Friday, 17 October 2008
Activities have been planned in Argentina, Chile, Colombia and Peru, but basically limited to the International Day for the Eradication of Poverty, celebrated Friday, Oct. 17. In Brazil, Uruguay and Venezuela, by contrast, no actions have been planned.
GCAP, a coalition of hundreds of social organisations, was formed at the World Social Forum in 2005, held in the southern Brazilian city of Porto Alegre. Later it became associated with the United Nations Millennium Campaign.
The eight Millennium Development Goals (MDGs), setting targets on poverty reduction, health, education, gender equity, the environment, sustainable development and international trade for 2015, were adopted by the U.N. member countries in 2000.
But in Latin America, GCAP has never caught on like it has in regions like Europe and Africa, even though 35 percent of the Latin American population, or 190 million people, are living below the poverty line, according to Economic Commission for Latin America and the Caribbean (ECLAC) statistics for 2007.
Moreover, this year ECLAC reports that the surge in inflation caused by soaring food and energy prices may have increased the number of poor people to 200 million, without even taking into account the present financial crisis, which will affect economic growth, job creation and social spending.
This year in Argentina, only one event was held, on Thursday. The non-governmental Citizen’s Forum of Participation for Justice and Human Rights (FOCO) invited reporters to a breakfast, to "talk about the problem of poverty, so they can publish the material the following day," Cecilia Pon, a member of FOCO, told IPS.
In Chile and Peru, activities focused on inequality and the financial crisis.
The Chilean Association of Non-Governmental Organisations (ACCION) and the indigenous Mapuche Council of All Lands held a political-cultural event Friday in Constitution Square in the capital, which only drew a few hundred participants.
As well as publicly voicing their demands, the activists invited candidates running for mayor and the city council in Santiago on Oct. 26 to publicly sign their petition.
They also delivered a letter to the Chilean Association of Banks and Financial Institutions, urging its members to act responsibly. The groups asked them to rein in indiscriminate consumer credit, and to respect the Ecuador Principles, a set of good practices for managing social and environmental risks that were recently adopted by the financial sector.
In Peru, a public forum was held on Wednesday to analyse how local governments' budget cuts, a preventive measure taken in view of the international crisis, will affect food security for the poor.
On Thursday the National Federation of Peasant, Artisan, Indigenous, Native and Salaried Women (FEMUCARINAP) held a rally. A market and exhibition on agricultural diversity and fair trade was opened, and a book, "La política de deuda en el Perú" (The Politics of Debt in Peru), about the challenge of the financial crisis in the context of inequality in the country, was launched.
On Friday a round table discussion was held by experts and social organisations, focusing on the fight against poverty and the international context.
"Governments must ensure that the crisis does not affect social spending. Health, housing and education budgets and the different assistance programmes should not be cut back, as is currently happening," economist Héctor Béjar, the coordinator of GCAP-Peru and the main speaker at the round table discussion, told IPS.
In Colombia, educational and cultural activities in public and private schools took place, including talks by teachers, rock concerts and puppet plays, with messages about poverty and the food crisis.
A popular activity held every week in a street in Bogotá was used as an opportunity to involve the public in reflections on the subject. The organising coalition had the support of the United Nations Development Programme (UNDP).
In Brazil and Uruguay, lack of funding was the reason given for the failure to organise events.
Donors to the participating Brazilian organisations approved funding "two weeks ago," but the funds would not be available before Oct. 17, Jair Barbosa, communications adviser to the non-governmental Institute of Socioeconomic Studies (INESC), based in Brasilia, which is the secretariat for GCAP in Brazil, told IPS.
However, Barbosa acknowledged that there has never been much action related to the GCAP in Brazil, because of "resistance" by the organisations themselves, which take the view that they are already fighting poverty in their day-to-day activities, by defending the rights of women or Afro-Brazilians or lobbying for better public policies.
Because of this, the campaign in Brazil has allied itself with other organisations and networks that are pursuing the same ends, and joins in their actions, such as a march in memory of Zumbi dos Palmares, the hero of the Afrodescendants' movement, on Nov. 20, National Black Consciousness Day.
