The Pentagong Show

The Pentagong Show
United State of Terror: Is Drone War Fair?

Tuesday, August 26, 2008

Summer of Missed content.

Too much Crack and Cable: facing an unclear winter of discontent.

It's being reported in Bloomberg that Stuart Thomson of Resolution Investment Management Ltd. said: "The banking system relies on trust and at the minute there quite simply isn't any.'' Meanwhile, Larry Summers, whose frightening aspect is reminiscent of Star Wars' Jabba the Hut, warns: "The next administration faces the prospect of having to make the most consequential international economic policy choices in a generation at a time when the confidence of governments in free markets is being increasingly questioned."

Of, course, what he really means is confidence in "Regulation-free Markets", which is not the same thing. Summers is famous for his stark blandishment, made in 1991 while at the World Bank, that developed countries ought to export more pollution to developing countries, such as China, because those countries would incur the lowest cost from the pollution in terms of the lost wages of people made ill or killed by that pollution due to the fact that wages are so low in developing countries. He further stated that, "the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that" (ie rake in huge profits from it to enrich ourselves and ensure our continued full spectrum domination of the econo-sphere). The Netherlands, by the way, got caught doing exactly that: dumping horrible toxic sludge in Nigeria, last year, after shipping it around for weeks to cover their tracks. But like our financial geniuses, they got caught with their pants down...and if you've seen the Wall St. boys, you know that can't be a pretty sight ...talk about toxic waist ... eewwww.

Beijing smog

So what might those policy choices be, we ask? Even after the fall of Summers from his position at Harvard and now that he and Scholes, (that other Master of the Universe who brought us the LCTM debacle, which started the whole Greenspan-led Fed precedent of gross interference with the still-called Free Market every time the Spoiled-Brat-Frat Rich-Boy Club brings it to its knees using it as their private gambling Casino), are still asked their opinion, it's plain they're feverishly working in the background to kluge together another graft to their money tree, replete with loopholes they can use to continue to game the system for their own aggrandizement.

It doesn't augur well this time around. And the reason is what Stuart Thomson's states at the beginning of this post: Trust. The world held its breath as it marveled at the spins and loops of the economic roller-coaster, as long as the party kept going and they were making money. But now that it's been revealed to the world the sheer scale of the losses with which Wall St., abetted by their cronies in Washington, (and London, Berlin, ... Hong Kong) intends to stick them with, they're not so anxious to pony up for the next hair-raising hair-cut. Now that caveat emptor's been rewritten to the unabashedly blatant, "Step right up, Suckers", they've lost their appetite for being Wall St.'s saps.

Good luck boys. But methinks that what Yu Yongding, the former adviser to China's Central Bank, said about the impending implosion of the two Enron-style SIV's we refer to as Freddy Mac and Fannie Mae, is spine-tinglingly apropos: "...it's catastrophic. It's the end of the current international financial system".

Sleep tight America, now knowing that the little Foxes are frenziedly networking to cover their collective fat ass, disguised as the stewards of your Security, whilst caring only for their own: Faith-based Economics is headed right where it belongs ... into the dustbin of history.

Saturday, August 23, 2008

GM Drives itself off a Cliff.

naked capitalism: "Peak Oil!! Peak Inflation ?!? Peak Credit??"

Having been called a Cassandra for years now, ever since doing a survey for a statistics class at Harvard during the summer of 2002 on the Boston-area's attitude toward the coming Iraq War, I was most interested in reading the above-referenced post of someone calling themselves precisely that (ie Cassandra). After reading said article, together with the news that, as posted by Bloomberg this week,  can there be any doubt that the particularly vicious form of Vampire Capitalism advocated by the US and shoved down the throat of the ROW via the so-called "Washington Consensus" (which is little more than the "right means might" philosophy of "cower to our power") is an excellent way to enfeeble a strong economy and bring it to its knees by shoveling mountains of cash into the pockets of the rich by privatizing big government and socializing industry?

