Thursday, December 18, 2008

Political Will, Political Won't (or Boy Are We In Deep Doo-doo)

This piece by Paul Chefurka gives an excellent overview of where we've been, where we are, and what we need to do. I don't need to add to it. I have reformatted to fit this space.

The article is reprinted whole with permission of the writer. (See permissions at the end of the article.)
Political Will, Political Won't
Today's environmental reform movement is founded on two core assumptions. The first is that most of the technical solutions we need to address the world's various crises are available, or at least could be swiftly developed by sufficiently intelligent, hard-working people. The second assumption is that all that's lacking for a successful outcome is the political will to put these technical solutions into effect.

Whether we're talking about replacing coal-fired power plants with wind turbines and using electric cars instead of SUVs, converting industrial agriculture to organic permaculture, or reversing the decline of ocean life though international regulations, it is an article of faith in the reformist environmental movement that we know what we need to do and all that's lacking is a sufficiently visionary leader to put more planet-friendly solutions in place.

Unfortunately, both those assumptions ignore significant aspects of the situation that considerably diminish the prospects that the reforms will succeed. This article examines those assumptions and uncovers the confounding issues.

Global Problems
Wicked Problems
The amount of carbon dioxide in the atmosphere is approaching 400 parts per million.

World oil production is on a 4 year plateau.

Ice caps and glaciers are disintegrating.

In the oceans the coral reefs are dying, dead zones are expanding, and predatory fish species (the ones we eat) have declined by 90% in the last 50 years.

The estimated extinction rate of plants and animals is at least 75 species per day.

Over 75,000 square miles of arable land is lost each year to urbanization and desertification.

A billion people in over 110 countries are affected by desertification.

On the American Great Plains, half the topsoil has been lost in the last hundred years, and the Ogallala aquifer is being drained up to 100 times faster than it is being refilled.

Indian farmers have drilled over 21 million water wells using oil-well technology. They take 200 billion tonnes of water out of the earth each year for irrigation.

We have eaten more grain than we have grown in 7 of the last 8 years, while world carry-over grain stocks declined from 130 days of consumption in 1986 to 53 days today.

The price of fertilizer is rising exponentially.

Climate change may cut African food production in half by 2020.

The cost of food is skyrocketing. Some countries have banned exports of wheat or rice.

We are in the beginning stages of a global financial crisis that could result in either a deflationary or hyper-inflationary depression lasting for a decade or more.
As the list of negative trends to the right clearly illustrates, the scale and diversity of the problems we face are significant. These sorts of problems are known as wicked problems: they are messy, circular, aggressive and interlinked, so that trying to solve one may worsen others. In some cases the trends have been visible for centuries (for example the loss of arable land and desertification), sometimes for decades (as with the loss of aquatic biomass), and some like Peak Oil for a scant few years. In all cases the global trends show no signs of reversing, however much effort has been expended to alter their local or regional trajectories . As their effects become more pronounced, it becomes easier to see their potential to hit our globalized industrial civilization like a planet-sized version of Hurricane Katrina.

As daunting as the individual problems are, the linkages between them are even more important. In many cases, trying to solve one problem can inadvertently make others worse. One prominent example is the attempt to address global warming through the use of ethanol as a vehicle fuel. While there may have been some merit to that primary intention, the secondary effects – increasing dead zones in the oceans due to fertilizer runoff, and rising food prices due to the use of food crops as fuel – eliminated the overall benefit of the effort, and even created a net negative outcome. One dark quip that addresses this sort of backfire is, "Around every silver lining there is a cloud."

It is obvious that dealing with the panoply of problems besetting our world involves considerably more than just knocking them down one at a time. If we don't apply holistic, system-level thinking to the converging crisis, our well-meaning efforts stand an excellent chance of making the situation worse. It is a mistake to think of "solving" these problems in any global or final sense. Some of them may be improved regionally, especially if they are not in conflict with other local problems. The logical corollary is that there will be other regions where those same problems cannot be solved, due to different local circumstances.

The big concerns, however, are those problems do not respect national or regional boundaries. Global warming and the death of ocean life affect us all, and failing to address these problems in any region can make the situation worse for everyone. In these cases, it's obvious that a collective global response is called for – a response that brings together the political, economic, industrial and opinion-making institutions of our world. If these institutions acted together they might have a chance of implementing the deep and wide-ranging changes the situation calls for.

Unfortunately, we have seen precious little evidence of such a collective response. For example, we have repeatedly seen climate change conferences break down or issue watered-down statements that fail to address the scale of the accelerating crisis. While individuals, citizens' groups and even some governments are obviously aware of the urgency, collective action repeatedly fails to gain the required global traction.

This state of affairs is no accident. This is not because of some dark and sinister cabal or conspiracy to hold back change in the name of personal profit, though there probably are some instances of that. The real reasons are at once more banal and more worrisome than the Bilderberg watchers assume.

In the next section we will begin to examine the reasons for this sorry situation.

Our Origins
There have been some remarkable recent discoveries about the quality of life in the times before modern civilization. We have always known that society back then consisted of hunter-gatherers, organized as tribes. The classical impression was that their lives were, in the words of Thomas Hobbes, "solitary, poor, nasty, brutish and short".

Recent research has shown that in fact hunter-gatherer societies enjoyed a remarkable quality of life characterized by low levels of effort, plenty of leisure time, good nutrition, low levels of disease, egalitarianism, very low levels of suicide, homicide and warfare, a high degree of personal autonomy and close-knit communities. In the words of anthropologist Marshall Sahlins, hunter-gatherers were "the original affluent society."

In one of our more damaging semantic restatements we have defined "subsistence" living as bad and "sustainable" living as good – even though in the context of a hunter-gatherer society, they mean exactly the same thing.
In order to understand the role that politics plays in our collective failure to address our predicament we need to examine the nature of modern civilization.

Now, when I use the term "modern civilization" I’m not just talking about the growth of industrialism over the last two hundred years or even the growth of Western culture over the last two thousand years. What we usually think of as modern civilization is the development, refinement and culmination of cultural changes that began ten thousand years ago. To understand who we have become we need to look back at who we were before we became "modern and civilized" and what happened to push us across that threshold.

Human beings have been around in one form or another for over two million years, first as Homo habilis, then as Homo erectus, and finally as Homo sapiens. For virtually all of those two million years, we lived in harmony with our environment. While it may not always have been a comfortable life (how could it have been, without color cable television or cars?), we were nonetheless perfectly adapted to our habitat. This statement is supported by two facts: over most of that period our presence caused little or no damage to the planetary biosphere; and during that time the human population was essentially stable, growing to only about five million in two million years – a net addition of a scant two people per year.

So here we have a species that was exquisitely adapted to its environment, living an affluent yet sustainable life, treading lightly on the earth, never outgrowing or overrunning its habitat, at least in terms of the species as a whole. We lived in harmony with our world for two million years, for 99.5% of the time we have been on the planet. Then suddenly, in the last ten thousand years – a mere 0.5% eye blink of time – our population increased over 1000 times, we decimated the earth's stocks of non-renewable resources, we cut down 90% of the planet's forests, we fished her oceans to the edge of extinction, and we live in a near-constant state of conflict with each other. In this grievously short time we have brought about all the wicked problems listed above.

So what the hell happened?

What Changed Us?
In a word, it was agriculture.

About 10,000 years ago humanity developed organized, settled agriculture. Starting from a small area in the Middle East, over the next few thousand years the world's predominant social model gradually changed as the new agricultural societies replaced hunter-gatherer or horticultural societies by means of displacement, absorption or genocide. We settled down (as one has to, to raise monoculture crops), and started to form larger social structures – villages, towns and cities. Nobody is precisely sure why we developed monocrop agriculture – after all, our previous ways of life had been perfectly satisfactory for millions of years. It may have been precipitated by climate changes, or growing populations in some areas, or it may have been just one of those things. Whatever the trigger was, the threshold of radical human change is clearly demarcated by fields of grain.

