s. About 10% and falling since the 1980s, and according to the Government Accountability Office (GAO) 94% of major corporations now pay less than 5% of their income in taxes. In addition, payments are the lowest in 60 years. Many pay nothing at all. Some, including profitable ones, get large rebates on top of huge annual subsidies. Ones working people pay for under socialism for business and free-market, on-your-own capitalism, for most others.
For them, welfare as we know it is disappearing. Public education eroding. College for many unaffordable. Health care as well for nearly 50 million uninsured and many millions more underinsured. New Deal and Great Society programs are eroding at a time they're most needed. To enrich the privileged and for unsustainable militarism. Destroying the American dream and national solvency. A free society with it. One for "them," not "us."
Lavish (Taxpayer-Funded) Corporate Subsidies
Corporations get tens of billions annually in taxpayer-funded subsidies. Giveaways. From looting the national treasury and returning nothing to the public.
The Cato Institute is no bastion of egalitarianism. It's for limited government and unfettered "free market" capitalism. Here's what its May 2007 Policy Analysis Number 592 had to say on subsidies. It's titled: "The Corporate Welfare State - How the Federal Government Subsidies US Business." Cato's budget studies director Stephen Slivinski prepared it.
He calls subsidies "corporate welfare" and defines them as "any federal spending program that provides payments or unique benefits and advantages to specific companies or industries." In FY 2006, he calculates it totaled $92 billion "in direct and indirect subsidies to businesses and private-sector corporate entities." Handouts he opposes. Examples are cash payments to farmers, primarily to agribusiness. Others to defense contractors. Research grants to high-tech companies, and indirect funds such as for promoting US products and industries overseas. Outside his definition are preferential tax treatment and advantageous trade benefits. Combined they add tens of billions more.
"What's wrong with federal business subsidies," Slivinski asks? Its supporters say they're in the national interest. They promote business, enhance US competitiveness, and remedy market failures. Misguided reasoning for him (and Cato) as follows:
-- business, not government, is best-suited to finding the "Next Big Thing;"
-- subsidies "create an incestuous relationship between business and government;" and
-- they're unconstitutional as opposed to infrastructure spending that benefits everyone; business and the public.
A case study example: Agribusiness subsidies. In FY 2006, the largest of all direct ones totaling $21 billion. In the mid-1990s, Congress (in the 1996 Freedom to Farm Act) voted to scale down and eliminate the program, but instead increased it to record levels.
Another example: the 1988 Advanced Technology Program (ATP) and Small Business Innovative Research (SBIR) one to grow the high-tech economy. Since inception, it funded 768 ATP projects costing $2.3 billion through 2006. Another $1 billion to SBIR. Cato calls it ill-directed. To already generously-supported private sector research ventures in some cases. In others, by crowding out private research spending. The net result is that government subsidies produce no overall increase in R & D. Instead, they underwrite it and increase business profits - at the taxpayers' expense.
An example Cato omitted. A likely greater subsidy than to agribusiness. One media scholar and critic Robert McChesney has studied and states: "The (US) media and communications systems have been the recipients of enormous direct and indirect subsidies, arguably as great as or greater than any other industry in our economy." He lists:
-- free monopoly licenses to commercial radio and TV stations; spectrum for satellite television; and monopoly cable TV and telephone franchises; valued at about $500 billion;
-- since the advent of radio in the 1920s, this amounts to hundreds of billions of dollars;
-- many billions more in postal subsidies for magazines, periodicals and other publications;
-- hundreds of millions for film and television production;
-- indirect subsidies through government advertising;
-- another one by letting businesses write off advertising expenditures as an expense;
-- additional many billions in political advertising during every election cycle amounting to over 10% of commercial TV revenue;
-- what McChesney calls perhaps the largest subsidy of all - copyrights; "a government-created (and enforced) monopoly right to eliminate the possibility of competitive markets;" and
-- an indirect subsidy in the form of government serving as a "powerful lobbying force for commercial media oversea to see that foreign governments change regulations and divert subsidies to the benefit of US communications firms."
