The American Bear

› Lies, Betrayals, Obfuscation | Norman Pollack

The People (imprisoned in their own fantasies, delusions, false consciousness) vs. Obama (skillful practitioner of deceit, war criminal) is no contest, given the political culture of acquiescence he has intensified and accelerated, through the pervasive atmosphere of counterterrorism on one hand, and worshipful gratitude to wealth-concentration and the structural hierarchy of power—founded on that wealth– on the other, on the shoulders of his predecessors, themselves adept at pushing the fortunes of advanced capitalism. A vicious circle, or perhaps dark hole out of which the public cannot climb, defines the present, with Obama the personification, the ideal leader, from the standpoint of ruling groups, in achieving the smooth integration of capitalism and militarism—the latter critical to the prevention of stagnation in the former. In today’s New York Times editorial (May 19), practically beseeching POTUS to take action on the climate issue, rather than slamming down hard on his dismal, indeed, treacherous, record, one sees the problem: abject dependence on a policy-structure rooted in the performance and systemic requirements of capitalism, whatever the quality, character, or decisions of leadership, and the consequences to the United States and the world at large.

[…] “…and no one doubts that he cares about it [the climate issue].” Is there any salutary position affecting a vital issue that Obama does care about? None. NYT misreads his record and intentions at every turn, climate change being an obvious case in point. Why persist with this delusion? Why grant heart and intelligence which, if only Republican obstruction did not exist, presumably would be resoundingly clear?

Face the reality, a deceitful president who would say anything to get elected and reelected, while supporting, by inaction as well as action, every vested interest working against the American people. [++]

› Deadly Manufacturing Mirage, Green-Red Alternative | Paul Street

[T]he fact that American and other global capitalists and their corporations increasingly find the U.S. to be a hospitable environment for manufacturing reflects the declining fortunes of the U.S. workers across the long neoliberal era (1970s to the present). The mass “off-shoring” (export) of formerly U.S.-based manufacturing jobs during that era did not occur because big “American” capital was interested in de-industrialization per se. It occurred because capital was interested in maximum profits and reduced costs – reduced labor costs above all. Capitalists who dismantled industry in the “high wage” and once heavily unionized United States were happy to promote a type of industrialization in “developing nations” – ultimately and above all “communist” China (endowed with spectacular supplies of newly available and super-exploitable labor power) – where low wages and weak worker protections promised higher rates of surplus value and profit. It was always implicit that some manufacturing might return to the U.S. if and when American unions were smashed and wages cut.

“U.S. Steel,” that company’s former Chairman David Roderick once commented in explaining why his firm was laying off workers and closing plants, “is in business to make profits, not to make steel.” That was a very candid statement of the cold reality of the profits system. “Rarely is the reality put with greater clarity,” notes the prolific Marxist analyst David McNally: “under capitalism, use is irrelevant; profit is king. Capitalist enterprises have no particular attachment to what they turn out, be it flat-rolled steel, loaves of bread, or pairs of jeans.”. An obvious fact should be added: capitalism has no particular attachment to turning out anything material or tangible in any particular country.

If manufacturing is reviving in the U.S. to any significant degree, it is not because of any particular commitment to the United States on the part of investors. It is happening because U.S. labor, materials, energy, transportation and/or other production costs have fallen so low that capitalists finally find it competitively advantageous to make more things in the so-called homeland.

› US House set to approve cuts to food stamp programme with new farm bill | guardian.co.uk

How to make sense of this. Hmm. How about:

[F]our little words that capture the grand, overarching political philosophy of the age:

Fuck Off And Die.

This is the lodestar guiding leaders of every political stripe across the breadth of western civilization. If you want to make your way through their billows of bullshit, hold fast to this phrase. It’s what they’re really saying to you.

› The End of QE? | Mike Whitney

› Richard Wolff Examines Class

Foreclosure in the United States today is in fact a classic example. Over the last thirty years, we have faced a phenomenon we never had before in the history of the United States. We have had rising real wages in America, roughly from the beginning of our history, up until the 1970s. If you worked hard, you got more money in your wage envelope at the end of the week. That was true for 150 years, that was really amazing, and no other country did that.

