Trust capitalism and shun government interference we were told. But irresponsible bankers saw a chance to get rich quick and went for it. Their failure has become ours -- and the promise of a common good has evaporated along with faith in democratic capitalism.
Germany has taken to the skies. It is 9:00 a.m. on Thursday, Oct. 2 and the Luftwaffe Airbus A310 -- Germany’s equivalent of Air Force One -- took off half an hour ago from Berlin’s Tegel Airport. The plane is heading east, destination Saint Petersburg, Russia. Crew members are serving the usual copious breakfast, including omelets, meat, cold cuts, cheese and honey.
On board are many of the people who determine Germany’s position in the world: the German chancellor and six ministers, the heads of major German corporations like Siemens, Deutsche Bahn and E.on, and a number of journalists. There are no bankers on the plane, but they play the leading role in everyone’s mind and in the discussions taking place.
After breakfast, German Chancellor Angela Merkel invites the journalists up to the front of the aircraft for an off-the-record chat with the press. Everyone squeezes into a small room, 25 people in all, standing, sitting cramped together, some of them even on the floor. “The microphone isn’t working again,” says the chancellor to start things off.
She talks about Russia and then addresses the financial crisis. The sound of a toilet flushing can be regularly heard. The aircraft’s lavatory juts into the conference room. It is an earnest discussion. The journalists ask questions in a serious manner and the chancellor responds in kind. Every word resonates concern.
Poker for the Politicians; Blackjack for the Journalists
At the same time, Economics Minister Michael Glos is conferring with the heads of German companies. Here as well everyone is deadly serious, solemn and concerned. The atmosphere on board this Airbus is enough to imbue an observer with confidence: Germany seems to be in good hands and the problems can be solved.
But we could also paint a very different picture. We could throw out the rows of seats and replace them with gambling tables, poker up front for the politicians, roulette in the middle for the corporate executives, and blackjack in the back for the journalists. Everyone has taken off their jackets and loosened their ties. Beads of sweat have formed on some foreheads and tension fills the air. Nobody wants to land. They will play until they crash.
Would this picture be entirely wrong? Or does it contain a kernel of truth?
One thing is clear: The world seems to be teetering on the brink of disaster because a few people have been on a big-time gambling binge. They have lost their stake on bad loans and now banks are collapsing, companies are facing a liquidity crunch, investors are losing their savings and a recession is looming.
This time around, though, there is more hanging in the balance than just the cyclical ups and downs of the economy. This time fundamental issues are at stake. Is a market economy nothing more than an invitation to engage in excessive gambling? And what about the democratic principles that are so closely linked with the market economy, a concept that was used by the West to achieve dominance over the world? This vision of democracy is also at risk.
Suddenly, everything seems possible. Nobody knows which banks will suffer a meltdown and what will be the consequences for the real economy. Nobody knows how big a risk the Wall Street gamblers have taken. That’s what makes the situation so frightening. It’s as if we were riding in a small dinghy on an African lake. The passengers know that crocodiles are lurking in the water, but they don’t know how many there are, nor can they determine the size of the beasts.
Welfare for Banks
Now the challenge is to keep people from losing all faith in the markets, to prevent panic from erupting. Success here also depends on whether the actors and observers of global events -- company executives, politicians and journalists -- take things seriously or whether they too are basically just gamblers.
These days, it is hard to recognize the world as we thought we knew it. A large number of American financial institutions have sought protection from the state, and now the US government has taken action to keep the country’s entire financial sector above water. An entire country, Iceland, threatens to go bankrupt. In Germany, Finance Minister Peer Steinbrück has had to save Hypo Real Estate in a hastily organized bailout operation, and Josef Ackermann, the CEO of Deutsche Bank -- a man who was once a high-flying champion of capitalism -- has been calling for the government to launch a rescue package, which is paramount to providing welfare to banks.
Who would have thought that Ackermann would one day join the ranks of Germany’s unemployed and low wage earners in asking for government aid? The poor had long hoped that the state would help them out of their economic plight. People like Ackermann though -- those who place a great deal of faith in the power in the power and freedom of the individual -- blasted them. Now, taxpayers are expected to help Ackermann's industry out of a jam.
The insanity of the situation becomes clear when we look back to the years 2003 to 2005. At the time, then-German Chancellor Gerhard Schröder of the center-left Social Democrats pushed through his Agenda 2010 reform package. Long-term unemployment payments were scrapped. Those who lost their job knew that time was short before benefits would shrink to those mandated by the new welfare plan known as Hartz IV.
During those years, the economic debate was dominated by true-blue capitalists who sought to limit government intervention. This was the heyday of a neo-liberal ideology that placed its faith in the strengths of the individual and the free market. The word “government” became virtually synonymous with harassment, suffocation, inefficiency and a lack of freedom. Deregulation was the magic formula of the day.
Trust Us
This was the theme music -- played by politicians, business people and journalists -- that accompanied Agenda 2010, an orgy of black-and-white thinking that glorified the individual and demonized the state.
But Agenda 2010 was the right approach. The reforms didn’t go too far; actually, they should have gone even further. They should have harnessed the political momentum at the time to prepare Germany's healthcare and convalescent care systems for the challenges of the future.
Agenda 2010 was a deal between politicians and industry on the one side and the unemployed and workers on the other side. The deal went like this: It might be painful, we are taking away some safeguards, but you will receive something in return. Waiving those benefits will boost the economy, trigger growth and create jobs. Trust us, trust this deal, said the politicians and the captains of industry.
At first, it looked as if this new deal would be a success. Over the past few years, Germany’s economy has been growing stronger again and the number of unemployed has fallen from 5.2 million in February 2005 to 3 million in September 2008. This success can be attributed to Agenda 2010 and to workers’ willingness to settle for lower wages.
The Crocodiles Below the Surface
Nevertheless, doubts started to creep in over the fairness of the deal’s implementation. Real wages stagnated while investment income and corporate profits soared. At the same time, the gap between rich and poor continued to grow, causing the middle class to shrink.
People were increasingly outraged over the injustice of the situation when a number of managers negotiated golden handshakes worth millions, despite weak performances. The head of Deutsche Post, Klaus Zumwinkel, will have to face criminal charges for allegedly depositing money in a Liechtenstein foundation to evade taxes in Germany.
In the German press, the word "American" became shorthand for greed. Many managers demanded “American” salaries of over $10 million (€7.25 million) a year. They targeted “American” earnings for their companies. Ackermann aimed for profits of 25 percent. German savers were recommended to take an “American” approach to their investments. Saving accounts and government bonds were passé and investing and gambling with stocks was all the rage because it held out the promise of higher returns.
German business practices were frowned upon as conservative and narrow-minded. Sexy investments required a no-holds-barred attitude and a willingness to play the markets and take risks. Let’s be like Americans -- that was the guiding principle for German banks and top company executives. They gleefully played along with what was done on the other side of the Atlantic. Not surprisingly, they also purchased those wonderful securities that had something to do with American homeowners and promised such rewarding returns.
A Gigantic Bubble
German bankers became gamblers. They joined the investment game that had begun in America. They bought securities that had long since lost any connection to economic realities. They flourished in their own world, a virtual world of numbers that continuously grew and created a gigantic bubble.
The players in the game lost touch with reality. Many Americans wanted to own homes, although they couldn’t afford them. When these people received loans, it was a dodgy business. That is actually not difficult to understand, but it failed to sound the warning bells for gamblers who were out to make huge profits out of those risks.
That’s one side of the greed. The other side is the desire to break new ground regardless of the consequences.
A caller to a Berlin radio station recently ranted about “29-year-old banking snobs.” This immediately calls to mind a certain image: well-dressed people with perfectly styled hair who are intelligent and eager to change the world. But there was so much out there already, all kinds of derivatives and securitizations -- those products that have a direct connection with the real world were, by definition, invented long ago.
Anything new had to be even further away from reality. But it wasn't difficult for those eager new bankers to come up with something new once they set their minds to it -- and soon the world had another product that nobody needs and hardly anyone understands. It was a product that was floated on the market for the sole reason that it was there -- and, of course, because it promised to generate wealth. That is how a brave new world is created.
What followed, though, was a horror scenario of a globalization process taking place on two levels. There is a real level that consists of a greater exchange of goods which comes along with a more intense competition for jobs, prosperity and the rights to use the world’s resources. This may seem frightening enough for the individual, although it may be unavoidable and legitimate.
Clandestine Masters of Globalization
But the other level is truly uncanny. This is the lake with the crocodiles. You can’t see a thing; the surface of the lake is smooth. But a lot is happening down in the murky water. The banking snobs have surreptitiously spun their web; they have used sales in countries around the globe to forge links -- silently, uncontrolled, electronically. They are the clandestine masters of globalization. They have created another world, a secret one.
It is not until this world collapses that we notice its existence. By then, of course, it’s too late. Since everything is interconnected, the catastrophe immediately takes on global proportions.
At least some of the banking snobs are brought down by the calamity. There are pictures of them walking out of their office skyscrapers with boxes in their arms. But the bankers who manage to remain quickly adjust. They have learned to be flexible, and what was true yesterday is simply no longer true today. They require protection, they need help from the government and, of course, they have no qualms about asking for it.
A number of German bank managers are outraged that the German government has not immediately launched an initiative to save them all. They have never been modest, so why start now? They of course know that there is an enormous fear of a huge crash. So they brazenly dance on the limb that they themselves have started to saw. And naturally they have no problems with the fact that Depfa, a bank that moved to Ireland to lower its tax bill, should now be saved with German tax money.
Now the greatest skeptics of government intervention will receive state aid, which is probably even a wise move because nobody knows what would happen if a large German investment house were to collapse. Buy why is there no humility, no modesty, no apology for all these monstrosities?
And how does your average German worker feel about all this? What should someone think who has lived on a modest income over the past five years and has been unable to shake off his fear of unemployment? He has kept his side of the 2003 deal; he didn't really have a choice. A low income amid rapidly rising energy prices, a life on the edge of Hartz IV, a real hard life.
The End of the Deal
But now the virtual world is flowing into the real one and the crocodiles are crawling onto land. A recession is looming. It could be that the banking snobs have gambled away this man's job. That is tantamount to a deal breaker for an agreement that was already fairly shaky. It would spell the end of the deal of 2003.
What would be the consequences?
This man will never become a friend of globalization. It will remain a total mystery to him, a dark force. Now he won’t want to help shape globalization.
Nor will he agree to a new deal. Why should he? He has lost his faith in the system. But there will have to be another deal because the next recession will throw the budget into turmoil again and increase the cost of providing social services. If there is an attempt at a new deal, he will take to the streets and demonstrate.
It was hard enough pushing through Agenda 2010. But the current crisis is making Germany virtually unreformable. Now nobody will follow politicians who say that you have to do good things for the economy so that everyone benefits. People will laugh out loud should anyone say that freedom leads to the best results.
It is no coincidence that gamblers have created this chaos, people who fabricate unreal worlds where they can seek their happiness. The gambler is one of today’s most predominant types. He is the Internet freak who blasts away in online games or writes love letters under a false identity. He is the athlete who takes performance-enhancing drugs although he knows about the doping controls.
Politicians, though, are also gamblers -- ones who take pleasure in gambling with power. That, though, is particularly worrisome because it is now up to the politicians to clean up the mess left by the financial gamblers.
Political games go like this: Last Thursday in Saint Petersburg, German Foreign Minister Frank-Walter Steinmeier was unhappy when he came back from the working lunch of the German and Russian delegations: “The protocol of the chancellery has its way, don’t ask me how.” He was upset because he wasn't allowed to sit at the table with Russian President Dmitry Medvedev and the chancellor.
A Landing in the Real World
Steinmeier felt insulted, and perhaps the chancellery actually did pull a fast one, but don’t they have other problems? Now? In a time of crisis?
Politicians are also very skilled at building their own world, a virtual world of power plays where they feel so at home that progress in the real world becomes difficult. Of course power struggles belong to politics, but with the current governing coalition pairing the Social Democrats with Merkel's conservatives, the ruling parties sometimes give the impression that politics consists of nothing else.
It would be a disaster if the chancellor and her foreign minister -- who is also the SPD candidate for chancellor in the general elections next fall -- were to get caught up in a tiny little game over some telltale advantage. They should conduct a fair debate on how to prevent the real world from falling into a recession or how they can establish a new deal for Germany’s labor market. The election campaign will come soon enough in the summer of 2009.
And of course, the criticism comes from a glass house. In the media there are also plenty of gamblers who are not necessarily interested in fairness and accuracy.
While we teeter on the brink of disaster we might reflect on the fact that for politicians, bankers, business people and the media, there is a second challenge more important than that of rising up the career ladder: We also need to secure democracy and the free market economy.
Bringing the state and the world of business and finance into balance with the right amount of control and freedom would be an important step toward attaining this objective. But none of this is possible without a word that is not particularly exciting, and even a bit old-fashioned: seriousness.
So, out go the gambling tables and in come the rows of seats again in the Luftwaffe’s Airbus A310, and fasten your seatbelts for landing -- in the real world.
News and politics
Dirk Kurbjuweit
RT On Air
Thursday, 9 October 2008
Wildlife gives early warning of 'deadly dozen' diseases spread by climate change
Scientists have nicknamed them the “deadly dozen”: 12 diseases, lethal to humans and wildlife, that are increasing their geographical range.
Ebola, cholera, plague and sleeping sickness were among those identified yesterday by veterinary scientists from the Wildlife Conservation Society (WCS) as spreading across the planet because of climate change. The scientists said that wildlife could give an early warning of the approach of diseases and save millions of people.
Researchers called for wildlife monitoring systems to be set up around the globe to watch for signs of disease among animals before it spreads and kills people. Monitoring networks have already been introduced in parts of the world and have proved successful in saving lives.
William Karesh, of the WCS, told the International Union for the Conservation of Nature (IUCN) conference in Barcelona that there was increasing concern about the impact that climate change would have on the spread of disease. Changes in rainfall patterns and temperatures were known to have an effect, though the reason was not always clear, he said at the launch of the report, The Deadly Dozen.
By watching for the arrival of diseases in the animal population it should be possible to take measures to protect both people and local economies. “What we are calling for today is a comprehensive approach to disease globally. Our long-term vision is a comprehensive monitoring network to watch the health of wildlife across the globe,” Dr Karesh said.
Among the trials that have already proved the success of the idea is a network of hunters and other locals who use the forests of the Republic of Congo. By reporting on sightings of gorillas and chimpanzees that have died from outbreaks of Ebola they have prevented any human outbreaks of the deadly disease in northern parts of the country for three years.
Until the hunters were recruited for the project, they brought back dead animals to their villages, hastening the spread of Ebola among people.
Similar projects have been established in South America, where data is just starting to be gathered on the impact of climate change on diseases such as yellow fever. Vaccination programmes are now carried out in areas where outbreaks are observed in primates.
Animals are regarded by scientists as a valuable indicator of climate change because they can rarely adapt rapidly enough for change to pass unnoticed. Changes in the diseases they suffer or the pattern of disease outbreak can often be the result of climate change.
The means by which climate change influences the spread of diseases includes warmer weather, which helps the pathogens or their carriers to live longer; changes in livestock management, such as water availability, bringing them into more frequent contact with wild animals; and altered rainfall patterns that make it easier for pathogens to survive and spread.