Though no precise calculations have been made on these benefits, McChesney believes combined they're worth up to hundreds of billions annually. Without people even noticing or that commercial broadcasters exploit the public airwaves solely for their own benefit. They and other industries feed at the public trough. The amount of free money they get is enormous. Taxpayer dollars fund it with no reciprocal benefit. Another component of the fleecing of America.
More largesse to the nuclear industry. In the mid-1990s, it was on its knees. Strapped by unmanageable debt from billions in cost overruns and plant shutdowns. Plagued by aging reactors. Expensive and shoddy maintenance. Haunted by Chernobyl and Three Mile Island. No nuclear power plant has been built in America since the 1970s. The last one to start up was the Tennessee Valley Authority's Watts Bar reactor in 1996 after 23 years of construction delays.
Today a revival is underway because of unprecedented subsidies from the 2005 Energy Policy Act along with generous state incentives. Without them, no new plants would be proposed. Nuclear power is unsafe, uneconomic, uncompetitive, and unneeded, despite what its advocate say. Its costs are also rising, and the industry is plagued with huge cost-overruns. Building a new plant runs somewhere between $5 - $12 billion dollars depending on its capacity and problems related to bringing it online.
Nonetheless, 30 new reactors are proposed for the US alone. Some in the planning stages. Others close to groundbreaking. Because of more than $13 billion in industry subsidies and tax breaks. Unlimited taxpayer-backed loan guarantees. Limited liability in case of accidents under the Price-Anderson Act. Absolving companies of most costs if they happen. Various other incentives as well to revive a moribund industry. For construction, R & D, operations, nuclear waste disposal, and eventual shutdowns. More coming if the administration's requested 37% FY 2009 nuclear program appropriation increase is approved. At the same time, a 27% energy efficiency and renewable energy budget reduction was proposed.
The Great Social Security Heist
Until the present fraud-based financial crisis, it was the largest modern era wealth transfer from the public to the rich. Engineered by Alan Greenspan in 1981 as head of the National Commission on Social Security Reform. Called the Greenspan Commission to address "the short-term financing crisis that Social Security faced." Based on the fraudulent claim that the Old-Age and Survivors Insurance Trust Fund "would run out of money as early as August 1983." It wouldn't then nor will it now.
In January 1983, the Commission issued its report. Congress, in turn, used it to enact Social Security Amendments to "resolve short-term financing problems and (make) many other significant changes in Social Security law" harmful to the public interest.
A menu of changes were enacted, including a "consensus package" to fix the problem by raising payroll taxes on incomes but exempting the rich beyond a maximum level. It also raised the retirement age in incremental steps. The result:
-- working Americans bare the brunt of this unfair regressive tax;
-- the rich barely feel it;
-- low income earners pay more payroll than income tax; and
-- the working poor have an enormous unaffordable burden; many earn too little to pay income taxes; yet they're not exempt from paying 6.2% of their wages for Social Security and another 1.45% for Medicare; employers match them with equal amounts, but it's not surprising that they pass on these costs through lower pay and benefits; an effective and unfair 15.3% of income burden for wage earners.
The public was told that the changes would make Social Security solvent for the next 75 years. They weren't told that the program was sound and needed no restructuring. That doing it was to transfer massive wealth amounts from working Americans and the poor to the rich. One part of a greater Reagan administration scheme to shift more of it upward. In addition to restructuring individual and corporate income taxes between 1981 to 1986.
The rich benefitted most with top rates dropping from 70% in 1981 to 50% over three years and then to 28% in 1986. At the same time, the lowest rate actually rose from 11 to 15%. It was the first time that US income tax rates were simultaneously reduced at the top and raised at the bottom. Even worse was that Reagan and Greenspan collaboratively defrauded the public.
By engineering the largest ever income tax cut for the rich combined with the greatest one ever affecting working Americans earning $30,000 or less. The payroll tax was doubled, and "Trust Fund" revenues were then used to reduce budget deficits. The tax code became hugely regressive, and for the first time a pay-as-you-go retirement and disability program became one where wage earner contributions subsidize the rich as well as support current beneficiaries.
