The Pentagong Show

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

Monday, December 31, 2012

The War Against Peace: Mission Accomplished.

 A post on one of the blogs I read daily, but failed to mention in my post on the subject, featured an article by Bruce Krasting entitled,  On Krugman's Epiphany, in which he registers his incredulity that this Nobel-prize-winning, Princeton-educated, NYT-employed academic economist, known as such to more readers than any other economist on the planet, should have been all of a sudden awakened to the fact that machines have replaced humans as the largest productive component of modern economies. 

Now, whereas I can well see why this could come as somewhat of a shock, it should not be anything we're unfamiliar, with, as it merely reflects the saying that Upton Sinclair made famous, that: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" And if there's one thing "The Conscience of a Liberal"'s salary depends upon, it's liberal ideology. But it's only with the size of profits made from a productive capitalist machinery paying its workers a generous wage that a State can afford the benefits Liberalism insists it should provide those workers. 

That paradigm ended with Reagan, and it's death sealed with the construction of the "Information Superhighway" under the Clinton Administration. Yet all through the Bush era, the Krug kept insisting that all GW need to do was raise the taxes on the wealthy back to where they were and everything would be fine again. But it wasn't true then, and it isn't true now. But since his salary depended on it ...

Similarly, this paradigm works on the entire American electorate on the issue of War, and its place in the modern economics of Globalization and capitalist productivity. As we watch the effects of this new structure topple the old regime of money and replace it with something we've failed to come to terms with as yet, I like reading other people's thoughts on the matter who aren't, like the Krug, bent on continuing their political tirades based on a past that, not only isn't going to return, but that we shouldn't wish to return. 

In doing so, I've been reading Thomas Greco's book, "The End of Money (and the Future of Civilization)", one of the themes of which is the claim that money is now more of an information system and so we need to separate it's use as an exchange mechanism from its use as a safe haven, or repository of value, such as gold seems to now be playing:

(per "For the past eight years-in-a-row, that worthless yellow barbarous relic that some call 'Gold' has outperformed the 'precious' Dow Jones Industrial Average (even with the constant DJIA re-indexing where the losers are quietly taken out back and shot). As we enter the last day of trading in 2012, Gold still holds a slight edge +6.3% on the year vs the Dow's +5.9%.".

Arguing that Gold not only imposes a measure of fiscal discipline, but can also serve as a store of value, since commodities in general can help to serve as a store of wealth in times of inflation and financial chaos, Greco explains that other commodity monies can also provide portability of wealth and can be useful when people are displaced by natural disasters, political strife, and War. And this is where I go over the deep end.

Because just as the Krug blinded himself to the ramifications of the effect automation would have on all the liberal dreams of providing social security and health care and financial security to an entire generation, the US as a whole has similarly blinded itself to the fact that a constant state of war is the new paradigm that is necessary for globalization and is discontents to continue to shower us with an unending downpour of cheap manufactures, draining the globe of its resources while accepting a battered and debauched dollar in exchange for the products the rapacity produces.

Whether, or for how long this should possibly continue is one question, but the basis upon which its sits is not. Because what Greco doesn't admit, despite the fact that it's staring him, and the rest of us, right in the face, is that War is now a constant. And it is accepted as such, albeit tacitly since, like rap music, it makes a noxious atmosphere not welcome amongst polite society.

Because, in his attempt to describe the new economic reality being denied by the politicians of all the OECD nation states, Greco starts his next sentence by saying, "But under more normal conditions... ", but what does that imply when the normal condition he speaks of is one in which the building and selling of weapons of mass destruction is the underlying basis of the peace we now know is based on constant war?

The very concept of world peace is now accepted as the aim of only crackpots and Miss America contestants, and is not only unacceptable but a positive danger, and not for the reasons claimed by War Hawks who maintain that without a strong peace, there's war, and that maintaining a standing army, navy, air force, Marines, Special Ops' intelligences services, NASA, etc, etc, and spending constantly escalating share of GNP on the Pentagon, are, from a military-preparedness basis, strategically necesssary.  

No. That argument was made moot long ago. My argument is that the destruction to the economy that destroyed the first Bush Presidency, which he brought onto himself via his so-called 'peace dividend', is a calamity the economy never recovered from.  Therefore any attempt to jigger with this arms-based economic dreadnaught will cause the global economy to not only shrivel, but collapse, bringing internal War right to the doorsteps of the OECD nations, who, up until now, have been successful in maintaining the new paradigm, reached at the end of WW2 of exporting conflict to lesser economies, ravaging them, and then providing them 'humanitarian support' which bolsters their own economies, giving their people higher standards of livings and crushing any possibility of their destroyed 'enemies' from recovering sufficiently enough to ever emerge as a viable threat.

This is unabashedly referred to as 'Full Spectrum Domination", and is not exactly a secret that it is the outspoken, and never rescinded, goal of the US as "The World's Sole Superpower". Which is, of course the main reason why Al Qaeda was named by Pres Obama as the greatest geo-political threat to the US. Because the idea of initiating an attack by sending guided missiles launched from within the borders of the great super power by its own commercial industries, left free to cut costs, no matter what the danger to its customers or, indeed, the country, back onto itself ...  was a quite brillaint strategy, (the conception of which, I, for one, have no inclination whatsoever of attributing to him).

If this paradigm sounds familiar, it's because, of course, it's the one whose efficacy was demonstrated so tellingly to the world via the US's institiuion of the Marshall Plan following the exhilirating episode of rampant bombing and firestorming of one continent and the incineration of entire cities on another. WW2, and it's rebuilding of the Japanese and German economies, making the countries upon whom it inflicted the largest total destruction in the history of the world into its two largest customers, also made them, in the process, its fiercest competitors. 
For once the loans stop, they need to be able to generate enough wealth to remain customers, and thus the paradigm of export platforms, where that excess productivity is sold to other countries. Thus it is that the chimera of Ricardo rises to replace the ghost of Adam Smith resulting in the brilliance of the China syndrome. Instead of serving as a competitor, a totalitarian government can keep the demands of its population suppressed. Because, as Upton Sinclair also said,  "Fascism is capitalism plus murder." 

