The Time is Nigh to Occupy

Even if your only news outlets are corporate megaphones Fox News and CNN you must still be aware of the ongoing Occupy Wall Street protests, demonstrations and organizing taking place in lower Manhattan. Indeed, the spirit of resistance appears to be spreading faster than a Texas wildfire as similar encampments have sprung up all over the country. To gain a sense of the scale you can check out Occupy Together, which is providing a collection point for access to information on the various protests that have been created, and are being created, in solidarity with Occupy Wall Street.

What began as a modest sized gathering in "Liberty Plaza" in lower Manhattan has steadily grown to encompass large scale mobilizations in cities across the nation. We need to nurture and foster this growth, because such direct demonstrations of real democracy are the only way the majority, all of us, will be able to exert any kind of political and economic power in what now can only be described as the Corporate Oligarchy of the United States.

If pulling a voting booth lever every 2 or 4 years remains your only participation in what passes for our democracy, then it's time to switch the TV channel to something other than Fox News or CNN. If you still need convincing, still think that vote has meaning, just consider the shape that the 2012 presidential election (as an example) is taking. It is more than a year away from the elections and one can already describe the nature of the choice that one will be confronted with upon entering the voting both. If you remain committed to self destruction then you are likely to be tempted by one of these shining examples of human thought; Mitt (corporations are people, yes, really they are) Romney, Rick (let's just pray for rain) Perry, Herman (I will stand against Sharia Law) Cain, Michelle (minimum wage, we don't need no stinking minimum wage) Bachmann. That's not the full list of Republican candidates, and I didn't even get to Rick Santorum, or Newt Gingrich, but you get the point. So, if you can't find the intestinal fortitude to connect the arrow for one of these corporate clowns what other option do you have? Well, sadly, that "other" option is also largely a corporate clown, President Obama. Elected ostensibly to usher in "change," Obama has shown himself to be a staunch defender of the status quo. He has done more to foster cynicism and extinguish hope within his own political base than any Republican could have.

There is no meaningful choice here, "elections" in the US have largely become public relations exercises whose primary goal is a manipulation of voters so as to cynically ratify an intolerably unjust system that has abandoned the needs of the vast majority of the population in order to extract ever more profits for a privileged minority of super-rich and their lackeys.

As the election cycle gears up, billions of dollars will be spent--billions of overwhelmingly corporate dollars--to "purchase" candidates and influence the outcome. Endless hours of vacuous punditry will be spoon-fed to the population by the corporate media to convince us of the "excitement" and "importance" of the election. You see, when the outcome is so rigged in advance, the game at least has to look convincing or else too many might realize the true nature of the charade being perpetrated. And while at least theoretically a candidate might still be elected who would provide some challenge to the corporate oligarchs, their virtually bottomless electoral war chests serve to reduce those odds to a virtual impossibility. And as additional insurance against even marginally meaningful elections, those ostensible lovers of American democracy just can't wait to pass laws making it harder for people to vote.

The corporate media's response to all this has been anything if not predictable, and follows the standard playbook. First, attempt to ignore the protests. What, there are protestors? What, there are problems that might actually justify protests? Second, when it becomes impossible to ignore the situation, then attempt to criticize, denigrate and dismiss the protestors and distort their message and reasons for demonstrating. Typical of the latter tactic was the abysmal performance of CNN's newest "anchor" Erin Burnett in her debut show on the network where, rather than attempt to explore the issue in an objective way, she simply attempted to mock and dismiss the protestors as "...dancing...and bongo playing...hippies..." See also Glenn Greenwald's total evisceration of Burnett and with it the bulk of what passes for American journalism these days.

But of course the corporate media doesn't get it. Consolidation of media ownership has left a handful of large multinationals in control of the news outlets from which the majority of Americans regularly get their information. Any pretense of public service has long since been eroded with the effective sedation of the regulatory responsibility of government. After all, regulations are "job killers," if we are to believe the right wing meme that is repeated endlessly, and never challenged, in the mainstream press. Public service gets in the way of profits. Can't have that. So naturally these corporate media conglomerates are just another cog in the edifice of oligarchy, and an important cog at that.

If you're one of those still harping about "liberal media bias," then it's long past time you dusted off the remote and did what's left of your brain a favor and switched off Fox News. The only bias in the corporate media is that which slavishly supports their own corporate and economic interests, which, more often than not are in direct opposition to the interests of the vast majority of citizens. The media's "celebrity" and outrageously compensated anchors are for the most part members of the same economic and political cohort as the corporate CEOs and managers that finance them, so naturally they tend to identify with the same ideology.

With the ballot boxes bought and paid for the only way to halt the slide into further plutocracy and possibly fascism is direct democratic action, like the Occupy Together movements. It is a fundamental right of the people to peaceably assemble to petition the government for a redress of grievances. Corporate elites recognize this, hence the several decades long war against any avenue for collective democratic action, such as unions, fairer labor practices, and enforcement of workplace safety regulations.

It increasingly appears likely that our only route to a saner, more equitable and more sustainable future is via direct democratic actions. Occupy Wall Street is leading the way. Let's get behind them and push. We are the 99 percent.

"Burglary Tools to Criminals"

Occasionally a right winger will go "off script" and we get a rare treat, we get a peek at what some of these folks really think, and more often than not it isn't pretty. Such is the case with this hate-fest from the pen of unrepentant fascist Matthew Vadum, and excerpted here at Talking Points Memo.

While suppression of the voting rights of their political opposition remains a persistent right wing goal--Republican "dirty tricks" prior to elections have been a commonplace, including the recent attempts to suppress and confuse Democratic voters during the recent Wisconsin recall elections--such overt anti-democratic sentiment has typically been couched in the rhetoric of trying to reduce voter fraud. But perhaps worrying that such tactics are yielding diminishing returns, we now have this vile screed from Vadum which dispenses completely with any pretense of trying to stop fraud and just gets right to the heart of the matter. Vadum has the following to say about poor people, "... registering them to vote is like handing out burglary tools to criminals. It is profoundly antisocial and un-American to empower the nonproductive segments of the population to destroy the country." And, according to Vadum, "... the poor can be counted on to vote themselves more benefits by electing redistributionist politicians. Welfare recipients are particularly open to demagoguery and bribery." Well, at least he's not shy about telling us what he thinks of democracy. Apparently it's un-American to allow a certain segment of the American citizenry to vote, the "wrong" segment that is. While he's not completely explicit about who the real target of his ire is, with references to ACORN, Obama's ostensible support for welfare recipients and a quote from an NAACP official, it's not that hard to connect the dots. Not only is this a vile screed, it's a vile racist screed to boot.

In the remainder of the piece Vadum then goes on to lay out the "infamous" Cloward - Piven conspiracy. According to Vadum, this is how the poor will "... destroy the country ..." You see, a modest, reserved liberal academic (Frances Fox Piven) who has done activist work in the past in support of poor, disenfranchised communities is pulling the strings of a vast, evil, liberal conspiracy that will bring down America. This fantasy, made famous by the ravings of none other than Glenn Beck, ostensibly came within a hairs breadth of bringing down capitalist western civilization and seemingly all the good in the world to boot, and will no doubt succeed next time if we let our guard down and fall into such traps as, say, letting the poor vote. Or so Vadum would have us believe.

What a pile of excrement. Vadum's hatred of the poor is apparently only eclipsed by his hatred of poor welfare recipients. This is just classic fascist scapegoating, nothing less. Not surprisingly, the piece is shot through with distortion and hypocrisy. For example, one might be tempted to ask if Vadum harbors a similar hostility for those myriad other kinds of welfare recipients, like bank CEOs and their corporate clients who had to be rescued and bailed out with serious multi-trillion dollar welfare, or the oil company CEOs and board members whose annual take in corporate welfare is in the tens of billions of dollars. But Vadum is presumably happy to see these folks keep their voting privileges, because their redistributionist politicians are shoveling it to the "right" folks. Wing-nuts like Vadum just love to have their cake and eat it too.

Of course the majority of the poor are productive working people and are not poor by choice. Why should they not have the right to vote? They are for the most part kept poor by a system that the insipid Vadum and those of his ilk worship, that values the rights of money over the rights of human beings to a decent living. But Vadum is on the wrong side of history and knows it, and that explains much of the fear-mongering from his crowd. These folks hate democracy because it is an avenue by which the will of the majority may be implemented and some measure of economic justice ensured for all. Now that's worth voting for.