The dozen diseases include cholera, which survives better in warmer conditions, lyme disease and babesiosis, which are carried by ticks, and avian flu, which can spread when climate change disrupts migration patterns of wild birds.
Malaria, which is expected to spread because of climate change, was excluded from the deadly dozen list because the version that affects people cannot be caught by animals, despite being carried by mosquitoes. Kristina Smith, of the WCS, joined the call for a wider network of monitors. She said: “We are starting to see trends where disease is affected by the climate. We have a flashing warning sign. Wildlife can be our early warning system.”
The coming contagion
Avian influenza An increase in stormy weather can disrupt flights and force infected wild birds into new areas - and into greater contact with domestic birds
Babesiosis A tick-borne disease that is increasingly a problem for humans. Climate change is thought to have aided a tick boom among lions and buffalo in East Africa
Cholera Warmer water suits the pathogen perfectly. Global warming will cause widespread outbreaks
Ebola Has been linked to variations in rainfall patterns. It kills gorillas, chimpanzees and people
Intestinal and external parasites Both rising temperatures and increased rainfall help the parasites to survive. They are an increasing problem for humans and animals
Lyme disease Changes in population patterns of white-tailed deer and white-footed mice have promoted a spread northwards of the tick-borne disease in the US and into Canada
Plague It kills people and animals and is spread by rodents and fleas, which are altering their distribution amid warmer conditions
Red tides These algal blooms can kill people through the spread of brevetoxins, domoic acid and saxitoxins. Their biggest impact is on the loss of natural resources
Rift Valley fever The virus has significant health, food security and economic impacts, especially in Africa and the Middle East
Sleeping sickness It is transmitted by the tsetse fly, distributions of which are changing
Tuberculosis People catch TB through drinking milk from infected cattle. As rivers dry up because of warming, livestock will be forced to drink in the same places as infected wild animals
Yellow fever Mosquitoes, which carry yellow fever, are expected to spread to new areas as rainfall patterns and temperatures change
Behind the Panic: Financial Warfare over Future of Global Bank Power
What is clear from the behavior of European financial markets over the past two weeks is that the dramatic stories of financial meltdown and panic are deliberately being used by certain influential factions in and outside the EU to shape the future face of global banking in the wake of the US sub-prime and Asset-Backed Security (ABS) debacle. The most interesting development in recent days has been the unified and strong position of the German Chancellor, Finance Minister, Bundesbank and coalition Government, all opposing an American-style EU Superfund bank bailout.
Stock market falls of 7 to 10% a day make for dramatic news headlines and serve to foster a broad sense of unease bordering on panic among ordinary citizens. The events of the last two weeks among EU banks since the dramatic state rescues of Hypo Real Estate, Dexia and Fortis banks, and the announcement by UK Chancellor of the Exchequer, Alistair Darling of a radical shift in policy in dealing with troubled UK banks, have begun to reveal the outline of a distinctly different European response to what in effect is a crisis ‘Made in USA.’
As I suggested in my previous piece here, Spezi-Kapitalismus in den USA: Paulsons Panikmache sieht immer mehr nach Berechnung aus, there is serious ground to believe that US Goldman Sachs ex CEO Henry Paulson, as Treasury Secretary, is not stupid and is actually moving according to a well-thought-out long-term strategy. Events as they are now unfolding in the EU confirm that. As one senior European banker put it to me in private discussion, ‘There is an all-out war going on between the United States and the EU to define the future face of European banking.’
In this banker’s view, the ongoing attempt of Italian Prime Minister Silvio Berlusconi and France’s Nicholas Sarkosy to get an EU common ‘fund’, with perhaps upwards of $300 billion to rescue troubled banks, would de facto play directly into Paulson and the US establishment’s long-term strategy, by in effect weakening the banks and repaying US-originated Asset Backed Securities held by EU banks.
Using panic to centralize power
As I document in my forthcoming book, Power of Money: The Rise and Decline of the American Century, in every major US financial panic since at least the Panic of 1835, the titans of Wall Street—most especially until 1929 the House of JP Morgan—have deliberately triggered bank panics in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power. Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century.
That process of using panics to centralize their private power created an extremely powerful, concentration of financial and economic power in a few private hands, the same hands which created the influential US foreign policy think-tank, the New York Council on Foreign Relations in 1919 to guide the ascent of the American Century, as Time founder Henry Luce called it in a pivotal 1941 essay.
It is becoming increasingly obvious that people like Henry Paulson, who by the way was one of the most aggressive practitioners of the ABS revolution on Wall Street before becoming Treasury Secretary, are operating on motives beyond their over-proportional sense of greed. They, as did Fed Chairman Greenspan, had a strategy. Knowing that at a certain juncture the pyramid of trillions of dollars of dubious sub-prime and other high risk home mortgage-based securities would come falling down, they apparently determined to spread the so-called ‘toxic waste’ ABS securities as globally as possible in order to seduce the big global banks of the world, most especially of the EU into their honey trap.
It worked…up to a point. That point came over the weekend of October 3, coincidentally the national unification holiday of Germany.
Germany breaks with US model
In closed door talks well into the evening of Sunday October 5, Alex Weber the hard-nosed head of the Bundesbank, BaFin head Jochen Sanio and representatives of the Berlin coalition Government of Chancellor Merkel came up with a rescue package for Hypo Real Estate of a nominal €50 billion. However, behind the dramatic headline number, as Weber pointed out in a September 29 letter to Finance Minister Peer Steinbrück that has been made public, not only did the private German banks have to come up with 60% of that figure, the state with 40%. But also, given the careful manner in which the Government in cooperation with the Bundesbank and BaFin, structured the rescue credit agreement, the maximum possible loss, in a worst case scenario, to the state would be limited to €5.7 billion, not €30 billion as many believed. It’s still real money but not the blank check for $700 billion that a US Congress under duress and a few days of falling stock market prices agreed to give Paulson.
The swift action by Finance Minister Steinbrück to fire the head of HRE, in stark contrast to Wall Street where the same criminal fraudsters remain at their desks reaping huge bonuses, indicates as well a different approach. But that does not cut to the heart of the issue. The situation of HRE arose as noted previously, from excesses in a wholly-owned daughter bank of HRE subsidiary DEPFA in Ireland, an EU country known for its liberal loose regulation and low tax regime.
A British policy shift
In the UK, after the costly and foolish bailout of Northern Rock earlier in the year, the Government of Prime Minister Gordon Brown has just announced a dramatic change in policy in the direction of Germany’s position. Britain's banks will get an unprecedented 50 billion-pound (€64 billion) government lifeline and emergency loans from the Bank of England.
The government will buy preference shares from Royal Bank of Scotland Group Plc, Barclays Plc and at least six other banks, and provide about 250 billion pounds of loan guarantees to refinance debt, the Treasury said. The Bank of England will make at least 200 billion pounds available. The plan doesn't specify how much each bank will get.
That means the UK Government will at least partially nationalize its most important international banks, rather than buy their bad loans as under the unworkable Paulson plan. Under such an approach, costs to UK taxpayers once the crisis abates and business returns to more normal conditions, the Government can sell the state shares back to a healthy bank at perhaps a nice profit to the Treasury. The Brown Government has apparently realized that the blanket guarantees it gave to Northern Rock and Bradford & Bingley merely opened the floodgates of government costs without changing the problem.
The new nationalization policy is a dramatic contrast to the Paulson ideological ‘free market’ approach of buying the worthless bonds held by the select banks Paulson chooses to save, rather than recapitalize those banks to allow them to continue to function.
The battle lines drawn
What has emerged are the outlines of two opposite approaches to the unfolding crisis. The Paulson plan, as we noted in our previous article, is part of a project to create three colossal global financial giants—Citigroup, JP MorganChase and, of course, Paulson’s own Goldman Sachs. Having successfully used fear and panic to wrestle a $700 billion bailout from the US taxpayers, now the big three will try to use their unprecedented muscle to ravage European banks in the years ahead.
By agreeing on a strategy of nationalizing what EU finance ministers deem are ‘EU banks too systemically strategic to fail,’ while guaranteeing bank deposits, the EU governments have opted for what will in the longer run allow European banking giants to withstand the anticipated financial attacks from the likes of Goldman or Citigroup.
The dramatic selloff of stocks across European bourses and across Asia is in reality a secondary and far less critical issue. According to market reports, the selloff is being driven by mainly US hedge funds desperate to raise cash as they realize the US economy is going into economic depression and that the Paulson Plan does nothing to address that.
A functioning solvent banking and interbank system is far the more strategic issue. The ABS debacle was ‘Made in New York.’ Nonetheless, its effects have to be isolated and viable EU banks defended in the public interest, not just the interest of Paulson’s banking pals as in the US. The coordinated interest rate cut by the ECB and other European central banks while grabbing headlines, in effect do little to address the real problem: banks fear to lend to each other until their solvency is assured.
By initiating state partial nationalizations across the EU, and rejecting the Berlusconi/Sarkozy bailout scheme, the governments of the EU, interestingly led by the German, are laying a far more sound foundation to emerge from the crisis. Stay tuned, it’s far from over. Asian banks, badly burned by Wall Street’s manipulated 1997-98 Asia Crisis, are very little exposed to the US problem. European banks are exposed in different ways, but none so serious as in the US banking world.
Stock market falls of 7 to 10% a day make for dramatic news headlines and serve to foster a broad sense of unease bordering on panic among ordinary citizens. The events of the last two weeks among EU banks since the dramatic state rescues of Hypo Real Estate, Dexia and Fortis banks, and the announcement by UK Chancellor of the Exchequer, Alistair Darling of a radical shift in policy in dealing with troubled UK banks, have begun to reveal the outline of a distinctly different European response to what in effect is a crisis ‘Made in USA.’
As I suggested in my previous piece here, Spezi-Kapitalismus in den USA: Paulsons Panikmache sieht immer mehr nach Berechnung aus, there is serious ground to believe that US Goldman Sachs ex CEO Henry Paulson, as Treasury Secretary, is not stupid and is actually moving according to a well-thought-out long-term strategy. Events as they are now unfolding in the EU confirm that. As one senior European banker put it to me in private discussion, ‘There is an all-out war going on between the United States and the EU to define the future face of European banking.’
In this banker’s view, the ongoing attempt of Italian Prime Minister Silvio Berlusconi and France’s Nicholas Sarkosy to get an EU common ‘fund’, with perhaps upwards of $300 billion to rescue troubled banks, would de facto play directly into Paulson and the US establishment’s long-term strategy, by in effect weakening the banks and repaying US-originated Asset Backed Securities held by EU banks.
Using panic to centralize power
As I document in my forthcoming book, Power of Money: The Rise and Decline of the American Century, in every major US financial panic since at least the Panic of 1835, the titans of Wall Street—most especially until 1929 the House of JP Morgan—have deliberately triggered bank panics in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power. Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century.
That process of using panics to centralize their private power created an extremely powerful, concentration of financial and economic power in a few private hands, the same hands which created the influential US foreign policy think-tank, the New York Council on Foreign Relations in 1919 to guide the ascent of the American Century, as Time founder Henry Luce called it in a pivotal 1941 essay.
It is becoming increasingly obvious that people like Henry Paulson, who by the way was one of the most aggressive practitioners of the ABS revolution on Wall Street before becoming Treasury Secretary, are operating on motives beyond their over-proportional sense of greed. They, as did Fed Chairman Greenspan, had a strategy. Knowing that at a certain juncture the pyramid of trillions of dollars of dubious sub-prime and other high risk home mortgage-based securities would come falling down, they apparently determined to spread the so-called ‘toxic waste’ ABS securities as globally as possible in order to seduce the big global banks of the world, most especially of the EU into their honey trap.
It worked…up to a point. That point came over the weekend of October 3, coincidentally the national unification holiday of Germany.
Germany breaks with US model
In closed door talks well into the evening of Sunday October 5, Alex Weber the hard-nosed head of the Bundesbank, BaFin head Jochen Sanio and representatives of the Berlin coalition Government of Chancellor Merkel came up with a rescue package for Hypo Real Estate of a nominal €50 billion. However, behind the dramatic headline number, as Weber pointed out in a September 29 letter to Finance Minister Peer Steinbrück that has been made public, not only did the private German banks have to come up with 60% of that figure, the state with 40%. But also, given the careful manner in which the Government in cooperation with the Bundesbank and BaFin, structured the rescue credit agreement, the maximum possible loss, in a worst case scenario, to the state would be limited to €5.7 billion, not €30 billion as many believed. It’s still real money but not the blank check for $700 billion that a US Congress under duress and a few days of falling stock market prices agreed to give Paulson.
The swift action by Finance Minister Steinbrück to fire the head of HRE, in stark contrast to Wall Street where the same criminal fraudsters remain at their desks reaping huge bonuses, indicates as well a different approach. But that does not cut to the heart of the issue. The situation of HRE arose as noted previously, from excesses in a wholly-owned daughter bank of HRE subsidiary DEPFA in Ireland, an EU country known for its liberal loose regulation and low tax regime.
A British policy shift
In the UK, after the costly and foolish bailout of Northern Rock earlier in the year, the Government of Prime Minister Gordon Brown has just announced a dramatic change in policy in the direction of Germany’s position. Britain's banks will get an unprecedented 50 billion-pound (€64 billion) government lifeline and emergency loans from the Bank of England.
The government will buy preference shares from Royal Bank of Scotland Group Plc, Barclays Plc and at least six other banks, and provide about 250 billion pounds of loan guarantees to refinance debt, the Treasury said. The Bank of England will make at least 200 billion pounds available. The plan doesn't specify how much each bank will get.
That means the UK Government will at least partially nationalize its most important international banks, rather than buy their bad loans as under the unworkable Paulson plan. Under such an approach, costs to UK taxpayers once the crisis abates and business returns to more normal conditions, the Government can sell the state shares back to a healthy bank at perhaps a nice profit to the Treasury. The Brown Government has apparently realized that the blanket guarantees it gave to Northern Rock and Bradford & Bingley merely opened the floodgates of government costs without changing the problem.
The new nationalization policy is a dramatic contrast to the Paulson ideological ‘free market’ approach of buying the worthless bonds held by the select banks Paulson chooses to save, rather than recapitalize those banks to allow them to continue to function.
The battle lines drawn
What has emerged are the outlines of two opposite approaches to the unfolding crisis. The Paulson plan, as we noted in our previous article, is part of a project to create three colossal global financial giants—Citigroup, JP MorganChase and, of course, Paulson’s own Goldman Sachs. Having successfully used fear and panic to wrestle a $700 billion bailout from the US taxpayers, now the big three will try to use their unprecedented muscle to ravage European banks in the years ahead.
By agreeing on a strategy of nationalizing what EU finance ministers deem are ‘EU banks too systemically strategic to fail,’ while guaranteeing bank deposits, the EU governments have opted for what will in the longer run allow European banking giants to withstand the anticipated financial attacks from the likes of Goldman or Citigroup.
The dramatic selloff of stocks across European bourses and across Asia is in reality a secondary and far less critical issue. According to market reports, the selloff is being driven by mainly US hedge funds desperate to raise cash as they realize the US economy is going into economic depression and that the Paulson Plan does nothing to address that.
A functioning solvent banking and interbank system is far the more strategic issue. The ABS debacle was ‘Made in New York.’ Nonetheless, its effects have to be isolated and viable EU banks defended in the public interest, not just the interest of Paulson’s banking pals as in the US. The coordinated interest rate cut by the ECB and other European central banks while grabbing headlines, in effect do little to address the real problem: banks fear to lend to each other until their solvency is assured.