So, while Neo-Liberals can sell the concept, such as it did with Nafta, of a rising middle class in the client country clamoring for the hi-tech products of our own, thereby talking the, let's call them Krug-liberals, into allowing the wholesale transfer of their own country's entire productive base, nevermind that it was stabbing its own working class in the back. But the promised benefits were never attained, for two reasons: the client country uses the power of repression to keep wages and demands for benefits, such as air that's not unbreathably befouled, down, so that the demand from those client countries' consumers never materializes, and secondly, those hi-tech jobs, ones thought to be so secure, once the infrastructure has been built to transfer the physical plant of lo-tech jobs, it's even easier to use it to transfer hi-tech jobs to the low-wage platform economy, thus leaving the host economy bereft of any productive capacity whatsoever, forcing its unionized laborers out of high-skill jobs into servile positions as waiters and latte makers.

One example of this was recently documented in the pages of the NYT as it ran a story about the accelerating growth of automobile sales in Russia, by plants built there with capital furnished by the American taxpayers' risked capital from labor's pension funds for the GM rescue, to build plants in Russia and China, serving those markets, and returning nothing to the population that risked its Capital, with all the rewards, in the form of dividends, going to the financiers and shareholders, and the jobs going to Russians and the resulting tax revenue, going, not to feed America's children, but Russia's. Pre WW2, this would be called treason, especially if done, as it's being done now, during times of war (remember, we are always at war).

 One of the consequence of which, is that, whereas China has many sources of production and centers of economic vitality, the US has, year after year, decade after decade, chipped away everything from its industrial base until there is only one center: New York. Take out New York, and there's simply nothing left.

Yet the fact that the financial sector, having crowned itself the ruler of the world, than went on to inflict more damage to NYC, the economy, and the country than the attacks of Bin Laden, makes one stop momentarily, on those occasions when one has the time to contemplate the long-term impact of events, and realize that this matter is never mentioned. And the criminals responsible, far from being rabidly pursued by letting loose the demons of war onto them, are instead, exonerated, by the newly elected President Obama mit Biden, who urge us to look forward, ignore those men behind the black curtain, forget the perfidy done that produced a shimmering mirage of wealth in front of our eyes, and then, with a swirl of the cape and a puff of smoke, as entire countries went up in flames, swept it all away and simply shrugged at our stunned silence as they made everything evaporate right in front of our eyes. And then threatened utter ruination and despair if they were not given billions upon billions of dollars, demanding a blank check to finish the job of draining everything of value out of the economy.

Presto! Keep walking ... Nothing to look at here ... We're fixing everything.

As if to make my point for me, from, again, I found, right before finishing this post an article re: the Fiscal Cliff's effect on Pentagon spending,  one line of which read:

 "Mandatory federal spending cuts designed to be prohibitively drastic will become a reality on Wednesday if negotiators remain unable to reach an agreement to avert the reductions. Illustrating the gravity of the cuts, the Pentagon plans to notify 800,000 civilian employees that they could be forced to take several weeks of unpaid leave in 2013 if a deal isn't struck". 

Note that only civilian jobs are threatened.

This is the real physical cliff, the precipice upon which we stand as the productive capacity of our economy is entirely held hostage to military spending: not just GM, and McDonnell Douglas, Boeing, Raytheon,and Bechtel, Haliburton, Dow Chemical, and IBM, but Wal-Mart, Sears, Macdonald's and Burger King, Starbucks and Apple, are all heavily reliant on their big fat Federal Government contracts, and, now that all the CEO's are from the Aritocats which America , naturally, doesn't have, these companies are run only for the resource-stripping operations of its board, who all vote Republican to keep their own taxes down. 

Cisco Systems is one example. It got rich building the internet, which, it isn't a secret, grew from a small Defense and Research Library Group network (RLG, which I worked at Stanford doing the physical installation of), which we all paid for, invested in, bore the risk of failure for, with our taxpayer money, siphoned through the defense department, as that's where you have the most latitude to spend enormous amounts of cash unaudited. Yet none of the internet companies feel any obligation to pay taxes, nor, now, even dividends. For ten of its most profitable years, I owned Cisco stock and as the cash rolled in they sat on it, reinvested it, who knows, but I never garnered one nickel in dividends despite owning one of the most successful internet stocks ever. John Chambers, however, is, I believe, one of the richest men in the country.

So, whether one agrees with this philosophically becomes unimportant, the Defense-controlled and dominated system now drains more and more cash from those left who still do pay taxes.  Eventually, even those willing to do so, will no longer have the capacity to bear the fiscal responsibility the largest and most profitable entities are shirking. Basically, we're talking Greece, but with a population groaning under the weight of the hi-powered sophisticated weaponry in the hands of its citizens. One wonders who they'll blame it on the next time the match is lit.


Saturday, December 29, 2012

Fiscal Cliff Notes.

Caught Between the Cheats

As we spend our last weekend before the New Year ushers us into the next round of incredible money-from-nothing-creation, and we all wonder what the outcome can possibly be when the present stage of evolution ends and God, in the guise of the Chairman of the FED, must withdraw his credit, and enjoyment of life, belief in ourselves, and, the ability that all civilized nations have to spread around them the comfortable illusion that they have a mission, ends. And so America, which was once an intelligent country, sheltering, as it did within its frontiers, a fair number of cultivated persons, who, like cultivated persons in all parts of the world, dash about in an unsettled state of mind amidst a tremendous upheaval of noise, speed, innovation, legal disputes, and everything else that belongs to the visual and acoustical landscape of our lives, will, for a moment, allow itself a pause for reflection.

In the last year, or week, we've daily read and heard several dozen news-items that made our hair stand on end, and we're prepared to become excited about them, indeed, even to do something about them, but nothing ever comes of it because some moments later the stimulus has already been displaced from the consciousness by other and more recent stimuli.

Like all other people we enjoy the sensation of being surrounded by murder, manslaughter, passion, self-sacrifice, and greatness, which come about somehow in the tangle that forms around us, but we cannot reach these adventures because we are held captive in an office or in some other quasi-professional enclosure, and when, towards evening, we are at last let out, the accumulated tension for which we have no more use then explodes in front of us on the ever larger screen we seek out as our chosen form of entertainment that no longer entertains, yet holds us fast, inexplicably, in its sway.