Debt Ridden? Obama and the Destruction of the Democratic Party

The current debacle over the raising, or not, of the US government's debt limit, as well as the train wreck nature of the current budget negotiations in general, is just further evidence of a political and economic system that is broken and corrupt to its core. The debt limit has been raised by Congress some 80-odd times in the last 70 years. It has been done by both major parties, rather routinely, and, perhaps in recognition of the 14th amendment (section 4) prescription that US debt's legally obligated by Congress shall not be questioned, has not been the focus of substantial partisan rancor, at least until now. We largely have brain-dead, hypocritical, corporate-boot-licking Republican ideologues and their frothing tea-party accomplices, to thank for this, but with significant assistance from an absolutely rudderless and incompetent Democratic Party that is ostensibly led by none other than the President, but which in reality is effectively leaderless.

The current hysteria about the debt (and deficit) begs some questions. 1 ) When did the Republicans become so obsessed with the debt? Was it when they were running it up faster than you can say "blank check?" Apparently not, since the bulk of the current deficit largely consists of huge war and defense-related expenditures (think Iraq and Afghanistan), massive tax cuts for corporations and the wealthy (think Bush tax cuts), a huge prescription drug giveaway to pharmaceutical companies (yup, W again), and a dismal economy that has severely cut into tax revenues. Guess who we have to thank for all that? That's right, Republican administrations. Finally, was the deficit a concern to Republicans as the budget-busting Bush tax cuts were set to expire? Not in the slightest. And Obama, sadly, also seemed more than happy to accommodate this massive increase to the Federal debt.

The Bush administration, with it's deregulating, hands-off, gung-ho Capitalist cheer-leading happily watched as the financial system imploded under massive corruption and malfeasance, taking down the rest of the economy with it. Was the deficit then a concern as Hank Paulson, Bush's Treasury Secretary, floated a straw-man bill before Congress to grant him (Treasury) a multi-trillion dollar blank check with which to bail out his bankster buddies? Indeed, the deficit was irrelevant when it came to bailing out the core Republican constituency of wealthy banking fat-cats (sadly a chief Democratic constituency as well). How obscene now their desire and attempts to balance the budget by slashing social and health programs for working people, seniors and children.

One of the biggest myths about the current Republican Party is that they loathe big government. They love to say it, but talk is dirt cheap, their record of deeds indicates otherwise. Republicans love big government, as long as it's "bigness" consists of distributing public money to their wealthy corporate cronies, and restricting the political power and freedoms of working people.

No, with the Republicans now in control of the House of Representatives, a result for which we largely have President Obama to thank, they see that they can now hold the rest of the country hostage to their professed desire to see the deficit reduced. This is just a smokescreen, and an attempt to use a manufactured debt "crisis" as a cudgel that they hope to use to eviscerate programs which they have long despised, Social Security and Medicare, for example.

While we're at it let's explode another myth that mindless, lapel-flag-wearing Republicans hold dear, that their patriotism is unassailable. Patriotism? Are you kidding me? There are many adjectives one could use to describe the budget hostage-taking currently being carried out by congressional Republicans; selfish, reckless, insane, childish. I'm sure you have your own favorites, but patriotic is almost certainly not among them. Indeed, forcing such a confrontation which has the very real possibility of doing serious harm to the financial and economic security of millions of US citizens is more treasonous than patriotic. You might think at this point that the shame of it all would eventually kick in and force an about-face, but you'd be wrong, because shame is no match for ideological fundamentalism.

If all this has you thinking about Greek tragedies, then let's consider a second question, regarding the nature of the US debt. 2) Who holds the debt of the United States? And perhaps a corollary, how is it that the US government can actually be "in debt." As it turns out, a majority of the US debt in the form of US Treasury bonds is held by US citizens and institutions. Much of it is held by private US chartered banks, specifically, the Federal Reserve banks. So, in some ways the federal deficit is debt owed to ourselves. Not all of it, perhaps 35% is held by foreign institutions, say, like the governments of Japan and China. Needless to say, the majority of those holding US bonds are and/or represent wealthy, private corporate interests. Indeed, the Federal Reserve (or Fed for short) is one of those classic government double-speak terms, kind of like the Defense Department (which used to be known by the more accurate moniker, War Department), because it's not really Federal (it is privately owned, though with some very loose governmental oversight), and it's certainly not a Reserve (of, say, money!). So, if the debt is largely a debt owed to US citizens, why didn't the government tax more substantially those wealthy interests directly, rather than issuing debt which then must also be serviced with interest payments?

Another amazing fact about the Fed is that it doesn't really have the money it lends. The Federal Reserve act of 1913 established the way in which the US monetary system is organized. The Fed, indeed, private banks generally, can simply create money as bank account entries (loans) which can then be spent, but the US government (ultimately its citizens) is essentially placed in debt for this. But that's not all, for the privilege of essentially creating "money" out of whole cloth these institutions also demand the right to charge interest payments! If this sounds like the sweetest deal you've ever heard, then you'd be close to right.

So, for example, let's look at the recent economic calamity. The financial system implosion of a few years ago was largely the result of the issuing of massive amounts of fraudulent loans by private banks and financial institutions, followed by the repackaging and sale of those loans as securities, again under corrupt and fraudulent circumstances. That is, these were loans that private banks knew would or could not be paid back, and they were packaged and sold again as vastly overvalued securities. Note that such loans (money) are created in the same way that the Fed creates money, simply as new accounting entries on their balance sheets, that is, largely out of whole cloth. After the system collapsed these same private interests (and their sponsors within government) were not held responsible, rather, they contrived to have these fraudulent loans paid back dollar for dollar at the public trough. If they weren't paid off we would all face an economic armageddon, or so we were told. This was and remains, in effect, a vast shakedown scheme whereby public tax dollars, the bulk of which are now supplied by lower and middle income Americans, were and are redistributed to wealthy private interests.

The ultimate source of "money" in our present economic system is the full faith and credit of the US government, which is finally represented by the sum total of the productive capacities of it's tax-paying citizens. The government, our government, has effectively turned this credit, our credit, over to wealthy private interests (banks, financial institutions and their corporate patrons). They can issue loans at interest, often with usurious rates, backed by our blood and sweat. Yes, in effect, banks create money out of thin air, backed in the end by our productive labor, and expect interest payments in return. While there do exist some constraints on the system (the scheme of fractional reserve lending, as it is called, limits to some extent the amount of such money creation), this is essentially what the current debt "crisis" is all about. It is about whether the productive work of the vast majority of Americans will serve their own needs (the public's needs), or those of wealthy, private, corporate interests. Indeed, in the current standoff, the Republicans are attempting to extort their demands by effectively holding hostage the full faith and credit of the United States, something which is not theirs to begin with! That's what you call chutzpah!

If the Republican's succeed in enforcing massive budget cuts, and increasingly it seems that Obama and the Democrats are more than content to proceed down this road, then we will have our answer, and many Americans will be pushed further down the path to eventual indentured servitude. Needless to say, you would be hard pressed to hear any serious discussion of the above on Fox News or most other corporate media outlets.

3) So how did we get here? That's quite a long story, so I'll stay with only relatively recent events. As summarized above, after eight years of reckless Republican rule, and the economy shattered, Obama was elected with a large majority to change things. Not only did Obama have a strong electoral mandate, he also had Democratic control of both houses of Congress. But from day one he has governed almost completely in the interests of corporate America while largely ignoring the constituency that elected him. He was faced with crippling economic circumstances upon taking office, but his appointed economic team was largely representative of those who had created, or at least enabled the financial collapse. He made the banks whole but could only manage a watered-down and anemic stimulus package completely inadequate to the economic need. And as a result he has been more or less forced to accept the Republican meme that the "stimulus" didn't work, because, well, government stimulus doesn't work. Of course, it did work, to the limited extent that it could given its size. Indeed, much of the stimulus package was a further capitulation to Republican and conservative themes, with more tax cuts and less spending. The same was true with Obama's health care plan. It is largely a Republican plan (similar to that enacted by Mitt Romney while governor of Massachusetts). This is an entrenched theme of the Obama presidency; while ostensibly representing the Party in opposition to Republicans he has adopted conservative views and Republican framing on almost every issue. Because of this, Republicans know that if they just protest a little louder or longer, then they will get what they want. This is glaringly obvious in the current circumstance as Obama has swallowed whole the Republican "debt crisis" meme and has in fact offered the largest spending cuts, including cuts to ostensibly core Democratic programs such as Social Security and Medicare, programs which have not created the current deficit. Is this what he was elected to do? From day one in office Obama has not led, rather, he has simply reacted to whatever circumstances arose, and these have largely been engineered by Republican and conservative desires.

Several conclusions are possible. First, that Obama is asking for and getting exactly what he wants, that he is, in effect, more or less a conservative at heart. If true, it means that essentially his entire campaign was, at best, a massive deception, and at worst, a wholesale fabrication. Second, he would like to achieve more progressive ends, but he is completely unwilling to fight for them, which, if true, begs the question, why did he want to be President to begin with? Likely there is some truth in both. He operates within constraints imposed by our current money dominated political system, but clearly Obama seems totally unwilling to upset corporate interests that fill his and his Party's campaign coffers. He seems most comfortable in doing all he can to not rock the boat. In either case, he has shown himself to be thoroughly devoid of serious leadership skills.