Humans and Resources
The most far-reaching change that came out of our development of agriculture was a heady awareness of our ability to control the world. For the first time in our two million year history we did not have to simply take whatever Mother Nature offered. We suddenly realized that we could control her bounty, we could coax, cajole and coerce her into providing what we wanted.

As we planted the seeds of millet and maize in the earth, we planted a very different seed within ourselves – the seed of a new idea about our relationship with the earth. We now saw our ability to control the earth's produce as a sign of our mastery, our ownership, our dominion. No longer would we need to be just another nexus in the web of life, now the web belonged to us. And just like any other possession it was ours to do with as we saw fit.

We came to the profound conclusion that the world consisted of only two broad classes of things: human beings and resources.

The Growth of Hierarchy
The shift to settled cultivation entrained a host of other changes. Our diet was dramatically impoverished. Levels of chronic disease and malnutrition increased. Levels of social violence escalated. And we witnessed the appearance of hierarchies that had not previously existed in our tribal social systems.

Anthropologists are still debating why the development of agriculture resulted in the simultaneous growth of social hierarchies. In my opinion it happened because the risk to farming communities from crop failures was very high. If the crops failed, these communities contained too many people to survive on local foraging or hunting – both because population densities were so high and because the habitat destruction caused by farming had reduced the amount of local wild food. There was also no way to bring in enough food from other unaffected regions. Therefore the risk of crop failures had to be mitigated. This mitigation involved many activities. For example, local hunting kept larger crop-eating pests at bay, irrigation helped in times of drought, and shamanic intercession took care of storms and blights.

Each of these activities of hunter, irrigation engineer and shaman was highly specialized in comparison to the more generic farming skills required for planting and harvesting. This specialization conferred power on the holders of those skills. This was especially true in the case of shamans, whose power could not be entirely learned, but was said to emanate from a mysterious connection with the supernatural. Their attempt to exercise control over nature gave the shamans the real ability to exercise control over other people ("Obey me or the gods will frown on us, and the crop failure will be your fault!"), and the first power hierarchies were born.

The Effects of Surplus
Centralizing the production of food and managing its distribution introduced new elements to the growing hierarchies. Since some of the food was needed by people who had no direct hand in producing it (such as weavers, shamans and granary guards), some means had to be found to give them equitable access to it. This meant we had to come up with a way of defining the relative values of different kinds of work, and to establish a medium of exchange so that people could obtain the amount of food their work was deemed to be worth. In one stroke the concepts of money and wages appeared. This of course transferred a lot of of power to those who established the value of work and controlled the money supply.

Yet another major impact of organized agriculture was the psychological effect of reliable food surpluses. For the previous two million years, our existence had been shaped by sustainable subsistence – our wants had been satisfied by the concept of "enough". People worked until they had enough, then they stopped. Now there was almost always "more than enough". This awareness caused yet another radical change in how we looked at the world.

The combination of food surpluses and a medium of exchange made trade for non-food goods possible. This trade enabled a continuous growth in the material comfort of peoples' lives, and it did not take long for them to become accustomed to this new state of affairs. As memories of the past faded over just a few generations, the new conditions of growing abundance were rapidly accepted as the "natural" order of things.

The Roots of Modern Civilization
We now had the three critical preconditions for "modern civilization": the belief that humans owned the world and all its products; the belief that continuous growth in material prosperity is the natural order of the universe and the birthright of humanity; and the belief that hierarchy is essential to manage the rapidly growing complexity of civilization.

Guardian Institutions
As always happens with hierarchies, power flows uphill. Along with it go the perquisites of power, the most important being the right to higher levels of material abundance than those lower in the pecking order. To ensure that this comfortable situation is maintained, part of the accumulated social power is used to protect the situation. This is done by strongly defending the three preconditions set out above. The people to whom this power flowed quickly realized that the status quo is most easily maintained if the rest of the community sees this situation as the only possible way life can work, and any suggestions to the contrary are the result of either some nefarious agenda or outright insanity.

Over time an interlocking system of guardian institutions grew up to protect and defend the three key ideas of ownership, growth and hierarchy:
  • Economic and financial institutions cooperate with business and industry to set the value of work and control the money supply (thereby controlling access to food). In this role it doesn't make any difference whether an economy is capitalist, socialist or communist. The core beliefs it guards are always the same: ownership and growth.
  • Educational institutions teach successive generations how the system works, giving them the tools to integrate into it and manipulate it, while at the same time training them to see this as the only possible way the world can work.
  • Communications media reinforce this message by enlisting people in the growth paradigm. They do this both through overt messages like advertising and covert messages embedded in the story lines of entertainment.
  • Religious institutions (as distinct from the religions they purport to enshrine) are primarily normative social structures. Many incorporate an overt message that we should be content with things as they are. There are often injunctions against questioning authority, as all authority is seen to devolve from the supernatural – just as it did for the shamans of the early agricultural era.
  • Legal institutions enforce the norms of ownership and hierarchy in ways too numerous to count. These range from the protection of privilege (one law for the rich, one for the poor) to the preferential defense of property rights over human rights.
  • Political institutions sit at the tip of the pyramid. Political institutions encode, enshrine and manage the application of social power. Politics is the institution that legitimizes all the others. Because of its unique ability to make laws and its access to legalized violence to defend those laws, politics is the fullest expression of the power hierarchy of modern civilization.

At the base of the hierarchy, supporting it all, are an ever-diminishing number of farmers who apply ever-increasing amounts of knowledge, technology and petroleum to ensure an ever-expanding supply of food. Because at the core it is their food that makes the whole edifice possible.

So where does this put us in relation to the array of wicked problems we listed at the beginning? Simply put, every one of those problems is the result of unbridled growth. They are the logical results of the continual exercise of the first two preconditions of modern civilization, the twin drummers of ownership and growth we have been marching to for ten thousand years since the invention of agriculture.

Politics is the problem, not the solution
In light of this analysis it is obvious why we are repeatedly failing to address any of these wicked problems. The only permanent "solution" to any of them is the secession of growth and the relinquishment of ownership. That idea is anathema to our guardian institutions. And as the occupants of the pinnacle of power, our politicians have every reason to derail efforts in that direction, no matter how small.

Politics, regardless of party or ideology, is part of the problem and can never be part of the solution. While it may be easier for the average person to live under the rule of a more humane parcel of rogues, at its heart politics is the primary guardian institution of modern civilization. The role of all politics is to manage power, and power is always managed for the benefit of the holders of power. It doesn't matter whether the power managers are Democrats, Republicans, Tories, Grits, Social Democrats, Communists or a military junta. They all fulfill the same role in service of the same beneficiaries.

In order to fulfill that role they unite with the other guardian institutions – the economic, industrial, legal, religious, educational and communications organizations. Together they create, maintain and guard a noetic milieu (a globalized intuitive, non-rational consciousness) in which any values that challenge the two fundamental preconditions to modern civilization are seen as incomprehensible, self-evidently absurd, dangerous or even insane. Since the primary value system these guardians protect is the paradigm of continuous material growth, the most dangerous of all radical ideas are any proposals to limit, halt or reverse that growth.

The guardian institutions are so firmly embedded in our global culture that it is ultimately fruitless to try and remove them from power by either direct or indirect confrontation. The penalties for trying this are severe and ruthlessly applied.