By initiating state partial nationalizations across the EU, and rejecting the Berlusconi/Sarkozy bailout scheme, the governments of the EU, interestingly led by the German, are laying a far more sound foundation to emerge from the crisis. Stay tuned, it’s far from over. Asian banks, badly burned by Wall Street’s manipulated 1997-98 Asia Crisis, are very little exposed to the US problem. European banks are exposed in different ways, but none so serious as in the US banking world.
Wednesday, 8 October 2008
Manly destroy Melbourne in record breaking NRL grand final romp
One year on - and 26 games of football later - Manly and Melbourne returned to the scene of last year's rugby league decider, with the club from Sydney's northern beaches dramatically reversing the result.
Manly ran away with a record victory of 40-0, dismantling the Melbourne machine that had won last year's grand final 34-8.
Clearly, they have been the best two teams in the competition, this year and last. But Manly proved last night that their five-year process of continual self-improvement has made them significantly better than their southern rivals.
The Sea Eagles could not expunge last year's humiliation from the record books. The next best thing was to better it, which they did before a vocal and partisan crowd of 80,388 that thrilled in the runaway victory created with play that got more extravagant as the match went on.
Last year Manly choked, hit by the vigorous Storm but also unable to contain the half-dozen bright sparks in the Melbourne side. One of the players most derided in the aftermath was their captain and halfback, Matt Orford, who has been plagued ever since with questions about his ability to deliver in big matches.
The 30-year-old deserves a break after an imperious performance, igniting Manly's attack, stiffening their defence and leading his side with great confidence.
"That is the best feeling in the world. That's made my year," the exultant leader said. Last year's anguish is now "truly gone - I love all the boys. That's the best ever."
Asked for his thoughts, Orford's opposite number, Cooper Cronk, was admirably succinct. "It sucked," he said.
His shell-shocked coach, Craig Bellamy, rued the fact that his team had left their worst perform-ance to last. "I'm in a whirlpool at the moment. I certainly didn't see that coming," he said.
The Manly coach, Des Hasler, did. "Coming in I thought we were playing some really good footy … our boys were fairly up for it tonight," he said.
"As a group of players they've just worked so hard and strived so hard and I'm just so pleased for them and so proud of them."
Playing behind a powerful forward pack led by the man of the match, Brent Kite, Orford made the most of his opportunities and created more for the players outside him, notably the winger Michael Robertson, who scored three tries.
After the kick-off, the biggest roar of the first half was reserved for the introduction of the ageless veteran Steve Menzies. Playing his last, and 349th game, equalling Terry Lamb's record, Menzies let the Eagles soar.
The backrower seemed to lift the team and they swung the ball from one side to the other in search of the break. Eventually, the young hooker Matt Ballin, in his first year in the top grade, scored with a sleight of hand and sneak from dummy half.
Later in the evening, as Menzies returned for the last 10 minutes, the crowd responded in kind, lifting the noise level another notch as he scored his 180th try.
Orford, known affectionately as "Ox", hit the Melbourne forward Antonio Kaufusi with a bone-rattling tackle, giving away 36 kilograms in the contest but shaking the ball loose. From the changeover Robertson scored his first.
Manly led 8-0 at half time and started the second section with the same intent but never expecting the final outcome. Orford speared a kick straight for the corner post and Robertson, again, was perfectly placed to intercept it, snatching the ball and scoring in one graceful movement as the Storm's Billy Slater swooped.
Manly were not ready to defend a lead, instead continuing to play the same up-tempo game that produced the Storm's capitulation. After 60 minutes Kite scored under the posts to finish a great team effort and the Manly players and crowd were ready to celebrate their first premiership since 1996, with the score 24-0 with 20 minutes left.
Since 1996 the once-rich club has hit the skids and rebounded. Hasler, a premiership winner back then, returned as coach with the club on wounded knee, without enough players for a squad and barely enough money to pay their way.
Since 2003 Hasler, supported by the developer Max Delmege, has reinvigorated the club Sydney once used to hate.
Last night Manly felt the love.
Storm fans had to go home to Melbourne, whereas Manly fans got to go home to God's country.
rugby league
NRL
grand final
Manly Sea Eagles
Tuesday, 7 October 2008
The Failure of Central Banks
Just two years ago, Central Banks appeared triumphant. Inflation, the scourge of the 1970s and 80s, appeared dead, the financial crisis of the Tech Wreck had been contained, economies worldwide were booming, and stock markets and house prices were spiralling ever upwards.
Then along came the Subprime Crisis, and we received a rude reminder of why Central Banks were created in the first place: to ensure that the world would never again experience a Great Depression.
We are not in a Great Depression–not yet anyway–but a key pre-condition for one has developed right under the noses of Central Banks: excessive private debt. In fact, debt levels today are twice as high as in 1929, which is why this financial crisis is causing far more carnage than 1929 did.
At the time of the Stock Market Crash of October 1929, the US’s debt ratio was 150%; today it is 290%. Australia’s ratio was 64%; today, it is 165%. The regulators who were supposed to keep us from the jaws of The Beast have instead led us closer towards its belly.
Figure One
USA and Australian Debt to Output Ratios 1920-2008
This was not, of course, a conscious decision. It has happened because Central Banks are run by economists, and the dominant “Neoclassical” faction within economics ignored the real lessons of the Great Depression.
The false lesson that Neoclassical economics preaches is that the market economy is fundamentally stable, and the Great Depression was caused by the monetary authorities tightening credit in the aftermath to the Stock Market Crash, rather than loosening it.
The real lesson of the 1930s is that a credit-driven market economy is fundamentally unstable, and a Great Depression occurs when debt-financed speculation results in excessive private debt at the same time as inflation is low.
Central Banks, under the misguidance of conventional economic theory, ignored the role of private debt in the economic system. They instead reinterpreted their charters–which emphasised full employment–as a mandate to keep inflation low.
As the RBA put it in its most recent Annual Report, its:
“duty … to ensure … the stability of the currency… the maintenance of full employment … and the economic prosperity and welfare of the people of Australia… has found concrete expression in the form of a medium-term inflation target. Monetary policy aims to keep the rate of consumer price inflation at 2– 3 per cent, on average, over the cycle.” (Annual Report 2008, page 5).
With its Neoclassical eyes fixated on the rate of inflation, it ignored the expansion of private debt–as did its equivalents at Central Banks around the world, as did government Treasuries, and as did international economic agencies. This is why the sudden collapse of the world economic order took economists by surprise. They were looking at their mathematical models, which ignore private debt (and indeed money!), rather than at the real world, where debt is king.
Nowhere was this more obvious than with the OECD–the organisation whose imprimatur the Australian Treasury seeks. The following are the unabridged opening two paragraphs from the Editorial to the OECD Economic Outlook from May of 2007 (with the really funny bits in bold):
“In its Economic Outlook last Autumn, the OECD took the view that the US slowdown was not heralding a period of worldwide economic weakness, unlike, for instance, in 2001. Rather, a “ smooth” rebalancing was to be expected, with Europe taking over the baton from the United States in driving OECD growth.
“Recent developments have broadly confirmed this prognosis. Indeed, the current economic situation is in many ways better than what we have experienced in years. Against that background, we have stuck to the rebalancing scenario. Our central forecast remains indeed quite benign: a soft landing in the United States, a strong and sustained recovery in Europe, a solid trajectory in Japan and buoyant activity in China and India. In line with recent trends, sustained growth in OECD economies would be underpinned by strong job creation and falling unemployment.”
Yeah, right. Just three months later, the financial crisis began.
It should by now be painfully obvious that conventional economics cannot be relied upon to explain where we are, how we got here, where we might end up, and what might work to avoid the worst consequences. To understand it, we have to go back to the economist who got it right, but was ignored by the economics profession: Irving Fisher.
The Debt-Deflation Theory of Great Depressions
Fisher had been an academic cheerleader for the financial bubble of the Roaring Twenties–his main claim to fame one can find on the Internet is that he uttered the fateful prediction that “Stock prices have reached what looks like a permanently high plateau” the week before the Stock Market Crash of 1929.
Four years on, chastened and effectively bankrupted, he reflected that a Great Depression ensued when too much debt was accompanied by falling prices. He christened the phenomenon a “debt-deflation”.
A key aspect of Fisher’s reasoning was that, though economists of his time modelled the economy as if it were permanently in equilibrium, the real economy would always be in disequilibrium. As he put it, even if the economy did tend towards equilibrium:
“ new disturbances are, humanly speaking, sure to occur, so that, in actual fact, any variable is almost always above or below the ideal equilibrium”
He also argued that the forces that gave rise to a Depression were innately disequilibrium in nature. The two key factors that caused a Depression, he argued, were excessive debt and falling prices. Though other factors might lead to a crisis (such as overconfidence or excessive speculation), debt and deflation were the two key forces that turned a garden-variety downturn into a Depression. As he very poignantly put it (since he himself was a victim):
“over-investment and over-speculation are often important; but they would have far less serious results were they not conducted with borrowed money. That is, over-indebtedness may lend importance to over-investment or to over-speculation. The same is true as to over-confidence. I fancy that over-confidence seldom does any great harm except when, as, and if, it beguiles its victims into debt.”
Fisher then laid out the sequence of events that follows when a financial crisis ensues in the context of excessive debt and low inflation:
“(1) Debt liquidation leads to distress selling and to
(2) Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of deposits and of their velocity, precipitated by distress selling, causes
(3) A fall in the level of prices, in other words, a swelling of the dollar. Assuming, as above stated, that this fall of prices is not interfered with by reflation or otherwise, there must be
(4) A still greater fall in the net worths of business, precipitating bankruptcies and
(5) A like fall in profits, which in a “capitalistic,” that is, a private-profit society, leads the concerns which are running at a loss to make
(6) A reduction in output, in trade and in employment of labor. These losses, bankruptcies, and unemployment, lead to
(7) Pessimism and loss of confidence, which in turn lead to
(8) Hoarding and slowing down still more the velocity of circulation. The above eight changes cause
(9) Complicated disturbances in the rates of interest, in particular, a fall in the nominal, or money, rates and a rise in the real, or commodity, rates of interest.”
After the Crash of 1929, when business debt was dominant, many firms found themselves with debt repayment commitments that they couldn’t meet out of cash flow. They undertook “ distress selling” to try to raise the money they needed— and because everyone dropped their prices, prices fell across the board. Even firms that managed to pay their debts down in nominal terms found that their revenues fell even more than their debt, leading to “ Fisher’s Paradox” that:
“the more debtors pay, the more they owe. The more the economic boat tips, the more it tends to tip. It is not tending to right itself, but is capsizing.”
That phenomenon is strikingly obvious in the historical data, which shows the rate of inflation falling from trivial levels (of between 0.5% and 1% p.a.) to minus 10% p.a. between 1931 and 1933.
Figure Two
Inflation Rates 1920-40 USA and Australia
Economic growth also came to a shuddering halt as the ensuing credit crunch cut spending levels, and as cash-strapped businesses sacked their workforce. That decline is also evident in the data, with the rate of real economic growth falling from 6% before the crash to minus 8% after it–and as low as minus 13% in 1932.
Figure Three
Rate of Economic Growth 1920-40, USA and Australia
The decline in both output and prices meant that the debt to GDP ratio continued to rise after the Stock Market Crash of 1929–even though credit was tight, and anyone who was in debt was trying to reduce it. Notice on Figure One that debt ratios continued to rise until 1932–from 150% to 215% of GDP in America, and from 64% to 77% of GDP in Australia.
The effect of this decline on employment was so severe that it has remained etched into humanity’s psyche. When the Stock Market began its collapse, the level of unemployment in America, as recorded by the National Bureau of Economic Research, was 0.04%–one 25th of one percent. Three years later, it reached 25%. Australia’s unemployment rate blew out too, from a higher initial level of 9% to a peak of 20% in 1932. The world had suddenly moved from The Great Gatsby to They Shoot Horses, Don’t They?
Figure Four
Unemployment Rates 1920-40, USA and Australia
This calamity, which economic theory said could not happen, both discredited conventional economic thought, and gave credence to the then unfashionable views of John Maynard Keynes (Fisher, with his reputation in tatters after his false assurances that nothing was amiss in 1929, was largely ignored–even though Fisher’s explanation of how Depressions occur was superior to Keynes’s). When the world emerged from the World War that followed the Great Depression, so-called Keynesian Economics dominated the profession, and the once supreme Neoclassicals were ignored.
However, one of the most prophetic observations that Keynes ever made concerned the likelihood that his new ideas would fail to be truly accepted by the economics profession. In the Preface to his General Theory of Employment, Money and Wages, Keynes observed that:
“The ideas which are here expressed so laboriously are extremely simple and should be obvious. The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.”
So it proved to be. Though calling themselves “Keynesian”, most academic economists continued to cling to the preceding “Neoclassical” ideas (especially in the area of microeconomics, which Keynes did not address).
As the experience and the memory of the Great Depression receded, academic economics produced a hybrid of Keynes’s macroeconomic ideas grafted on top of Neoclassical microeconomics that they called “the Keynesian-Neoclassical Synthesis”.
Unfortunately, the ideas were incompatible–and over time, wherever there was a conflict, academic economics rejected the Keynesian graft, rather than the underlying Neoclassical microeconomics. After fifty years of this, Keynes’s ideas were completely ejected from the economic mainstream, the Neoclassical belief that the economy is self-correcting became dominant once more, and economists trained in this belief came to dominate Treasuries and Central Banks around the world. They ignored levels of private debt, championed deregulation of finance, and virtually encouraged asset price speculation.
Now we have twice as much debt as caused the Great Depression, and inflation so low that, were it not for unprecented factors (the rise of China, global warming and peak oil), deflation would almost be a certainty.
Having thus unlearnt the real lessons of the Great Depression, the economics profession may yet make us relive it.
END OF COMMENTARYComments on the Data
It appears that Australia’s debt to GDP ratio has peaked at 165% of GDP. It could still turn up once again if deflation takes hold, but for the meantime, this seems to be the top of the bubble.
Now as debt levels start to fall–firstly relatively to GDP and then, ultimately, in absolute terms as well–the macroeconomic effect of the bubble’s bursting be felt.
This is because aggregate demand is the sum of income plus change in debt. For the last decade, the latter factor has been adding to demand–and aggregate supply, asset prices, and our import bill have adjusted upwards to suit. But as the change in debt drops and ultimately turns negative, it will subtract from demand–and supply (read employment), asset prices and imports will follow it down.
If Australians decided to reduce their debt to income ratio by 10% each year–to get back to the 25% level that applied back in the 1960s (before this long-term speculative bubble took off)–it would take roughly 15 years to get there.
Chart One
Democracy Now - Can Coal Be Clean?
A Debate Between Michael Brune of Rainforest Action Network and Joe Lucas of American Coalition for Clean Coal Electricity
While John McCain and Barack Obama have painted clean coal as a panacea that will help solve the nation’s energy problem, many environmental and scientific groups have questioned whether the burning of coal can ever be clean. We host a debate between Rainforest Action Network director Michael Brune, author of the new book Coming Clean: Breaking America’s Addiction to Oil and Coal, and Joe Lucas of the American Coalition for Clean Coal Electricity.
Guests:
Michael Brune, executive director of Rainforest Action Network and author of the new book Coming Clean: Breaking America’s Addiction to Oil and Coal.