Indeed, the Democratic Party has largely been decimated by Obama's "leadership." Having alienated his core of support it was no surprise then that the Republicans were able to achieve gains in the Congress during the low-turnout mid-term elections. This was also aided in no small part by Obama's complete refusal to confront Republican ideas and policies in any forceful or organized way. Again, any messaging that he has attempted has largely been framed from conservative viewpoints. This only further alienates potential supporters.

So, having ignored and alienated the majority constituency within his party, he now threatens to cut core Democratic programs as part of a desire to win "bipartisan" support for a horrible budget cutting deal that will shatter the lives of many of his ostensible base constituency, and resign the country to a future of stagnation and decline? This deal is "bipartisan" only in the sense that it is exactly what conservatives have been craving, and what Obama will apparently try and force congressional Democrats to vote for against their better instincts. In reality, this deal is a suicide pill for congressional Democrats and they would be wise to oppose it with as much vigor as they can muster. Obama seems to think that in agreeing to this fools errand he will be seen as some great conciliator that saved the country? Who does Obama think is going to vote for him come November 2012, all those people whose futures--and their children's futures--he has resigned to economic misery? If so, then he and his advisers are dangerously delusional.

So where does this leave us and our future? Any hope lies in the fact that comfortable majorities of Americans actually want to see the country move in what would be accurately termed a more progressive economic direction. This includes majority support for universal health care access and a return to more progressive taxation of the rich and corporations, among other things. The conundrum is that the necessary political organizations do not exist at present to force such changes. They do not exist largely because our political institutions are essentially under the control of a wealthy, corporate oligarchy, and the vast power that such wealth controls. The Democratic Party was at one time an avenue for the interests of the working majority to be acted upon, but this is clearly no longer the case, and indeed, if Obama "succeeds" in forcing an austerity budget on the country, then that will be the end of the Democratic Party as we have known it. It is time for progressive Democrats to confront their own leadership, and force a change. If that does not succeed, then new political organizations outside of the Democratic Party must be formed. The only alternative is a bleak future.

Clearly Not Getting It: Obama Channels Hoover

In my last post I lambasted the Democrats as the Party of stupid. I did so with a rather general critique, and did not wade into the details too much. Suffice to say that they had abandoned most of the allies responsible for their majority status and have essentially governed as corporatist Republicans might have. While "change" was Obama's over-riding mantra, he has delivered precious little of it. The ever eloquent Glenn Greenwald filled in some of the details, and Norman Soloman pointed out that the Dems have simply emboldened the right-wing populists with their Clintonian triangulation. I concluded with the speculation that the Dems would not draw the correct conclusions from their Massachusetts debacle, but rather would conclude exactly the opposite, that they should govern more "from the center," meaning more like Republicans, and to their own electoral demise.

Well, that was a week ago, and I think we have now seen enough of the Democratic response, and particularly the actions of Mr. Obama, to conclude that I was right, and that indeed, the Democrats are completely without a clue. Of course in immediate reaction to the events in Massachusetts one of the first things Obama did was to ratchet up a little populist rhetoric, talk tough to the banks a little bit. But the banksters and most Americans now know that this is just more meaningless huffing and puffing from Obama. If anything can be gleaned from his first year it's that Obama can certainly talk a good game, but when it comes to actually backing up all that talk with action, well, he seems much less adept at that, or a more cynical conclusion might be that he rarely intends to put into action that of which he speaks. This has become such an obvious pattern that, as Bob Herbert has pointed out, he is very rapidly exposing a "credibility gap" with many voters, but particularly with left-leaning, traditional Democrats. One might think he would want to reconsider such actions, since these people were after all largely responsible for his election! But apparently re-election is not a primary concern for Mr. Obama, if comments to Diane Sawyer are to be believed. No, he would rather just be a "good President." Fair enough, but a good President for whom, Wall Street bankers?

The Democrats are so inept, or maybe it's simply corrupted by corporate money, that they can't even recognize when someone comes bearing political gifts. In the wake of the populist rage in Massachusetts a number of Democratic Senators still had sense enough to be able to read the tea leaves (or was it tea bags?) accurately and decided that come November they didn't want voters to see their name next to a reconfirmation vote in the affirmative for "Mr. Bailout" himself, Fed chairman Ben Bernanke. Indeed, stiffer opposition to Bernanke arose quickly after the Massachusetts special election, and even from within Republican ranks, including no less than John McCain. Heck, if it's one thing Republicans are good at it's shameless political opportunism. If ever there was an obvious gift to Democrats then this was it. As a first step toward showing the people he was really serious about all that tough talk with the banks, Obama could have accepted the gift from these Democratic Senators who bravely tried to throw him a lifeline. Why not let Bernanke's term lapse, and then appoint a more Main-Street-friendly Fed chairman. Well, that's what Obama should have done. What did he actually do? Believe it or not he has now spent what little political capital he has left and gone on the record expressing "full confidence" in Bernanke, and is now essentially demanding that the Senate confirm him for a second term, or else! Or else what may you ask? Or else the markets will become "unsettled." Perhaps even more laughable was word of Obama's Treasury Secretary, Wall Street insider and ethically conflicted bank servant Timothy Geithner, also demanding that Bernanke be confirmed, or else! Or else what, no more bailouts for Wall Street gamblers? I can see the Republicans quaking in their boots after that threat, Not!

Judging from these actions it seems clear that the Democrats must really have no idea of how this is playing with regular working folk, nor how well the Republicans will be able to use this to their electoral advantage come November. No, they don't seem to fathom the problem with hooking their caboose, and the Nation's economic recovery, to the guy who helped usher in the second coming of the Great Depression. Moreover, while Bernanke dished trillions of dollars of taxpayer cash to the banks, who are now writing record, business as usual bonuses, an unemployment disaster descended on America, and has yet to be adequately addressed. Who does Obama think is going to re-elect him come November, a handful of rich, greedy bankers, or millions and millions of struggling Americans who see their economic dreams being trumped while billions go to aid banksters? One could scarcely imagine a more delusional and self destructive political calculation, but there you have it. We are talking about Democrats here after all.

But it gets worse. Apparently in an attempt to try and re-capture the mythical "center"--what that center might actually be I have not the slightest idea--Obama has announced a "freeze" on some Federal discretionary spending. You got it. At a time when we need more than ever the spirit of FDR, Obama is channeling Herbert Hoover so as to tame the awful deficit, and demonstrate to the folks that matter (ie. bankers and other corporate elites), that he is a true fiscal conservative. Of course, off the table from the get-go is all "security" spending, meaning that the already obscene defense budget (war budget would more accurately reflect the nature of the spending) will simply continue to grow. It already amounts to more than the combined defense expenditures of most of the rest of the world. With such profligacy you might think that evil hordes were swarming the national territory on every border, while in reality we are kept in mortal fear and told we must spend our children's inheritance because of, "... those skinny, lice covered, illiterate, dirty men in those craggy hills of a broken country?" While any real effort at reigning in spending would have to look at the defense budget, there are lots of other arguments against this ludicrous plan, and many were articulately made by none other than Obama himself during the 2008 presidential campaign! So, thanks to the wonders of YouTube, we now have Obama arguing against his own plan, before he's fully announced it! He doesn't have a credibility gap, it's a credibility ocean!

With all this it's hard not to think of FDR, who taught us that we have nothing to fear but fear itself. If only Obama would begin to listen to those instincts, the instincts of a community organizer that he must have harbored in his heart at one time, rather than the pratings of Rahm Emanuel, Lawrence Summers, Timothy Geithner and other denizens of the corporate bubble that suffocates Washington, perhaps we could hope for a more people-centered governance from here on out. I wouldn't hope to hard though, for that may be Obama's greatest failing since taking office, he has done more to kill hope than any Republican could have. No doubt we will hear some additional details, and excuses, during his first State of the Union Address tomorrow night. I however, would simply sum it up thusly, FUBAR.

Out of Thin Air

What is money? It sounds like a simple question, right? Better yet, where does money come from? Doesn't it come from, as my wife jokingly said, "... the ATM?" While you can get money from an ATM, that is clearly not it's ultimate source. In reality the concept of money is not all that complicated, however, I'm willing to bet that many readers have some serious misconceptions about it. I would also argue that this is no accident. For the most part we are not taught nor encouraged to think in detail about the more fundamental concepts around money, and more broadly, economics. I think this is partly so because the corporate elites in our society, those who control most of the money and its power are more than happy for us to stay ignorant. What better way to push through outrageous bailouts, bonuses and job cuts than when most people are content to shrug their shoulders and mutter, "well, these guys are really smart, right, they must know what they are doing, right?" Moreover, if people understood better, understood the outrageous injustices present in our economic and monetary systems they might get so pissed off as to march off and change it! After all, we still live in a political democracy, and with enough mobilization and commitment the will of the people can still be a powerful force.