In light of this rather dismal assessment, is there any hope for a return to a sustainable, egalitarian, interconnected, considerate and just civilization? I strongly believe that there is, but getting there will be neither sure nor easy.

The institutions that stand between us and such a future are trapped by their dependence on the very paradigm they are sworn to protect. They defend the belief that permanent material growth is natural, possible and inevitable. While they defend that belief with laws, guns and television, ultimately their power comes from people who accept that premise. If people stop believing that such growth is possible the institutions' power declines, no matter how many defense mechanisms they engage. If growth falters, the people lose faith and the institutions crack and crumble.

Look back at the list of wicked problems. Every single one of them is the result of our growth encountering limits. While we may be able to figure out ways to temporarily circumvent some of these limits, the pattern is now clear. The growth of modern civilization is slowing down, and is even showing evidence of coming to a halt. For the guardian institutions that depend on growth for their very survival, this is like a diagnosis of terminal cancer.

What that means is that our guardian institutions will inevitably start losing their monolithic top-down power. This dis-integration will leave "cracks in the sidewalk of civilization". And just as grass grows through cracks in real concrete, small communities and individuals will start to appear through the metaphorical concrete of our industrial civilization.

No one can predict when, where or how the dis-integration will appear. It will take different forms in different places. The response of the guardians will probably be violently draconian in most cases. But there are places where communities have already formed in anticipation of such an opportunity. Like "Gaia's antibodies" they will work to heal the wounds, widen the cracks, and let the sunshine and fresh air revitalize the hidden earth. As the seed stock of the next phase of civilization they will spread their values on the wind.

The next cycle of human experience on this planet will be very different from any that has gone before. We will have fewer resources, but more knowledge. We will have to deal with toxic landscapes, a warming climate, shifting rainfall patterns and the emergence of new diseases. To balance that we will have better communications and longer memories than any civilization that has gone before us. We will not fall back into the stone age, but neither will we motor off happily into the sunset in our electric cars. There will be hardship and misery, but there will also be joy – the joy that comes from looking forward, from participating in our communities, from the love of those around us.

Above all, there will be the future.

I'm indebted to the writing of Daniel Quinn and John Zerzan, as well as to Riane Eisler for her book "The Chalice and the Blade". I'd also like to acknowledge the philosophy of Anarcho-Primitivism for its critique of civilization (though perhaps not for its suggested solutions).

September 3, 2008

© Copyright 2008, Paul Chefurka
This article may be reproduced in whole or in part for the purpose of research, education or other fair use, provided the nature and character of the work is maintained and credit is given to the author by the inclusion in the reproduction of his name and/or an electronic link to the article on the author's web site. The right of commercial reproduction is reserved.
Hat tip to a commenter at Climate Progress for his inappropriately long comment.

Thursday, October 23, 2008

Disaster Capitalism for Dummies

We are no longer waiting for The Perfect Storm to come, it is here. The outer bands are sweeping the beaches, the storm surge is lapping at the sea walls and breaches are occurring. But it's not just the economy, stupid. Keep in mind energy prices were the pin that popped the housing bubble. Keep in mind energy prices and environmental disasters drove the costs of food and fertilizer higher. This is a Perfect Storm of converging storms, large and small.

We have energy prices (at current "low" prices, they are still 3 - 4x prices in 2003) driving food, fertilizer, pesticide prices, bio-fuels creating havoc with food production, impacting funding for alternative energies, and slowing the economy.

We have weather disasters driven by Climate Change causing destruction we cannot seem to recover from (Katrina, Galveston) and reducing harvests in a number of areas, notably the US, Australia and Bangladesh.

We have the economic disaster (We *might* be in a recession? Freaking liars and/or idiots.) literally resulting in the nationalization of economies all over the globe. We have sold our nations to the bankers. All of this compounded by the wars in Iraq and Afghanistan, which had already been used as excuse to strip away our rights and freedoms, draining the coffers and dragging on the economy. Our ability to adapt to Climate Change, rebuilding as a sustainable society is deeply impacted. Global Warming is likely unstoppable simply because we will likely not be able to afford the transition.

We are in deep poop, people. The longer this goes without the We the Sheeple standing up and telling our leaders what to do, rather than being led to our own slaughter, the more likely there will be nothing but the ultra wealthy and powerful buying their custom built oases, fully staffed by Blackwater, and the rest of us baking in the sun scratching about for a few weeds to nibble on.

With regard to the Economic Storm, I don't think it can be said any better than this:

Wall Street's 'Disaster Capitalism for Dummies'

14 reasons Main Street loses big while Wall Street sabotages democracy

ARROYO GRANDE, Calif. (MarketWatch) -- Yes, we're dummies. You. Me. All 300 million of us. Clueless. We should be ashamed. We're obsessed about the slogans and rituals of "democracy," distracted by the campaign, polls, debates, rhetoric, half-truths and outright lies. McCain? Obama? Sorry to pop your bubble folks, but it no longer matters who's president.

Why? The real "game changer" already happened. Democracy has been replaced by Wall Street's new "disaster capitalism." That's the big game-changer historians will remember about 2008, masterminded by Wall Street's ultimate "Trojan Horse," Hank Paulson. Imagine: Greed, arrogance and incompetence create a massive bubble, cost trillions, and still Wall Street comes out smelling like roses, richer and more powerful!

Yes, we're idiots: While distracted by the "illusion of democracy" in the endless campaign, Congress surrendered the powers we entrusted to it with very little fight. Congress simply handed over voting power and the keys to trillions in the Treasury to Wall Street's new "Disaster Capitalists" who now control "democracy."

Why did this happen? We're in denial, clueless wimps, that's why. We let it happen. In one generation America has been transformed from a democracy into a strange new form of government, "Disaster Capitalism."

Here's how it happened:
  • Three decades of influence peddling in Washington has built an army of 42,000 special-interest lobbyists representing corporations and the wealthy. Today these lobbyists manipulate America's 537 elected officials with massive campaign contributions that fund candidates who vote their agenda.
  • This historic buildup accelerated under Reaganomics and went into hyperspeed under Bushonomics, both totally committed to a new disaster capitalism run privately by Wall Street and Corporate America. No-bid contracts in wars and hurricanes. A housing-credit bubble -- while secretly planning for a meltdown.
  • Finally, the coup de grace: Along came the housing-credit crisis, as planned. Press and public saw a negative, a crisis. Disaster capitalists saw a huge opportunity. Yes, opportunity for big bucks and control of America. Millions of homeowners and marginal banks suffered huge losses. Taxpayers stuck with trillions in debt. But giant banks emerge intact, stronger, with virtual control over government and the power to use taxpayers' funds. They're laughing at us idiots!
Amazing isn't it, Wall Street's Disaster Capitalists screwed up, likely planned or let happen this meltdown and recession. Yet America's clueless taxpayers just reward them by giving the screw-ups massive bailouts, control over more than $2 trillion of tax money, and the power to clean up the mess they made. Oh yes, we are dummies!

This end game was planned for years in secret war rooms on Wall Street, in Corporate America, in Washington and the Forbes 400. Democracy is too cumbersome. It had to be marginalized for Disaster Capitalism to take over. Reagan, Bush and Paulson were Wall Street's "Trojan Horses."
Naomi Klein summarizes the game in "Shock Doctrine: the Rise of Disaster Capitalism." This "new economy" generates enormous profits feeding off other peoples' misery: Wars, terror attacks, natural catastrophes, poverty, trade sanctions, subprime housing meltdowns and all kinds of economic, financial and political disasters. Natural (Katrina) or manmade (Iraq), either way "disaster capitalism" creates fortunes.