The wealth gap began widening. Today it's unprecedented with the top 1% owning 40% of global assets. The top 10% around 85% of them. The top 1% over one-third of the nation's wealth. The bottom 80% just 15.3%. The top 20% nearly 85%, and in contrast, the poorest 20% in debt owing more than they own. The result of a generational wealth transfer as well as the added effects of globalization, automation, outsourcing, the shift from manufacturing to services, deregulation, weak unions and declining membership, and government indifference to human needs. More than ever under George Bush.
Now compounded by a deepening financial crisis of unknown magnitude. The potentially catastrophic fallout from it. Rescue packages for business alone, and millions of working Americans left to fend for themselves in a very uncertain environment. The result of fleecing America. Letting greedy bankers profit from it. Commit massive fraud and get away with it. Reward them for their crimes. Looting the national treasury to pay for them. Is public anger so surprising? Only that it hasn't boiled over on the streets of the nation's Capitol. Maybe in time as things keep worsening and Washington only worries about Wall Street.
Stephen Lendman is a Research Associate of the Centre for Research on Globalization.
Here's a safe bet for uncertain times: A lot of banks won't survive the next year of upheaval despite the U. S. government's $700-billion plan to restore order to the financial industry.
The biggest question is how many will perish and how they will be put out of their misery -- in outright closures by regulators scrambling to preserve the dwindling deposit insurance fund or in fire sales made under government pressure.
Enfeebled by huge losses on risky home loans, the banking industry is now on the shakiest ground since the early 1990s, when more than 800 federally insured institutions failed in a three-year period.
That was during the cleanup phase of a decade-long savings-and-loan meltdown that wound up costing U. S. taxpayers $170 billion to $205 billion, after adjusting for inflation.
The government's commitment to spend up to $700 billion buying bad debts from ailing banks is likely to save some institutions that would have otherwise died, but analysts doubt it will be enough to avert a major shakeout.
Stanford Financial analyst Jaret Seiberg says it will help, but it's not going to be the saving grace.
He says that's because a lot of banks are holding construction loans and other types of deteriorating assets the government won't take off their books.
Seiberg expects more than 100 banks nationwide to fail next year.
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Just like our Wall Street heroes of the recent past, so, too, back in the 1920s the savants of the Street claimed credit for the rickety prosperity of the Jazz Age. With the Crash they took the blame for the disaster, just as they had taken the credit for the prosperity, and were despised for their hypocrisy as well. Just as seems to be starting to happen today, Congressmen, some of whom had spent their careers genuflecting before the titans of Wall Street, suddenly hauled them before investigating committees, there to be defrocked, treated to a withering storm of biblically-inspired injunctions and Shakespearean curses, and indicted in the court of public opinion. Wall Street was, as it now seems about to be again, excommunicated.
Suddenly weak beyond compare, the Street was powerless to resist Franklin D. Roosevelt's regulatory state. In rapid succession came the Glass-Steagall banking act and the Federal Deposit Insurance Corporation, the two securities acts of 1933 and 1934, the creation of the Securities and Exchange Commission (SEC), the Public Utility Holding Company Act, and much more. When, in 1936, the President summoned the people to battle against the "economic royalists" everyone knew just who he was talking about.
It's long been said that FDR's New Deal saved capitalism from itself. That is true. One ironic consequence of that fateful turn of events was, politically speaking, to cloak Wall Street in invisibility. After all the shouting was over, after the installation of legislative reforms had further chastened an already cowed Street and constrained its penchant for financial wilding, it ceased to function as the magnetic north for all those troubled by the inequities, injustices, and deformations of capitalism.
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'Get these people arrested' - Naomi Wolf
Naomi Wolf asks: Can't we be revolutionaries? We celebrate revolution every July 4th, don’t we?
...BuzzFlash: I would say to illustrate the power of demonstrations, I was very heartened that approximately 1500 women assembled a couple of weeks ago in Anchorage to reject Palin. It was started by a couple of Anchorage women having a cup of coffee and deciding that they needed to show the rest of America that many Alaskan women object to the policies of Governor Palin. It showed that a couple of ordinary Americans can have a national impact through a spontaneous protest.
Naomi Wolf: But we need to take it a step further. There is a war being conducted against American citizens. You and I talked about this a year ago in terms of my last book. We need to get ahead of the curve with outlets like BuzzFlash. But this war has escalated dramatically. Protesters and activists are being harassed and arrested and placed under surveillance. Activists are talking about their e-mail and mail being disrupted.