And there is the one additional factor to the cultivated person, or passionate dreamer, if they do not dedicate themselves to love, as exclusively as their daydreaming selves did: they dread the day when they no longer have the boon of credit and can no longer bestow on themselves the gift of deceit it makes possible. Then they will no longer know what will become of their smiling, their sighing, their very thoughts. To what purpose have we been thinking? Why have we smiled? All our opinions are accidental, our likings grown suddenly old; somehow everything is still there, floating in the air, ready-made (in China, more'nlikely) and one runs full tilt into it; and we can no longer do anything, nor yet leave anything undone, because there is no longer any unifying law.

So it is that we keep at bay the gnawing dread, the undeniable knowledge from which we hide as we bury in our hoardings of accumulated nonsensicals, the sheer weight of which keeps reminding us of the accumulated debt that's steadily rising higher and higher and that we know we will never be able to pay off. Then as the inevitable bankruptcy, which each New Year we fear draws nearer, we either inveigh against the age in which we're condemned to live, although liking living in it just as much as everyone else, we fling ourselves, with the courage of those with nothing to lose, upon every idea that holds out a promise of a change.

This, of course, is the same throughout the world. But when, or should, the Fiscal Cliff, or more likely, the Debt Ceiling, cause credit to be withdrawn from America, it will do something special as all the minorities are forced to realize the difficulty in our polyglot civilization. We've all been sitting pretty like bacteria in a culture medium, without worrying about whether the sky is as blue as it ought to be, or some such thing; but all at once, we will begin to feel that we are in a tight place. Because, although mankind doesn't usually know it, we must believe we are something more in order to be capable of being what we are; we must somehow have the sense of something more above and around us.

But, of a sudden, we may be deprived of it, and this lack will be as distressing as not being able to sleep or not being able to understand. So whereas it is easy for us to persuade ourselves that it would all be different if each of the nations within the Empire could just be a Democracy, and have its own way of life, the American minorities are not so easily convinced of the same thing themselves. For we Americans are defiant by nature and contented with ourselves by half, though not necessarily with each other, merely doing to the utmost what seems to be necessary in order to co-exist with one another, giving rise to many inexplicable things, which people cease to worry about when they sing the national anthem.

Therefore, it would be a mistake to form a picture of our notorious American nationalism as particularly savage. It is more an historical than a real phenomena. The people here rather like each other, although admittedly that doesn't stop them from hitting each other over the head or spitting at each other. But this they do only from higher cultural considerations, such as when a man that wouldn't hurt a fly, even if alone with it, would, were he to be with his fellows in a court of law, even with the Crucified One hanging around his neck, not hesitate to condemn another man to death.

So you can feel justified in saying that every time the Chairman uses his monetary tools to give respite, forestalling the hammer that's poised over our heads, binding us increasingly in his thrall, it allows us to remain faithful to the vision of our higher selves and - good little fools that we are for eating and drinking, having been created to that end like all other human beings, and for that matter, all other sentient creatures -  will be greatly amazed at the experience that failure of such tools delivers, as we are suddenly, soddenly even, made the fools of history.

But for now, Happy New Year!

Friday, December 28, 2012

Blogs vs. Newspapers

Why do I, and you , for that matter, read other people's postings in their blogs instead of, or more than likely, in addition to, a newspaper? It's not because they're more timely, then one could simply look at the AP newsfeed, or get an RSS feed. And whereas some, like CK Michaelson's "Some Asembly Required" give news clips with a cynical view's quips, he gives little analysis, but is valuable for the links he provides to articles of interest. While others, like Mike Shedlock's (Mish) globaleconomicanalysis are overwrought and used to pimp for his investment advisory services. He's rabidly anti-union, anti-New Deal, a reactionary Republican, and a Tea Party aficionado, philosophically if not by name. He was, however, one of the most accurate forecasters of the repercussions a Republican President's policies would have on the economy during the period 2004-2008, an invaluable source of information who, together with Mike Ruppert, of "Crossing the Rubicon" fame, made others think I was somehow prescient. For that alone I owe him gratitude and kudos. But his insistence on a balanced federal budget, to hell with the premature deaths it would cause, is as crackpot as Derrick Jensen's solution in "A Culture of Make Believe", or his newer, "Endgame". It is simply too 'advocatus diaboli' for me to take seriously.

Yves Smith's "Naked Capitalism" has a similar format, but with an emphasis, as suggested by the  title, on financial matters, and she writes articles on them as well as featuring others' writings. She has  published a book, "Econned", which looks at the genesis of the financial crisis from the perspective of academic theory, disproving the notion that economics is a 'science' and describing the result that flooding the world with indoctrinated MBA holders who have a vested interest in error, ie mountains of debt accrued in the attainment of quant-ie skills on the strength of which they base the hope of making or raking in a fortune, is likely to have on the economic system.

I like the moniker Yves Smith, because it is so clever. Realizing that the financial world is a man's world, Susan Weber (her real name) feminized Adam Smith's name, and then masculinized its feminization ... so cool. And she did in fact bring a woman's POV to economics, noting which may be considered un-PC of me, but always being suspicious of any concept as unabashedly fascist as trouncing those who hold a different POV than you, as they are therefore 'incorrect', has never held any appeal for me anyway. Limbaugh's term, feminazis didn't spring from nowhere, and, in fact, it could well be imagined that without the PC world, we'd never hear from Rush more.

Then there's the Automatic Earth, featuring the wonderfully articulate Nicole Foss (Stoneleigh) the Energy Bulletin, (now with Michael Greer's 'Archdruid Report', the Oildrum,, James Howard Kunstler, and Dmitri Orlov (who has better credentials to write about economic collapse than someone who's lived thorough one?) to, prison planet, and the whole plethora of the collapse industry outpourings, including Paul Craig Robert's rants and William Engdahl's dire prognostications and well-wrought fulminations.