It stopped in the 1970s, because of computers replacing people, because of American companies moving abroad so they could pay lower wages, because of a mass movement of women into the labor force, immigration, and we went from a country with a chronic labor shortage to a country with a chronic labor oversupply. Employers no longer had to raise wages to keep workers working, to keep them happy, and keep them employed.

And as result, the American working people went into a kind of prolonged psyhic shock. Their wages weren’t rising any more. And so what they did was they turned to another source of money to realize the American Dream that they had been culturally developed to hope for, to expect, to promise to their kids.

They borrowed money like crazy. And the business community of the United States saw in the borrowing of the American working class a fantastic market to go after. You know in the 1970s, in the beginning, the only people who had a credit card were wealthy people or folks on business expense accounts. Starting in the 1970s, we gave credit to the mass of Americans. Everybody gets a credit card, and everybody can go to the bank to borrow to buy a home. Mortgage debt, credit card debt explodes.

It was a money-making extravaganza. We saw all the wealthy come together and get involved in this money. Bulding houses, lending workers at huge interest rates the money with which to buy the new and expensively built homes. Wealthy people poured their money in to companies that built these homes, furnished these homes, decorated these homes, and you had a literal explosion of profitability.

But of course. You can’t keep lending to working people if their underlying economic situation isn’t improving. So it was only a matter of time until the extra borrowing reached the limit of the underlying frozen, stagnant wages.

That was hit in 2007. Millions of Americans could no longer afford the houses that they had borrowed to buy. The foreclosure crisis represents the rage and anger of the wealthy class. If the underlying people they lent money to can’t pay for them, they’re going to take those houses back, throw those people out of their homes, and try to find another way to make money. Here’s a perfect example of the profit motive creating a housing boom that becomes a bust, and that now to recoup the money of the minority who invested in it, requires millions of people, the majority, to literally lose their homes, producing in the United States in 2010 and 2011, a society that has millions of empty homes, side by side with millions of homeless people. [++]

› The Radical Center and Armed Revolution | Rob Urie

It is a virtual certainty professional liberals and progressives were sitting behind their office desks only last year when the NYPD (New York Police Department) and Oakland police were beating the crap out of Occupy, firing projectiles into faces at point blank range and parking their motorcycles on the legs of NLG (National Lawyers Guild) observers for daring to protest the ‘liberal’ state / plutocrat nexus. This was in marked contrast to Federal and local police respect for the ‘rights’ of Tea Partiers to carry loaded weapons at rallies for their political ‘opposition.’ FBI and local police infiltration of Occupy, including illegal ‘pre-emptive’ kidnappings and all manner of dirty tricks, was immediate, intense and had the desired effect of creating paranoia and mistrust. And those efforts tie historically to the COINTELPRO facilitated murders of black leaders and radical disruption of the legal and constitutionally ‘protected’ rights of (real) leftist and anti-war organizations trying to affect substantive political change in the 1960s and early 1970s. But the grassroots Tea Partiers aren’t responsible for the different treatment they received– the institutions of the radical right in Federal and state government working in the interests of their ruling class patrons are.

› Financial Empire And The Global Debtors’ Prison | Jérôme E. Roos

Let there be no doubt about it: we live in the era of Financial Empire. Unlike the military conquests that drove the territorial expansions of the empires of old, contemporary Financial Empire consists not in the highly visible exercise of a Big Stick ideology (although military imperialism undoubtedly continues today), but rather takes the shape of an Invisible Hand. Where in the late 19th and early 20th centuries the logic of domination was driven by the instrumental power of imperial states, the Empire of the 21st century no longer needs any sticks to enforce the submission of sovereign states: through the global enforcement mechanisms of market discipline and IMF conditionality, the structural power of finance capital now ensures that all shall bow before the money markets.