Joe Lucas, vice president of communications for American Coalition for Clean Coal Electricity. The coalition was formed earlier this year to promote coal technology. The coalition’s members include many of the nation’s largest coal companies.
AMY GOODMAN: Senators Barack Obama and John McCain are holding their second debate tonight at Belmont University in Nashville, Tennessee. The town-hall style debate will be moderated by NBC’s Tom Brokaw. While the candidates are expected to spar over the economy, the war in Iraq and healthcare, there is one issue both Obama and McCain have agreed on: the development of so-called clean coal technology to reduce the environmental impact of burning coal.
Obama has repeatedly praised clean coal in campaign speeches, including his acceptance speech at the Democratic National Convention in Denver in August.
SEN. BARACK OBAMA: As president—as president, I will tap our natural gas reserves, invest in clean coal technology and find ways to safely harness nuclear power. I’ll help our auto companies retool, so that the fuel-efficient cars of the future are built right here in America.
AMY GOODMAN: John McCain has also been a vocal supporter of clean coal technology.
SEN. JOHN McCAIN: There’s another area that’s important, and that’s clean coal technology. Despite what may have been said by someone else, we’re going to have to continue to build coal-fired plants. And what we need to do, though, is improve and develop the technology for clean coal technology so we don’t continue polluting and continue to contributing to greenhouse gas emissions, which threaten our very planet.
AMY GOODMAN: While McCain and Obama have painted clean coal as a panacea that will help solve the nation’s energy problem, many environmental and scientific groups have questioned whether the burning of coal can ever be clean.
An editorial in today’s Los Angeles Times describes the phrase “clean coal” as an Orwellian marketing slogan invented by coal interests. The paper criticized both campaigns for embracing coal while claiming to be interested in fighting global warming and pollution.
Well, today we’ll host the debate you won’t hear tonight in the presidential debate. Michael Brune is executive director of Rainforest Action Network and author of the new book Coming Clean: Breaking America’s Addiction to Oil and Coal. Joe Lucas is the vice president of communications for the American Coalition for Clean Coal Electricity. The coalition formed earlier this year to promote coal technology, the coalition’s members including many of the nation’s largest coal companies.
We welcome you both to Democracy Now! Joe Lucas, let’s begin with you in Washington. Why do you think clean coal is the answer, and how important is it to you that both main party presidential candidates agree on the issue of clean coal?
JOE LUCAS: Well, Amy, it is not the answer; it is part of a lot of answers. I mean, meeting America’s growing demand for electricity or the world’s growing demand for electricity, for that matter, is going to require us to use all of our available energy resources: coal, wind, solar and others. And so, coal is 50 percent of our electricity we use here each day. We have more energy in the form of coal right here in America than the entire rest of the world has oil. And over the last thirty years, we’ve made great progress in ensuring, with technology, using coal to generate electricity has a lesser impact on the environment.
And going forward, we realize that a part of these technologies will be used to capture and store carbon. So, we can meet America’s growing demand for energy. We can do it cleanly. And we can also meet the challenge of reducing greenhouse gas emissions and at the same time keep electricity reliable and affordable for American families.
AMY GOODMAN: So, Michael Brune, what’s your problem with it?
MICHAEL BRUNE: Well, the words “clean” and “coal” really shouldn’t be in the same sentence together. Coal is the largest source of greenhouse gas emissions in the country. It’s the largest—fastest-growing source of greenhouse gas emissions on the planet. It’s also the largest source of mercury poisoning in the country. And the American Lung Association estimates that 24,000 Americans die prematurely each year due to pollution from coal-fired power plants.
The choice that we have is whether or not to funnel billions of dollars toward so-called clean coal technology or begin the transition right now toward solar and wind and clean energy.
AMY GOODMAN: I wanted to turn for a minute to the debate, the debate between the vice-presidential candidates, Palin and Biden. So-called clean coal came up in the Thursday vice-presidential debate between Sarah Palin and Joe Biden.
GOV. SARAH PALIN: Barack Obama and Senator Biden, you’ve said no to everything in trying to find a domestic solution to the energy crisis that we’re in. You even called drilling, safe, environmentally friendly drilling offshore, as raping the outer continental shelf. There—with new technology, with tiny footprints even on land, it is safe to drill, and we need to do more of that.
But also, in that all-of-the-above approach that Senator McCain supports, the alternative fuels will be tapped into: the nuclear, the clean coal. I was surprised to hear you mention that, because you had said that there isn’t anything such a thing as clean coal. And I think you said it in a rope line, too, at one of the rallies.
SEN. JOE BIDEN: My record—just take a look at the record. My record for twenty-five years has supported clean coal technology. A comment made in a rope line was taken out of context. I was talking about exporting that technology to China, so when they burn their dirty coal, it won’t be as dirty. It will be clean.
AMY GOODMAN: Michael Brune, what’s the difference between clean and dirty coal?
MICHAEL BRUNE: What we need to understand is that there’s not a single coal plant in the country that can actually capture its greenhouse gas emissions. The coal industry itself will say that the technology to capture and store greenhouse gas emissions is at least a decade away. And so, the difference between clean and dirty is that one is real—coal is the dirtiest form of energy production and dirtiest energy source on the planet—and one is a marketing creation.
The coal industry, Big Coal, coal companies and the utility industry, have a problem on their hands, in that their substance is the largest source of greenhouse gas emissions and one of the largest sources of air and water pollution on the planet. They can’t clean up the product, so they have to clean up the industry.
AMY GOODMAN: Joe Lucas?
JOE LUCAS: Amy, I guess we could play this game back and forth all day. I mean, Michael is correct: we don’t have a plant here in the United States today that has commercially installed carbon capture technology. Also, by the same token, we don’t have any wind farms today that can produce steady forms of electricity that make it possible to displace traditional energy resources like coal. The fact is, it is not an either/or solution here. We’re going to need both wind, solar, as well as what we call base load power, like coal, nuclear and other resources, to meet that constant, steady demand of electricity we use here in this country.
Going forward, we’re a lot closer to having the technology that will allow us to capture and store carbon from greenhouse gas—or to restore—to capture and store greenhouse gas emissions from coal plants. And this whole issue of how to have these sort of on-demand renewables simply are not there. Today, wind and solar account for less than two percent of our electricity here in the United States. And even with Herculean growth over the next thirty years, that’s still only going to be about four percent. Now, that’s not to slam renewables; that’s just to say, if we’re going to have reliable power here in the United States to power our economy, to ensure that when we flip the light switch at night that the light does come on, we’re still going to need to have domestic energy resources, reliable energy resources like coal, and with technology.
And I guess the point that I’m making is, we’re supporting the development of these technologies, and we would like to have other groups like Michael’s join us to ensure that these technologies do come into the marketplace as soon as possible.
AMY GOODMAN: Michael Brune of Rainforest Action Network?
MICHAEL BRUNE: Sure. Well, what we can remember is that the solar and wind industries are going—growing dramatically faster than the coal industry right now. We added three times more wind capacity in 2007 than we added new coal capacity. A new large wind farm was just approved off the state of New Jersey. Another wind farm was approved off the state of Delaware. Massive solar farms are being approved in Arizona, New Mexico, California, Utah—the Saudi Arabia of sun.
The reality—one thing that I will agree about that Joe says is that coal will be here for some time to come. Coal produces 50 percent of our electricity, and it will take some time to phase that out. The point is that every dollar that we invest in clean—or in coal technology, in the coal industry infrastructure, is a dollar that is better invested in solar and wind. We know—we know that the future economy has to be powered by clean energy. Why not go all in for clean energy today, rather than continuing to perpetuate our addiction to the dirtiest fuel on the planet?
JOE LUCAS: And Michael, I guess what I would say is, when you say invest in clean energy, I would agree with you there. And with that investment in clean coal, coal can be clean energy. If you look at Vice President Gore’s plan, when he talks about clean energy, he squarely says that carbon capture on coal plants meets his definition of clean energy. And that’s what we’re saying. We’re not saying let’s take money away from renewables to put into clean coal; we’re saying let’s build—let’s bake a big enough pie here, so that, going forward, we do have renewables added to the mix, we have clean coal added to the mix, we have all these things that will ensure that we meet our growing demand for electricity, as well as make sure that we have technology that can be—as Barack Obama said, we can have technology that can be sent overseas to places like China and India, where coal use is continuing to grow.
AMY GOODMAN: Let me go for a moment, since you raised, Joe Lucas, the issue of Al Gore—I wanted to ask you about his recent comments, the Nobel laureate, Al Gore, calling for civil disobedience against carbon-emitting coal plants.
AL GORE: If you’re a young person, looking at the future of this planet and looking at what is being done right now and not done, I believe we’ve reached the stage where it is time for civil disobedience to prevent the construction of new coal plants that do not have carbon capture and sequestration.
AMY GOODMAN: Joe Lucas, vice president of communications for the American Coalition for Clean Coal, your response?
JOE LUCAS: I think that Vice President Gore’s statement is misplaced there. We have another problem in this country, and that is, electricity demand is growing twice the rate that we’re adding new capacity right now. And one of the things that we lose sight of is, once a new coal plant is proposed, it’s somewhere between eight to twelve years before that plant actually goes into operation. Now, you can call me an optimist, but I’m telling you that we’re making great progress on this technology, and I see the opportunity for these new carbon capture and sequestration technologies to come online at or near the time these new plants come online.
So, if we’re going to keep electricity reliable, if we’re going to make sure that we’re using affordable energy resources, if we’re going to have these carbon control technologies, we have to have a robust market for those technologies. And so, I don’t think that right now the best method of bringing these technologies to the marketplace is to have a moratorium. We need to be building new coal plants to meet our growing demand for energy and also ensure the market for these new technologies that we’re hoping to rush to the marketplace as soon as possible.
AMY GOODMAN: Michael Brune, you sent Al Gore handcuffs?
MICHAEL BRUNE: Sure, I did. I did. You know, just to respond to Joe and then talk about civil disobedience, the coal industry itself says that the ability to capture and store emissions is at least ten to twelve years away. Joe talks about how coal plants take eight to ten years to build. Why would we want to wait that long? It takes two years to build a massive wind farm, two-and-a-half years to build a large solar facility, two weeks to put solar panels up on a rooftop. We know that the new economy has to be based on clean energy. Let’s start today.
This is why Al Gore—Al Gore did talk about the fact that there is no such thing as clean coal. There is no blueprint for a coal plant that can capture and store its emissions. There’s no plants that are under construction. He says that the single biggest crisis facing our climate today is the construction of new coal-fired power plants. And so, he’s proposing that young people engage in civil disobedience. Civil disobedience—
JOE LUCAS: Michael—
MICHAEL BRUNE: —has brought our country out of its darkest hours. It’s helped to end segregation laws. It’s helped to end unjust wars. It’s helped to secure for women the right to vote. It is time for people today to engage in peaceful, nonviolent and creative protest to create a clean energy future.
AMY GOODMAN: So, Michael Brune, what does it mean to you that tonight, in the debate that the presidential candidates will have—some of them, the major party candidates—this is an issue they fully agree on. In fact, at the Democratic convention, clean coal was everywhere, the advertisements for it. Trucks were riding around with it. They were sponsoring events.
MICHAEL BRUNE: I write about this in my book, Coming Clean. It means that we have work to do. You can go to followthecoalmoney.org and find out who are the largest recipients of coal industry cash. You can go to followtheoilmoney.org and find out who are the largest recipients of oil industry cash.
To get clean energy, we’re going to need a clean government. And we won’t be saved by either administration. And so, come January 20th, if you’re a progressive activist looking to create a clean energy future, you have to get to work.
AMY GOODMAN: Well, what about that issue of the coal money and who—well, basically, who Joe Lucas represents? He represents the coal companies.
MICHAEL BRUNE: He does. He represents Big Coal, the utilities and the coal industry, that are writing energy legislation today. The bailout that we saw last week had significant guarantees for so-called clean coal money.
AMY GOODMAN: What do you mean?
MICHAEL BRUNE: There were—there’s about eight—two-and-a-half—excuse me, two-and-a-half billion dollars in loan guarantees that were provided for the construction of so-called clean coal technology. And again, that’s two-and-a-half billion dollars that is much better spent on energy efficiency and clean power.
AMY GOODMAN: Joe Lucas, did the coal companies, your organization, the American Coalition for Clean Coal, weigh in on the bailout? Were they—were you satisfied with that bailout?
JOE LUCAS: We support—
AMY GOODMAN: Were they—were you satisfied with that bailout?
JOE LUCAS: Well, keep in mind, we support the advancements of technology that will allow us to meet this challenge of reducing greenhouse gas emissions. And so, from that standpoint, we see this as a partnership between the federal government and private industry to bring these first-of-their-kind, first-of-their-scale technologies to the marketplace. And so, from that standpoint, these are technology incentives that have been debated throughout the Congress numerous times in numerous bills that had not passed that got added to this omnibus piece of legislation.
But I want to go back to two things that Michael said. First off, there is a blueprint for building a carbon capture near-zero emissions coal plant that also produces hydrogen, and that blueprint was developed in the Clinton administration that Vice President Gore was a part of. We’ve been trying to get the demonstration of that project off the ground in FutureGen. That was a project that was going to be the technology demonstration project that was going to build this plant. It was going to be in Mattoon, Illinois. Late last year, the Bush administration sort of put that program on hold. What they said, instead of building one big plant, they wanted to build seven or eight smaller plants. One of the things that’s in this bailout bill is the fact that it preserves the decision to move forward with FutureGen, so the next president can decide.
The other thing that I want to raise that Michael keeps talking about, solar and wind, the question that I have: how do you produce electricity from solar and wind when there is not sufficient wind speed or not enough direct sunlight? That’s why renewables are intermittent power resources, for the most part. They can be used for peaking power, not base load power, which is what you use coal for. That’s why I’m saying it is not a choice of either/or; in many cases, it’s a combination of both wind and solar.
AMY GOODMAN: Michael Brune, last comment?
MICHAEL BRUNE: Sure. I just want to talk about FutureGen. The Bush administration realizes that it’s a financial boondoggle. If the Bush administration—
AMY GOODMAN: What is it?
MICHAEL BRUNE: The FutureGen is this idea of a new plant that might be able to capture its emissions. If the Bush administration isn’t supporting a big plan for a new coal-fired power plant, you know that it has problems. Most executives are calling it NeverGen, because it never will be built.
And to address the issue of how we can meet our base load needs with renewable power, just look to other countries. Denmark gets a massive proportion of its power from both hydroelectric plants and wind power, and they don’t have any problems with base loads. When we scale up both solar and wind and when we scale up geothermal and hydroelectric power, all of those sources will begin to balance each other out, and we can start to retire coal plants and replace them with clean energy.
AMY GOODMAN: Well, I want to thank you both for being with us, for sharing with us some diverse opinions that we’re not going to hear tonight on the issue of clean coal in the debate: Michael Brune, executive director of the Rainforest Action Network, his new book is Coming Clean: Breaking America’s Addiction to Oil and Coal; and Joe Lucas, vice president of communications for American Coalition for Clean Coal Electricity. When we come back, we’ll be joined by Antonia Juhasz. She has a new book out, The Tyranny of Oil: The World’s Most Powerful Industry—And What We Must Do to Stop It.