Nothing like this has ever been available to the reading public via newspapers. I tried valiantly for years, reading the business section of not just newspapers but of periodicals like US News and World Report, Time and Newsweek magazines, and the Economist and Business Week. They all failed to deliver. Friends who eschew online reading, speaking favorably of newspapers and their historical place in American journalism, although I lend  a sympathetic ear to their protestations, need to look at the entire period of the Bush administration and see the utter failure of this medium to cover the impending collapse of the financial sector that many of the writers listed above were writing about on a daily basis.

And left out of that listing is the person, in my, well, not really humble, but let's call it outspoken, despite my limited knowledge on the subject's, opinion, who stands head and shoulders above the rest, giving a balanced and consistently well-grounded analysis of the economic underpinnings the newly-minted moneyness of credit was, and is, having on the financial system,'s Doug Noland. Mr. Noland has always provided what I've felt is the most necessary of investigations into the profound, calamitous effects that easy credit, disbursed by a shadowy banking system intent on hiding the risk involved in the dissemination by those unconcerned with its inevitably deleterious denouement, would necessarily produce.

Week after week he puts out a sober accounting of the week's financial news, (that used to precede his analysis thereof, but now follows it), sans the charts with which he first caught my attention, when I first started reading him in 2004 . Those charts were instrumental in arousing a sense of foreboding in the future as much as the similar ones on the growth of energy use did in the WEO's (World Energy Outlook) publications, because they graphically demonstrated the same impossibility of continuing along the same path we were following without a major dislocation.

But like Noam Chomsky's work in pointing out the results of the US government's interventions around the world, soberly, without calling for revolution or hysterically calling for the end of the US, Doug Noland doesn't castigate Congress or rail against the administration's policies, nor call for the elimination of the FED, but instead analyses the effects of what he calls the 'moneyness' of credit that results when IOU's of various forms and vintage are used as leverage, enabling them to be used as though they were cash, when in fact they are not; in effect, building castles that, no matter how strong their stones, skilled their masons, or powerful their mortar, are nonetheless built on a shifting foundation of sand, the slightest economic tremor under which, will cause liquefaction and crash the well-wrought edifice to the ground.

Because Cash is exactly that: cold hard cash. Credit is an ephemera, a dream, a wished for outcome that may or may not come to pass. To equate the two is to invite disaster, and like that favorite of modern day nightmares, the Vampire, once invited in, it is hard to keep it from sinking its fangs into your neck and sucking out your lifeblood. There is something mystical and primal about money, and when you start allowing it to be used by charlatans for their own aggrandizement without the balancing discipline of accountability, changing the rules of the FASB to suit whatever new sleight of hand needs to be accommodated to forestall complete disintegration of a system that underpins the hopes and dreams of the world's billions, you would do well to know that with which you are toying. And we should do our best to know that as well.

And that is why I like the internet and the vast array of opinion and depth of knowledge that it has made, for now, so freely available and generously provided: Intellectual manna from the cloud. So, to all those I've listed above, I offer my gratitude and deep respect, and can only apologize to the many I, necessarily, had to, in the cause of not simply making a reading list, missed. You have enriched my life, and deepened my knowledge like no other living being who I can physically touch, has been able to, because, unlike the frivolous majority, you take issues that demand scrutiny seriously, and share the results of your research with those incapable of performing your magic. Thank you. Thank you. Thank you.

Thursday, December 27, 2012

Zombie Institutions Reinstitute Poverty

"Read my quips: "Bushonomics is the continuous consolidation of money and power into higher, tighter and righter hands."
George Bush Sr, November 1992

A curious sentence in the beginning of Van Wyck Brooks', "The Flowering of New England" states that, "Classes are provisional in a republic", and he's not referring, as currently seems to be the case, to school classes, but instead, to the classless society which, here in America, or at least The United States thereof , we've struggled so mightily, and managed so adroitly, to create. LOL

But I can't help but note that, with the FED's ZIRP, it's apparent, with even a smattering of knowledge about economics, that, given the completely debased, erroneous, and proven failure, of EMH (Efficient Market Hypothesis, or sometimes EMT, for Efficient Market Theory), none of its adherents have recanted any of their rhetoric in its regards, nor believe it is in any way flawed, retreating instead to the familiar shibboleth that there wasn't enough Free Market to disprove their theory, simply too much governmental interference to allow the true flowering of the economy that would  have occurred had the Crony Capitalism Conspiracy, euphemistically referred to as laissez-faire, simply been allowed to continue unhampered.

But, as Mike Norman writes in his blog, "Fed actions have removed an enormous amount of interest income from the economy. In fact, it has removed over $100 billion more in interest income than the total net gain in private wages and salaries since it began undertaking these extraordinary measures". Now, this may nonetheless, be a desirable outcome, given the fact that work is such an important part of people's lives and self-image, and also, from a fiduciary perspective, that it actually increases revenues to not only the Social security fund, via the payroll tax, but also to the coffers of the general fund, given the fact that labor is taxed at approximately twice the rate that interest income is. But, in terms of what it forces those with savings to do with their hard-earned cash, it also gives us a  valued insight into the motivations of the FOMC (Fascist Oligarchic Medieval Cabal).

For proponents of EMH, and its true beleivers are ensconced on the board of the FOMC, when they institute a ZIRP, it is because they wish to force those who have cash in savings, to move it into riskier investments, since not only are they getting da nada in interest, the purchasing power is simultaneously being debased via the FED's stated goal of igniting inflation, which will further diminish the value of those savings. And since EMH  claims that prices on traded assets (e.g., stocks, bonds, or property) already reflect all past publicly available information, the MBS the FED holds, as well as the $1.2 trillion (at the rate of $85bln/mo) they have announced their intention of purchasing, are not worth that, else the private market would be lining up to do what they do best: line their own pockets.

And since EMH claims that not only do prices reflect all publicly available information but also that prices change to reflect new public information, what the purchase of impaired collateral is telling the markets is that without the purchase of said assets, there is no market for them, the more the FED purchases, the more impaired it becomes, despite the stated assertion that they will in time rise to their true value. For EMH makes quite clear that if no one in the private economy will purchase them at any price, they have no value.