In Uruguay, activities have also been few and far between. In 2006 and 2007 the only organisation to take action was the non-governmental National Beijing Follow-up Commission: Women for Democracy, Equity and Citizenship (CNS Mujeres), a coalition which this year "had no funds specifically set aside for the campaign," it reported.
In Venezuela no GCAP-related events were held. "It's a question of organisation and the agenda priorities of non-governmental organisations and social movements in the country," Marino Alvarado, head of the human rights group PROVEA, told IPS.
The cold response of Latin America can be explained by GCAP's identification with the MDGs, Álvaro Ramis, president of the Chilean association ACCION, told IPS.
The first of the eight MDGs is to halve the proportion of extremely poor people by 2015, with respect to 1990 levels.
"The MDGs have become an agenda that does not necessarily represent the vision of Latin American organisations," said Ramis. In his view, the MDGs are "less ambitious" than the aspirations of NGOs in the region.
The activist said organisations in the industrialised North that are involved in GCAP are proposing a welfare-based approach to the problem of poverty, while groups in Latin America are seeking to change development models, overcome social inequalities, end trade dependence between countries and transform international financial institutions.
Therefore, organisations in the region are probably more concerned about the fundamental reforms taking place in some countries, such as constitutional reform.
"We have tried to promote this debate at the GCAP Global Council, but we have not yet done enough. However, we think it is possible to form inter-regional alliances. At the last meeting we had a lot of affinity with the positions of Asia, like India and Indonesia, but not with those of Africa," Ramis said.
ECLAC expert Juan Carlos Feres told IPS he thought Ramis' proposal was based on a rather superficial view of the MDGs.
Feres said that it has not been easy for the countries of the region to meet the MDGs, even though they regard them as being "not very ambitious." He also said that the MDGs "cannot be fulfilled merely by administrative measures, but require countries to undergo deep transformations," of a political, economic, social and cultural nature. "There is nothing ingenuous about the MDGs," he said.
In April 2009, ACCION will take on the Latin American GCAP secretariat, a role now played by organisations in El Salvador. From that position, they want to broaden the movement's vision, said Ramis.
*With additional reporting by Marcela Valente in Buenos Aires, Mario Osava in Rio de Janeiro, Milagros Salazar in Lima, Helda Martínez in Bogotá, Raúl Pierri in Montevideo and Humberto Márquez in Caracas.
Less than a week after the Washington Post reported that the Department of Defense will pay private contractors $300 million over the next three years to "produce news stories, entertainment programs and public service advertisements for the Iraqi media in an effort to 'engage and inspire' the local population to support U.S. objectives and the Iraqi government," Virginia Sen. Jim Webb wrote a strongly worded letter to Defense Secretary Robert Gates. "I have serious reservations about the need for this expenditure in today's political and economic environment," he wrote. "Consequently, I am asking that you put these contracts on hold until the Armed Services Committee and the next administration can review the entire issue of U.S. propaganda efforts inside Iraq."
Such a review, if it were to happen, would be a formidable undertaking, one that would have to start with the declaration of the "War on Terror" itself. It's a project the Bush administration has always approached as a PR campaign as much as a military one. Who can forget former White House Chief of Staff Andy Card's explanation for the need to introduce the Iraq War to Americans in September: "From a marketing point of view, you don't introduce new products in August." And remember the short-lived attempt by administration officials to re-brand the "War on Terror" by renaming it the "Global Struggle Against Violent Extremism"? (Reports at the time were that administration officials worried that the original phrase "may have outlived its usefulness," due to its sole focus on military might.)
Regardless of what you call it, the so-called "War on Terror" has cost American taxpayers hundreds of millions of dollars in propaganda costs alone. As with so much of modern war-making, most of this work is carried out by private military contractors. With the word "Halliburton" now shorthand for waste, fraud and abuse for many Americans, taxpayers' tolerance for war profiteering has reached new lows -- especially when private military companies operating with no oversight undermine the very "hearts and minds" that mission propaganda is supposedly meant to advance.