So, this will begin a series of posts where I attempt to focus in on some common misconceptions about our economic system, and why I think it needs to be reorganized around the needs of people, and not the needs of money. Before beginning I have to confess to harboring from a rather young age a strong dose of skepticism around the wonders of "free market" economics. In college I remember taking a first economics course and upon finishing deciding I could not stomach any more. I think this revulsion was largely a combination of two factors. First, it often seemed that the simple models of how our market driven system was supposed to work were so crude and simplistic as to be virtually worthless when applied in the real world, and second, even in spite of this apparent crudeness the implication was that these economic "laws" were somehow akin to physics. The assumption being that they held as much predictive power as, for example, the laws of gravity. This is very serious indeed, because I think many people are of the belief that they are natural laws and thus could not be changed, when nothing could be further from the truth. Anyway, let's get back to the topic at hand, money.

Let's start with a somewhat silly, but rather illustrative example. A group of 10 people are midway on a trip across a vast desert when their vehicle fails and they find themselves stranded. After stretching their legs for a bit the vehicle suddenly explodes and all the provisions they had with them are destroyed. They decide that in order to survive an "economy" will have to be set up. They find 100 pennies amongst the whole group so they decide to issue 10 to each as their new "currency." Each agrees they will work to provide some useful service or product that will help them survive. Joe decides that he will make simple pottery vessels to store and transport water. He is able to make ten in a week, and he sells nine for 1 penny each and keeps the tenth for his own use. He uses his money to buy necessary items from his colleagues. The pots work well but break rather easily. Joe starts to get the hang of making his pots and he finds he can double his production, making now 20 a week. His mates now would like to buy two each but they do not have enough pennies to pay the previous price of 1 penny per pot. Joe is faced with a dilemma, he will have to cut his price in half if he is to sell his pots. His colleagues face a similar situation, price deflation, and must cut their production, or rather, have no incentive to increase production. This is a result of scarcity of their "money" supply. The group endures and eventually multiplies, but the total number of pennies remains the same. Joe cannot feed his offspring on the poor income from his pots. He has the capacity to produce more, but is shackled by the "tight" money supply. Joe asks to borrow pennies from a friend, but he also needs his money and will only agree to lend if Joe pays him interest. But are there enough pennies in the money supply to pay this additional interest fee? The money supply is fixed. If one of the group were able to lend his coins in this way, using compound interest, it is not hard to see that eventually this one individual would own the entire money supply, all the others would be flat broke and probably in debt bondage to the one "banker." If this scenario sounds a little bit like the beginnings of industrial capitalism, when the money supply was tied to a limited, controlled commodity, like gold, then you are right. Those in charge of such a tight money supply understand that they can control everyone and that over time more and more of the money will accrue to them if they lend it with interest compounded annually.

Now, consider changing the scenario slightly. Rather than fussing about the pennies, one of the group volunteers to act as group accountant and goods merchant. He will issue a small wooden stick to record the production of a good or service by his mates, and they will bring their goods to him for distribution and purchase. The group agrees that the accountant should be "paid" for this service, so he gives himself 10 sticks per week as a salary. Now, when Joe produces a pot, he is paid a stick, and there is no arbitrary limit on how many pots he can produce, he just gets a money stick for each one. He now has an obvious incentive to increase production. The accountant can easily make sticks from the trees and bushes. The sticks themselves are plentiful and have no intrinsic value, but they keep account of the production of goods and services and can be traded for them, they are the group's "money." All the others do the same, as they increase their production their money supply grows along with it, they all have more purchasing power and can now buy multiple pots from Joe at the penny per pot price he initially set. There is no inflation or deflation, prices can stay stable, and the amount of money simply grows with the increase in production of goods and services. The stranded group finds it is able to prosper and multiply.

The above examples are borrowed, with some paraphrasing, from the book The Web of Debt, by Ellen Hodgson Brown. I read this book recently and was frankly astounded with how well these simple examples highlighted both the basic concepts around money as well as the stark differences in systems where the money itself is thought of as the thing of value rather than simply the productive capacity of every individual. In the first example, the productive capacity is strangled because there is not enough money to go around. Naturally, under such conditions it is easier for the supply of money to be unscrupulously controlled by a small minority of the community, enriching itself at the expense of the rest of the group. Sound familiar? The second example shows what money really is, it is just an agreed upon system to account for the production and distribution of goods and services, it has no intrinsic value of itself, but serves as a medium of trade and accounting, providing the lubrication for the gears of commerce. When money comes into existence with the production of goods and services there is never a shortage of it and the supply of money simply grows with the increase in production, so that supply and demand increase together, without price inflation or depression of output.

Another paradox that comes into sharp focus in the above example is the so-called "Impossible Contract." Put simply, when money is lent at interest the money supply is not increased to cover the additional costs of the interest. The result is that there is never enough money to pay off the interest, or put another way, there will always be losers. Someone will always have to go to debtors prison. The system sets up an economic dog-eat-dog mentality, with the bankers eventually controlling all the money. The Impossible Contract was understood by many ancient cultures and is perhaps partly responsible for the ancient proscriptions against usury, and Christ's famous eviction of the "money changers" from the temple. Closer to home, it was also recognized by Benjamin Franklin, who was a proponent of state "banks" that would lend and spend money, without interest, directly into the community. His own State of Pennsylvania having successfully done this in the years prior to the American Revolution.

But perhaps the most astounding revelation in Hodgson-Brown's book is that the right to "coin" money, a right designated to Congress in the US Constitution, has been given over almost completely to private, for profit banks, the principal culprit being the Federal Reserve System (or Fed, for short). The Fed and the US Treasury department have for years reported several indicators of the US money supply. The simplest of these just count the notes and coins in circulation, and at most account for only a few percent of the total money in the system. The vast majority, measured as M3, represents loans issued by commercial banks (including the Fed). Where does this loan money come from? The answer is that it comes out of thin air! When a bank makes a loan it simply adds an accounting entry on its books for the amount of the loan (and not including the interest to be paid). Normally when we think of borrowing and lending we are thinking about things that already exist, like your neighbor's milk or eggs, but the banks don't actually have the vast majority of money that they lend! It is really your money! Your agreement to pay back the loan based on your productive capacity, but with additional enormous interest costs! The banks are largely just unproductive middlemen who extract an enormous cost from all of us as we go about our productive lives. Curiously, the Fed is no longer reporting the value of M3. Now I wonder why that could be? Let's look at the impossible contract again. So where does the additional money come from that must eventually cover the interest charges? Well, it can only come from additional bank loans, but these are also issued with interest due, so we have a pyramid scheme of gargantuan proportions, that is slowly but steadily inflating the money supply, and simultaneously devaluing the purchasing power of every dollar in your pocket. If by now you are muttering that I must be crazy, just look at this figure which shows the value of the US dollar over time. Also note that from the time of the Federal Reserve Act the value of the dollar in real purchasing power has been steadily declining, as it must based on the above reasoning.

Our present monetary and economic system is slowing but steadily impoverishing the public at the expense of a small minority of private banking and corporate fiefdoms. As the simple examples demonstrate, the system cannot endure, and indeed appears now to be teetering near the verge of collapse. While many additional factors also contribute to our present, unjust system that has "monetized" the productive capacity of the people and turned it over to a private minority, it seems clear that a first step towards regaining control of our economic future is to regain control of the monetary system for the benefit of all and not the enrichment of a small minority of parasitic "bankers." More about that to come.

Because Nothing Inspires Confidence Like Failure

If you still were not quite sure who President Obama really holds closest to his heart, banksters or working folk, then this little bit of news should clear it up for you. The AP is announcing that Obama will soon reappoint Fed Chairman Ben Bernanke to a second four year term. While the appointment requires Senate confirmation, does anyone out there really think the Senate cares for working folk more than banksters? Thus, you can rest assured that "Bailout Ben" will remain at the tiller of the Fed, dishing out taxpayer cash to his bankster buddies for the forseeable future. I don't know about you, but I'll be sleeping easy tonight, as apparently so will lots of bankers and Wall-Streeters that Obama was again so keen to appease.