LISTEN
Clean Coal
Democracy Now
While John McCain and Barack Obama have painted clean coal as a panacea that will help solve the nation’s energy problem, many environmental and scientific groups have questioned whether the burning of coal can ever be clean. We host a debate between Rainforest Action Network director Michael Brune, author of the new book Coming Clean: Breaking America’s Addiction to Oil and Coal, and Joe Lucas of the American Coalition for Clean Coal Electricity.
Guests:
Michael Brune, executive director of Rainforest Action Network and author of the new book Coming Clean: Breaking America’s Addiction to Oil and Coal.
Joe Lucas, vice president of communications for American Coalition for Clean Coal Electricity. The coalition was formed earlier this year to promote coal technology. The coalition’s members include many of the nation’s largest coal companies.
AMY GOODMAN: Senators Barack Obama and John McCain are holding their second debate tonight at Belmont University in Nashville, Tennessee. The town-hall style debate will be moderated by NBC’s Tom Brokaw. While the candidates are expected to spar over the economy, the war in Iraq and healthcare, there is one issue both Obama and McCain have agreed on: the development of so-called clean coal technology to reduce the environmental impact of burning coal.
Obama has repeatedly praised clean coal in campaign speeches, including his acceptance speech at the Democratic National Convention in Denver in August.
SEN. BARACK OBAMA: As president—as president, I will tap our natural gas reserves, invest in clean coal technology and find ways to safely harness nuclear power. I’ll help our auto companies retool, so that the fuel-efficient cars of the future are built right here in America.
AMY GOODMAN: John McCain has also been a vocal supporter of clean coal technology.
SEN. JOHN McCAIN: There’s another area that’s important, and that’s clean coal technology. Despite what may have been said by someone else, we’re going to have to continue to build coal-fired plants. And what we need to do, though, is improve and develop the technology for clean coal technology so we don’t continue polluting and continue to contributing to greenhouse gas emissions, which threaten our very planet.
AMY GOODMAN: While McCain and Obama have painted clean coal as a panacea that will help solve the nation’s energy problem, many environmental and scientific groups have questioned whether the burning of coal can ever be clean.
An editorial in today’s Los Angeles Times describes the phrase “clean coal” as an Orwellian marketing slogan invented by coal interests. The paper criticized both campaigns for embracing coal while claiming to be interested in fighting global warming and pollution.
Well, today we’ll host the debate you won’t hear tonight in the presidential debate. Michael Brune is executive director of Rainforest Action Network and author of the new book Coming Clean: Breaking America’s Addiction to Oil and Coal. Joe Lucas is the vice president of communications for the American Coalition for Clean Coal Electricity. The coalition formed earlier this year to promote coal technology, the coalition’s members including many of the nation’s largest coal companies.
We welcome you both to Democracy Now! Joe Lucas, let’s begin with you in Washington. Why do you think clean coal is the answer, and how important is it to you that both main party presidential candidates agree on the issue of clean coal?
JOE LUCAS: Well, Amy, it is not the answer; it is part of a lot of answers. I mean, meeting America’s growing demand for electricity or the world’s growing demand for electricity, for that matter, is going to require us to use all of our available energy resources: coal, wind, solar and others. And so, coal is 50 percent of our electricity we use here each day. We have more energy in the form of coal right here in America than the entire rest of the world has oil. And over the last thirty years, we’ve made great progress in ensuring, with technology, using coal to generate electricity has a lesser impact on the environment.
And going forward, we realize that a part of these technologies will be used to capture and store carbon. So, we can meet America’s growing demand for energy. We can do it cleanly. And we can also meet the challenge of reducing greenhouse gas emissions and at the same time keep electricity reliable and affordable for American families.
AMY GOODMAN: So, Michael Brune, what’s your problem with it?
MICHAEL BRUNE: Well, the words “clean” and “coal” really shouldn’t be in the same sentence together. Coal is the largest source of greenhouse gas emissions in the country. It’s the largest—fastest-growing source of greenhouse gas emissions on the planet. It’s also the largest source of mercury poisoning in the country. And the American Lung Association estimates that 24,000 Americans die prematurely each year due to pollution from coal-fired power plants.
The choice that we have is whether or not to funnel billions of dollars toward so-called clean coal technology or begin the transition right now toward solar and wind and clean energy.
AMY GOODMAN: I wanted to turn for a minute to the debate, the debate between the vice-presidential candidates, Palin and Biden. So-called clean coal came up in the Thursday vice-presidential debate between Sarah Palin and Joe Biden.
GOV. SARAH PALIN: Barack Obama and Senator Biden, you’ve said no to everything in trying to find a domestic solution to the energy crisis that we’re in. You even called drilling, safe, environmentally friendly drilling offshore, as raping the outer continental shelf. There—with new technology, with tiny footprints even on land, it is safe to drill, and we need to do more of that.
But also, in that all-of-the-above approach that Senator McCain supports, the alternative fuels will be tapped into: the nuclear, the clean coal. I was surprised to hear you mention that, because you had said that there isn’t anything such a thing as clean coal. And I think you said it in a rope line, too, at one of the rallies.
SEN. JOE BIDEN: My record—just take a look at the record. My record for twenty-five years has supported clean coal technology. A comment made in a rope line was taken out of context. I was talking about exporting that technology to China, so when they burn their dirty coal, it won’t be as dirty. It will be clean.
AMY GOODMAN: Michael Brune, what’s the difference between clean and dirty coal?
MICHAEL BRUNE: What we need to understand is that there’s not a single coal plant in the country that can actually capture its greenhouse gas emissions. The coal industry itself will say that the technology to capture and store greenhouse gas emissions is at least a decade away. And so, the difference between clean and dirty is that one is real—coal is the dirtiest form of energy production and dirtiest energy source on the planet—and one is a marketing creation.
The coal industry, Big Coal, coal companies and the utility industry, have a problem on their hands, in that their substance is the largest source of greenhouse gas emissions and one of the largest sources of air and water pollution on the planet. They can’t clean up the product, so they have to clean up the industry.
AMY GOODMAN: Joe Lucas?
JOE LUCAS: Amy, I guess we could play this game back and forth all day. I mean, Michael is correct: we don’t have a plant here in the United States today that has commercially installed carbon capture technology. Also, by the same token, we don’t have any wind farms today that can produce steady forms of electricity that make it possible to displace traditional energy resources like coal. The fact is, it is not an either/or solution here. We’re going to need both wind, solar, as well as what we call base load power, like coal, nuclear and other resources, to meet that constant, steady demand of electricity we use here in this country.
Going forward, we’re a lot closer to having the technology that will allow us to capture and store carbon from greenhouse gas—or to restore—to capture and store greenhouse gas emissions from coal plants. And this whole issue of how to have these sort of on-demand renewables simply are not there. Today, wind and solar account for less than two percent of our electricity here in the United States. And even with Herculean growth over the next thirty years, that’s still only going to be about four percent. Now, that’s not to slam renewables; that’s just to say, if we’re going to have reliable power here in the United States to power our economy, to ensure that when we flip the light switch at night that the light does come on, we’re still going to need to have domestic energy resources, reliable energy resources like coal, and with technology.
And I guess the point that I’m making is, we’re supporting the development of these technologies, and we would like to have other groups like Michael’s join us to ensure that these technologies do come into the marketplace as soon as possible.
AMY GOODMAN: Michael Brune of Rainforest Action Network?
MICHAEL BRUNE: Sure. Well, what we can remember is that the solar and wind industries are going—growing dramatically faster than the coal industry right now. We added three times more wind capacity in 2007 than we added new coal capacity. A new large wind farm was just approved off the state of New Jersey. Another wind farm was approved off the state of Delaware. Massive solar farms are being approved in Arizona, New Mexico, California, Utah—the Saudi Arabia of sun.
The reality—one thing that I will agree about that Joe says is that coal will be here for some time to come. Coal produces 50 percent of our electricity, and it will take some time to phase that out. The point is that every dollar that we invest in clean—or in coal technology, in the coal industry infrastructure, is a dollar that is better invested in solar and wind. We know—we know that the future economy has to be powered by clean energy. Why not go all in for clean energy today, rather than continuing to perpetuate our addiction to the dirtiest fuel on the planet?
JOE LUCAS: And Michael, I guess what I would say is, when you say invest in clean energy, I would agree with you there. And with that investment in clean coal, coal can be clean energy. If you look at Vice President Gore’s plan, when he talks about clean energy, he squarely says that carbon capture on coal plants meets his definition of clean energy. And that’s what we’re saying. We’re not saying let’s take money away from renewables to put into clean coal; we’re saying let’s build—let’s bake a big enough pie here, so that, going forward, we do have renewables added to the mix, we have clean coal added to the mix, we have all these things that will ensure that we meet our growing demand for electricity, as well as make sure that we have technology that can be—as Barack Obama said, we can have technology that can be sent overseas to places like China and India, where coal use is continuing to grow.
AMY GOODMAN: Let me go for a moment, since you raised, Joe Lucas, the issue of Al Gore—I wanted to ask you about his recent comments, the Nobel laureate, Al Gore, calling for civil disobedience against carbon-emitting coal plants.
AL GORE: If you’re a young person, looking at the future of this planet and looking at what is being done right now and not done, I believe we’ve reached the stage where it is time for civil disobedience to prevent the construction of new coal plants that do not have carbon capture and sequestration.
AMY GOODMAN: Joe Lucas, vice president of communications for the American Coalition for Clean Coal, your response?
JOE LUCAS: I think that Vice President Gore’s statement is misplaced there. We have another problem in this country, and that is, electricity demand is growing twice the rate that we’re adding new capacity right now. And one of the things that we lose sight of is, once a new coal plant is proposed, it’s somewhere between eight to twelve years before that plant actually goes into operation. Now, you can call me an optimist, but I’m telling you that we’re making great progress on this technology, and I see the opportunity for these new carbon capture and sequestration technologies to come online at or near the time these new plants come online.
So, if we’re going to keep electricity reliable, if we’re going to make sure that we’re using affordable energy resources, if we’re going to have these carbon control technologies, we have to have a robust market for those technologies. And so, I don’t think that right now the best method of bringing these technologies to the marketplace is to have a moratorium. We need to be building new coal plants to meet our growing demand for energy and also ensure the market for these new technologies that we’re hoping to rush to the marketplace as soon as possible.
AMY GOODMAN: Michael Brune, you sent Al Gore handcuffs?
MICHAEL BRUNE: Sure, I did. I did. You know, just to respond to Joe and then talk about civil disobedience, the coal industry itself says that the ability to capture and store emissions is at least ten to twelve years away. Joe talks about how coal plants take eight to ten years to build. Why would we want to wait that long? It takes two years to build a massive wind farm, two-and-a-half years to build a large solar facility, two weeks to put solar panels up on a rooftop. We know that the new economy has to be based on clean energy. Let’s start today.
This is why Al Gore—Al Gore did talk about the fact that there is no such thing as clean coal. There is no blueprint for a coal plant that can capture and store its emissions. There’s no plants that are under construction. He says that the single biggest crisis facing our climate today is the construction of new coal-fired power plants. And so, he’s proposing that young people engage in civil disobedience. Civil disobedience—
JOE LUCAS: Michael—
MICHAEL BRUNE: —has brought our country out of its darkest hours. It’s helped to end segregation laws. It’s helped to end unjust wars. It’s helped to secure for women the right to vote. It is time for people today to engage in peaceful, nonviolent and creative protest to create a clean energy future.
AMY GOODMAN: So, Michael Brune, what does it mean to you that tonight, in the debate that the presidential candidates will have—some of them, the major party candidates—this is an issue they fully agree on. In fact, at the Democratic convention, clean coal was everywhere, the advertisements for it. Trucks were riding around with it. They were sponsoring events.
MICHAEL BRUNE: I write about this in my book, Coming Clean. It means that we have work to do. You can go to followthecoalmoney.org and find out who are the largest recipients of coal industry cash. You can go to followtheoilmoney.org and find out who are the largest recipients of oil industry cash.
To get clean energy, we’re going to need a clean government. And we won’t be saved by either administration. And so, come January 20th, if you’re a progressive activist looking to create a clean energy future, you have to get to work.
AMY GOODMAN: Well, what about that issue of the coal money and who—well, basically, who Joe Lucas represents? He represents the coal companies.
MICHAEL BRUNE: He does. He represents Big Coal, the utilities and the coal industry, that are writing energy legislation today. The bailout that we saw last week had significant guarantees for so-called clean coal money.
AMY GOODMAN: What do you mean?
MICHAEL BRUNE: There were—there’s about eight—two-and-a-half—excuse me, two-and-a-half billion dollars in loan guarantees that were provided for the construction of so-called clean coal technology. And again, that’s two-and-a-half billion dollars that is much better spent on energy efficiency and clean power.
AMY GOODMAN: Joe Lucas, did the coal companies, your organization, the American Coalition for Clean Coal, weigh in on the bailout? Were they—were you satisfied with that bailout?
JOE LUCAS: We support—
AMY GOODMAN: Were they—were you satisfied with that bailout?
JOE LUCAS: Well, keep in mind, we support the advancements of technology that will allow us to meet this challenge of reducing greenhouse gas emissions. And so, from that standpoint, we see this as a partnership between the federal government and private industry to bring these first-of-their-kind, first-of-their-scale technologies to the marketplace. And so, from that standpoint, these are technology incentives that have been debated throughout the Congress numerous times in numerous bills that had not passed that got added to this omnibus piece of legislation.
But I want to go back to two things that Michael said. First off, there is a blueprint for building a carbon capture near-zero emissions coal plant that also produces hydrogen, and that blueprint was developed in the Clinton administration that Vice President Gore was a part of. We’ve been trying to get the demonstration of that project off the ground in FutureGen. That was a project that was going to be the technology demonstration project that was going to build this plant. It was going to be in Mattoon, Illinois. Late last year, the Bush administration sort of put that program on hold. What they said, instead of building one big plant, they wanted to build seven or eight smaller plants. One of the things that’s in this bailout bill is the fact that it preserves the decision to move forward with FutureGen, so the next president can decide.
The other thing that I want to raise that Michael keeps talking about, solar and wind, the question that I have: how do you produce electricity from solar and wind when there is not sufficient wind speed or not enough direct sunlight? That’s why renewables are intermittent power resources, for the most part. They can be used for peaking power, not base load power, which is what you use coal for. That’s why I’m saying it is not a choice of either/or; in many cases, it’s a combination of both wind and solar.
AMY GOODMAN: Michael Brune, last comment?
MICHAEL BRUNE: Sure. I just want to talk about FutureGen. The Bush administration realizes that it’s a financial boondoggle. If the Bush administration—
AMY GOODMAN: What is it?
MICHAEL BRUNE: The FutureGen is this idea of a new plant that might be able to capture its emissions. If the Bush administration isn’t supporting a big plan for a new coal-fired power plant, you know that it has problems. Most executives are calling it NeverGen, because it never will be built.
And to address the issue of how we can meet our base load needs with renewable power, just look to other countries. Denmark gets a massive proportion of its power from both hydroelectric plants and wind power, and they don’t have any problems with base loads. When we scale up both solar and wind and when we scale up geothermal and hydroelectric power, all of those sources will begin to balance each other out, and we can start to retire coal plants and replace them with clean energy.