So you, me and the other 300 million better get out of denial. America is no longer a democracy. Voting is irrelevant. Best case scenario: We're a plutocracy, a government ruled by the wealthy, the richest 1%, the Forbes 400, the influential wealthy elite, while the other 99% are their "servants." Meanwhile, the inflation-adjusted income of wage-earners has declined for three decades.

Worst case scenario: America's no democracy and as a result of the meltdown and the surrender of our power to Wall Street's new Disaster Capitalism we are morphing into what one WWII dictator called "corporatism," a "merger of state and corporate power," kind of like what's going on now with Goldman Sachs' ex-boss as de facto president.
Wolves in sheep's clothing

Yes, a strong charge. But like a lot of our readers, I don't like what's happening to America. I'm a patriot. I volunteered for the Marines. Served four years. Volunteered for Korea. I don't like how our freedoms, rights and value system are being subverted in the name of greed, arrogance, self-righteous intolerance and other false gods.

We know for the last eight years disaster capitalists ignored obvious warnings of a coming meltdown. They apparently planned it. They road the bull, got very rich. Now they have the ultimate disaster capitalist weapons, trillions in tax money, virtual control of government.

That's why I fear we're on the edge of a dangerous line between Wall Street's version of disaster capitalism and a toxic "merger of state and corporate power." The wolf is in sheep's clothing. Wall Street pretends we're a democracy. Yet America more closely resembles the kind of "corporatism" that Laurence W. Britt wrote about five years ago in Free Inquiry magazine.

We adapted his historical analysis of 14 key traits for today's discussion. Notice how they have a huge impact your investments and retirement:

1. Wall Street rich get first priority
Think "bailout." Wall Street's greedy con game spins out of control globally. Millions of homeowners misled, lose. Who gets hundreds of billions first? Wall Street's con men.
2. National security obsession
Think of the expansion of executive powers in the name of national security: Preemptive wars, wiretapping private citizens, Gitmo, torture; driven by a dark wealthy neocon elite.
3. Superpower with massive military
Think of our $3 trillion Iraq/Afghan War. Disaster capitalists love the thrill of military power. We outspend all nations, over half the federal budget to strut before the world.
4. Extreme nationalism
Signs are everywhere: Flags, lapel pins, "support the troops" slogans, all to get huge military budgets passed. Challenge them and you're un-American and unpatriotic.
5. Rally the masses by scapegoating enemies
Think "axis of evil," mushroom clouds, "Islamofascists," more terrorist attacks on the homeland. Propaganda creates "enemies" in the public's mind and distracts from real issues.
6. Corruption and cronyism
Think earmarks, no-bid defense contracts, paid mercenaries outnumbering military in Iraq, superlobbyist Jack Abramoff, biofuels, bridge to nowhere, millions donated to campaigns.
7. Obsession with crime
Think of prison-building as just another investment opportunity, rather than focusing on reforming our criminal justice system. Stoke irrational fear of criminals and extremists.
8. Labor and low wages
Think corporate earnings versus the wages paid to workers. No "trickling down," leaves more for tricklers: Rich insiders, stockholders. Wages dropping as CEO salaries skyrocket.
9. Contempt for human rights
Think of abuses of habeas corpus, loss of right to trial, bogus charges, plus "demonizing" the victims, all in the name of national defense and homeland security.
10. Mass media manipulation
Think of leaking false information, Joseph Wilson, Valerie Plame, Scooter Libby, Colin Powell's United Nation's testimony, Condoleezza Rice's mushroom clouds, WMDs, all to suppress the truth.
11. Obsession with sexism
Think of paternalism, antigays, antiabortion, subordinate women -- then codify the system as the law of the land reinforcing a male-dominated society, punish violators.
12. Disdain for intellectuals
Think of conservative intellectuals Francis Fukuyama and Bill Buckley. Contrast them to Sarah Palin and Joe Sixpack conservatism, Bush's funding cuts for arts and science education.
13. Religion in government
Think of all the faith-based programs versus antiscience in drug approvals, creationism vs. evolution, Ten Commandments enshrined in public buildings, public money to churches.
14. Fraudulent elections
Think of police and prosecutorial intimidation and threats to voters, challenging minority voters, ballots disappearing, party election officials committing outright fraud.

Yes, officially America is still a democracy. We have enough signs and rituals to support that illusion. But the truth is America has become a plutocracy run by and for the wealthy. And since Wall Street's Disaster Capitalism coup de grace, we are rapidly morphing into a dangerous new government.

For more, read Britt's original article, then add comments here: Was the meltdown planned by Wall Street's Disaster Capitalists?

"America has become a plutocracy run by and for the wealthy."


And you are not invited to partake.

More info on "Shock Doctrine" from Naomi Klein:

The Shock Doctrine, the book.

The Shock Doctrine, Short Video

The Shock Doctrine, Long Video

Friday, October 3, 2008

Of Crashes, Failures and Bailouts - Round III

Should the Senate pass its revised version of the $700 billion bailout bill?

Yes - No
35% - 65%


Representative Sherman's remarks on the House floor at 8:07 PM EST, Thursday, Oct. 2nd:

The only way they can pass this bill is by creating and maintaining a panic atmosphere. That atmosphere is not justified. Many of us were told in private conversations that if we voted against this bill on Monday... the markets would fall 2 or 3,000 points the first day, another couple thousand the second day, and a few members were even told that there would be Martial Law in America if we voted no.
This is what is driving the debate, the vote: Fear. It is what we have seen for the last 7+ years. Are you not tired of the lies?

UPDATE: Rep. Sherman also spoke again at 8:23 AM Friday morning. He points out again the pork and the fact the "oversight" is B.S.: the Congress has no power to enforce. He says again: let's stay here a week and develop a GOOD bill.

Let's review:

Claim by Paulson, Bernanke, Bush, McCain, et a.: The economy is fundamentally strong. Paulson: It's contained.

Reality: Obviously false.


Claim: Paulson, Bernanke, Bush, et al.: We must act now. We don't have weeks. There will be financial disaster and Martial Law.

Reality: Obviously false.
  1. It's been more than a week.
  2. Secret conference call assures Wall Street first funds won't be used for a couple weeks while they decide who lives and who dies. Also, provisions have no teeth; all 700 billion will be available immediately.
Here's some more on that secret conference call. (Hat tip to Leanan at The Oil Drum.):

Financial Eugenics: The Paulson Plan for Survivor Bias

As I write this... I suspect that Congress will force the passage of the bill in some form because the media and political narrative on the necessity of the measure is unremitting and so horribly biased.

No alternatives will be considered.

No constraints on the unilateral executive authority of Hank Paulson will be considered.

No assurances that funds will be used to unlock credit markets or promote lending to the real economy (as opposed to the financial robber barons) will be considered.

...Having listened to all 42 minutes of the late night Treasury briefing of investment banks on Sunday, there is no doubt in my mind that this legislation represents the sort of federal largesse for Goldman Sachs, Morgan Stanley, Citibank and JPMorgan Chase that the Iraq war provided for Halliburton and Blackwater.

The most cynical moment in the call is when the Treasury official confirms, ”our preference would be to help the healthy banks become even healthier” rather than helping troubled banks or illiquid banks.

America is now a centrally planned economy where the Treasury will determine which firms survive and prosper...

Clearly what is going on here has nothing to do with kick starting the credit markets or stabilising the equity markets or restoring depositor confidence in banks. (Treasury official: “No provision in the legislation that mandates re-lending.”) What is going on here is a blatant attempt to provide government funds to a select cadre of firms (not all banks) which are chosen to be the survivors feasting off the carcasses of their less fortunate and less well-connected brethren as the downturn intensifies in the years to come.