I urge you to give Philip Elliott's piece a read. It's a paragon of the "professional journalism" that dominates main stream corporate media nowadays, and whose sole purpose would appear to be the servicing of the rich and powerful. After stating that Bernanke will be reappointed, Elliott then describes Bernanke's apparent accomplishments with the following glowing text, all in the first two short paragraphs, "...as Chairman of the Federal Reserve, a position from which he guided the economy away from its worst recession since the 1930s and, the White House hopes, toward an economic recovery critical to its legacy. Widely credited with taking aggressive action to avert an economic catastrophe after the financial meltdown last year..." Well, you get the point. If you had slept through the last few years and found yourself reading this piece you might think Ben Bernanke didn't share any of the blame for bringing on a financial disaster of epic proportions. That he wasn't "asleep at the wheel" while ostensibly Fed-regulated banks over-exposed themselves to risky economic weapons of mass destruction, like credit default swaps and other toxic mortgage-backed securities. That he didn't stand by, watch it all happen, do little, but then commit trillions of dollars of taxpayer funds to try and clean up the mess. Oh, and as for the economy being "guided" away from recession, the jury still seems to be out on that one.

As for whom is "widely crediting" Bernanke with rescuing the financial system, and from whom he "received heaps of praise..., for his handling of the crisis," well, Elliott is a little less specific on that. But fear not, Elliott assures us that Bernanke is not "without his detractors," but if you were looking for any more specific criticism, maybe even just a smidgen of the many column inches detailing Bernanke's malfeasance, then you were sure to be disappointed. So, here are a few sanguine comments from Bernanke critic Dean Baker just for fun. I guess it's just more of the "Change We Need."

Kickin' Up

The payment of upwards of $200 million in bonuses to employees of one-time insurance giant AIG, after said company was bailed out to the tune of $180 billion with hard-earned taxpayer money, has rightly led to a firestorm of indignation from the public and clearly vulnerable politicians and administration officials, including President Obama, with their fingerprints all over the odious bailout legislation and policies. Apparently, AIG execs paid out "retention" bonuses, some to the tune of more than $5 million, to individuals in its financial products unit, the very division responsible for bringing the company to its knees. The ostensible argument given by AIG generalissimo Edward Liddy was that these employees needed to be persuaded to stay with the company because they were the only ones with sufficient knowledge of all the murky "deals"--bets would be a more honest description--to allow the company to "unwind" the deals and extricate itself with a minimum of additional losses. That the AIG execs felt this was a proper decision shows us the depths to which our so called financial masters and their defenders and supporters in the government have fallen. And, go figure, a significant fraction of the "bonused" just took the money and ran. While a herd of politicians and current and former administration officials had initially sworn they had no prior knowledge of the bonuses, it is now clear that both the relevant Congressional leaders and Treasury officials knew that the payments would be made and acquiesced. Read, for example, the eloquent summary of current affairs by Alexander Cockburn at Counterpunch.

Let's get a few numbers out in the open that will let us gauge the level of greed and corruption which is now being evidenced. According to the Census Bureau, the median household income in the United States for 2007 was just about $50,000. That is, half of all households made less than this, and the other half made more. Since about the mid '70s average incomes for most American workers have remained flat or actually fallen. The only reason median household incomes have risen modestly is because more people are working per household, and generally working longer. Now, consider that some of the bonuses paid by AIG execs were in excess of $5,000,000, a sum 100 times greater than half the families in the US earn in a whole year. Next, consider that these sums were paid AFTER the company was near failure and was rescued by 10's of billions of taxpayer dollars, and with the tacit approval of government officials, and one begins to see that Americans have a right to be boiling mad over this intolerable state of affairs.

I've often wondered what it is that a corporate CEO does in each 8 hour day that would justify the incredible sums they are paid in compensation, often in the region of many millions of dollars per year, not even considering so-called bonuses! From recent events one can only conclude that the ability to run a company into the ground doesn't come cheap. Ironic how a chief argument of many corporate and Wall Street apologists has been the professed need to maintain exorbitant compensation and bonuses in order to keep the "best and brightest" at these firms. With talent like that Wall Street could afford some mediocrity, or better yet, downright incompetence! One of the more "creative" recent arguments put forth in support of the bonus payments has to be that of CNBC anchor Mark Haines who suggested that, "It’s just like when the Allies were victorious over Nazi Germany in World War II, when we occupied the country, we left a lot of Nazis in place because they were the ones who made the trains run on time and the bureaucracy function properly, etc. And it was distasteful, but you needed them." Like I said, creative. Insane, but creative.

While mainstream media attention on "bonus-gate" has shed some important light on the issue, as usual the more important story lies elsewhere, and serves to show the truly massive scale of the corruption on Wall Street and in the government as well. While AIG was "bailed-out" with more than $100 billion in public funds it now appears clear that a large fraction of this money was then funneled to the very same financial institutions--most notoriously Goldman Sachs, which received almost $13 billion--and that have been at the heart of the financial scandal and who themselves had to be rescued with billions of dollars of taxpayer funds. Democracy Now has an excellent story on this so-called "back-door bailout."

The dealing around Goldman in particular reeks of corruption. As Robert Scheer has ably discussed, the decision to save AIG, only days after Lehman Brothers had been allowed to fail, was reached after a meeting that included a host of former Goldman execs and proteges as well as the CEO of Goldman, the only CEO at the meeting. Participants at the meeting included then head of the NY Federal Reserve bank, and current Treasury secretary, Timothy Geithner; and former CEO of Goldman and then Treasury secretary (in the Bush administration) Hank Paulson. All of these parties need to be subpoenaed to testify before Congress, if not a court of law, to answer some very serious questions. Principle among these is why the CEO of Goldman would even be permitted at such a meeting, with the company having upwards of $20 billion in toxic "bets" insured by AIG? If that's not a conflict of interest then I don't know the meaning of the phrase. Moreover, the fact that President Obama has moved a number of these people into his administration, including Geithner and Lawrence Summers, the protege of one-time Goldman CEO and Clinton administration Treasury secretary Robert Rubin, is deeply troubling. Recall that is was Rubin who led the Clinton administration's support for the Financial Services Modernization and Commodity Futures Modernization Acts, both of which became law and did anything but modernize the financial industry, and in fact paved the way to unregulated credit default swaps and other financial instruments of mass destruction, in the prophetic words of Warren Buffet. Given the magnitude of the plunder, and the degree of public outrage it is hard to see how Obama can continue to support Geithner. Indeed, if Obama wishes to maintain support from working people, then he should do an about-face and start fresh with a new economic team comprised of reputable Main-street economists and not a pack of Wall Street re-treads.

Or perhaps the whole scandal is simply revealing who is really in charge of our economy and government. Wall Street financial institutions, and other corporate interests generally, have been among the largest contributors to both major political parties for decades now. Moreover, the revolving door from government to Wall Street has been operating at full speed during this time. Little wonder then that government decisions on financial deregulation and the use of public money, have so often favored these financial robber barons.

In the world of organized crime the boss has the last say, and his lieutenants and foot soldiers have to go "upstairs" to get tacit approval for their deals and to keep the boss up to speed on what's going down. Or, at least, that's how the bosses would like it to go. OK, I confess to having watched a certain trilogy of Francis Ford Coppola films more than a few times! Another key aspect of the criminal underworld is that the junior guys have to "kick up" a decent percentage of proceeds from their dealing, and of course, everybody eventually kicks up to the boss. Maybe we're just seeing the "foot soldiers," our own elected representatives, kicking up to the real bosses, the financial oligarchs who seem increasingly to have the final say in decisions which impact all Americans. Moreover, the boss always holds the fear of reprisal over the heads of his underlings. Don't let the boss find out you've been holding out on a particular deal, that's a good way to get yourself whacked. It would seem that our real economic masters are now holding the whole country hostage with a similar kind of fear, "better pay up or we'll just whack the whole economy." While undoubtedly these analogies are not perfect, they seem to hold more than a grain of truth. Chiefly, that corruption is much more endemic to "free market" capitalism than is ever admitted in our supposedly free corporate media. We love to talk about the corruption present in other countries economies and governments, but nothing can compare to the levels of corruption we have seen on Wall Street recently, and which have had devastating consequences here and around the world.

Bad Banking

If even after what seems a never ending string of financial debacles you were still not completely convinced that the status of the US economy was anything but abysmal, then ruminating on the following chart for just a few seconds should help to remove any remaining optimism. The figure, compiled by Speaker of the House Pelosi's office, shows the run of job losses for several recent recessions and compares them with our current economic downturn. You can easily pick out the "Republican Depression" (ie. our current economic nightmare), it's the green curve that is heading South faster than a jackrabbit fleeing the gun sights of Dick Cheney. The scary thing, other than there being no evidence for a slowing in job losses, is that it's not even clear that the rate of job losses has reached it's peak. That is, the next few months could see the economy shed even more jobs than the last few.

Having gotten their proverbial butts kicked in the recent election, the Republicans were keen to make some changes to show voters and their constituents that they had not become completely irrelevant. Thus, newly elected National Committee Chair Michael Steele's first public utterances were basically along the lines of, "wrong? what's wrong? there's nothing wrong with our party, we just have to do a better job of selling our ideas." Yes, I kid you not, it was the old, we're just not good salesmen routine. Well Michael, good luck with that.