AMY GOODMAN: Well, I want to thank you both for being with us, for sharing with us some diverse opinions that we’re not going to hear tonight on the issue of clean coal in the debate: Michael Brune, executive director of the Rainforest Action Network, his new book is Coming Clean: Breaking America’s Addiction to Oil and Coal; and Joe Lucas, vice president of communications for American Coalition for Clean Coal Electricity. When we come back, we’ll be joined by Antonia Juhasz. She has a new book out, The Tyranny of Oil: The World’s Most Powerful Industry—And What We Must Do to Stop It.
LISTEN
WATCH
Clean Coal
Democracy Now
Democracy Now - Is Posse Comitatus Dead? US Troops on US Streets
In a barely noticed development, a US Army unit is now training for domestic operations under the control of US Army North, the Army service component of Northern Command. An initial news report in the Army Times newspaper last month noted that in addition to emergency response the force “may be called upon to help with civil unrest and crowd control.” The military has since claimed the force will not be used for civil unrest, but questions remain. We speak to Army Col. Michael Boatner, future operations division chief of USNORTHCOM, and Matthew Rothschild, editor of The Progressive magazine.
Guests:
Col. Michael Boatner, Future Operations division chief of USNORTHCOM.
Matthew Rothschild, Editor of The Progressive magazine.
AMY GOODMAN: In a barely noticed development last week, the Army stationed an active unit inside the United States. The Infantry Division’s 1st Brigade Team is back from Iraq, now training for domestic operations under the control of US Army North, the Army service component of Northern Command. The unit will serve as an on-call federal response for large-scale emergencies and disasters. It’s being called the Consequence Management Response Force, CCMRF, or “sea-smurf” for short.
It’s the first time an active unit has been given a dedicated assignment to USNORTHCOM, which was itself formed in October 2002 to “provide command and control of Department of Defense homeland defense efforts.”
An initial news report in the Army Times newspaper last month noted, in addition to emergency response, the force “may be called upon to help with civil unrest and crowd control.” The Army Times has since appended a clarification, and a September 30th press release from the Northern Command states: “This response force will not be called upon to help with law enforcement, civil disturbance or crowd control."
When Democracy Now! spoke to Air Force Lieutenant Colonel Jamie Goodpaster, a public affairs officer for NORTHCOM, she said the force would have weapons stored in containers on site, as well as access to tanks, but the decision to use weapons would be made at a far higher level, perhaps by Secretary of Defense, SECDEF.
Well, I’m joined now by two guests. Army Colonel Michael Boatner is future operations division chief of USNORTHCOM. He joins me on the phone from Colorado Springs. We’re also joined from Madison, Wisconsin by journalist and editor of The Progressive magazine, Matthew Rothschild.
We welcome you both to Democracy Now! Why don’t we begin with Colonel Michael Boatner? Can you explain the significance, the first time, October 1st, deployment of the troops just back from Iraq?
COL. MICHAEL BOATNER: Yes, Amy. I’d be happy to. And again, there has been some concern and some misimpressions that I would like to correct. The primary purpose of this force is to provide help to people in need in the aftermath of a WMD-like event in the homeland. It’s something that figures very prominently in the national planning scenarios under the National Response Framework, and that’s how DoD provides support in the homeland to civil authority. This capability is tailored technical life-saving support and then further logistic support for that very specific scenario. So, we designed it for that purpose.
And really, the new development is that it’s been assigned to NORTHCOM, because there’s an increasingly important requirement to ensure that they have done that technical training, that they can work together as a joint service team. These capabilities come from all of our services and from a variety of installations, and that’s not an ideal command and control environment. So we’ve been given control of these forces so that we can train them, ensure they’re responsive and direct them to participate in our exercises, so that were they called to support civil authority, those governors or local state jurisdictions that might need our help, that they would be responsive and capable in the event and also would be able to survive based on the skills that they have learned, trained and focused on.
They ultimately have weapons, heavy weapons and combat vehicles and another service capability at their home station at Fort Stewart, Georgia, but they wouldn’t bring that stuff with them. In fact, they’re prohibited from bringing it. They would bring their individual weapons, which is the standard policy for deployments in the homeland. Those would be centralized and containerized, and they could only be issued to the soldiers with the Secretary of Defense permission.
So I think, you know, that kind of wraps up our position on this. We’re proud to be able to provide this capability. It’s all about saving lives, relieving suffering, mitigating great property damage to infrastructure and things like that, and frankly, restoring public confidence in the aftermath of an event like this.
AMY GOODMAN: So the use of the weapons would only be decided by SECDEF, the Secretary of Defense. But what about the governors? The SECDEF would have—Secretary of Defense would have—would be able to preempt the governors in a decision whether these soldiers would use their weapons on US soil?
COL. MICHAEL BOATNER: No, this basically only boils down to self-defense. Any military force has the inherent right to self-defense. And if the situation was inherently dangerous, then potentially the Secretary of Defense would allow them to carry their weapons, but it would only be for self- and unit-defense. This force has got no role in a civil disturbance or civil unrest, any of those kinds of things.
AMY GOODMAN: Matt Rothschild, you’ve been writing about this in The Progressive magazine. What is your concern?
MATTHEW ROTHSCHILD: Well, I’m very concerned on a number of fronts about this, Amy. One, that NORTHCOM, the Northern Command, that came into being in October of 2002, when that came in, people like me were concerned that the Pentagon was going to use its forces here in the United States, and now it looks like, in fact, it is, even though on its website it says it doesn’t have units of its own. Now it’s getting a unit of its own.
And Colonel Boatner talked about this unit, what it’s trained for. Well, let’s look at what it’s trained for. This is the 3rd Infantry, 1st Brigade Combat unit that has spent three of the last five years in Iraq in counterinsurgency. It’s a war-fighting unit, was one of the first units to Baghdad. It was involved in the battle of Fallujah. And, you know, that’s what they’ve been trained to do. And now they’re bringing that training here?
On top of that, one of the commanders of this unit was boasting in the Army Times about this new package of non-lethal weapons that has been designed, and this unit itself is going be able to use, according to that original article. And in fact, the commander was saying he had even tasered himself and was boasting about tasering himself. So, why is a Pentagon unit that’s going to be possibly patrolling the streets of the United States involved in using tasers?
AMY GOODMAN: Colonel Boatner?
COL. MICHAEL BOATNER: Well, I’d like to address that. That involved a service mission and a service set of equipment that was issued for overseas deployment. Those soldiers do not have that on their equipment list for deploying in the homeland. And again, they have been involved in situations overseas. And having talked to commanders who have returned, those situations are largely nonviolent, non-kinetic. And when they do escalate, the soldiers have a lot of experience with seeing the indicators and understanding it. So, I would say that our soldiers are trustworthy. They can deploy in the homeland, and American citizens can be confident that there will be no abuses.
AMY GOODMAN: Matt Rothschild?
MATTHEW ROTHSCHILD: Well, you know, that doesn’t really satisfy me, and I don’t think it should satisfy your listeners and your audience, Amy, because, you know, our people in the field in Iraq, some of them have not behaved up to the highest standards, and a lot of police forces in the United States who have been using these tasers have used them inappropriately.
The whole question here about what the Pentagon is doing patrolling in the United States gets to the real heart of the matter, which is, do we have a democracy here? I mean, there is a law on the books called the Posse Comitatus Act and the Insurrection Act that says that the president of the United States, as commander-in-chief, cannot put the military on our streets. And this is a violation of that, it seems to me.
President Bush tried to get around this act a couple years ago in the Defense Authorization Act that he signed that got rid of some of those restrictions, and then last year, in the new Defense Authorization Act, thanks to the work of Senator Patrick Leahy and Kit Bond of Missouri, that was stripped away. And so, the President isn’t supposed to be using the military in this fashion, and though the President, true to form, appended a signing statement to that saying he’s not going to be governed by that. So, here we have a situation where the President of United States has been aggrandizing his power, and this gives him a whole brigade unit to use against US citizens here at home.
AMY GOODMAN: Colonel Michael Boatner, what about the Posse Comitatus Act, and where does that fit in when US troops are deployed on US soil?
COL. MICHAEL BOATNER: It absolutely governs in every instance. We are not allowed to help enforce the law. We don’t do that. Every time we get a request—and again, this kind of a deployment is defense support to civil authority under the National Response Framework and the Stafford Act. And we do it all the time, in response to hurricanes, floods, fires and things like that. But again, you know, if we review the requirement that comes to us from civil authority and it has any complexion of law enforcement whatsoever, it gets rejected and pushed back, because it’s not lawful.
AMY GOODMAN: Matthew Rothschild, does this satisfy you, editor of The Progressive magazine?
MATTHEW ROTHSCHILD: No, it doesn’t. One of the reasons it doesn’t is not by what Boatner was saying right there, but what President Bush has been doing. And if we looked at National Security Presidential Directive 51, that he signed on May 9th of 2007, Amy, this gives the President enormous powers to declare a catastrophic emergency and to bypass our regular system of laws, essentially, to impose a form of martial law.
And if you look at that National Security Presidential Directive, what it says, that in any incident where there is extraordinary disruption of a whole range of things, including our economy, the President can declare a catastrophic emergency. Well, we’re having these huge disturbances in our economy. President Bush could today pick up that National Security Directive 51 and say, “We’re in a catastrophic emergency. I’m going to declare martial law, and I’m going to use this combat brigade to enforce it.”
AMY GOODMAN: Colonel Michael Boatner?
COL. MICHAEL BOATNER: The only exception that I know of is the Insurrection Act. It’s something that is very unlikely to be invoked. In my thirty-year career, it’s only been used once, in the LA riots, and it was a widespread situation of lawlessness and violence. And the governor of the state requested that the President provide support. And that’s a completely different situation. The forces available to do that are in every service in every part of the country, and it’s completely unrelated to the—this consequence management force that we’re talking about.
AMY GOODMAN: You mentioned governors, and I was just looking at a piece by Jeff Stein—he is the national security editor of Congressional Quarterly— talking about homeland security. And he said, “Safely tucked into the $526 billion defense bill, it easily crossed the goal line on the last day of September.
“The language doesn’t just brush aside a liberal Democrat slated to take over the Judiciary Committee”—this was a piece written last year—it “runs over the backs of the governors, 22 of whom are Republicans.
“The governors had waved red flags about the measure on Aug. 1, 2007, sending letters of protest from their Washington office to the Republican chairs and ranking Democrats on the House and Senate Armed Services committees.
“No response. So they petitioned the party heads on the Hill.”
The letter, signed by every member of the National Governors Association, said, “This provision was drafted without consultation or input from governors and represents an unprecedented shift in authority from governors…to the federal government.”
Colonel Michael Boatner?
COL. MICHAEL BOATNER: That’s in the political arena. That has nothing to do with my responsibilities or what I’m—was asked to talk about here with regard to supporting civil authority in the homeland.
AMY GOODMAN: Matthew Rothschild?
MATTHEW ROTHSCHILD: Well, this gets to what Senator Patrick Leahy of Vermont was so concerned about, that with NORTHCOM and with perhaps this unit—and I want to call Senator Leahy’s office today and ask him about this—you have the usurpation of the governor’s role, of the National Guard’s role, and it’s given straight to the Pentagon in some of these instances. And that’s very alarming. And that was alarming to almost every governor, if not every governor, in the country, when Bush tried to do that and around about the Posse Comitatus Act. So, I think these are real concerns.
AMY GOODMAN: Matt Rothschild, the Democratic and Republican conventions were quite amazing displays of force at every level, from the local police on to the state troopers to, well, in the Republican convention, right onto troops just back from Iraq in their Army fatigues. Did this surprise you?
MATTHEW ROTHSCHILD: It did. It surprised me also that NORTHCOM itself was involved in intelligence sharing with local police officers in St. Paul. I mean, what in the world is NORTHCOM doing looking at what some of the protesters are involved in? And you had infiltration up there, too. But what we have going on in this country is we have infiltration and spying that goes on, not only at the—well, all the way from the campus police, practically, Amy, up to the Pentagon and the National Security Agency. We’re becoming a police state here.
AMY GOODMAN: Colonel Michael Boatner, a tall order here, could you respond?
COL. MICHAEL BOATNER: Well, that’s incorrect. We did not participate in any intelligence collection. We were up there in support of the US Secret Service. We provided some explosive ordnance disposal support of the event. But I’d like to go back and say that, again, in terms of—
AMY GOODMAN: Could you explain what their—explain again what was their role there?
COL. MICHAEL BOATNER: They were just doing routine screens and scans of the area in advance of this kind of a vulnerable event. It’s pretty standard support to a national special security event.
AMY GOODMAN: And are you saying there was absolutely no intelligence sharing?
COL. MICHAEL BOATNER: That’s correct. That is correct. [inaudible] we’re very constrained—
MATTHEW ROTHSCHILD: But even that, Amy, now the Pentagon is doing sweeps of areas before, you know, a political convention? That used to be law enforcement’s job. That used to be domestic civil law enforcement job. It’s now being taken over by the Pentagon. That should concern us.
AMY GOODMAN: Why is that, Colonel Michael Boatner? Why is the Pentagon doing it, not local law enforcement?
COL. MICHAEL BOATNER: That’s because of the scale and the availability of support. DoD is the only force that has the kind of capability. I mean, we’re talking about dozens and dozens of dog detection teams. And so, for anything on this large a scale, the Secret Service comes to DoD with a standard Economy Act request for assistance.
AMY GOODMAN: Boatner, in the Republican Convention, these troops, just back from Fallujah—what about issues of, for example, PTSD, post-traumatic stress disorder?
COL. MICHAEL BOATNER: Well, my sense is that that’s something that the services handled very well. There’s a long track record of great support in the homeland. If those soldiers were National Guard soldiers, I have no visibility of that. But for the active-duty forces, citizens can be confident that if they’re employed in the homeland, that they’ll be reliable, accountable, and take care of their families and fellow citizens in good form.
AMY GOODMAN: Last word, Matthew Rothschild? Ten seconds.
MATTHEW ROTHSCHILD: Well, this granting of the Pentagon a special unit to be involved in US patrol is something that should alarm all of us. And it’s very important to the Army. General Casey, Army chief of staff—
AMY GOODMAN: Five seconds.
MATTHEW ROTHSCHILD: —was a drill exercise for this group just last week, or just three weeks ago. It was called—
AMY GOODMAN: We leave it there. We’ve got to leave it there. Thank you to Matthew Rothschild and Colonel Michael Boatner.
LISTEN
News and politics
Democracy Now
Guests:
Col. Michael Boatner, Future Operations division chief of USNORTHCOM.
Matthew Rothschild, Editor of The Progressive magazine.
AMY GOODMAN: In a barely noticed development last week, the Army stationed an active unit inside the United States. The Infantry Division’s 1st Brigade Team is back from Iraq, now training for domestic operations under the control of US Army North, the Army service component of Northern Command. The unit will serve as an on-call federal response for large-scale emergencies and disasters. It’s being called the Consequence Management Response Force, CCMRF, or “sea-smurf” for short.
It’s the first time an active unit has been given a dedicated assignment to USNORTHCOM, which was itself formed in October 2002 to “provide command and control of Department of Defense homeland defense efforts.”
An initial news report in the Army Times newspaper last month noted, in addition to emergency response, the force “may be called upon to help with civil unrest and crowd control.” The Army Times has since appended a clarification, and a September 30th press release from the Northern Command states: “This response force will not be called upon to help with law enforcement, civil disturbance or crowd control."