What the Bloomberg article says, is that after spending billions on lobbying that Parliament of Whores we like to call Congress, to keep the CAFE standards low for decades, we the people are now going to be required, by our "representatives", all bought and paid for by that same industry, to shell out billions more for them to do what the Free Market was incapable, apparently, of doing.

So, let's get this straight, GW, by initiating GWII (as in Gulf War II), has not only provided War profiteering to pay James Baker back for helping to put him in the Whitehouse (Bechtel is one of the largest War profiteers, as was GM's Hummer division), but, by constraining oil supplies, via its invasion of Iraq, enriched his Texan cronies (Texas being the largest supplier of Oil in the lower 48), created a patronage trough, known as the "Department of Homeland Security", to be filled with Bushies who can suck from the federal teat while lambasting "Big Government", even as, a la McCain, they funnel taxpayers' money into their own pockets, and call it Serving Their Country. It's merely a coincidence that they happen to thereby obtain higher than the private sector pay scales for their total lack of skills, along with health- care, job security, and pensions, all paid for by the citizens stuck in dead-end private industry jobs with no job security, no healthcare benefits, require skills and/or an education, which, in order to obtain, they had to first put themselves in debt for a decade, and offers only "pay for your own damn pension benefits" plans.

What this should all tell us, and tell us all, is that the particular version of Capitalism championed by the Republicans offers us Medical care and education we can't afford, pension promises, which if they're defined benefit plans, they will either be abrogated or destroyed by inflation, or, if of the 401k variety, mismanaged by professional Financial "experts", of whom, to judge by the retirement plans of the Bear Stearns employees who's savings have been wiped out (if employees of Bear Stearns...employees at the very heart of the financial industry... are incapable of managing their 401k's competently, what chance do you and I have?), will leave us destitute, and can grow the economy only by increasing the federal and state government outlays by unsustainable quantities of debt while simultaneously ballooning asset prices to ridiculous valuations, it's quite apparent that we are all a bunch of suckers who want nothing more than to have bigger and bigger houses built for us not to live in, make bigger and bigger bombs so brutally destructive that we can't use them, while manufacturing bigger and bigger cars that we can't afford to drive, all while paying more and more money for food that poisons us, hospitals that kill us and leaders that sneer at us to live within our means, while they run billion-dollar campaigns to put them in positions where they can collect millions from graft and bribery, all the while calling it by nicer names like "lobbying".

But just as "spin" has come into the vernacular, to enable us to talk openly of politicians' distortion of truth and outright lies, cynically hiring Spinmeisters, like Karl Rove, to better package those lies so they're more palatable for public consumption, allowing us to convince ourselves that a lie by any other name is not still a lie, small government has come to mean larger and larger outlays for the military and the War Machine that enables it, while running larger and larger deficits and pushing up the National debt into trillions and trillions of dollars so that when its bankrupt and unable to pay for social security they can simply shrug their shoulders and absolve themselves of any blame ... "it was the system".

On May 28, 1987, Mathias Rust took off from Helsinki, and, flying at low altitude to avoid radar detection, landed a small, single-engine plane in Moscow's Red Square.

This caused considerable embarrassment to the Politburo, and within a year the entire top echelon of the Soviet military had been replaced.

On September 11, 2001, airliner jets slammed into NYC's largest towering skyscrapers and into the Pentagon itself, killing thousands and wreaking havoc in not only those cities but to the airline industry and the economy as a whole. Not one government person lost their job. The head of the National Security council was promoted; the bloated Pentagon budget swelled to catastrophic proportions; Afghanistan, the country that we had armed and made hospitable as a haven for terrorist activity was taken over by those same organizations that had made the attacks possible, and, having set the same trap for ourselves that we had, with much braggadocio, and highly publicized with the release of "Charlie Wilson's War", laid for the former Soviet Union, sprang it on ourselves.

By doing so, a small cadre of left-over Reagan-era apparatchiks and felons, together with their new cronies, took over the reins of the federal government. Having an immensely high opinion of themselves they are not far from believing that they form a species apart from the rest of the human race, and, therefore, brook no dissent. As Alexis DE Tocqueville predicted in his magnificent volume on the United States, "Democracy in America": "they regard the ... states as (their) subjects and enforce the respect for their own sovereignty under cover of the sovereignty of The Union. Things may be done in the Federal government's name, but in truth, the Union would have ceased to exist."