ZIRP has the effect that the same message is broadcast loud and clear for the very lifeblood of a capitalist economy as well: Money. If nothing is charged for the loan of an asset, it is because the manufacturer is convinced of its worthlessness. My artistic endeavors are a perfect example. In spite of putting labor and materiel into them that by my estimate, are worth thousands of smackeroos, let's say, if no one finds them appealing, they are worth, no matter what my protestations to the contrary might be, only what the market will pay. Now, if I give that same art away for free, it may be very appreciated, and even coveted by those to whom I've not given it. But that increases its value not a whit. It merely reenforces its monetary worthlessness. Similarly, since the FED, by the pronouncement of its own chairman that it has a printing press, it follows that the FED is the manufacturer of money, and, since interest is what they charge for their product, and they charge ZIP via ZIRP, they thereby announce that they are convinced that their product, cash, has no value. Sure, we'll take it for free, but once you charge for it, well ... not so much.

The value it did have was deliberately debauched and destroyed by the Bush regime, as per the stated objective so blithely announced by its avatar, Grover Norquisling, to make the Federal government small enough  so it could then, like an infant, be drowned in its bathwater. With a floating exchange rate, the dollar's value was dependent on three things: the productivity of the economy vis-a-vis its competitors (which includes the power to tax the wealth the economy generates), the military ascendancy the United States of America held over the rest of the globe, and the value of its real property, which fluctuates based on the former two.

One by one the administration of GW Bush destroyed these bulwarks of the American economy, finishing the job his father had started during the Reagan, and then his own short-lived, administration. In those years they strived mightily to transfer America's manufacturing base overseas, creating the Rust Belt, destroying the Savings and Loans Industry, and then, hand-in-hand with that, moving military bases from its Homeland, where they served as anchors to local economies, overseas, where the economic benefits flowing from the US taxpayers' support of said bases, were transferred to the citizens and economies of its enemies.

They then, in connivance with Norquist, who had already drafted his "Pledge not to Raise taxes" which they planned to have every Republican sign, passed their tax-cuts for the rich, even as they funneled a greater proportion of the productive wealth of the economy into their pockets, knowing that the taxing power of the federal government would thereby be concomitantly reduced, and only then launched their War on Iraq (though we all knew it had been planned long before Bush was even elected, per the PNAC).

Then, finally, playing the trump card of an overaching military preparedness completely out of balance with any threat from any single or combined force on the planet, they used that military in a bungling, farcical charade, demonstrating how that trump card, once played, projected far less power than the fear of its being played did.

That this was a planned campaign, which I, among other writers, was writing about and warning about before any attack occurred on the WTC, has been completely ignored, the historical facts no longer containing any meaning, proving that the complete derision with which the Bush regime held its own constituents, never mind its opposition, was completely justified. To this day, the fact that the planned destruction of their own government was the platform on which the Republicans put Bush into the White House, is still never mentioned. As I said at the time, it can't be called a conspiracy when its announced beforehand and done in the full light of day. It can, however, be called criminal, traitorous, treasonable and, most importantly, prosecutable.

But now, our Democratic President insists that the treason of his predecessors should be ignored.  President Obama, when pressed to investigate Bush and Cheney for war crimes, has repeatedly declared: "I prefer to look forward rather than backwards". And what, exactly is it he looks forward to? Well:

Continued destruction of the middle class,
Escalation of wars in all parts of the globe,
Continued exposure of our savings to pillaging by the very banks we pour government funding into,
Debasement of Social Security
Declining longevity as the forces in the US that conspired to destroy The Soviet Union now openly take aim at destroying anything that smacks of socialism here. (And the result is just as predictable: millions will die, saving Medicare billions, or more likely, trillions.)
Hopelessness for growing numbers of our young.
The prison industry will remain the largest growth  opportunity.

And those are just the known knowns. The unknown knowns and the unknown unknowns aren't even known.

But when they are, it won't be pretty.

Happy New Year!

Monday, December 24, 2012

John Law Shredded = Coal's Law

The reason I'm so adamant about the rot being deeper than the prosecution of a few financial criminals and greedy bankers is going to solve, is illustrated, I believe, by the assertion in the that, "The Lie that Prosecuting Bank Fraud Will Destabilize the Economy Is What Is REALLY Destroying the Economy". This belief is belied by the 'punchbowl' metaphor I mentioned in my previous post, namely, that of the Greenspan's FED that taking the punchbowl away will dampen the spirit of Irrational Exuberance.

This guiding motto was enunciated in 1970 by William McChesney Martin who was chairman of the Federal Reserve Board during his lengthy 19-year tenure from 1951 to 1970, who stated that it was his job to shut down any wild and irresponsible “party” involving money before it could start.  He was going to take the punch bowl away before people started profligately spending money and negligently loaning money.

This is diametrically opposed to the public stance of the current FED board and the ECB, whose stated policy is do exactly the opposite. Their current belief, given what the Global Economy has morphed into, is that the only wind in the sails of the current ships of state are the one blowing bubbles of speculation up our collective assets.

Which isn't all to say that prosecuting criminals is a job that should be shirked, but just that I can't help but wonder whether restoring confidence in a system that is a confidence game isn't in fact doing a disservice to the very people that it's claiming to serve. The economic system and the products, services and necessities it brings to people's lives, providing them with a steady livelihood and a degree of stability, should not be left to those who consider it to be just one big party put on for their own benefit.  Should the underlying edifice on which that system is built, the dollar and its exalted status as the  world's reserve currency, really be thought of as an intoxicating drug, the access and control of which is in the hands of an anointed few who have the audacity to laugh in our face as they puke on our shoes?

The reason that "the central bank has not been immune from suspicion and lack of respect" is that, while claiming that "Our country can not enjoy the long-run "maximum employment and stable prices" if the financial system is unstable", and that the "central mission of the Federal Reserve, to maintain financial stability and reduce and contain systemic risks", it maintains the punchbowl in fully spiked mode, via ZIRP, all the while knowing that, in its own words, "lower interest rates will unleash inflationary forces, inflicting severe damage on our economy", and that the resulting "inflation destroys jobs".