When Democracy Now! spoke to Air Force Lieutenant Colonel Jamie Goodpaster, a public affairs officer for NORTHCOM, she said the force would have weapons stored in containers on site, as well as access to tanks, but the decision to use weapons would be made at a far higher level, perhaps by Secretary of Defense, SECDEF.
Well, I’m joined now by two guests. Army Colonel Michael Boatner is future operations division chief of USNORTHCOM. He joins me on the phone from Colorado Springs. We’re also joined from Madison, Wisconsin by journalist and editor of The Progressive magazine, Matthew Rothschild.
We welcome you both to Democracy Now! Why don’t we begin with Colonel Michael Boatner? Can you explain the significance, the first time, October 1st, deployment of the troops just back from Iraq?
COL. MICHAEL BOATNER: Yes, Amy. I’d be happy to. And again, there has been some concern and some misimpressions that I would like to correct. The primary purpose of this force is to provide help to people in need in the aftermath of a WMD-like event in the homeland. It’s something that figures very prominently in the national planning scenarios under the National Response Framework, and that’s how DoD provides support in the homeland to civil authority. This capability is tailored technical life-saving support and then further logistic support for that very specific scenario. So, we designed it for that purpose.
And really, the new development is that it’s been assigned to NORTHCOM, because there’s an increasingly important requirement to ensure that they have done that technical training, that they can work together as a joint service team. These capabilities come from all of our services and from a variety of installations, and that’s not an ideal command and control environment. So we’ve been given control of these forces so that we can train them, ensure they’re responsive and direct them to participate in our exercises, so that were they called to support civil authority, those governors or local state jurisdictions that might need our help, that they would be responsive and capable in the event and also would be able to survive based on the skills that they have learned, trained and focused on.
They ultimately have weapons, heavy weapons and combat vehicles and another service capability at their home station at Fort Stewart, Georgia, but they wouldn’t bring that stuff with them. In fact, they’re prohibited from bringing it. They would bring their individual weapons, which is the standard policy for deployments in the homeland. Those would be centralized and containerized, and they could only be issued to the soldiers with the Secretary of Defense permission.
So I think, you know, that kind of wraps up our position on this. We’re proud to be able to provide this capability. It’s all about saving lives, relieving suffering, mitigating great property damage to infrastructure and things like that, and frankly, restoring public confidence in the aftermath of an event like this.
AMY GOODMAN: So the use of the weapons would only be decided by SECDEF, the Secretary of Defense. But what about the governors? The SECDEF would have—Secretary of Defense would have—would be able to preempt the governors in a decision whether these soldiers would use their weapons on US soil?
COL. MICHAEL BOATNER: No, this basically only boils down to self-defense. Any military force has the inherent right to self-defense. And if the situation was inherently dangerous, then potentially the Secretary of Defense would allow them to carry their weapons, but it would only be for self- and unit-defense. This force has got no role in a civil disturbance or civil unrest, any of those kinds of things.
AMY GOODMAN: Matt Rothschild, you’ve been writing about this in The Progressive magazine. What is your concern?
MATTHEW ROTHSCHILD: Well, I’m very concerned on a number of fronts about this, Amy. One, that NORTHCOM, the Northern Command, that came into being in October of 2002, when that came in, people like me were concerned that the Pentagon was going to use its forces here in the United States, and now it looks like, in fact, it is, even though on its website it says it doesn’t have units of its own. Now it’s getting a unit of its own.
And Colonel Boatner talked about this unit, what it’s trained for. Well, let’s look at what it’s trained for. This is the 3rd Infantry, 1st Brigade Combat unit that has spent three of the last five years in Iraq in counterinsurgency. It’s a war-fighting unit, was one of the first units to Baghdad. It was involved in the battle of Fallujah. And, you know, that’s what they’ve been trained to do. And now they’re bringing that training here?
On top of that, one of the commanders of this unit was boasting in the Army Times about this new package of non-lethal weapons that has been designed, and this unit itself is going be able to use, according to that original article. And in fact, the commander was saying he had even tasered himself and was boasting about tasering himself. So, why is a Pentagon unit that’s going to be possibly patrolling the streets of the United States involved in using tasers?
AMY GOODMAN: Colonel Boatner?
COL. MICHAEL BOATNER: Well, I’d like to address that. That involved a service mission and a service set of equipment that was issued for overseas deployment. Those soldiers do not have that on their equipment list for deploying in the homeland. And again, they have been involved in situations overseas. And having talked to commanders who have returned, those situations are largely nonviolent, non-kinetic. And when they do escalate, the soldiers have a lot of experience with seeing the indicators and understanding it. So, I would say that our soldiers are trustworthy. They can deploy in the homeland, and American citizens can be confident that there will be no abuses.
AMY GOODMAN: Matt Rothschild?
MATTHEW ROTHSCHILD: Well, you know, that doesn’t really satisfy me, and I don’t think it should satisfy your listeners and your audience, Amy, because, you know, our people in the field in Iraq, some of them have not behaved up to the highest standards, and a lot of police forces in the United States who have been using these tasers have used them inappropriately.
The whole question here about what the Pentagon is doing patrolling in the United States gets to the real heart of the matter, which is, do we have a democracy here? I mean, there is a law on the books called the Posse Comitatus Act and the Insurrection Act that says that the president of the United States, as commander-in-chief, cannot put the military on our streets. And this is a violation of that, it seems to me.
President Bush tried to get around this act a couple years ago in the Defense Authorization Act that he signed that got rid of some of those restrictions, and then last year, in the new Defense Authorization Act, thanks to the work of Senator Patrick Leahy and Kit Bond of Missouri, that was stripped away. And so, the President isn’t supposed to be using the military in this fashion, and though the President, true to form, appended a signing statement to that saying he’s not going to be governed by that. So, here we have a situation where the President of United States has been aggrandizing his power, and this gives him a whole brigade unit to use against US citizens here at home.
AMY GOODMAN: Colonel Michael Boatner, what about the Posse Comitatus Act, and where does that fit in when US troops are deployed on US soil?
COL. MICHAEL BOATNER: It absolutely governs in every instance. We are not allowed to help enforce the law. We don’t do that. Every time we get a request—and again, this kind of a deployment is defense support to civil authority under the National Response Framework and the Stafford Act. And we do it all the time, in response to hurricanes, floods, fires and things like that. But again, you know, if we review the requirement that comes to us from civil authority and it has any complexion of law enforcement whatsoever, it gets rejected and pushed back, because it’s not lawful.
AMY GOODMAN: Matthew Rothschild, does this satisfy you, editor of The Progressive magazine?
MATTHEW ROTHSCHILD: No, it doesn’t. One of the reasons it doesn’t is not by what Boatner was saying right there, but what President Bush has been doing. And if we looked at National Security Presidential Directive 51, that he signed on May 9th of 2007, Amy, this gives the President enormous powers to declare a catastrophic emergency and to bypass our regular system of laws, essentially, to impose a form of martial law.
And if you look at that National Security Presidential Directive, what it says, that in any incident where there is extraordinary disruption of a whole range of things, including our economy, the President can declare a catastrophic emergency. Well, we’re having these huge disturbances in our economy. President Bush could today pick up that National Security Directive 51 and say, “We’re in a catastrophic emergency. I’m going to declare martial law, and I’m going to use this combat brigade to enforce it.”
AMY GOODMAN: Colonel Michael Boatner?
COL. MICHAEL BOATNER: The only exception that I know of is the Insurrection Act. It’s something that is very unlikely to be invoked. In my thirty-year career, it’s only been used once, in the LA riots, and it was a widespread situation of lawlessness and violence. And the governor of the state requested that the President provide support. And that’s a completely different situation. The forces available to do that are in every service in every part of the country, and it’s completely unrelated to the—this consequence management force that we’re talking about.
AMY GOODMAN: You mentioned governors, and I was just looking at a piece by Jeff Stein—he is the national security editor of Congressional Quarterly— talking about homeland security. And he said, “Safely tucked into the $526 billion defense bill, it easily crossed the goal line on the last day of September.
“The language doesn’t just brush aside a liberal Democrat slated to take over the Judiciary Committee”—this was a piece written last year—it “runs over the backs of the governors, 22 of whom are Republicans.
“The governors had waved red flags about the measure on Aug. 1, 2007, sending letters of protest from their Washington office to the Republican chairs and ranking Democrats on the House and Senate Armed Services committees.
“No response. So they petitioned the party heads on the Hill.”
The letter, signed by every member of the National Governors Association, said, “This provision was drafted without consultation or input from governors and represents an unprecedented shift in authority from governors…to the federal government.”
Colonel Michael Boatner?
COL. MICHAEL BOATNER: That’s in the political arena. That has nothing to do with my responsibilities or what I’m—was asked to talk about here with regard to supporting civil authority in the homeland.
AMY GOODMAN: Matthew Rothschild?
MATTHEW ROTHSCHILD: Well, this gets to what Senator Patrick Leahy of Vermont was so concerned about, that with NORTHCOM and with perhaps this unit—and I want to call Senator Leahy’s office today and ask him about this—you have the usurpation of the governor’s role, of the National Guard’s role, and it’s given straight to the Pentagon in some of these instances. And that’s very alarming. And that was alarming to almost every governor, if not every governor, in the country, when Bush tried to do that and around about the Posse Comitatus Act. So, I think these are real concerns.
AMY GOODMAN: Matt Rothschild, the Democratic and Republican conventions were quite amazing displays of force at every level, from the local police on to the state troopers to, well, in the Republican convention, right onto troops just back from Iraq in their Army fatigues. Did this surprise you?
MATTHEW ROTHSCHILD: It did. It surprised me also that NORTHCOM itself was involved in intelligence sharing with local police officers in St. Paul. I mean, what in the world is NORTHCOM doing looking at what some of the protesters are involved in? And you had infiltration up there, too. But what we have going on in this country is we have infiltration and spying that goes on, not only at the—well, all the way from the campus police, practically, Amy, up to the Pentagon and the National Security Agency. We’re becoming a police state here.
AMY GOODMAN: Colonel Michael Boatner, a tall order here, could you respond?
COL. MICHAEL BOATNER: Well, that’s incorrect. We did not participate in any intelligence collection. We were up there in support of the US Secret Service. We provided some explosive ordnance disposal support of the event. But I’d like to go back and say that, again, in terms of—
AMY GOODMAN: Could you explain what their—explain again what was their role there?
COL. MICHAEL BOATNER: They were just doing routine screens and scans of the area in advance of this kind of a vulnerable event. It’s pretty standard support to a national special security event.
AMY GOODMAN: And are you saying there was absolutely no intelligence sharing?
COL. MICHAEL BOATNER: That’s correct. That is correct. [inaudible] we’re very constrained—
MATTHEW ROTHSCHILD: But even that, Amy, now the Pentagon is doing sweeps of areas before, you know, a political convention? That used to be law enforcement’s job. That used to be domestic civil law enforcement job. It’s now being taken over by the Pentagon. That should concern us.
AMY GOODMAN: Why is that, Colonel Michael Boatner? Why is the Pentagon doing it, not local law enforcement?
COL. MICHAEL BOATNER: That’s because of the scale and the availability of support. DoD is the only force that has the kind of capability. I mean, we’re talking about dozens and dozens of dog detection teams. And so, for anything on this large a scale, the Secret Service comes to DoD with a standard Economy Act request for assistance.
AMY GOODMAN: Boatner, in the Republican Convention, these troops, just back from Fallujah—what about issues of, for example, PTSD, post-traumatic stress disorder?
COL. MICHAEL BOATNER: Well, my sense is that that’s something that the services handled very well. There’s a long track record of great support in the homeland. If those soldiers were National Guard soldiers, I have no visibility of that. But for the active-duty forces, citizens can be confident that if they’re employed in the homeland, that they’ll be reliable, accountable, and take care of their families and fellow citizens in good form.
AMY GOODMAN: Last word, Matthew Rothschild? Ten seconds.
MATTHEW ROTHSCHILD: Well, this granting of the Pentagon a special unit to be involved in US patrol is something that should alarm all of us. And it’s very important to the Army. General Casey, Army chief of staff—
AMY GOODMAN: Five seconds.
MATTHEW ROTHSCHILD: —was a drill exercise for this group just last week, or just three weeks ago. It was called—
AMY GOODMAN: We leave it there. We’ve got to leave it there. Thank you to Matthew Rothschild and Colonel Michael Boatner.
LISTEN
WATCH
News and politics
Democracy Now
Monday, 6 October 2008
Intellectual Cleansing Part 2
Former Guardian and Observer Journalist Jonathan Cook Responds
How is it then, if this thesis is right, that there are dissenting voices like John Pilger, Robert Fisk, George Monbiot and Seumas Milne who write in the British media while refusing to toe the line?
Note that the above list pretty much exhausts the examples of writers who genuinely and consistently oppose the normal frameworks of journalistic thinking and refuse to join the herd. That means that in Britain's supposedly leftwing media we can find one writer working for the Independent (Fisk), one for the New Statesman (Pilger) and two for the Guardian (Milne and Monbiot). Only Fisk, we should further note, writes regular news reports. The rest are given at best weekly columns in which to express their opinions.
However grateful we should be to these dissident writers, their relegation to the margins of the commentary pages of Britain's "leftwing" media serves a useful purpose for corporate interests. It helps define the "character" of the British media as provocative, pluralistic and free-thinking - when in truth they are anything but. It is a vital component in maintaining the fiction that a professional media is a diverse media.
Also, by presenting these exceptional writers as straining at the very limits of the thinkable, their host newspapers subtly encourage a view of them as crackpots, armchair revolutionaries and whingers, as they often are described in the paper's feedback columns.
The case of Fisk is instructive. All the evidence is that the Independent might have folded were it not for his inclusion in the news and comment pages. Fisk appears to be one of the main reasons people buy the Independent. When, for example, the editors realised that most of the hits on the paper's website were for Fisk's articles, they made his pieces accessible only by paying a subscription fee. In response people simply stopped visiting the site, forcing the Independent to restore free access to his stories.
It is also probable that the other writers cited above are among the chief reasons readers choose the publications that host them. It is at least possible that, were more such writers allowed on their pages, these papers would grow in popularity. We are never likely to see the hypothesis tested because the so-called leftwing media appear to be in no hurry to take on more dissenting voices.
Finally, it should also be noted that none of these admirable writers - with the exception of Pilger - choose or are allowed to write seriously about the dire state of the mainstream media they serve. Sadly, it seems self-evident that were they to do so they would quickly find their employment terminated.
We are fortunate to have their incisive analyses of some of the most important events of our era. Nonetheless it is vital to acknowledge that even they cannot speak out on an issue that is fundamental to the health of our democracy.
How then do I dare write as I have done here? Simply because I have little to lose. The mainstream media spat me out some time ago. Were it otherwise, I would probably be keeping my silence too.
News and politics
media
In response to Part 1 of this alert, the former Guardian and Observer journalist, Jonathan Cook, emailed us:
"I woke up after four hours sleep my head buzzing with recollections of my early years in journalism. I've been sitting and writing ever since, trying to make sense of it all. It's quite therapeutic and more revealing about how the media work than I had appreciated before. Your alert really has set off processes in my head." (Email to Media Lens, October 3, 2008)
A short piece Cook initially sent us on this theme was brilliant, in fact one of the most honest and insightful media analyses we have seen. The key point he made is that crude sackings of the kind we highlighted "are a great rarity":
"Editors hardly ever need to bare their teeth against an established journalist because few make it to senior positions unless they have already learnt how to toe the line."