It’s a logical next step, once the technology has been put into place for spying on terrorists, that it will be used on activists.
At a time when the U.S. government will take over a giant chunk of the U.S. economy, you have to understand that it is a very serious and dangerous time.
And while protests like the kind in Alaska are heartening, it is important to take to the streets. Civil disobedience like the kind taken by Dr. Martin Luther King is necessary now because people are being marginalized. It is what will give people leverage.
That is why at the end of my book, there is a section on protests. Martin Luther King went to jail for disregarding a restrictive permit system. I am urging people to use all the powers that they have.
BuzzFlash: We should point out that this is a handbook. You do articulate core principles of democracy, but the largest part of the book is on how to become a “Minuteman” or “Minutewoman” in 2008. It is important to restate that protests from a dedicated group of people for a righteous cause can have an impact. We only need to look back, as you mentioned, to the Civil Rights movement to see how dramatically people who put themselves on the line in protest changed the nation.
Naomi Wolf: You’re exactly right. You’re looking at the building blocks of oppression under this administration, and the thing about tyrants is that they don’t want to relinquish power. If people are intimidated by the police suppression, silence will lead to more and more encroachment and harassment.
I am really excited by efforts to ramp up the democracy memory by the efforts I am seeing on my book tour to form spontaneous groups to defend liberty, and there are 55 action steps at the back of the book to assist their efforts. At this point, it is going to take some radical actions to launch a movement to push back. As you and I have said before, there is a rampant disregard of the rule of law by those in authority. There are more and more dangerous abuses of power.
It is going to be a very dark future if we don’t rise up. This is about what we have to cherish as Americans...
The Battle Plan
...But historians are also now documenting the stories of how in the pre-Revolutionary years, ordinary people -- farmers, free and enslaved Africans, washer-women, butchers, printers, apprentices, carpenters, penniless soldiers, artisans, wheelwrights, teachers, indentured servants -- were rising up against the king's representatives, debating the nature of liberty, fighting the war and following the warriors to support them, insisting on expanding the franchise, demanding the right to vote, compelling the more aristocratic leaders of the community to include them in deliberations about the nature of the state constitutions, and requiring transparency and accountability in the legislative process. Even enslaved Africans, those Americans most silenced by history, were not only debating in their own communities the implications or the ideas of God-given liberty that the white colonists were debating; they were also taking up arms against George III's men in hopes that the new republic would emancipate them. Some were petitioning state legislatures for their freedom; and others were even successfully bringing lawsuits against their owners, arguing in court for their inalienable rights as human beings. This is the revolutionary spirit that we must claim again for ourselves -- fast -- if we are to save the country.
When Abraham Lincoln said that our nation was "conceived in Liberty" he was not simply phrasemaking; our nation was literally "conceived" by Enlightenment ideas that were becoming more and more current, waking up greater and greater numbers of ordinary people, and finally bearing on our own founders, known and unknown, with ever-stronger pressure.
Key Enlightenment beliefs of the colonial era are these: human beings are perfectible; the right structures of society, at the heart of which is a representational government whose power derives from the consent of the governed, facilitate this continual evolution; reason is the means by which ordinary people can successfully rule themselves and attain liberty; the right to liberty is universal, God given, and part of a natural cosmic order, or "natural law"; as more and more people around the world claim their God-given right to liberty, tyranny and oppression will be pushed aside. It is worth reminding ourselves of these founding ideas at a time when they are under sustained attack.
The core ideals, the essence, of what the founders imperfectly glimpsed, are perfect. I am often asked how I can so champion the writing and accomplishments of the better-known founders. Most of them were, of course, propertied, white, and male. Critics on the left often point out their flaws in relation to the very ideals they put forward. John Adams was never comfortable with true citizen democracy. "Jefferson's writings about race reveal that he saw Africans as innately deficient in humanity and culture." When a male slave escaped from Benjamin Franklin in England, Franklin sold him back into slavery.
But the essence of the idea of liberty and equality that they codified -- an idea that was being debated and developed by men and women, black and white, of all classes in the pre-Revolutionary generation -- went further than such an idea had ever gone before. It is humanity's most radical blueprint for transformation.