In The Accumulation of Capital (1913), Rosa Luxemburg noted that, “though foreign loans are indispensable for the emancipation of rising capitalist states, they are yet the surest ties by which the old capitalist states maintain their influence, exercise financial control and exert pressure on the customs, foreign and commercial policy of the young capitalist states.” So great was this financial control that in the First Wave of Globalization, which ran from 1870 until the onset of WWI in 1914, defaulting countries faced a 40 percent chance of being invaded, subjected to gunboat diplomacy, or having foreign control imposed on their domestic finances under threat of a naval blockade. In a telling and ironic sign of the times, even the Hague Peace Conference of 1906 recognized the legitimacy of the use of force in settling sovereign debt disputes.

[…] Today, the imperial era of gunboat diplomacy may have come to an ignominious end, but the era of Financial Empire is still in full swing. What the ongoing European debt crisis confirms once more is that financial capitalism, once fully developed and globalized, has no need for debtors’ prisons, gunboat diplomacy or US marines to enforce debtor discipline. The iron bars of the debtors’ prison are replaced with the global flows of finance capital; the gunboats have long since made way for what Warren Buffet called the financial weapons of mass destruction; and the foreign administrators of tax and customs offices no longer wear military suits but carry IMF suitcases. Through its control over capital flows and its ability to withhold much-needed credit, the global bankers’ alliance (made up of the big banks and institutional investors, along with international financial institutions and the financial and monetary authorities of the dominant capitalist states) has obtained a form of structural power that allows it to discipline the behavior of indebted countries without having to resort to military coercion. It is this discipline enforced by global capital markets and financial institutions that forms the backbone of Financial Empire. [++]

› We Have Always Been Rentiers | Peter Frase

In my periodic discussions of contemporary capitalism and its potential transition into a rentier-dominated economy, I have emphasized the point that an economy based on private property depends upon the state to define and enforce just what counts as property, and what rights come with owning that property. Just as capitalism required that the commons in land be enclosed and transformed into the property of individuals, so what I’ve called “rentism” requires the extension of intellectual property: the right to control the copying and modification of patterns, and not just of physical objects.

But the development of rentism entails not just a change in the laws, but in the way the economy itself is measured and defined. Since capitalism is rooted in the quantitative reduction of human action to the accumulation of money, the way in which it quantifies itself has great economic and political significance. To relate this back to my last post: much was made of the empirical and conceptual worthiness of Reinhart and Rogoff’s link between government debt and economic growth, but all such disputations presume agreement about the measurement of economic growth itself. [continue]

› Time for Some Publicly-Owned Banks | Ellen Brown

The crossing of the Rubicon into the confiscation of depositor funds was not a one-off emergency measure limited to Cyprus. Similar “bail-in” policies are now appearing in multiple countries. (See my earlier articles here.) What triggered the new rules may have been a series of game-changing events including the refusal of Iceland to bail out its banks and their depositors; Bank of America’s commingling of its ominously risky derivatives arm with its depository arm over the objections of the FDIC; and the fact that most EU banks are now insolvent. A crisis in a major nation such as Spain or Italy could lead to a chain of defaults beyond anyone’s control, and beyond the ability of federal deposit insurance schemes to reimburse depositors.

The new rules for keeping the too-big-to-fail banks alive: use creditor funds, including uninsured deposits, to recapitalize failing banks.

But isn’t that theft?

Perhaps, but it’s “legal” theft.

… [U]nder the Bankruptcy Reform Act of 2005, derivatives counter-parties are given preference over all other creditors and customers of the bankrupt financial institution, including FDIC insured depositors. Normally, the FDIC would have the powers as trustee in receivership to protect the failed bank’s collateral for payments made to depositors. But the FDIC’s powers are overridden by the special status of derivatives. (Remember MF Global? The reason its customers lost their segregated customer funds to the derivatives claimants was that derivatives have super-priority in bankruptcy.)