But Cook didn't stop there. He appears to have spent most of the weekend October 4-5 writing a 6,500-word piece which had the effect of "reframing my career in a way that finally makes sense to me". We have published an edited version of this below. The full article is available on our website: http://www.medialens.org/forum/viewtopic.php?t=2860
We would like to express our sincere thanks to Jonathan Cook for the time, energy and thought he has put into his response.
Jonathan Cook is a British journalist based in Nazareth, Israel. His reports on Israel-Palestine have been published in numerous journals and websites including the Guardian, the Observer, the Times, Al Jazeera, New Statesman, International Herald Tribune, Al-Ahram Weekly (Cairo), The National (Abu Dhabi), Electronic Intifada and Counterpunch. His new book, published this month, is 'Disappearing Palestine: Israel's Experiments in Human Despair' (Zed Books). His two earlier books are 'Blood and Religion' (Pluto Books, 2006) and 'Israel and the Clash of Civilisations' (Pluto Books, 2008). He has his own website at www.jkcook.net.
Cook started out writing for the Southampton Advertiser and then Southampton's Daily Echo. He comments on his early career:
"Most ambitious journalists start out on a daily local newspaper (I would soon end up on one), owned by one of a handful of large media groups. There, as I would learn, one quickly feels all sorts of institutional constraints on one's reporting. As a young journalist, if you know no better, you simply come to accept that journalism is done in a certain kind of way, that certain stories are suitable and others unsuitable, that arbitrary rules have to be followed. These seem like laws of nature, unquestionable and self-evident to your more experienced colleagues. Being a better journalist requires that these work practices become second nature."
These "rules" were constantly reinforced:
"Promotion meant moving on from the lowly beat reporter, covering community issues, to other posts: the city or county council correspondent, who depended on council officials and councillors for information; the court reporter, who loyally regurgitated court proceedings; the business staff, who tried to liven up advertisers' press releases; and the crime correspondent, who spent all day hanging out with policemen.
"In other words, success at the newspaper was gauged in terms of obedience to figures of authority, and the ability not to alienate powerful groups within the community. Ambitious journalists learnt to whom they must turn for a comment or a quote, and where 'suitable' stories could be found. It was a skill that presumably stayed with them for the rest of their careers.
"Those who struggled to cope with these strictures were soon found out. They either failed their probationary periods and were forced to move on, or stayed on in the lowliest positions where they could do little harm."
In the guest media alert below, Cook describes his experience of intellectual cleansing.
There Is No Home Of The BraveLike many British journalists, my ambition was to reach the national media. I had been working for several years at the Echo, learning my craft, proving I was a professional, slowly moving up the hierarchy in terms of promotion but not much in terms of responsibility. I seemed to have a hit a glass ceiling, and I had a vague sense of why.
A damning criticism I have often heard in newsrooms was that someone is not a "team player". Nobody said this to my face at the Echo but I had no doubt that it was a suspicion held by the senior staff. I thought of them as cowardly, failing in their role as watchdogs of power. Maybe my contempt showed a little.
In those days, my experiences at the Echo did nothing to shake my faith in the profession. I assumed that these failings were restricted to the paper and its lily-livered editors. Were new editors to be appointed, or were I to move to another paper, I would find things were different. The national newspapers, I had no doubt, were braver.
Working on a national is seen as the pinnacle of a professional journalist's career. Very few make it that far. The competition is fierce, and acceptance is slow. There are many stages in the early career of journalists designed to handicap and weed out those who do not conform or who question the framework within which they work. Noam Chomsky refers to this as part of a "filtering" process. Are the nationals different?
It is worth examining how a journalist who works for the Guardian, Independent, BBC or any other major media institution gets a job. There are several stages on the way to a secure position in the national media.
The most common requirement is to have completed several years in the local media. Turnover of staff at the local level is high, with most "non-team players" identified very quickly. Those who survive tend to share the professional values of the editors they serve. If there is any doubt in the case of a particular individual, the national media can always check his or her track record of published articles.
A tiny number of privileged individuals manage to avoid this route and come direct from university. At the Guardian, where I worked for several years, it was seen as a mild amusing idiosyncrasy that the newspaper recruited the odd trainee direct from Oxbridge, and more usually from Cambridge. It was generally assumed that this was a legacy of the fact that the paper's editors had traditionally been Cambridge graduates. These journalists invariably worked their way up the paper's hierarchy rapidly.
This preference for untested Oxbridge graduates can probably be explained by the filtering process too. The selected graduates always came from the same predictable backgrounds, and were the product of lengthy filtering processes endured in the country's education system. The Guardian appeared to be more confident that such types could be relied on without the kind of "quality control" needed with other applicants.
For a journalist like myself who was well trained and had spent several years in the local media, getting a foot in the door of the nationals was relatively easy. Keeping my feet under the desk was far harder. Few recruits are given a job or allowed to write for a paper until they have completed yet another lengthy probationary period.
On national newspapers, this usually means spending considerable time as a sub-editor, as I did, a role in which the journalist is slowly acclimatised to the newspaper's "values". The sub sits at the bottom of the newspaper's editorial hierarchy, editing and styling reports as they come in for publication. Above him or her are the section editors (home, foreign etc), a chief sub-editor (usually an old hand), and a revise sub to check their work. Subs invariably spend years as freelancers or on short-term contracts.
The subs' primary task is to stop errors of fact and judgment getting into the newspaper. But their own judgment is constantly under scrutiny from editors higher up the hierarchy. If they fail to understand the paper's "values", their career is likely to stall on this bottom rung or their contract will not be renewed.
Reporters who avoid a period of sub-editing are in an equally insecure position. They are usually taken on as a freelance writer before getting a series of short contracts. During this period news reporters are mainly restricted to the night shift, when their job is to update for the later editions stories that have already been filed by senior reporters during the day. Writers offering material from abroad fare little better. The best they can usually aspire to is being taken on as a stringer, retained by the paper for an agreed period.
Hollywood films may perpetuate the idea of reporters, even junior ones, regularly initiating new stories for their papers, but actually it is relatively rare. In truth, reporters are more usually directed by senior editors on which stories to cover and how to cover them. Unless they are senior writers, usually specialist correspondents, they have little input into the way they cover events.
If they are to survive long, writers must quickly learn what the news desk expects of them. Newcomers are given a small amount of leeway to adopt angles that are "not suitable". But they are also expected to learn quickly why such articles are unsuitable and not to propose similar reports again.
The advantage of this system is that high-profile sackings are a great rarity. Editors hardly ever need to bare their teeth against an established journalist because few make it to senior positions unless they have already learnt how to toe the line.
The media's lengthy filtering system means that it is many years before the great majority of journalists get the chance to write with any degree of freedom for a national newspaper, and they must first have proved their "good judgment" many times over to a variety of senior editors. Most have been let go long before they would ever be in a position to influence the paper's coverage.
Journalists, of course, see this lengthy process of recruitment as necessary to filter for "quality" rather than to remove those who fail to conform or whose reporting threatens powerful elites. The media are supposedly applying professional standards to find those deserving enough to reach the highest ranks of journalism.
But, of course, these goals - finding the best, and weeding out the non-team players - are not contradictory. The system does promote outstanding "professional" journalists, but it ensures that they also subscribe to orthodox views of what journalism is there to do. The effect is that the media identify the best propagandists to promote their corporate values.
It is notable that there is not a single large media institution dedicated to providing a platform to those who dissent or express non-conformist views, however talented they are as journalists. Only at the very margins of what are considered to be left-wing publications such as the Guardian and the Independent can such voices very occasionally be heard, and even then only in the comment pages.
Surprisingly, most national newspapers talk a great deal about their "values" and the special character that marks them out from their rivals. And yet when I was seeking a job on the national newspapers, it was striking how interchangeable the staff were. I spent periods working freelance for the Guardian, Observer and Telegraph, and kept meeting the same aspiring journalists trying to get work at these apparently very different newspapers.
As freelancers we quickly became aware of what each newspaper expected from us in terms of story presentation, and the differences were not great; it was more about nuance (that favourite term of professional journalists). Similarly, the nationals regularly poached senior staff from each other.
Journalists like to argue that this is not surprising in a "professional" environment. After all, the point of "professional" standards is that all newspapers should apply the same principles of supposed neutrality and objectivity.
Where, then, is this difference of character to be located in our media? According to most journalists it is to be found in the commentary pages and in the selection of news stories. This is where a paper reveals its true values. (We will gloss over the problematic fact that the need for stories to be selected - by whom and according to what criteria? - in itself undermines the idea of impartiality.)
In fact, despite their claims to having distinctive characters, newspapers closely follow the same news agendas, trying to mirror each other's story lists. One of the jobs I once had on the foreign desk was to scan the pages of the first editions of rival papers to see if they had any stories we had missed. All national papers do this compulsively.
The mirroring by newspapers of each other's news agendas is often attributed to human nature, in the form of the herd instinct or the tendency to follow the pack. In truth, this is the way most reporters work out in the field. They attend press conferences, they chase after celebrities together, they speak to the same official spokespeople.
I learnt this myself the hard way when I moved to Israel to report on the Israeli-Palestinian conflict. Naively, I assumed that, in line with my vision of the ideal journalist as an investigative reporter, a Woodward or a Bernstein, that I should be trying to find exclusives, stories no other reporter knew about. After all, most newspapers still include as their motto some variation on the claim to be "First with the news".
What I discovered, however, was that, when I rung up the news desk back in London, the editor would always start by asking me where else the story had been published. Paradoxically, when I said it was an exclusive, I could hear his interest wilt. Even though he knew I had a great deal of experience, he did not want to take a chance on a story that no one else had reported.
On run-of-the-mill stories too, the demand from the news desk was the same: could I get an official source to confirm the story? It happened even when I had seen something with my own eyes. And an official source meant an Israeli source. It felt almost as if the Israeli government and army had to give their seal of approval before a story could be published.
In fact, more than 95 per cent of the reports filed by Britain's distinguished correspondents in Jerusalem originate in stories they have seen published either by the world's two main news agencies, Reuters and Associated Press, or in the local Israeli media. Exclusives are almost unheard of. The correspondent's main job is to rewrite the agency copy by adding his own "angle"; usually a minor matter of emphasis in the first paragraphs or an addition of a few quotes from an official contact.
This reliance on the wires is in itself a very effective way of filtering out news that challenges dominant interests. The agencies, dependent for survival on funding from the large media groups, are extremely deferential to the main Western power elites and their allies. This is for two chief reasons: first, large media owners like the Murdoch empire might pull out of the arrangement, or even set up their own rival agency, were Reuters or AP regularly to run stories damaging to their business interests; and second, the agencies, needing to provide reams of copy each day, rely primarily on official sources for their information.
The minnow in the battle between the agencies is AFP, the French news agency. And much like the Advertiser in its golden days, AFP needs to beat the Reuters-AP cartel by finding other readers / buyers for its wire service. It does this by trying to provide a limited supply of alternative news, especially of what are called "human interest" stories.
In the context of the Israel-Palestine conflict this sometimes translates into sympathetic reports of Palestinian suffering at the hands of the Israeli army or the Jewish settlers, stories hard to find in Reuters or AP. Not surprisingly, the media in countries that do not subscribe to the Western corporate view of world affairs are the main subscribers to AFP.
The main other source of information, the Israeli media, reinforces the coverage trends of the big agencies. Israeli newspapers are subject to all the usual institutional constraints we have considered in the case of the evening paper in Southampton. But they also reflect the dominant values of a highly ideological and mobilised society. The British media's reliance on partisan Israeli news gatherers for information severely undermines their own claims to objectivity and neutrality.
Being a foreign correspondent in Israel, it should be underlined, is no different from being one anywhere else in the world. The same issues apply.
The inadmissibility of many important details of the Israeli-Palestinian conflict - especially when they concern the weaker, Palestinian side - is not confined to news reports. Even the opinion pages of newspapers are closed off to the full spectrum of human, mainly Palestinian, experience and relevant political context, as I have repeatedly discovered.
Through personal contacts and fortuitous circumstances, I managed in the early stages of the second intifada, which began in 2000, to publish several commentaries in the International Herald Tribune. All were critical of Israel's behaviour in a way that is rarely seen in any American media.
After a short time, Israel's powerful lobby, realising that I had evaded the normal safeguards, moved into action. After one of my commentaries, the lobby organised the largest postbag of complaints the IHT had received in its history, as a sympathetic editor confided in me. I was forced to submit a lengthy defence of my article to counter the campaign of pressure from the lobby groups, with the IHT eventually accepting that there were no errors in my piece and refusing to publish an apology. However, they severed all links with me: another triumph for the lobby.
Subsequent efforts by the main Palestinian media organisation in the US to get my commentaries published in American papers and journals have failed dismally. Even publications regarded as progressive by American standards refuse to consider my pieces.
The use of institutional power to silence dissident voices is more savage and ugly in the Israeli-Palestinian conflict than elsewhere, but similar obstacles face any journalist anywhere in the world who tries to break out of the narrow confines of mainstream reporting, analysis and commentary.
How is it then, if this thesis is right, that there are dissenting voices like John Pilger, Robert Fisk, George Monbiot and Seumas Milne who write in the British media while refusing to toe the line?
Note that the above list pretty much exhausts the examples of writers who genuinely and consistently oppose the normal frameworks of journalistic thinking and refuse to join the herd. That means that in Britain's supposedly leftwing media we can find one writer working for the Independent (Fisk), one for the New Statesman (Pilger) and two for the Guardian (Milne and Monbiot). Only Fisk, we should further note, writes regular news reports. The rest are given at best weekly columns in which to express their opinions.
However grateful we should be to these dissident writers, their relegation to the margins of the commentary pages of Britain's "leftwing" media serves a useful purpose for corporate interests. It helps define the "character" of the British media as provocative, pluralistic and free-thinking - when in truth they are anything but. It is a vital component in maintaining the fiction that a professional media is a diverse media.
Also, by presenting these exceptional writers as straining at the very limits of the thinkable, their host newspapers subtly encourage a view of them as crackpots, armchair revolutionaries and whingers, as they often are described in the paper's feedback columns.
The case of Fisk is instructive. All the evidence is that the Independent might have folded were it not for his inclusion in the news and comment pages. Fisk appears to be one of the main reasons people buy the Independent. When, for example, the editors realised that most of the hits on the paper's website were for Fisk's articles, they made his pieces accessible only by paying a subscription fee. In response people simply stopped visiting the site, forcing the Independent to restore free access to his stories.
It is also probable that the other writers cited above are among the chief reasons readers choose the publications that host them. It is at least possible that, were more such writers allowed on their pages, these papers would grow in popularity. We are never likely to see the hypothesis tested because the so-called leftwing media appear to be in no hurry to take on more dissenting voices.
Finally, it should also be noted that none of these admirable writers - with the exception of Pilger - choose or are allowed to write seriously about the dire state of the mainstream media they serve. Sadly, it seems self-evident that were they to do so they would quickly find their employment terminated.
We are fortunate to have their incisive analyses of some of the most important events of our era. Nonetheless it is vital to acknowledge that even they cannot speak out on an issue that is fundamental to the health of our democracy.
How then do I dare write as I have done here? Simply because I have little to lose. The mainstream media spat me out some time ago. Were it otherwise, I would probably be keeping my silence too.
News and politics
media
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