For, as Greenspan says, "at root, money--serving as a store of value and medium of exchange--is the lubricant that enables a society to organize itself to achieve economic progress. The ability to store the fruits of one's labor for future consumption is necessary for the accumulation of capital, the spread of technological advances and, as a consequence, rising standards of living."

So, by derstroying the value of that dollar, by purposely inflating its numbers, thereby deflating its value, the FED brings the analogy of monetary policy to the world's energy policy, both of which are inflicting undeniable damage to future living standards in order to uphold the illusion of present prosperity. Because, just as burning larger and accelerating quantities of coal poison's tomorrow to enjoy today, using John Law dynamics to stimulate an economic structure that will otherwise collapse into chaos and World War similarly enshrouds the globe in an obfuscating miasma of toxic fumes that is used for the sole purpose of hiding the fact that it is their own policies that have brought us to this impasse.

Instead, the FED keeps the bowl spiked, its speculative acolytes drunk and reeling, so that when the consequences of this poisonous policy occur, a smokescreen is already there for them to hide behind, and once again, using the well-tested cry of plausible deniability, claim that no one could have seen it coming.  Neglecting to mention that the reason for that is because smoke gets in your eyes, and they are the main source of that smoke.

My contention that this is deliberate, is based on quotes, such as that cited above, that "money--serving as a store of value". That value, being derived by the labor and productive installed manufacturing base of the underlying economy, is stored energy. Money is a sort of battery that a laboring public uses in order to, not only use as an exchange medium, which is more analogous to a capacitor, but to, via savings, store the energy output of its useful years into a battery that it can draw down when its unable to use its carbohydrate-fueled labor any longer, ie, when it ages.

And its that very nature of money as a store of energy that is being surreptitiously dissipated via the policies of the very institution whose stated purpose is to maintain it. That is fraud, and criminality as stated in the beginning sentencce of this post, but, given the statement and policies of the very persons in charge of it, one that it is unable, by its very nature and structure, to provide.

The only way to change this dynamic is to confront it, but by harping on the necessity to prosecute those responsible and bring them to justice, we actually aid and abet the chicanery because we create the false impression that if only we could rid the system of these lawless elements, confidence will be restored and all will once again function fine.

But that is not the case.  It is the same as saying that if only we can fine the Corporations who burn coal, and institute carbon credits, install scrubbers, and initiate carbon sequestration, the issue of Climate Change will be addressed, and everything's hunky-dory. Great, all-fixed, let's all go for a drive in our electric-powered vehicles. 

But what is actually expressed by that attitude is one of hopelessness  and despair. Both attitudes admit something different then what they pretend. They assume, and want us all to agree in that assumption, that this is the best we can do, this is all we can hope to accomplish. And perhaps that is really the case. But the fact that any other suggestions are quashed, any real meaningful dialog on the future prospects of humanity, other than one in which we're all skewered on a spit and left turning in the gyre, are denied, I remain profoundly suspicious that this is the only route to take ... and you should be too. 

Saturday, December 22, 2012

Pear-shaped economy: Reap, then rape, then say, YOU must Pare down.

The Voracious Vortex Swallows All.

The upside-down-pear shape of the Global economy got that way because the avatars of balanced budgets are the same people who benefit from swelling budget deficits. Meanwhile the poor, who want increased public spending, are the same folks who pay nothing into the public purse, and those demanding free healthcare are the very people who refuse to pay health insurance, so the malaise has gone viral. Because when the most successful people on the planet die, they get to pass on their ill-gotten gains to their progeny, which festers the entire sickness: the rising expectation of getting something for nothing infects rising numbers of the population. It is now considered a right by not only the rich, who always expect something for nothing, as it's their birthright, but now, the poor demand it as well.

As it has become increasingly clearer to increasingly large numbers of the populace that the rich get that way, not as they claim, by their cleverness, hard work and sobriety, but by rape of the government from whom they reap the benefits of their lobbyists' access to the public's representatives, and then demand the impossible of the rest of us: use our decreasing wages to increase our share of the tax burden, while simultaneously increasing our spending on consumables, to keep the economy humming, and increasing our savings, supposedly for our retirement,  but, as it turns out, so that they're easier for the rich to plunder, because the profits from business, and the river of money from the Capitol, is just not enough to satisfy the insatiable wants of  their royal-like families' growing numbers and appetites.

Thus, the only segment of the population left with a work ethic is the middle class, and the Rich are intent on the destruction of their wealth, whereas the poor are simply intent on their destruction. Though its proclaimed loud and clear that the War on Terror is alive and still the major foreign policy stance of the US, the rain of error it consists of fosters the pre-Reign of Terror-like conditions now festering in the OECD countries, those Nations who have the most, and therefore the most to lose.

The core of the problem, however, lies with the impossible economic structure of the Capitalist system that demands, and in fact needs, a globalized trading regimen, yet maintains the economics of the Nation-State, (or, if you prefer, Empirical structure, yet Democratic institutions) with financiers offering, as Lenin so aptly put it, to "Give them enough rope", and then, when they've pushed them out on the limb far enough, give them a shove and let them dangle in the wind: "Lynchenomics".

But because the only ones capable of financing the overstretched and unbalanced, are exactly the ones who'll, in their own twisted view, benefit from their failure, the falling Lehman syndrome, let's call it, brings the rest of the system down with it in a concatenated failure whose dynamics, once started, cannot be stopped. But what the masses don't understand is that this is exactly the way it's designed to work.

Let me explain: at the end of August in 2008, when the financial fiasco was well apparent, to none more so than the Chairman of the Federal Reserve, who, in order to stoke 'confidence', insisted that the economy, which had been in a recession for six months, was 'resilient', Chuck Prince, the head of Citibank, joked, as the entire globe balanced over the precipice, that he was still dancing. What that refers to in the parlance of financial economics, is loose monetary policy. The metaphor they always use, and still use even today, is to "take away the punch bowl".

As in any alcohol-fueled reel, once that happens, like in a game of musical chairs, you have a drunken stampede toward that island of safety to recover your senses and momentarily stop the sensation of  the room spinning around as your world spirals out of control. But, by design,  there are never enough chairs. So, of course, Someone has to fail.