The crash in equities will still happen. The debt deflation of the economy leading to mass commercial and consumer credit defaults will still happen. The collapse of many national, regional and local financial institutions will still happen. The bankruptcy of many municipalities and shortfalls in state budgets will still happen.

This bill is about engineering survivor bias to friends of the Bush administration... and unconditional authority of the Secretary of the Treasury.

...The SEC will support the plan and survivor bias by relaxing FASB 157 on mark to market accounting...

The Federal Reserve will support the plan by relaxing the definition of “control stake” in US banks and bank holding companies to allow secretive cabals to hold through private equity and offshore hedge funds... Many foreign creditors are irate at the losses... and this plan provides a secret way to buy them off and keep them lending and investing...

I would like to believe Americans expressed the courage to change over last weekend when they 25 to 1 rejected an unconstrained and unconditional bailout of Wall Street in favour of cold turkey deleveraging of the economy. I wish I could believe that it mattered in the political calculus, but the result of the House vote on the bill will tell us that.

Fight the survivor bias. It’s not your survival they’re engineering.

Claim: $700 billion will save us.

Reality: The Fed, a.k.a. Helicopter Ben, put over 60o billion in play and it did... nothing.


Claim: This will save Main Street.

Reality: Obviously false. There are mortgage resets coming for the next two or three years. That means this problem will just grind on and on... and this bill does NOTHING about that.

In fact, foreign investors get relief. I stated earlier this is inappropriate. It is likely unconstitutional. And why threaten veto if the provision is taken out? How can it possibly be of urgent interest to Americans? Sure, the world economy is important,but the ENTIRE WORLD is going to implode if this isn't passed this week? I've got a bridge to sell ya...

And who's buying banks and insurance companies? B of A, Goldman Sachs, JP Morgan... etc.... all buying, not selling. Buying assets and leaving liabilities... to YOU:

AIG to sell as many assets as needed to pay bailout

As Big Banks Converge...
Citigroup Inc.'s decision this week to gobble up most of ailing Wachovia Corp. is the latest in a string of blockbuster acquisitions that have transformed the banking landscape. A huge chunk of consumer deposits are now consolidated in three banking behemoths -- Citigroup, Bank of America Corp. and J.P. Morgan Chase & Co. -- not known for wooing consumers with high interest rates and low fees.

Wells Fargo to acquire Wachovia for $15.1 billion in all-stock deal, ends Citigroup talks


Claim: Not acting will cause a recession.

Reality: We have been in recession since the last quarter 2007 according to some, and virtually never got past the recession of 2001 according to others. The people saying we are not in a recession are in the government or neo-con pundits.

Chart of Growth in U.S.Gross Domestic Product (GDP)

Chart of U.S. Consumer Inflation (CPI)

Chart of U.S. Unemployment

And guess when the money supply started drying up. Last week? No.... Check out M3, which Bush stopped reporting in 2006 because it was "too expensive" to report and not important:

Chart of U.S. Money Supply Growth


Ex-Treasury secretary O'Neill says Bailout Plan 'crazy,' 'lunacy'
Former U.S. Treasury Secretary Paul O'Neill said the $700 billion bank-rescue proposal under negotiation in Washington is "crazy," with potentially "awful" consequences for the world's largest economy.

"Doesn't this seem like lunacy to you?" said O'Neill, who was President George W. Bush's first Treasury chief, from 2001 to 2002, in a telephone interview Wednesday. "The consequences of it are unbelievably bad in terms of public intrusion into the private sector."

O'Neill's objections mirror those of Republicans in the House of Representatives who rejected the plan in a Sept. 29 vote. The former Treasury chief said he lobbied for an alternative solution that would offer guarantees for troubled assets, stopping short of purchasing the debt.

"Is anybody thinking there?" asked O'Neill, who also served as deputy budget director in the Ford administration. "It's too late, it's not going to make any difference and it's aggravating as hell when there's a better idea and you can't even get it in play," he said.

O'Neill, 72, was fired after an almost two-year tenure marked by strains with White House officials and comments that roiled markets.
Peter Schiff and Bob O'Brien on Glenn Beck: Causes and What the Future Holds

Great comments at:
3:10: GDP top drop 10% ~ 15% over next 12 ~ 15 months (Beck)
7:40: Govt' made it easy to borrow instead of work hard (Schiff)
8:09: - Gov't atfault - For years gov't kept things artificially supported... money supply... stopped working a few months ago... now engineering price of't actions pernicious, untested (O'Brien)

This is from an e-mail I got from

The Senate's 74-25 vote for Paulson's Plunder came as no surprise, since the Senate is run by and for millionaires. So now it's back to the House of Representatives, where we shocked those millionaires on Monday by defeating their bailout bill by 228-205.

A terrified army of corporate lobbyists is working around the clock to switch 13 votes, but only 7 have switched so far - Jim Ramstad (R-MN), John Shadegg (R-AZ), Zach Wamp (R-TN), Ileana Ros-Lehtinen (R-FL), Shelley Berkley (D-NV), Emanuel Cleaver (D-MO) and John Lewis (D- GA). Other possible switches include Pat Tiberi (R-OH), Pete Hoekstra (R-MI), John Yarmouth (D-KY), Brian Bilbray (R-CA), Steve Rothman (D-NJ), Lee Terry (R-NE), Jim Gerlach (R-PA), Tim Murphy (R-PA), Jason Altmire (D-PA), and Gabrielle Giffords (D-AZ). But others may switch from Yes to No, including Ed Markey (D-MA), Charlie Melancon (D-LA), and Spencer Bachus (R-AL).

Bush's first Treasury Secretary, Paul O'Neill, called Paulson's plan "crazy" and "lunacy" with potentially "awful" consequences for the world's largest economy. Many of the best economists agree with O'Neill. Paulson's strongest supporters - including panicked CNBC hosts - now admit it will not raise stock prices or boost the economy as it falls into recession. Then why on earth should we give $700 $850 billion of our tax dollars to Wall Street??? Joe Lieberman gave away the real game when he told FOX " it will be good for John McCain."

With so much at stake, Congress should stay in session for another week (or two) to pass a much better (and cheaper!) plan proposed by Pete DeFazio (D-OR). But Congress desperately wants to go home so Friday may be our last chance to stop this $850 billion disaster .

(1) Call your Representative today!
First check how your Representative voted on Monday (and note switches above):
If (s)he voted NO, say "Thank you for helping stop the Bailout on Monday. Don't betray us now by voting YES on Friday, or I will vote NO against you on Election Day."
If (s)he voted YES, say "I'm outraged that you supported the Bailout on Monday, and I will remember on Election Day. If you want my vote on Election Day, you must vote NO on Friday."

(2) Join or organize a street protest against the bailout:


Wednesday, October 1, 2008

Bailout Alternatives

Are your reps in Congress listening to you? Scroll down the front page of to vote. (Thanks to Geckolizard at The Oil Drum.)

Should the Senate pass its revised version of the $700 billion bailout bill?

If you're going to complain about what's wrong, you should be willing to talk about what's right. So, here are the plans that might help.

Rubini's plan on CNBC Look for the video called "HARDTalk US Bailout Special."

Congressman Defazio's plan: No Bailouts Act

Karl Denninger's Genensis Plan:
The solution to the trust issues in our financial system is elegant and it will work.
1. Force all off-balance sheet "assets" back onto the balance sheet, and force the valuation models and identification of individual assets out of Level 3 and into 10Qs and 10Ks. Enact this requirement beginning with the 3Q 2008 reporting period which begins next month.

Total taxpayer cost: $0.00

2. Force all OTC derivatives onto a regulated exchange similar to that used by listed options in the equity markets. This permanently defuses the derivatives time bomb. Give market participants 90 days to get this done; any that are not listed in 90 days are declared void; let the participants sue each other if they can't prove capital adequacy.