Wrapping themselves in the flag so as to appear patriotic, they can then maneuver the federal government toward a policy of proclaimed national interest whereas the only interests they serve are their own. Since this is also the stance of the entire US Congress now, there's no one from either party in the legislative branch to cry foul at the Executive branch, as the cry would quickly, without falsehood, be visited upon themselves. For by proclaiming Greed, the very epitome of self-interest, to be sacrosanct, how can the same rulers declare themselves patriotic, which by definition puts the interest of the country above their own?

So the entire government becomes enmeshed in a tawdry web of deceit where, since everyone's culpable, and all that newcomers want is to enrich themselves, there's no one left to hold anyone accountable, even for such an enormous failure of all our National Institutions that the calamity of September 11 represents. Consequently, all it's been used for is a once-in-a-lifetime opportunity to expand federal spending, without even a pretense of accountability, that has brought us to the downward spiral of loss and defeat for which the US citizenry will pay while its leaders and Aristocracy continue to squander the productive capacity of a great people on realizing their own dreams of attaining Super Wealth by the continuation of the two great vehicles for absconding in the night with the products of labor: Huge budget deficits and Inflation. USA! USA! USA! ... has become a command from the rich: You essay, I'll just sit back and take the fruits of those essays (although I, naturally, won't even stoop to pick said fruit; after all, that's why we allow illegal immigration).

Wednesday, August 20, 2008

This is the Neo con-game; same as the old con-game.

Howard Kunstler, author of "The Long Emergency", in a speech in front of the Agora Financial investment symposium, was reported to have stated that: "The American suburb was the greatest misallocation of resources in the history of the world… Why? Because it has no future; because we’re not going to be able to run it…. We don’t have the resource base to run it."

This statement articulates the reason for both the enormity of the current financial crisis and the reason for its intractable nature, at least as measured by the actions the Fed has thus far taken to alleviate it. Because all the Fed has even attempted to do is to put markets back in operating condition while completely ignoring the underlying realities that engendered their dysfunctionality in the first place. The assumption with such a policy is that, once we balance the gyrating colossus, we can work on the underlying problems that are causing it to teeter so dizzyingly on the brink of collapse.

But this assumption is proving to be fatally flawed. Like the assumption that, after the U$ reached peak oil production in the early 70's, we could simply fuel the ever-thirsty behemoth of constantly-increasing U$ energy consumption with imported oil. Like the assumption that a society in which the major corporations, and the federal government collude to reassure the citizenry, via cooked up ideological Free-Market fervor, a la Milton "The Monster" Friedman, in which they pretend to believe that relieving the upper class of any responsibility for any of the rest of society, and then restructuring the tax system to flood them with money, simultaneously relieving them of their fiduciary responsibility to said system, that somehow, via "the wisdom of the marketplace" ( that's just been relieved of its "burden " of paying livable wages by colluding with a foreign Communistic Totalitarian regime to provide free labor from an impoverished, prostrate citizenry) can magically grow and prosper into a sustainable future.

But these outlandish assumptions weren’t believed by the ruling class. Unlike the rest of us, they were quite aware that peak oil production was reached in the US as far back as the early 70’s. So were the Saudis, who would have been completely incapable of an oil embargo if the production of US oil had not reached its peak, from which it would inevitably, inexorably decline. And it is from this point in time that one can easily follow the Upper Class plan to confiscate the productive capacity of the US, monetize it, and then export it to regimes in which it could constrain its costs from the clamoring of a middle class it couldn’t control, and continue to reap the profits far into the future, long after the Youessay was destroyed; their profits safe in Swiss Bank accounts and goldbricks, surveying their work in smug comfort from Swiss chalets and basking in the sun at third world resorts with the local minions to cater to their every whim.