More important, the idea itself carries within it the moral power to correct the contradictions in its execution that were obvious from the very birth of the new nation. An enslaved woman, Mum Bett, who became a housekeeper for the Sedgwick family of Massachussetts, successfully sued for her own emancipation using the language of the Declaration of Independence; decades later a slave, Dred Scott, argued that he was "entitled to his freedom" as a citizen and a resident of a free state. The first suffragists at the Seneca Falls Convention, intent on securing equal rights for women, used the framework of the Declaration of Independence to advance their cause. New democracies in developing nations around the world draw on our founding documents and government structure to ground their own hopes for freedom. The human beings at the helm of the new nation, whatever their limitations, were truly revolutionary. The theory of liberty born in that era, the seed of the idea, was, as I say, perfect. We should not look to other revolutions to inspire us; nothing is more transformative than our own revolution. We must neither oversentimentalize it, as the right tends to do, nor disdain it, as the left tends to do; rather we must reclaim it.
The stories I read and reread of the "spirit of 1776" led me with new faith to these conclusions: We are not to wait for others to lead. You and I are meant to take back the founders' mandate, and you and I are meant to lead. You and I must protest, you and I must confront our representatives, you and I must run for office, you and I must write the opeds, you and I must take over the battle. The founders -- the unknown as well as the well-known Americans who "conceived" the nation in liberty -- did not intend for us to delegate worrying about the Constitution to a cadre of constitutional scholars, or to leave debate to a class of professional pundits, or to leave the job of fighting for liberty to a caste of politicians. They meant for us to defend the Constitution, for us to debate the issues of the day, and for us to rise up against tyranny: the American who delivers the mail; the American who teaches our children; ordinary people...
The end of America
Canada's premiers will play a pivotal role in the country's efforts to integrate its economy with the 27 nations of the European Union, Quebec Premier Jean Charest says.
Preliminary talks between Canadian and European officials will begin on Oct. 17 at a summit in Montreal. The provinces' role in the negotiations will be instrumental to the fate of the proposed massive agreement because it involves issues that primarily fall under their jurisdiction, Mr. Charest told The Globe and Mail yesterday.
No deal could happen without the premiers at the table, he said.
"Unless we are fully involved in the negotiations, we are not going to get the deal we want," Mr. Charest said.
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The MoJo Interview
MJ: How about your own religious evolution. When did you stop seeing the light?
BM: I don't want people to think that I was someone who was born rational. Because I don't think any of us are. There's a section in the movie, in the beginning, where I go back to the church that I attended as a child, and my mother, who was alive at the time, and my sister came with me, and I interviewed them there and asked them some important questions I had never really talked with them about, like we never had a family discussion about why mom never came to church with my sister and father and me. I didn't really realize that my mother was Jewish until I was a teenager. I just always accepted that she didn't go to church and the three of us did. After we quit going to church I certainly never became a Christian or Catholic again. But I did believe that there was something. I was constantly, like lots of people do, making deals with God; usually when you are in trouble in some way, you bargain. I was bargaining for quite a bit of my life, and that's a form of belief.
MJ: What do you do in those moments now, when you used to bargain?
BM: I'm f*ck out of luck, lady. I'm telling you. I've got nothing. I've cast my lot in with this movie and this idea and in a way, I've painted myself into a corner.
MJ: Is there a difference between Catholicism or Judaism and Scientology?
BM: It's interesting you raise that point. There's a section in the film where I go into Hyde Park in London. There's a section called Speakers Corner, where what I would consider nuts stand on little soap boxes and rave and rant and people can do it about anything, but a fair number of them are religious. So they put me into a disguise. I looked like a homeless nut, and I went into Hyde Park and I ranted and raved the tenets of Scientology, and Mormonism, and I believe it was Jehovah's Witness. Which most people are not familiar with, and they do sound like the rantings of a complete maniac. We were trying to make the point that when you take the tenets of religion and put them in mouth of street barker, you see how crazy they are. And then that they are not that different, certainly not that much crazier, than Christianity, mainstream Christianity. It's just that we're used to mainstream Christianity. We are used to the story of a man living inside of a well for three days, we're used to the idea that a space god impregnated a virgin and had a child who was really him, and sent him on a suicide mission to earth, which he survived. If Christianity were the new religion, we would consider it just as crazy as Scientology.