Total taxpayer cost: $0.00

3. Force leverage by all institutions to no more than 12:1. The SEC intentionally dropped broker/dealer leverage limits in 2004; prior to that date 12:1 was the limit. Every firm that has failed had double or more the leverage of that former 12:1 limit. Enact this with a six month time limit and require 1/6th of the excess taken down monthly.

Total taxpayer cost: $0.00
And more...

If you like one of these, put it in the ear of your Rep/Senator.

Tuesday, September 30, 2008

Of Crashes, Failures and Bailouts - Round II

UPDATE: Tell your Reps and Senators to vote for this instead: The Genensis Plan. Primary elements:
The solution to the trust issues in our financial system is elegant and it will work.
1. Force all off-balance sheet "assets" back onto the balance sheet, and force the valuation models and identification of individual assets out of Level 3 and into 10Qs and 10Ks. Enact this requirement beginning with the 3Q 2008 reporting period which begins next month.

Total taxpayer cost: $0.00

2. Force all OTC derivatives onto a regulated exchange similar to that used by listed options in the equity markets. This permanently defuses the derivatives time bomb. Give market participants 90 days to get this done; any that are not listed in 90 days are declared void; let the participants sue each other if they can't prove capital adequacy.

Total taxpayer cost: $0.00

3. Force leverage by all institutions to no more than 12:1. The SEC intentionally dropped broker/dealer leverage limits in 2004; prior to that date 12:1 was the limit. Every firm that has failed had double or more the leverage of that former 12:1 limit. Enact this with a six month time limit and require 1/6th of the excess taken down monthly.

Total taxpayer cost: $0.00
And more... read it.


Denninger on Bailing out Foreign Companies: Real reason for bailout?

(Another website on the same issue.)

I doubt it is THE real reason, but many nations hold US treasuries and they may be threatening to sell them, which would destroy the dollar overnight. It's a real risk, enunciated by the Chinese a few months ago: The so-called Nuclear Option. It is VERY interesting that Paulson says any bill without bailouts for foreigners will be vetoed.

Like Denninger, I ask: Wasn't this supposed to be about helping Americans? What the hell business do we have socializing foreign companies??? I can't even begin to imagine how much debt that means for US taxpayers.

I think it is very instructive that such a pernicious item in the bill is not being covered by the mainstream media.


- You're being lied to! -

UPDATE: Excellent comments from Chomsky, via The Oil Drum:

...This wonderful anti-market system designed by self-proclaimed market enthusiasts is now being implemented in the United States, to deal with the very ominous crisis of financial markets. In general, markets have well-known inefficiencies. One is that transactions do not take into account the effect on others who are not party to the transaction. These so-alled "externalities" can be huge. That is particularly so in the case of financial institutions. Their task is to take risks, and if well-managed, to ensure that potential losses to themselves will be covered. To themselves. Under capitalist rules, it is not their business to consider the cost to others if their practices lead to financial crisis, as they regularly do. In economists' terms, risk is underpriced, because systemic risk is not priced into decisions. That leads to repeated crisis, naturally. At that point, we turn to the IMF solution. The costs are transferred to the public, which had nothing to do with the risky choices but is now compelled to pay the costs - in the US, perhaps mounting to about $1 trillion right now. And of course the public has no voice in determining these outcomes, any more than poor peasants have a voice in being subjected to cruel structural adjustment programs.

A basic principle of modern state capitalism is that cost and risk are socialized, while profit is privatized. That principle extends far beyond financial institutions...

UPDATE: New video from Karl Denninger: $700 billion Bailout Watch 9/30.

UPDATE: Senate attaching tax cuts to putlipstick on the pig. don't mind the tax cuts, but they're meaningless in terms of the bailout. This is bribery, pure and simple.

UPDATE: Did you fax or sign/send a petition? Do some checking here. Some good commentary/info, too:

It's Tuesday morning (now night/Wednesday morning) where most of you are, and Thursday - Ooops! Wednesday! They REALLY don't want you to have time to study this! - will bring another attempt to usurp the power of the People of the United States of America and force them to pay for the bills of the nation's richest people. Of course, with most of the wealthy paying literally no taxes, we already are. But this is ridiculous!

There are a few things you need to know:
This bailout was preplanned according to the official White House Spokesman, Tony Fratto:
Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough.
If this possibility was discussed for "weeks and months," why are lawmakers just hearing about it? It is quite normal for there to be behind-closed-door meetings between the Executive Branch and the Legislative. Why present this as an eleventh hour, not-time-for-due-process emergency? The why in a moment. More of the how.

First, we were told - a week ago - if this package wasn't passed immediately, the economy would crash. Where is the crash? Sure, we had a stock market drop of historic proportions, but it wasn't a crash and one third of the losses on Monday happened before the "No" vote. But let's not get distracted: Where is the derailed economy?

Second, not only have we had no crash, not only did they put this package together over "weeks and months", but we find out the Treasury had a secret conference call with Big Money in which they stated... wait for it... the money isn't needed for weeks. To wit:
Greenwald has explosive news:
UPDATE III: Matt Stoller has some important revelations and observations about today's vote -- here. The "private" conference call which Treasury Department officials held with Wall St. analysts (and which bloggers infiltrated) referenced by Stoller is revealed in detail here.
Say what? A private call between Treasury and Wall St.? Um... are THEY voting on the King Henry Paulson Bailout, Socialism and Welfare for Bankers and Financiers Act? No. Hmmm... so just what was said, then? Here's a bit:
1. The tranching is a mere formality...

2. However, they do not plan any action immediately, will wait a couple of weeks... They want to focus their efforts on stronger companies but also made noise about protecting the financial system...

5. The exec comp provisions sound like a joke, They DO NOT affect existing contracts, they affect only contracts entered into during the two years of the authority of this program and then affect only golden parachutes...
But what I really want to know is, why is this call happening at all? The people who created this mess have no business having anything to do with cleaning it up. (This leads to a serious problem with Paulson, Bernanke and Bush, but more on that further down.)

Third, here's what Karl Denninger, one of those predicting this crash for a long time, observed about Monday:

Bernanke ProvedPauslon Plan Bankrupt

Thank God we got a "NO" vote today folks.

No, not because the market tanked.

And no, I was not short up to my eyeballs.

I scalp traded the morning but was out when the blowup came, as I didn't expect it - I really did think the bill would pass, my and many other's efforts to stop it notwithstanding.

No, the real news is found here:

"Sept. 29 (Bloomberg) -- The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

The Fed's expansion of liquidity, the biggest since credit markets seized up last year, came hours before the U.S. House of Representatives rejected a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone."

Now let's think about this folks.

The Fed threw $630 billion into the market before the vote, and yet the S&P 500 was down 40 handles anyway, and in fact tanked after the vote.

Note carefully - Paulson's plan was $700 billion, and Bernanke spent $630 billion - almost the entire amount proposed - but failed to fix the problem.

Got it?


Now do you see what I've been saying?

People, you are being lied to. There is no emergency. They sky is not falling. (Well, it is,but not the way they say it is.) So, why they rush? Does this remind you of anything? Say, the Patriot Act? That sure turned out well: Don't read it, just vote! What was it Fratto said up there? They don't need much timeto think about it?

This legislation will have profound effects on this nation and the world. It is a prime determiner of how deep and how long this recession/depression/collapse will be. And at the end of the day, it's robbing you to pay for Wall Street's bankruptcies. This is socialism on a massive scale. This is nothing more than a flow of money and capital into the hands of the richest, most powerful people in the country. And, as Fratto said, it's no accident. They knew this was coming the entire time they kept saying the economy was "sound" and "fundamentally strong."