 But the manner in which the system is now set up, that failure will cause the whole system to implode bringing everyone else into the swirling vortex of destruction. Because, via the mechanism of the derivatives known as credit default swaps, which are nothing more than gambling bets in the guise of insurance, the financiers have put the noose around their own necks, so using a complex structure of opaque mathematical formulations and using such public-funded guardians of the financial world as the SEC, to guard against anyone investigating the manner in which it's been rigged, the very avatars of Governmental prudence and fiscal responsibility have roped our governments into covering all their bad bets, using the public purse, and forcing the institutions, abetted by the scurrilous conniving of sniveling, traitorous, obsequious slime, such as Grover Norquist, to make sure that it's those (that would be us) who get nothing if the bets win, pay everything when the bets fail. They do this, naturally, by insuring that the rich pay a minimum of taxes, raising the federal deficit, which they then use, by buying the Treasuries that fund it, to reap yet another steady stream of income from the government which they then use, via leveraging, to double down on their bets and the reel spins even faster.

And then they scream about too much government debt, fiscal cliffs, deficit spending, and over-taxation of the wealthy job-creators. And that is how they disarm Earp, rape the public, reap the rewards from the very thing they bluster about, which turns the economic structure into an upside down pear, with them at the top, and then demand those they've raped to pare down their expectations. And that's how the patronage in the pear tree works.

Merry Christmas.

Thursday, December 20, 2012

Die Verbrecher Klasse.

 "One (Criminal) Class to rule them all and in the darkness bind them".

According to Ambrose, "The new risk (in Asia) is a return to overheating as ultra-loose monetary policies in the West trigger a “flood of capital into the region that could lead to asset bubbles and excessive credit growth” -- with the risk of sharp reversals later", which illustrates that the real ramifications of Bernanke's FED policies doesn't allocate money, and thereby increase employment in the expensively-priced-labor market of the US economy, but instead provides the mechanism to siphon the money of the US taxpayer, via private capital - and private profit, taxes on which are small to non-existent - into the cheap labor market of China. Thus the conundrum of China's ever-expanding economic growth that the pundits pretend to wrestle with, is revealed for the shell game it's always been.

But we should not be surprised when the avatars of Financial Chicanery in the Capitol of Crony Capital smile into Uncle Sam's beard, for in the sum total of their beings, they are people in whom the propensity for Evil crackles like the fire under a cauldron.  

They, of course, would presumably retort that they simply serve the public, and are struggling mightily to save the world from catastrophic deflation by channeling cheapened dollars into a cheapened labor market to bring cheap goods at cheap prices to US consumers made hungry from receiving paltry paychecks from cheap employers, forced to be so in order to compete with cheaply-priced goods imported from China, using cheap capital indirectly supplied by the FED. 

This makes one ask how economics and, specifically, its criminal branch, finance, came to have its present-day aspect, which is in itself important, since after all, it dominates us. Not even an illiterate person is safe from it because her life is dependent on countless things that are born of it. 

And the answer to that, greed worshiped as a god, though simple, is not taken for the evil it is. Perhaps you could argue it's a necessary evil, however, just as the citizens of the most virulently-espoused form of capitalistic society are also those the least informed as to what their lives would be like if it were actually practiced here, the Nation itself, avowing its deeply religious, and specifically, Christian, roots, remains, at least in word, oblivious to the fact that the reigning power that drives it, Greed, is one of the seven deadly sins, and is therefore, based on Evil, as that's what sin is.

Not that it would be a virtue to let oneself be taken in in your business dealings, instead of putting one over on your rivals. However, if you were to investigate just what those qualities are that lead one to the discoveries that allow one to dominate your competition, you'd find that freedom plays a large part in it: freedom from scruples, freedom from inhibitions, freedom to allow the destructive spirit to drive you, and freedom from moral considerations. It demands patient bargaining for the smallest advantage, dogged endurance to attain your goal (while staying out of gaol), and a veneration for measure and number amounting to the most acute mistrust of all uncertainty; in other words, you must see like the hunter, soldier, and merchant, which is to say, like people whose nature it is to be cunning and violent. 

The financier simply transposes these vices into intellectual terms and re-interprets them as virtues. And so by this means they are seemingly raised above the appearance of pursuing their ends simply for their own personal and comparatively vulgar advantage. There still remains however, the element of primal Evil that is not lost in bringing about this apparent transformation. 

Intensified as it is into the heroically bitter realization that you cannot rely on anything in life except what is secured and riveted, these basic drives are enclosed within the soberness of the so-called science of economics, and even if, in order to keep up the appearance of nobility and honor and a concern for justice, one does not want to call it the Devil, the fact persists that it brings a decided whiff of brimstone with it. 

However, so long as it is able to deliver on a large enough proportion of its promises to a large enough contingent of its constituents, this basically primal aspect of its make-up is ignored, if not, in fact, completely forgotten, such that, when, as is the case in the present, the paradigm no longer applies to a large and growing swathe of its well-armed and overly-driven-to-dominate populace, and they turn on one another with the same violence and cunning that has been unthinkingly inculcated deeply into their psyche, no amount of gun control and high-minded speeches about the shock such viciousness engenders, can change the metaphysics of intoxication with which they have been so thoroughly imbued.

Hence, discussions of the political structure of the United States as a Republic, or a Democracy become not mere academic exercises and intellectual meanderings, but become issues with which it is incumbent upon the denizens of an over-arching, domineering Empire to come to terms. Instead, the world's only Super Power remains purposelessly unaware of, or at least refuses to address or admit, its status as World Dominatrix, even though personages as ideologically disparate as neo-liberal Niall Ferguson, and neo-con Charles Krauthammer have constantly reminded us of this status, we just as determinedly refuse to acknowledge, and therefore, discuss or digest its political ramifications.

Until we do, however, the financial class, whose bailiwick it is to supply the lifeblood, in the form of money and credit, that circulates through The Empire's sclerotic veins, will continue in their position of power and dominance, for without them, it all collapses into the chaos and uncertainty that are the lifeblood and power base of a thriving and pulsating Democratic Republic.