But not to worry so much, the Republicans did manage to latch onto what they argued was a "winning" political issue, watering down and stalling what almost all reputable economists consider a vital government spending program to stimulate the "rigor mortising" economy. Not a single House Republican saw fit to vote in favor of Obama's economic recovery plan, that's right, not a single one! And over in the Senate, mental steam engines such as Mitch McConnell were arguing that the bill did not have, wait for it, enough tax cuts! Even in the face of overwhelming data that shows that the fastest way to stimulate the economy, read add jobs, is by direct government spending--and essentially everyone agrees that creating more jobs is our most pressing economic need--the Republicans are still calling for more tax cuts. Word has it that the new Republican leadership is also working on the tax cut cure for cancer bill. Maybe they should get Michael Steele working on that.

Unfortunately, the Democrats, and President Obama in particular, have not done a good job of explaining why the spending plan is so important, nor countering the specious arguments put forth by Republicans and their echo chamber of talking heads in the main stream media. Rather, Obama seemed to be selling a "bipartisanship" stimulus bill, almost as if "bipartisanship" would feed hungry mouths, and keep roofs over people's heads. "Johnny, be a good boy and pass me another helping of the bipartisanship, please." Of course, there is nothing inherently problematic about seeking votes and allies across the aisle, however, it should not be a requirement for passage of a bill, particularly when the other side preconditions its support on the same failed policies that wrecked America in the first place. In such a case, the President needs to be much more aggressive in pushing the right ideas and facing down the Republicans when they propose the same useless and counterproductive policies. Indeed, Obama's desire for the illusive "bipartisanship" has resulted in a bill out of the Senate that cut too much useful spending and included ineffective tax cuts, simply to get all of three Republican votes. No, if Republicans cannot see fit to do the right thing, then Obama needs to get tough and go directly before the American people and hammer the Republicans as the Party of Herbert Hoover, that, having driven the ship of state over a cliff, are now unwilling to aid in its recovery.

Of course, with the Republicans having suddenly discovered a voice for fiscal restraint (after running up the biggest deficits in history, and amidst a depression no less), it was not much of a surprise that they could find many a willing media servant, who, if not mouthing Republican talking points verbatim, could at least be counted on to completely obfuscate the truth. Most notable in this regard was the vanilla-brained Charlie (don't call me Charles) Gibson of ABC News. In perhaps a record low moment (among many) Gibson, while questioning President Obama couldn't seem to get his little head around the concept that government spending is, by definition, economic stimulus. Gibson argued that, "a lot of people have said it's a spending bill and not a stimulus." So much for not being able to grasp perhaps the most fundamental fact surrounding the issue. Not even able to grasp this truism, how could we expect anything more but pablum from Gibson. As economist Dean Baker so eloquently put it, "Spending that is not stimulus is like cash that is not money. Spending is stimulus, spending is stimulus. Any spending will generate jobs. It is that simple. ... Any reporter who does not understand this fact has no business reporting on the economy." How much is ABC paying Charlie Gibson?

Meanwhile, all is clearly not the "Change We Need" in the White House. Evidence of this is clear in Obama's selections to head his economic team. Both Treasury Secretary Timothy Geithner and chief economic advisor, and ex-Clintonista, Lawrence Summers are so deeply entrenched in the policy and regulatory regimes that helped to fuel and precipitate the crisis, that one can still see the umbilical cords connecting them with Wall Street. Indeed, Geithner only just recently "announced" his new plan for Treasury to prop up the collapsing banks. I put announced in quotes because when you discuss a plan but then give essential no specifics, it's not really much of an announcement is it? The response from investors was swift, they either couldn't figure out what Geithner was actually talking about doing or they felt that it perhaps wasn't the "sweet-heart" deal that they had quite hoped for from the former Wall Street man. Either way, the stock market took another significant vacation in a southerly direction.

From Geithner's terse statements and pronouncements since, it has become clear that one aspect of the new bailout plan is the formation of a fed-run "bad bank" that will essentially accrue to itself much of the toxic securities that many banks find in abundance on their rose-red balance sheets. Of course, the name is telling, because the joke's on us, guess who the "bad bankers" are? That's right, it's just us poor tax paying suckers who are going to get stuck with all the bad debts made by these rich folks for whom the requirement of being restricted to, say a paltry salary of $500,000 a year is a travesty to scarring to bear. And what do we get for assuming all the risk in this little transaction? In real capitalism those who assume the risks stand to receive the biggest rewards, but not so much in this case. There is no indication that Geithner intends to obtain stakes in the bailed out banks for the government, so that taxpayers would get some compensation if and when the banks become profitable. But this is certainly not "real" capitalism. No, what we are witnessing here is more socialism for the rich, and social Darwinism for the rest of us. This is effectively the same dynamic that has led us to this point. Profits are privatized, but losses and risk are subsidized with the public's money. Put more simply, gamblers get to play at the table with someone elses money. Not the kind of system that you would expect to generate probity and restraint is it? Nope, the operating term here is corruption of the highest order.

At this stage a much more sensible, equitable, and arguably effective plan would be for receivership (ie, nationalization) of the failed and failing institutions. Indeed, many of the economists who foresaw the devastation and were ignored are calling for nationalization as the most effective solution, but the voices of those who best understood the situation and saw it coming continue to be largely ignored. A good example here is Nouriel Roubini, professor of economics at the Stern School, NY and no communist he, who argues eloquently that from a pragmatic standpoint the only remaining workable solution is nationalization. Let's see how long it takes the likes of Geithner and Summers to reach the same conclusion. I won't be holding my breath.

Depressed

As the Nation sinks deeper and deeper into the Bush Depression and the professed "small government" conservative ideologues of the administration throw around more and more billions of dollars of "bailouts," the priorities of a corrupt and wretched economic system are brought into sharp focus. The capitalist system has but one master, money. Decisions are taken such that the only consideration is that those with money can make more money. If that means that others would suffer so that "Capital" can profit, then so be it, money knows no ethics but money. There are essentially no rules. While a giant edifice of "lawfulness" has been erected around the system, at it's core it is the essence of lawlessness, take from others so that I may profit. How else to see the massive frauds that are routinely perpetrated on the powerless by the powerful. How else to see a world where 5% have accumulated most of the wealth, while 4 billion people toil in misery day in and day out. As long as the interests of money are served, then essentially any means can be justified.

That people are fed; children clothed, sheltered and educated; the sick cared for, then it is only a secondary outcome, as these basic human rights barely enter into the calculations of how money will seek more money. Indeed, such is the situation in our Nation today that the seeking of money will effectively determine if the sick are cared for. A more profoundly anti-human principle can scarcely be envisioned, yet our economic masters preach that it is the only way, as if the right of Capital to seek ever more profit were a natural law, akin to gravity or electrodynamics.

The worship of money is clearly seen in the recent response to the implosion of the Wall Street investment banks and the more recent, impending bankruptcy of the US automobile industry. The Wall Street financiers were provided with upwards of 700 billion dollars of bailout funds, and nary a single bank executive was required to appear before Congress to account for their catastrophic mismanagement, corruption and malfeasance, or explain how the public's largesse would not end up in the same rat-hole as the rest of their capital. No, the bailout was passed in a near-frenzy of media-induced panic, and subsequently, it seems not to have had any of its professed effects, the economic crisis only deepening, and banks remaining largely unwilling to lend. It did, however, manage to burden future generations with an even larger mountain of debt, and to transfer a huge sum of public funds to private hands, one of the few things that the Bush administration has been any good at. Maddeningly, perhaps as much as 1.6 billion of the funds went to the CEOs of bailed out institutions, in the form of bonuses and other compensation!

Consider next the treatment of the leaders of the US automobile industry. They were seeking a mere 30 billion dollars or so, a sum twenty times less than the titans of finance were bequeathed, but the Big Three auto CEOs were required to testify at congressional hearings, during which they were chastised and skewered for their abysmal management of their companies. It didn't help matters that they flew into Washington in the lap of luxury aboard their corporate jets. It would seem that no level of failure is sufficient to abrogate certain executive privileges. Indeed, in order to sway the Republican side of the aisle, the execs were required to submit a plan that would demonstrate how they planned to return to profitability. Moreover, this was apparently also an opportune time for Republicans to blame unionized American auto workers, and insist that they grant wage and benefits concessions which would put them on a par with their non-unionized brethren toiling for foreign automakers on American soil. Particularly repulsive was the sight of southern Senators, such as Kentucky's insipid Mitch McConnell, carrying water for foreign corporations like Toyota and Honda that employ non-unionized workers in their states. Here we had US politicians, with flags pinned to their lapels, insisting on reduced wages and benefits for American workers in the interests of foreign-owned companies. McConnell's "Grinchiness" did not escape the ire of many labor organizations, including the California Nurses Association. Indeed, it might be argued that the tax breaks and cheaper labor offered by southern states like Alabama and Kentucky to attract foreign manufacturers has been part of the demise of the US auto industry. Ah, but that's the "beauty" of the free market, the only thing that matters is the bottom line. Presumably, corporate bag-men like McConnell will not be satisfied until all American workers are toiling at subsistence wages, purely in the interests of Big Money.