- You're being lied to! -

All of this is so complex nobody, and I mean literally nobody, can say how much rotten debt is out there or who has it. Nobody can figure out how to let the market - the God of all on Wall Street, BuCheney and Republicans - solve its own problems, but it's something that can be reviewed and voted on in a day?

- You're being lied to! -

Martial Law, And You're Not Invited
Did you know Pelosi could invoke Martial Law and institute new rules in the House? She did. Normal processes were subverted, meeting not held, Congresspersons not consulted. This bill was made available for a mere 24 hours. That's enough time for our Representatives to read through it, consult their experts, discuss it with their constituents, right? And it's enough time for you, a layperson, to figure it all out and advise your Congressperson how to vote, right?

Wrong. This isn't democracy, especially when these extraordinary actions, as we've already seen above, are based on a false emergency. Yet another lie from this Administration and its henchmen.

- You're being lied to! -

Background Check
Who caused this problem? There were many players, but there a couple of events/actions/choices without which this could not have happened. In reality, it all started with the beginning of fractional banking long, long ago and the duplicitous creation of the Fed in 1913 under cover of night on Christmas Eve. You can learn more about those events here, but those are not our topic just now. We're concerned with more recent events.

First among these was the elimination of the Glass-Steagall Act in 1999.

Now then, let's first examine the nuts and bolts of this law. What this law did was break the figurative wall between banks, brokers, insurance companies and other financial services companies. The Glass Steagall Act, among many things, separated all sorts of financial services and placed careful limits on what sorts of financial services anyone company can perform.

The Glass-Steagall Act of 1933 established the Federal Deposit Insurance Corporation (FDIC) in the United States and included banking reforms, some of which were designed to control speculation.[citation needed] Some provisions such as Regulation Q that allowed the Federal Reserve to regulate interest rates in savings accounts were repealed by the Depository Institutions Deregulation and Monetary Control Act of 1980. Provisions that prohibit a bank holding company from owning other financial companies were repealed on November 12, 1999

As you can see, that wall was broken down with this act.
The stage was set for massive levels of abuse. It has taken less than ten years for that act play a major role in propelling the US into financial chaos. Thank you, Bill Clinton. I used to be a fan.

The next step in creating the current meltdown was the monetary policy of George Bush and Alan Greenspan. Afraid of letting the nation go through recession early in his term, and especially after 9/11, Bush wanted the economy stimulated. Go shopping, he told us. And Greenspan obliged by keeping interest rates so low money was literally essentially free for lenders. No risk was too high when every cent paid in return was pure profit.

Part of the mantra was that everyone should be able to buy a home. Greenspan kept rates so low, virtually anybody could. Just months before beginning to raise rates to slow down the housing bubble he started, he was telling lenders to find ever more creative ways to write mortgages. Incredible, no? Bush did his part by having his administration enforce... pretty much nothing.

With little or no regulation and extremely low interest rates, lenders of all stripes gave home loans to almost anyone who had a job. This was an inherently risky business. Top spread risk and to get the loans off their books so they could write more loans (far more money is earned in the short term by loan fees than by interest earnings), financiers got creative and created an alphabet soup of financial investments (CDOs, SIVs, etc.). They took loans, put them all together in one portfolio and sold them. Investors liked the income from payments and lenders got rid of their balances and their risk. But these things were sold and resold. The values never accurately assigned.

As home prices skyrocketed, a huge, huge new financial market was created, but all out of thin air. As more and more loans failed, these instruments became more toxic. And they failed, and are failing in great numbers because the loans were given to people who could not afford them and because the terms of the loans trapped people with sudden rises in payments. For example, many of the loans were interest only with the payments set to reset after a period of a few years. The new payment is often double or more the payment before. But all those buyers thought they'd be able to refinance. But then the bubble burst, resets started knocking people out of their homes and the economy started sliding.

And here we are.

Foxes in The Hen House
Who is Paulson? He is formerly of GoldmanSachs. Yes, that Goldman Sachs.

Forty years ago there were almost no investment banks, securitised debt or derivatives. The huge increase in global liquidity and credit since the early 1980s has been almost exclusively driven by investment banks through the creation of securitised debt and derivatives, which now represent nearly 90 per cent of total liquidity.

At the beginning of the year there were five major US investment banks - Goldman Sachs, with assets of US$1061 billion (or US$1.06 trillion), Morgan Stanley US$1045 billion, Merrill Lynch US$1020 billion, Lehman Brothers US$689 billion and Bear Stearns US$424 billion.

Bear Stearns and Lehman Brothers have disappeared and Merrill Lynch is being taken over by Bank of America. These companies created a huge amount of toxic securitised debt and derivatives that have plunged in value.

So we now have the former CEO of Goldman Sachs, of one of the creators of the FrankenDebt destroying the financial system, in charge of fixing the problem. But you don't hear this from Paulson. You don't hear it in the mainstream media. But Paulson IS the fox in the hen house. This is an obvious conflict of interest. He should be nowhere near the plan.

And he wants no oversight and no possibility of involvement of the Judicial Branch in this crisis he helped create? He's already bending the rules to bail outer Sterns, etc. How much more so if given carte blanche?

We already mentioned Bush and Greenspan. How about Obama and McCain? Why do they support this? Well, McCain is easy to figure: his wife is filthy rich and he's been a free-market, no regulation guy forever. Ever heard of the Keating Five Savings and Loan scandal? McCain. What about Obama? What happened to his populist beginnings? Read here.

There is so much more we could talk about, but there isn't time. You need to act, and act now, so I'm sending this to you. PLEASE, contact your reps/senators. You can find contact info here:

Let them know you're mad as hell, and you're not going to take it anymore!

Those who have been right all along say NO! and HELL NO!


Peter Schiff
Bailout cure worse than disease
By Peter Schiff

...Though the government and Wall Street assure us that these bold moves will save the housing market, and the economy as a whole, from collapse, the reality is that the solution is far worse than the problem. As painful as the failure of Freddie and Fannie would have been, bailing them out will hurt even more. In other words, it's not the disease that will kill us but the cure.
...By taking all of the risks out of mortgage lending (provided of course that the loans are conforming), the government is telling lenders not to worry about the loans they make because if borrowers do not repay, the government will.

...As a result of this bailout bill, the share of mortgages owned or insured by Freddie and Fannie will likely swell from near 50% today to over 80% within a year or two, turning a $5 trillion problem into a $10 trillion fiasco...

The grim reality is that trillions of dollars were borrowed and spent that will never be repaid.

...CNBC once nicknamed me "Dr Doom", but compared with what I see coming now, they should have then called me "Dr Sunshine". Take a look at a presentation I made back in November 2006... (Click here to watch the video on YouTube. )

Every real estate prediction I made at that conference, which was considered outrageous at the time by those in attendance, has already come true. As confident as I was then about this impending crisis, I am even more confident now that the government has just thrown gasoline onto the fire

(Copyright 2008 Euro Pacific Capital.)
Karl Denninger - Website Forums YouTube Channel

The Automatic Earth
Debt Rattle 9/30/08

The real world drama, the one not made for TV, certainly carries a lot more tragedy. We are living in the days of falling records, which will in time lead to the days of falling people.

As Wall Street fell more than it ever has in history, US home prices kept on plunging at an uncharted pace. But that’s all just a side show compared to what happens in money markets. Lending rates are surging to new highs so fast it’s time to get dizzy. It makes no difference anymore that central banks unleashed another $620 billion into the black hole, credit is utterly frozen.