MJ: Even though you think religion is bunk, are you okay with people whose religious principles help them be better people, i.e., not violent jerks? In other words, do you have a problem with the Golden Rule just because it has a religious origin?
BM: No ethicist has a problem with the Golden Rule, of course, but we don't know why it has to be attached to ancient myths and superstitions. It's fabulous on its own; it didn't have to come down via a burning bush from a god who, if you actually read the Bible, wipes people out randomly and should not serve as anyone's ethic role model.
The US and other NATO countries have been deeply suspicious of the ISI role and their links with Taliban commanders. On this count, India too has been in conversation with US to somehow check ISI influence after the attack on Indian Embassy in Kabul. These factors have weighed heavily on Pakistan Army Chief Gen. Ashfaq Parvez Kayani who has sought to handpick officers for key positions.
The new ISI chief Lt Gen Ahmed Shuja Pasha is a Pashtun and in his previous assignment as Director General of Military Operations was in-charge of planning and executing military operations in NWFP, Swat and FATA areas. During Pervez Musharraf's tenure, he was instrumental in trying to broker a deal with various tribal groups which did not work as conceived.
In fact, he himself is from the Frontier Force and has a good four years left in service. As DG ISI, he will now be the nodal person for the CIA that has held serious doubts about the ISI's "dubious" role. With the Pakistan Army still reluctant to move in ground troops in large numbers, Pasha will be crucial to US and NATO assaults in that area.
~ Indian Express ~
Bader was stunned by the percentage of Americans - 55 percent - who said they were protected from harm by a guardian angel. "That was something that was a complete surprise because this is not a question, do you believe in guardian angels or do you believe in angels. This is a very specific question: Do you believe you have been protected from harm by a guardian angel? Do you believe you avoided an accident through the agency of a guardian angel? To find out that more than half of the American public believes this was shocking to me. I did not expect that."
The survey found that 45 percent of Americans report having at least two religious encounters (Ch. 6, "Religious Experiences: God Told Me to Go to Church"). Denomination matters, too. Conservative Protestants are more likely than liberal Protestants, Catholics or Jews to report religious or mystical experiences. However, these experiences are not limited to conservative Protestants. They occur with considerable frequency in nearly all religious groups. The survey also showed that women, African Americans and Republicans are more apt to have religious and mystical experiences.
~ more... ~
Obama and the Palin Effect
Sometimes politics has the uncanny effect of mirroring the national psyche even when nobody intended to do that. This is perfectly illustrated by the rousing effect that Gov. Sarah Palin had on Republicans. On the surface, she outdoes former Vice President Dan Quayle as an unlikely choice, given her negligent parochial expertise in the complex affairs of governing. Her state of Alaska has less than 700,000 residents, which reduces the job of governor to the scale of running one-tenth of New York City. By comparison, Rudy Giuliani is a towering international figure. Palin's pluck has been admired, and her forthrightness, but her real appeal goes deeper.
She is the reverse of Barack Obama, in essence his shadow, deriding his idealism and turning negativity into a cause for pride. In psychological terms the shadow is that part of the psyche that hides out of sight, countering our aspirations, virtue, and vision with qualities we are ashamed to face: anger, fear, revenge, violence, selfishness, and suspicion of "the other."
Deepak Chopra to discuss using creativity to find calm in turbulent world
Saving the U.S. economy through "Trickle Up" economics
The United States and Lebanon on Monday set up a joint military commission to bolster military cooperation — a move that follows the first visit by the newly elected Lebanese president to Washington.
The development comes against the backdrop of a Syrian troop buildup along Lebanon's northern border and follows bombings blamed on Islamic militants in the two neighboring Mideast countries.
The United States is a backer of Lebanon's army and has pledged more help since President Michel Suleiman's September meeting with President Bush. At the time, U.S. Defense Secretary Robert Gates was quoted as saying the Lebanese army was given nearly $400 million in military assistance. A further $60 million worth of aid, including helicopters, ammunition and Humvees, is awaiting Congress' approval.