… An interesting series of commentaries starts with one on the website of Sprott Asset Management Inc. titled “Caveat Depositor,” in which Eric Sprott and Shree Kargutkar note that the US, UK, EU, and Canada have all built the new “bail in” template to avoid imposing risk on their governments and taxpayers. They write:

[M]ost depositors naively assume that their deposits are 100% safe in their banks and trust them to safeguard their savings. Under the new “template” all lenders (including depositors) to the bank can be forced to “bail in” their respective banks.

Dave of Denver then followed up on the Sprott commentary in an April 3 entry on his blog The Golden Truth, in which he pointed out that the new template has long been agreed to by the G20 countries:

Because the use of taxpayer-funded bailouts would likely no longer be tolerated by the public, a new bank rescue plan was needed. As it turns out, this new “bail-in” model is based on an agreement that was the result of a bank bail-out model that was drafted by a sub-committee of the BIS (Bank for International Settlement) and endorsed at a G20 summit in 2011. For those of you who don’t know, the BIS is the global “Central Bank” of Central Banks. As such it is the world’s most powerful financial institution.

The links are in Dave’s April 1 article, which states:

The new approach has been agreed at the highest levels … It has been a topic under consideration since the publication by the Financial Stability Board (a BIS committee) of a paper, Key Attributes of Effective Resolution Regimes for Financial Institutions in October 2011, which was endorsed at the Cannes G20 summit the following month. This was followed by a consultative document in November 2012, Recovery and Resolution Planning: Making the Key Attributes Requirements Operational.

Dave goes on:

[W]hat is commonly referred to as a “bail-in” in Cyprus is actually a global bank rescue model that was derived and ratified nearly two years ago… . [B]ank deposits in excess of Government insured amount in any bank in any country will be treated like unsecured debt if the bank goes belly-up and is restructured in some form.

Jesse at Jesse’s Café Americain then picked up the thread and pointed out that it is not just direct deposits that are at risk. The too-big-to-fail banks have commingled accounts in a web of debt that spreads globally. Stock brokerages keep their money market funds in overnight sweeps in TBTF banks, and many credit unions do their banking at large TBTF correspondent banks:

You say you have money in a pension fund and an IRA at XYZ bank? Oops, it is really on deposit in you-know-who’s bank. You say you have money in a brokerage account? Oops, it is really being held overnight in their TBTF bank. Remember MF Global? Who can say how far the entanglements go? The current financial system and market structure is crazy with hidden risk, insider dealings, control frauds, and subtle dangers.

… Robert Teitelbaum wrote in a May 2011 article titled “The Case Against Favored Treatment of Derivatives”:

… Dodd-Frank did not touch favored status [of derivatives] and despite all the sound and fury, … there are very few signs from either party that anyone with any clout is suddenly about to revisit that decision and simplify bankruptcy treatment. Why? Because for all its relative straightforwardness compared to more difficult fixes, derivatives remains a mysterious black box to most Americans … . [A]s the sense of urgency to reform passes … we return to a situation of technical interest to only a few, most of whom have their own particular self-interest in mind.

But that was in 2011, before the Cyprus alarm bells went off. It is time to pry open the black box, get educated, and get organized.

› UNICEF: U.S. kids worse off than many of their Western counterparts

American children are on average worse off than children in Western Europe and barely better off than their counterparts in the Baltic states and the former Yugoslavia, according to a recent report from United Nation’s Children’s Fund (UNICEF) on the welfare of children in developed countries.

The report, which compares kids in 29 Western countries, measures well-being across five metrics: material well-being, health and safety, behaviors and risks, housing and environment, as well as education. It ranks the United States in the bottom third on all five measures of well-being and particularly low on education and poverty. The United States is joined at the bottom by “emerging” European economies, while the Scandinavian countries and the Netherlands come out on top. The report notes that this latter group of countries tends to spend far more per capita on social welfare programs.

(Source: azspot)

› Evil clowns Reinhart and Rogoff based their pro-austerity study on a butchered Excel formula | Lambert Strether