For comparison, stock markets lost $1.2 trillion yesterday. Do you need a better proof that what goes in the House over $700 billion is posturing, and bad drama posing as reality TV? Money and credit is leaking out of the world economy so fast you'd need a Paulson plan every single day to keep it cranking along.

Every penny available is hoarded by banks trying to save their butts. You will next see central banks cutting interest rates as if the pit is indeed bottomless. That is an attempt at creating another carry trade. And no, that will not have any effect either. They can not make banks lend to each other who have far more debts than whatever portion of that $620 billion, or the next and the next after that, it is that they can get their hands on. They are gone, drowning in a sea of losing bets, and all the lifeboats left are leaking. Bad.

Here’s where the B-movie remake of the great Greeks meets the theatre of the absurd:

”House Republican conservatives are likely to keep pressing for a mandatory insurance program they initially proposed for mortgage-backed securities. They may also try to force the Securities and Exchange Commission to suspend mark-to-market accounting and require bank regulators to assess the real value of the troubled assets...”

If you still need a translation of that: the real value of the troubled assets is zero. And the real market has already marked it there.

PS Allow me to add something to that: The Real Markets have marked the "troubled assets" down to zero. They're just waiting for the assets to come out of their hiding places. And what we see happening now, is that the real markets are losing patience. They will increasingly start forcing the troubled assets out of their dark holes. And while I am not the only voice talking about this, I think it's still poorly understood: this poses a very serious concern that the economic system, as it exists today, will collapse in its entirety. $700 billion is just one tenth of one percent of the estimated $700 trillion in outstanding derivatives. It's like owing $100, and offering a dime as full and final payment.
There are others.... but I don't have time. My favorite, of course,is...


(Kidding. Everything I know on this subject has come from those linked, and still others not specifically mentioned or linked here,including a lot of excellent info from The Oil Drum, linked to the right.)

Can they save the economy? No. - January 7, 2008

The Crash - January 8, 2008


It's time for Americans to reassert their ownership of this nation. WE are America. Not the conglomerates, not the politicians. WE are America.

Tell them to vote NO!

Go get 'em.

Of Crashes, Failures and Bailouts

It is important not to stop applying pressure now. Paulson, Bernanke and BuCheney WILL be trying again. Personally, I'd let the chips fall where they may, but I know that scares the bejeezus out of everyone, and likely won't allow rationality to overcome fear. So, if you must support a plan, please look at Karl Denninger's plan linked below and here for your convenience.

If you really are not up on any of this stuff, and I know most if us are not (I have slowly become generally aware only over the last 18 months. It is still dense stuff and I only understand enough to get the gist and have a fairly clear sense of the implications), do yourself a favor and go to YouTube or any video site and/or google Peter Schiff, Karl Denninger, Nouriel Rubini, Dennis Kucinich and Ron Paul. See what they have to say. Of course, there are links to some of them below, but I am talking about really educating yourself. You should/can also visit The Automatic Earth and The Oil Drum, both linked to the right.


The following are two e-mails I sent out to family and friends regarding the Monday Sept. 30, 2008, vote in the House of Representatives on the King Henry Paulson Bailout, Socialism and Welfare for Bankers and Financiers Act.


Sorry to contact you like this, but this is vital. This morning, everything changes one way or another.

We must stop this bailout. Our "leaders" are acting in a way that Mussolini would be proud of. It was he who defined Fascism as the partnership of business and government. How amazing, in the most horrible sense, that the United States government is now exactly what Mussolini considered to be the ideal?

Worst of all, this "bail out" (better stated as welfare and socialism for the rich - didn't they just make it nearly impossible for us to declare bankruptcy?) is nothing but 1. a huge transfer of wealth to the richest and 2. the bankrupting of America. Were the scumbags who created this held to account, not one penny of taxpayer money would go this. And not one penny should.

1. The larger banks are and will be buying the smaller banks. More and more money in fewer and fewer hands. Then, they keep all the profits they've gotten up to now AND all future profits and give the debt... to you and I. Literally. Over and over. This will not stop at $500,000,000,000 or $700,000,000,000. It won't stop till it is many times that much. Because it can't. There is too much debt out there. The debt in these damned "vehicles" alone is hundreds of trillions. That's right HUNDREDS of TRILLIONS. And housing? Did you know there are additional resets coming in the next three years? We haven't even hit the peak. So, if this bailout is supposed to save us from the abyss, why doesn't it deal with those? Those resets means the banks are going to be right back with their hands out for another $700,000,000,000 over and over and over.

2. The US debt can never be repaid already, and here we are getting ready to double it, triple it... Do you really believe the people holding our debt will just sit on it forever? They will not.

You worry not bailing out the obscenely wealthy and the non-taxes-paying corporations will mean depression. It will. But to bail them out will equal depression and collapse because there will be too little left in the hands of you and me. The government will be so burdened it will have zero chance of dealing with the additional time bombs of energy decline and climate change, let alone have any hope of pursuing public works projects and such to pull us out of the depression.

You must understand that to allow this will mean the destruction of the economic and political system of the US. Too much power already rests with the Executive Branch, and now we are to have them holding our mortgages and having carte blanche over our financial systems? God help us...

Please view all of the following, then contact your representatives and senators. Tell them they will never get your vote again. Tell them a vote against this is a vote for the Constitution, while a vote for is a vote for the final corporate overthrow of our financial and political systems.!-SAVE-AMERICA!.html

Here is a plan for Main Street and America, not Wall Street:!.html

Here's an analysis of the final bill before Congress:

Here's Dennis Kucinich on the bail out:

There's much more, but let me leave you with this: Did you know they had been planning this for MONTHS?

Please, act. NOW.
The second e-mail:
If you don't know who Nouriel Roubini is, you should: he's one of the many who have been predicting a crash for years. (That's right, this is a surprise only to those not paying attention... some of them intentionally...)

...if this run accelerates - as it may now - a total meltdown of the US financial 0system could occur. We are thus now in a generalized panic mode and back to the risk of a systemic meltdown of the entire financial system. And US and foreign policy authorities seem to be clueless about what needs to be done next.
Before that he said:
...the Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown. It is pathetic that Congress did not consult any of the many professional economists that have presented - many on the RGE Monitor Finance blog forum - alternative plans that were more fair and efficient and less costly ways to resolve this crisis. This is again a case of privatizing the gains and socializing the losses; a bailout and socialism for the rich, the well-connected and Wall Street. And it is a scandal that even Congressional Democrats have fallen for this Treasury scam that does little to resolve the debt burden of millions of distressed home owners.
And another who has been predicting this collapse is Peter Schiff. Here he is in 2006:
Q: Just how bad do you think [the recession] is going to be?

PS: I think it's going to be pretty bad. ...whether it starts in '07 or '08 is immaterial, and I also think it's going to last not just for quarters, but for years...

Peter Schiff on 9/26/08:

Sadly, Americans now appear willing to abandon their economic heritage at the first sting of financial pain.

Although passage does seem inevitable, it is nevertheless the wrong thing to do...

The bottom line is that there is no way to resolve our economic problems without a severe recession, and our politicians need to level with the public. As a nation, we gambled on the alluring riches of real estate and we lost. The price must be paid. Contrary to the Bush Administration rhetoric, the fundamentals of our economy are not sound. If they were, we would not be in this mess. Recessions are meant to restore balance, purge excess, and liquidate mal-investments. On that score we have a lot of work to do...

In the end it is impossible for the American economy to be rebuilt on a sounder foundation of savings and production without a lot of economic pain. Government efforts to reinforce the shaky foundation of borrowing and consuming will result in the entire structure falling down around us.

It may be too late, but contact your reps/senators. If they vote for this, vote them out. It's time we had 535 Mr. Smith's (Mr Smith Goes to Washington) on Capitol Hill.