Many consign such theses to the realm of conspiracy theories; however this plan is no conspiracy. A conspiracy, by its very definition, is secret. But the US population is so seduced by the illusive prosperity of the trinkets provided by the armed forces of the free market, enabled by its Demockracy, that they’ve failed to note that anything of real value or capable of producing real security via investment in future productivity, has been pawned or conned or cast away. So the rich are free to steal right in front of our eyes, to cavort in their splendor, pervert the justice system, undermine the constitution, plan the destruction of Social Security, disable the regulatory mechanisms of the federal government, leave the States’ Treasuries not just empty but in the red by billions, and build up their own privatized armies, using taxpayer monies (Blackwater armed forces were the first “help” the victims of Katrina saw), monopolize all organs of the media, and use public monies to privatize wealth on a breathtaking scale, all with impunity from, in fact with the blessing of, the public (barring those few “elites” who “read books” and stuff).

So this has been done, not in secret, but in public, right in front of your eyes, using keywords like “freedom”, “Democracy”, “security”, and “liberalism”, together with the same strategy used in the middle east of funding and arming religious fundamentalists to do their dirty work, the Republicans have systematically undermined the democratic voice of the population and replaced it with the intolerant hate-speech of people of “faith” who baptize themselves with the knowledge that they’re doing the work of the Supernatural when they bomb US embassies, murder abortion doctors by shooting them in the back, or bomb abortion clinics. (Once the “War on Terror” was declared by their leader in the US, their Commander in Chief, George W. Bush, the radical forces of Christian fundamentalism have been called off, and not a single outrage of this nature has occurred within the US).

Because just as both the World Wars of the 20’th century were won by the West “riding on a wave of oil”, so the prosperity following those wars was fueled by that same black gold. The major difference being that after WWI, there was no mechanism in place to wrest control of the resultant prosperity from the cold hands of the capitalists and place it under control of those whose blood was spilled and whose backs were broken to produce it. Instead, like now, it all flowed to the richest, who need it the least, but whose greed is insatiable, self-stoked, narcissistically stroked to the level of insanity, by a financial mania and Darwinian justification of their racial and intellectual superiority, even as they descended into Hobbesian tooth-and-nail economic debauchery.

So seeing their black gold running dry, and disdainfully dismissive of the consequences on the very economy that enables their ascendancy, they scramble to destroy each others' enterprises, using high-minded phrases such as “creative destruction” to justify an orgy of self-aggrandizement that would leave the very population that produces their ignoble obliquity destitute. In their back-to-the-future dream world, the subdued population resembles those in authoritarian regimes such as the Middle East and Communist China. All aspirations not consistent with the upper class mirage are crushed by “Homeland Security” forces, while only one “American Dream” is allowed. The all-too-apparent contradiction of there being but one dream for a population exceeding 300 million free people in pursuit of happiness is never questioned. Nor is the fact that in the most prosperous nation in the world, with a GDP larger than that of the next three economies in the world combined (Japan, Germany, and China), the most anyone can dream for is a place to live. That’s why homelessness in America isn’t a problem: it’s a solution.

Remember, "We don’t have the resource base to run it.", but we can generate HUGE profits building it and then tearing it down, using the taxation on the resultant profits to fund an Imperial War of aggression, which will suppress the supply of oil to the world markets, enrich our fellow Oilmen, as the inevitable squeeze in supply and stoking of demand that a War and the Marketing of Huge gas-guzzling, 3-ton, SUV’s and Hummers will engender (deficits don’t matter and conservation is for lily-livered wimps…LIES), and leaving the population in dire financial straits with no one to blame but themselves. This is the Neocon-game; same as the old con-game. Welcome to the Back-to-the-Future world.

And as we continue to relive the economic panic of 1907 in 2007 and beyond, just think, we soon get to relive WWI; 2014’s just a scant 6 years away. As they dust off the old slogans that worked so well then, and are working so well now, we can look forward to another War to end All Wars with renewed relish, because apparently that’s all we care about anymore, destroying other peoples and confiscating their resources in the name of “freedom”, so they can go to those who rightly deserve them …U$.