A deeper irony is that the "success" of the financial industry represents the victory of the "paper" economy over the "nuts and bolts", manufacturing economy. It used to be that American wealth was founded on the manufacture of durable goods, but with the globalization of capital, manufacturing has been steadily "out-sourced" to regions with relatively low wages and lax labor laws. The factories of China and the maquiladoras of Mexico come to mind. This left finance and service industries as the remaining growth areas, but these industries are not truly generators of new wealth, they just tried to tap into existing wealth, or worse, financed the perpetuation of America's consumption economy on a mountain of debt. That debt is now burying us all, and as the bills come due, we are witnessing a steady contraction in US economic output.

Another irony is that none of this is new. We have seen the inherent instability in the capitalist system now for more than a century. The struggles of working people have managed to dull the sharp blade of capitalist downturns, winning many battles that acted to civilize the workplace, among these the 8 hour day and the 5 day work-week, and to erect a meaningful, if shaky, safety net in the form of government assistance programs and controls on capital. How quickly we forget though, and given the opportunity and their enormous financial power and the political influence it can buy, economic elites have been quick to attempt to redress the gains of working people and once again put everyone at the service of capital.

Although times are hard, a window of opportunity can be opened with the education of more people to the true realities of an unregulated capitalist system. With a new President about to take office, a President willing to listen to the needs of working people, we have a chance to try and address the fundamental problems with our present economic system. We should insist that economic decisions be based on real human values, and not simply the desire to maximize profits at all costs.

A Financial Patriot Act

Twice in the George W. Bush era a catastrophe has had its epicenter on Wall Street. We know all about the first, the terrorist attacks on September 11, 2001. The second, the financial "storm" engulfing our corrupt banking and financial system, will now play itself out over the weeks and months to come. Already it has claimed hundreds of billions of dollars of the public trust, and the end may be nowhere in sight. The circumstances surrounding these two events, ironically, have much in common.

With it's head in the sand, ignoring ample warnings suggesting that strikes inside the US were likely being organized--recall the title of that Presidential Daily Briefing, "Bin Laden Determined To Strike in US"--the Bush administration sleep-walked while the 9/11 attacks were being prepared and executed. The political results of that negligence we know all too well, expanded government powers; legislation gravely treading upon Constitutional liberties; a disastrous change in US foreign policy; torture, extraordinary rendition and Guantanamo Bay (to name but a few). Bad legislation was pushed through Congress and equally bad policies were foisted on an America kept fearful and ignorant by administration propaganda and deception. In a state of fear Congress rushed through the Orwellian-named "Patriot Act," provisions of which any true patriot would find unconscionable. Let us recap this sad tale. Those who were negligent, and by their negligence at least partially responsible, were left ultimately unaccountable, moreover, they were left in power, unchecked and with free reign to manage the aftermath of 9/11, to the disastrous ends we all now must live with.

Now, the American people, seemingly without a memory, are allowing a replay of this scenario to unfold, perhaps to equally disastrous ends. After eight years of corruption, deregulation, dismantling of any oversight and enforcement regime, and cheer-leading for corporate greed and excess, the same administration that napped while terrorists plotted, has been comatose while a largely foreseeable financial meltdown that may ultimately match or exceed the Great Depression, has been allowed to happen. And now, with the crisis at its apparent zenith, with fear and the professed need to act at near fever pitch, drastic solutions are being discussed by the administration and the Democrat-controlled Congress. Indeed, the first details of Treasury Secretary Paulson's proposed bail-out legislation has been made public this weekend, and from the looks of it has every indication of being a financial version of the Patriot Act. The remarkably terse text of the bill, essentially grants Paulson and the administration, a rolling $700 Billion slush fund with which to buy up the bad mortgage-related debts of ANY financial institution based in the US. How's that for broadly defined? Although it might seem that the $700 Billion is a cap, the text indicates that this is the amount that can be outstanding AT ANY GIVEN TIME. Thus, the total sum which American taxpayers could be on the hook for could be significantly more, say, several Trillion dollars! Now that's some serious coin! However, the most sinister and outrageous clause in the text is the following;

"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

Yes, you might want to read that again. Decisions made by the Secretary regarding this Act would be NON-REVIEWABLE, by ANY agency, court or entity. This would be Congressionally mandated and approved fascism, nothing less. It would grant virtually unlimited financial power to the agents of the President without any accountability! Moreover, it would grant this authority to those who, Nero-like sat back, watched and indeed, precipitated the crisis with their disregard of their regulatory functions and pro-Wall Street legislation. But it would do even more than that, it would privatize the ill-gotten profits of these corporate criminals, while socializing all of the risk, on the backs of our kids, perhaps for decades to come. This is beyond outrageous. As Glenn Greenwald and others have pointed out, this should arguably be something of a "pitch-fork" moment, something that might actually get people out into the streets protesting, that is, if protests were still allowed. This must not be allowed to happen. Every thinking, responsible American needs to get on the phone and contact their representatives in Congress to oppose this monstrous draft bill.

While it may be true that some form of Government-sponsored bail-out is needed to stabilize the economy, all Americans should insist that it meet several conditions;

1. It must not reward the perpetrators of this catastrophe. That is, the Wall Street fat-cats who gambled with the public's money, lost, and now wish to be repaid!
   
2. It must be largely financed by those who sought to profit and brought about the conditions that precipitated the crisis. It must not be financed on the backs of the middle class and lower income Americans. This point has recently been emphasized by Independent Senator Bernie Sanders. Taxes should be raised on corporations and the wealthy, at a minimum.
   
3. Any deal must be conditional on major changes to the current administration. At a minimum, those economic "stewards," the Treasury Secretary (Paulson) and Federal Reserve Chairman (Bernanke) who were so demonstrably wrong must resign. However, a more reasonable requirement for Democratic approval of some bail-out would be resignation of the President and Vice President.
4. It must be accompanied by a return to close regulation and policing of the banking and finance industries, indeed, of all corporations. There can be no return to "business as usual." A new commitment to a corporate culture that benefits society must be enforced.
   
5. Those responsible for the debacle must not be allowed to manage the aftermath, and must be held accountable for their negligence and malfeasance.
   

If the Democratic controlled Congress cannot insist on these conditions, then it will have shown itself to be in the thrall of the same corporate pay-masters that run the Republican Party. If that is the case then voters should vote the whole sorry lot out of office.

Socialized Capitalism

The last few days have seen some rather astonishing developments coming out of the Treasury Department of the Bush administration, what with the collapse and bail-out of mortgage giants Fannie Mae and Freddie Mac, the 500 point implosion of the stock market on Monday, followed by the death or sale of several big-name Wall Street financial institutions including; Merrill Lynch, Lehman Brothers, and now most recently, the insurance giant AIG. But not to worry, we can all rest easy knowing that none other than that economic genius John McCain has decreed that our economy has "sound fundamentals." I'm so glad, just imagine what unsound fundamentals might look like!

We are truly fortunate, as over the last few weeks we have been witness to the perfection of a new kind of political economy. This new form of governance can only accurately be called "Socialized Capitalism." And who have been the authors of this new kind of socialism for the rich? You guessed it, none other than the self-styled free-market, Capitalist, Republican administration of George W. Bush! Here's how it works. Powerful corporate and wealthy interests essentially take over the functions of government. This was easy, as the die was cast when the Republicans came back to power with the 2000 "election" of Bush. These elite, wealthy special interests are essentially the constituency of the Republican party (though the Democratic Party does not escape all blame here either). With the reigns of power in hand, or at least in the hands of their surrogates, corporations can then re-write regulatory law and weaken the oversight and enforcement functions of the government. In the context of the financial sector, this gave banks and investment firms carte blanche to freewheel and make a killing, selling "derivatives" and bundled, mortgage-backed securities, while overexposing themselves to substantial debts from an ocean of bad loans in the process. Then, when the bill finally comes due and the pyramid scheme collapses, that same corporate-run government that initially rigged the game, allowing and enabling the plunder, provides billions and billions of tax-payer dollars to bail out those poor ailing corporations. It's a perfect confidence racket, and every tax-paying citizen is a chump with the word "sucker" written right across their forehead. Not just you, your young children will be saddled with this debt for years to come. These hucksters have mortgaged our kids futures to enrich their already rich constituents. Almost enough to make one boiling mad, eh?