A joint statement Monday by the U.S. Embassy in Beirut and the Lebanese army said the commission will provide an annual opportunity to discuss military cooperation. It also said the two sides signed three new military contracts worth $63 million in U.S. grants to the Lebanese army for secure communications, ammunition and infantry weapons.
Lebanese Defense Minister Elias Murr and U.S. Assistant Secretary of Defense for International Security Affairs Mary Beth Long led the commission's inaugural session Monday. Long arrived in Beirut Sunday, joining U.S. Deputy Secretary of State for Near East Affairs David Hale who has held separate talks with Lebanese politicians for several days.
The United States increased its military aid to Lebanon since the 2006 war between Hezbollah and Israel in an effort to bolster the government.
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California Gov. Arnold Schwarzenegger said the state is "not out of the woods yet." State Treasurer Bill Lockyer will go ahead with a planned $7 billion bond offering, but market conditions remain dire. "There are no guarantees the legislation will produce the market conditions that will permit completion" of the offering, Mr. Lockyer said in a statement.
Gov. Schwarzenegger said that if the state couldn't borrow on its own, it would again "go to the federal government and ask for help." He had sent U.S. Treasury Secretary Henry Paulson a letter Thursday warning that California might have to seek $7 billion in emergency federal loans until liquidity is restored in credit markets.
With credit frozen, California had enough cash reserves to last until Oct. 28, said Tom Dresslar, a spokesman for Mr. Lockyer. As a result, the state was prepared to seek initial loans of between $1.5 billion and $2 billion to cover expenses including payrolls for thousands of teachers, police, firefighters and other public employees. Mr. Dresslar said $7 billion in federal loans might be needed before next spring, when new state tax revenue will be flowing.
But after the U.S. House of Representatives passed a revised version of the bailout plan that was signed by President George W. Bush on Friday, California's cash situation may be eased. Mr. Dresslar said the state is hopeful "the credit paralysis will end and we'll be able to access those markets the way we normally do." He added that the U.S. Treasury has the authority to grant an emergency loan for the state and that the rescue bill reinforces those powers.
Some other U.S. states, counties and municipalities also are feeling the effects of the credit crunch. Massachusetts this week postponed a $750 million offering and suspended a separate sale of commercial paper, after the state was only able to raise $232 million of its $400 million target for short-term cash needs. North Carolina's Cumberland County planned to borrow $27 million this month and refinance another $63 million for construction projects. But the state is unlikely to move ahead because of market conditions, said a county spokeswoman.
~ more... ~
The collapse of a rescue deal for Hypo Real Estate on Saturday threatens a €400bn (£311bn) bankruptcy that nearly matches the Lehman Brothers debacle for sheer scale.
Chancellor Angela Merkel has been forced to pull her head out of the sand, guaranteeing all German savings, a day after she rebuked Ireland for doing much the same thing. Reality intrudes.
During the past week, we have tipped over the edge, into the middle of the abyss. Systemic collapse is in full train. The Netherlands has just rushed through a second, more sweeping nationalisation of Fortis. Ireland and Greece have had to rescue all their banks. Iceland is facing an Argentine denouement.
The US commercial paper market is closed. It shrank $95bn last week, and has lost $208bn in three weeks. The interbank lending market has seized up. There are almost no bids. It is a ghost market. Healthy companies cannot roll over debt. Some will have to sack staff today to stave off default.
As the unflappable Warren Buffett puts it, the credit freeze is "sucking blood" out of the economy. "In my adult lifetime, I don't think I've ever seen people as fearful," he said.
We are fast approaching the point of no return. The only way out of this calamitous descent is "shock and awe" on a global scale, and even that may not be enough.
Drastic rate cuts would be a good start. Central bankers still paralysed by a misplaced fear of inflation – whether in Europe, Britain, or the US – have become a public menace and should be held to severe account by our democracies. The imminent and massive danger is now self-feeding debt deflation.
The lesson of the 1930s is that any country trying to reflate in isolation will be punished. The crisis will ricochet from one economy to another until every one is crippled. We are seeing it play again in this drama as our leaders fail to rise above their narrow, parochial agendas.
~ more... ~
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