Suburbia's become part of California's prison system, We don’t have the resource base to run it, but if we build it, they will come. Although they can ill afford to. But such is the new science of behavioral economics, where the prisons are Home Sweet Home and are built by the very population that clamors to be let into them.

Wednesday, August 13, 2008

Who the Fed cuts cut the Deepest.

The result of the gerrymandering of the economy in order to encourage misallocation of capital on a massive scale by funneling enormous streams of revenue into assets such as exurban homes, SUV's and the equity markets, was the creation of myriad credit-induced bubbles, the bursting of which, have brought us to our current state of a collapsing financial sector, crumbling infrastructure, and bloated, and growing, Federal and State government deficits. And because these "assets" were then leveraged, via mortgage-backed securities, "collateralized" debt obligations, and the like, they all rode high on a wave of debt, i.e.liabilities, misconstrued as assets. As if loans made to people with no collateral to back them, were as good as those made to fund the building of a factory, which at least had the potential to produce future returns able to finance the payment of the interest on that debt.

So, for those consumers who took out risky loans, and speculated on the pipe-dream of ever-expanding property values, while the citizens of the country in which that property was located continued to have their livelihoods eroded by a Corporate-Government collusion to castrate the bargaining power of labor, and could buy the consumer goods brought to its shores by the productive capacity of those whose totalitarian government brooks no dissent, only by extracting the phantom profits from their property's rising price, the Fed cut of the Discount Rate was a boon...for now.

But they will soon join the rest of us, receiving paltry returns for savings, in experiencing the ultimate failure of the cut as it raises the prices of those very same imported goods, by raising the inflation rate around the globe for those consumers in other countries, where our exported inflation (which is what lowering the interest rate on the World's Reserve Currency does) has caused much more rapidly increasing prices (including for those goods they export to us). But for those who have access to capital at a cost far less than the inflation rate, i.e. the banks, whose deregulation and subsequent chicanery got us into this intractable situation in the first place, the Fed cuts are a Godsend of Corporate Welfare and Stat-ism, explicitly pandering to the needs of these well-endowed Corporate hogs.

This is important , because, even as several articles have been written about the "New Frugality", and that Frugality is the "New Cool", such frugality fights against extremely powerful headwinds, as the Federal Government continues to increase an already unpayable National debt, of which the interest alone ($250 Billion) is equal to half of the Current fiscal year's budget deficit of half a Trillion dollars. This means that no matter how thrifty one may be, the government is spending your money faster than you can save it.

Saturday, August 2, 2008

Mistaking depression for delight.

A friend recently told me in an e-mail: "I am sure u must be delighted about the economy. all of your predictions are coming to fruition."

To which I had to reply:

"Delighted? That's just plain mean. It's like saying that the voices warning about the imminence of an Al-quaeda attack on the US in 2001 were "delighted" at the destruction of those twin soulless monoliths in Manhattan.

To suggest that because I didn't join the silence of the lambs as they flocked to be fleeced by usurers and conmen, dutifully wearing flag pendants in their lapels, is a perfect example of how the repression of any opinion that doesn't conform to the official script of the Age of Reagan, AIPAC, and the PNAC is not thrust upon us, Orwellian style, by an ever-watchful Big Brother, but instead is inflicted on us by the very citizens we wish to enlighten.

The message is do not rock the boat by discussing the perfidy wrought in dark backrooms where financiers, CEO's and politicians, posing as pious Puritans, virtuously betray their country and give their whole-souled services to the ruin of their fellow men.

Because although they offer their usual assured pronouncements upon finance, banking, market trends and property values, it is spine-tinglingly apparent that below all this is just utter, naked, frantic terror - the terror of men who know that they are ruined and are afraid to admit it, even to themselves.

The broken fragments of America waits and fears and schemes to put off the day of its impending ruin ... that you should accuse me of being delighted by this devolution into the maelstrom of anarchy and fear simply because I gave voice to how alarmed I was at the enormity of the fraud that was so bold-facedly, yes even delightedly, brought upon the citizenry, abetted by their own Oedipal (as in it is self-inflicted) blindness, smacks of denunciation.