And all this is brought to you by that very same Republican Party that loves to talk about free markets, small government, personal responsibility and the wonders of unfettered Capitalism, the same Republican Party that becomes apoplectic when anyone even breathes the words liberal, socialism or, god forbid, welfare. Of course all this Republican talk of free markets etc. is a steaming pile of guano, and maybe after being fleeced for eight years by Bush and Co. enough Republican-voting "suckers" out there will finally get the message? Republicans love big government, especially the kind that is doling out huge sums of cash to their constituents. They love free markets for the other guy, but hate them if it means they would have to compete fairly. And personal responsibility? Republicans are NEVER responsible, that's also for the other guy. In fact, when you're a Republican it's always the other guys fault. Make no mistake, this Republican administration is practicing rampant socialism for all its corporate constituents. Forget about welfare queens, Bush, McCain, and all their Republican supporters are the welfare kings, the kings of corporate welfare. We let them stay in power at our own peril.

Income Inequality and the "Skills Gap," Who Knew?

I'll confess right at the outset to being no fan of David Brooks. He's the kind of "conservative" that has done plenty to help bring about the economic conditions we currently have to live with, but will then go and tell us it's all our fault for not bringing up our kids in the proper educational environment. In a recent Op-Ed in the New York Times, Brooks makes just this case, that a principal cause of the massive gulf between the haves and have-nots in the US is a "skills gap" resulting from the woeful state of education in the country. He partly bases his arguments on a new book from Claudia Goldin and Lawrence Katz, “The Race Between Education and Technology.” While few would argue about the importance of education in enabling a productive economy and just society, it's clear that rather than explore the responsibility of three decades of conservative, quasi- laissez-faire policies on the current economy and income distribution, Brooks would much rather lay the blame at the masses who have not raised their kids, in his words, "...bathed in an atmosphere that promotes human capital development ..." Man, I'm glad my mother didn't raise me that way!

We could tear down Brooks' straw-man easily enough, but let's just make a few observations. First, wages have been stagnant or declining across the class/income board for more than 20 years now. That is, even the well-educated have been sliding down the ladder, although they are of course relatively more economically secure than their unskilled brethren. Meanwhile, studies show that Americans are among the most productive workers on the planet, and yet few of the productivity gains over these last 20 years have been put back into pay-checks. Now why is that? Where did all that money go? Somehow the corporate classes keep getting richer and richer. These facts do not point fundamentally to an education problem, rather, a much more accurate diagnosis would be class warfare!

Of course we need to better educate our children, but what Brooks and his ilk fail to explore is WHY we are not able to adequately educate all our citizens. Predictably, Brooks tries to dismiss some big issues, such as globalization, outsourcing and predatory capitalism, stating that, "the populists are going to have to grapple with the Goldin, Katz and Heckman research, which powerfully buttresses the arguments of those who emphasize human capital policies. It’s not globalization or immigration or computers per se that widen inequality. It’s the skills gap."

It's hard to know where to begin with such statements. It's as if all the economic choices, decisions and policies put in place by Republican administrations, beginning with Reagan (with significant Democratic assistance, or at least acquiescence I might add), that have been the fuel on the fire of income inequality for almost 30 years now never happened! Nope, it was the "skills gap," who knew? Although education is certainly a piece in the puzzle, I would argue that conservative economic policies, essentially placing all corporate interests over those of workers, including the resulting widening income inequality, are the primary causes of any "skills gap," not the other way around.

But for me, the biggest "whopper" in Brooks' whole piece is his overarching premise, stated in the first two sentences, I quote, "Why did the United States become the leading economic power of the 20th century? The best short answer is that a ferocious belief that people have the power to transform their own lives gave Americans an unparalleled commitment to education, hard work and economic freedom."

This is just so much conservative drivel. Just like every other major industrial power, the US grew by protecting it's markets, having a strong state-sponsored sector, and maintaining unfettered access to resources basically around the globe (and a productive citizenry). The nonsense that Brooks is peddling here is this pernicious myth of American exceptionalism. This is the same myth that enables a mediocrity like George W. Bush to talk about bringing democracy to Iraq (or insert currently relevant country), and our political class will basically cheer-lead. I have yet to go to another country and find people not committed to education, hard work and economic freedom. These values are evident in most every culture I have ever encountered, therefore they cannot be the PRIMARY reasons for the United States economic success.

Much can be learned about the state of our politics and society that this kind of mumbo-jumbo is placed on the Op-Ed page of one our most influential newspapers, rather than in a landfill, where it belongs.

$ 3,000,000,000,000.00

Well, that's a lot of zeros! Three trillion (yes, trillion) dollars worth to be precise. That is a conservative estimate of the cost of the Bush administration's wars in Iraq and Afghanistan, as estimated in a new book by Nobel prize winning economist Joseph Stiglitz and Harvard University professor Linda Bilmes. It may seem a daunting task, to estimate the cost of the largest American foreign policy boondoggle ever, but as professor Stiglitz indicated, it's basically just an addition problem, so, at least the math is pretty easy, there's just a lot of it! Note that this number is conservative! Stiglitz and Bilmes estimate that a more realistic number for the full costs is in the vicinity of 5 - 7 trillion.

Let's try and get our heads around that number. For comparison, the annual gross domestic product (GDP) of the United States is in the vicinity of 13 - 14 trillion dollars. So, we're looking at a cost approaching 1/4 of the ENTIRE economic output of the country for a whole year. Put another way, that's more than $10,000 dollars for every man, woman and child in the United States. I'd call that staggering, but the "Spender in Chief," doesn't seem to get it, for Bush, the wars have apparently been a plus. When asked if he agreed with comments that the war in Iraq is hurting the economy, Bush quipped, "I don’t think so. I think, actually, the spending on the war might help with jobs." Rather ironic to hear a so-called conservative Republican plug the war as a three trillion dollar jobs program! But in Bush-land anything is possible.

Of course, the White House was none to pleased with the fully sourced and documented conclusions of these impeccably credentialed American academics. So they rolled out one of their professional obfuscators, in this case the insipid Tony Fratto, to set the record straight. According to Fratto, “People like Joe Stiglitz lack the courage to consider the cost of doing nothing and the cost of failure. One can’t even begin to put a price tag on the cost to this nation of the attacks of 9-11.” Fratto's comments are appalling in both their arrogance and contempt for the truth. "The cost of doing nothing, and the cost of failure?" Is he serious? The additional cost of doing nothing, at least in the case of Iraq, would be, well, nothing! Zip, nada, the big goose egg. Iraq had NOTHING to do with 9-11, so any cost associated with Iraq "containment" would have been as before. As for the cost of failure, that too would also be zero, since Iraq was an illegal, immoral war of choice. What we are all burdened with now is the cost of the failed policy of the president Fratto defends.

But Fratto didn't have the decency to stop there, he also had this gem, “It is also an investment in the future safety and security of Americans and our vital national interests. $3 trillion? What price does Joe Stiglitz put on attacks on the homeland that have already been prevented? Or doesn’t his slide rule work that way?” Again, Fratto wouldn't know the truth if it bit him on the backside. Our own government has stated that the war in Iraq has resulted in more instability and insecurity, not less. Investment? Remind me to never let Fratto make a stock deal for me. So, with no real facts of his own to refute Stiglitz's claims, the only thing Fratto can do is to try and impugn the reputation and patriotism of one of our most distinguished economists. I'd call that disgusting, but it's just another day in this White House. And perhaps the most Orwellian aspect of these statements is that this is from the administration that sold the war as one that would "pay for itself." All that Iraqi black gold was going to flow in, and it would only cost about 1.7 billion to patch the place back up! So, they were in the ball-park, only off by a factor of 2,000!

Well, since Fratto brought up the notion of investment, let's see exactly what 3 trillion dollars can buy:

• ~4,000 US servicemen (and women) killed in Iraq
• ~30,000 US servicemen (and women) wounded in Iraq
  
• Upwards of 1,000,000 Iraqi deaths since the US-led invasion
• 3 - 5 million Iraqi refugees; either having fled the country or internally displaced
• Much of Iraq physically devastated
  
• Abu Ghraib, Guantanamo Bay, Extraordinary Rendition, Waterboarding, etc, etc.
  
• Stature and Standing of US in the world demolished
  

Well, you get the picture, and it isn't a pretty one, is it? What if we were to stay in Iraq for, say, 100 years, as presumptive Republican presidential nominee John McCain has suggested might be necessary to achieve "victory" in Iraq? Those costs would make 3 trillion dollars look like walking around money. When such statements are made, and the staggering costs considered, one has to wonder, who among us of right mind could even consider handing four more years to the Republican party that brought us this President, and such a calamity.