Wednesday, December 19, 2012

Drill, Baby, Drill = Burn, Baby, Burn.

"Did we come here to laugh or cry? Are we dying or being born?"
                                                   Terra Nostra by Carlos Fuentes

With panting excitement, the Oildrum published a list of energy-positive posts proclaiming the death-knell of the Peak Oil Theory and the beginning of the Renaissance of a new era of Oil's wells so all's well, while Energy & Capital, like similar Investment newsletters trumpets the easy way to profits is by investing in America's newly-found oilwealth, as it crows about the soon-to-be bonanza to be made as the US becomes a Natural Gas exporter (so get in now before the rest of the suckers and be one of the insiders during the ramp-up).

Meanwhile in the SFChronicle, the big news is the 25% rise in California property values, largest since the economic meltdown in 2008, heralding a new era in prosperity for the State.

In another report the miracle substance graphene is being drooled over while tantalizing  vistas of cash mountains, soon to be dumped into your bank account, are temptingly dangled in front of readers' eyes.

A new tidal wave of Irrational Exuberance is gathering force in the  ionosphere as the Bernanke Put (as into his bank accounts) puts money to work and throws people out of it. It's all so reminiscent of that avatar of the Computerized future, Alvin Toffler, and his series of books on the subject: "Future Shock", "Power Shift", and "The Third Wave".

Breathlessly looking to the future with utopian eyes, Toffler explains how the world of tomorrow, which of course, is today, will be transformed by technology, not into a time when millions of people will be suckered into buying cookie-cutter McMansions in locations so far removed from their workplace that any rise in fuel costs will put them out of reach, but instead he describes the Brave New World of the Electronic Cottage, that'll usher in the Home-centered society which will be so family-friendly it'll, "please the most ardent environmentalist or techno-rebel."

He explains how employees can do all their work at home, and even changing jobs will "only require a simple act of plugging in a different computer". This miraculous transformation will engender another one, one that will "transform neighborhoods into stable community centers, with less stress on individuals, fewer transient human relationships, and greater participation in community life".

He goes on to explain how this will lead not only to less energy utilization, but its decentralization, because "energy demand will be spread out and thus make it easier to use solar, wind, and other alternative energy sources". That's what he wrote in "The Third Wave". "The Third Wave" was published in 1980. Before another year elapsed, the solar panels on White House would be gone.

And that 's the problem with techno-fantasies and masturbatory delusions of quick and effortlessly-acquired riches. As Anthony Trollope so well documents in his tome, "The Way We Live Now", about financial fraud and the salacious get-rich-quick schemes it stimulates (in none more so than the already-wealthy), by the time they actually get put into place and brought into reality, all the money has been skimmed off and put into the bank accounts of the financier-class, with the result that the implementers of their chimera are left with the trickle-down dollars to try and eke out some modest replica of the dream that was sold in order to vacuum the wealth out of investors pockets into theirs.

And worse, as the Toffler quotes are meant to demonstrate, even if none of the advantages to society promised by them actually come to fruition, and in fact, they have the exact opposite effect, and the benefits flow only to a small well-connected elite, by the time that reality bites, the money's gone and the old way of life has been so thoroughly and pitilessly uprooted that the possibility of going back to it has been utterly demolished. Then, no matter what the cost, the installed base must be maintained and expanded upon to keep the wheel of trade turning and the flow of life's necessities, well, flowing.

And that 's why the babble is reaching a deafening crescendo now. Having orchestrated the financial debacle of the century to demonstrate to the new nouveau-riche their utter dependency (So you think you're middle-class? Well ... Management knows better) on the continued flow of oil and its byproducts to their physical well-being, the stage is set to have the new Tofflers take the stage and crow about the new future awaiting them, one of ease and family caring/sharing and techno-pleasure.

But far from writing here to tell you not to listen to them, I'm here to tell you the opposite. Because in 1980, when Toffler was publishing his second book in the series, I was working for a little company called NCR-Comten, a Front-end processor (FEP) manufacturer and RCP (remote concentor processor: a sort-of store and forward message system where the messages were network flows) installer that was using new, exciting, proprietary technology to wrest control of the network away from IBM and AT&T and deliver IT into the hands of their customers who were, up till then, in a more-or-less hostage situation vis-a-vis those powerful monopolies (the Justice department was soon to have an Anti-Trust suit against the one, and order the break-up of the other).

It was only by working in the heart of the beast, installing what was referred to as CNS, Communication Networking System, that I was put in a privileged position that  enabled me to see the internal dynamics of major corporations and how, for all their talk of Free Enterprise, they always and everywhere in these great United States, worked the hardest and strove the mightiest to shake those most lucrative, dazzling fruits from the customer-base tree: the Government (and especially the Federal Government) Contract.

But who cares? Being on the cutting edge, knowing technology that's a mystery to the rest of the world beat the hell out of standing in a Teller's window or sitting forty hours a week as a drone under the thumb of management in the insurance industry (yes they actually called the make-busy work of desk-clerks, industry), if for no other reason than that management treats you as though you're a man of importance (see they knew before I did how important that was to me).

However, remember this if you choose to follow the path of the pioneer: You'll be destroying other peoples livelihoods, throwing entire industries into the dustbin, and eventually suffering the Karmic reverberations as the years go on and the stench of obsolescence now begins to cling to you, and those who once treated you as a guru start to think, "He's through".

Because it 's not only oil that leaves a residue, a CO2, a filthy flue, as human resources are burnt up and their worn husks readied to be thrown onto the slag heap, provision's been made, plans have been laid and the price will be paid. The mentality that pumps wells dry and leaves a blighted, debauched landscape, sucked dry, succubus-like, of its lifeforce, behind, with no provision for its reclamation or renewal, has the same plan, ie, none, for you.

So plan well, and save wisely. Investigate the mystery of what is wealth, and what is money, and know that the two are not synonymous. A Sandy Soil when filled with oil is good for men who wrest from it bitumen, but as you should know, even water's flow though good and great, when it drops like freight,  Sandy waters  destroy and your world's but its toy.