Selling the War to Americans
Perhaps one of the Bush administration's most egregious PR undertakings in the war on Iraq was revealed this spring, when the New York Times blew the lid off the Pentagon's military analyst program, in which more than 75 retired military officials were recruited to spout pro-war rhetoric on major networks in the run-up to the invasion of Iraq. These "message force multipliers," as they were branded, were provided with thousands of talking points by the Department of Defense starting in 2002. In one memo, dated Dec. 9, 2002 and titled "Department of Defense Themes and Talking Points on Iraq," a quote from Paul Wolfowitz -- "We cannot allow one of the world's most murderous dictators to provide terrorists a sanctuary in Iraq" -- was followed with a bullet point: "Saddam Hussein: A Global Threat."
The investigative piece by the Times said the project "continues to this day," seeking to "exploit ideological and military allegiances, and also a powerful financial dynamic: Most of the analysts have ties to military contractors vested in the very war policies they are asked to assess on air."
"Records and interviews show how the Bush administration has used its control over access and information in an effort to transform the analysts into a kind of media Trojan horse -- an instrument intended to shape terrorism coverage from inside the major TV and radio networks." It would be hard to overstate the implications of such a program, particularly for a country that claims to be a beacon of democracy.
Although the Pentagon was said to have suspended its PR briefings of retired military officials shortly after the Times story broke, since claiming that its inspector general is conducting an investigation, in reality there has been precious little fallout. However, in one promising move, earlier this month, the Federal Communications Commission sent five letters of inquiry to TV military analysts in an apparent probing of the program. According to one report, "at issue is that some of them were also linked to Pentagon contracts, raising the issue of conflict of interest. In its letter signed by the chief of the investigations and hearings division enforcement bureau, the FCC suggests that TV stations and networks may have violated two sections of the Communications Act of 1934 by not identifying the ties to the Pentagon that their military analysts had." Diane Farsetta at PR Watch, who has written extensively on the Pentagon's pundits, particularly their work on behalf of defense contractors, says, "the good news is that that's (a first) step toward conducting an investigation."
Profiting off the "War of Ideas"
Beyond the Pentagon's pundit "scandal," the fact that propaganda contracts continue to be awarded to the very companies that have previously been implicated in ethical breaches for disseminating unattributed U.S. propaganda abroad is reason enough to renew alarm. More than the dollar amount, what is outrageous to Farsetta about the most recent propaganda contract is that it is "blatantly illegal." "If you look at this most recent contract," she explains, "one of the 'strategic audiences' is U.S. audiences." According to federal law going back to World War II, she says "no taxpayer money can go to propagandize U.S. audiences."
The Washington Post story describes the contract as the latest in a series of cutting-edge PR initiatives undertaken since 2003 that represent a revolution in what it calls "the military's role in the war of ideas." "Iraq, where hundreds of millions of dollars have been spent on such contracts, has been the proving ground for the transformation."
"The tools they're using, the means, the robustness of this activity has just skyrocketed since 2003. In the past, a lot of this stuff was just some guy's dreams,'" said a senior U.S. military official, one of several who discussed the sensitive defense program on the condition of anonymity.
The Pentagon still sometimes feels it is playing catch-up in a propaganda market dominated by al Qaeda, whose media operations include sophisticated Web sites and professionally produced videos and audios featuring Osama bin Laden and his lieutenants. "We're being out-communicated by a guy in a cave," Secretary Robert M. Gates often remarks.
The new contract was awarded to four companies, most of whom Farsetta refers to as "the usual suspects," including Lincoln Group, the Pennsylvania Avenue company that in 2005 was found to have planted articles written by U.S. military officials in Iraqi newspapers without attribution. (Although the group was cleared of any illegalities, even then-Defense Secretary Donald Rumsfeld recognized the potential breach, remarking, "Gee, that's not what we ought to be doing."
Selling the War to Iraqis
The main target audience for the $300 million contract is Iraqis. But, different from earlier propaganda efforts, the content is not simply meant to convince them of the noble intentions of their American occupiers. "Originally, the major focus was all about the U.S.," says Farsetta. "The message then was, 'Hey, you're free now,' but over time it has shifted to more 'make sure you support your own government, your own police.'"
Indeed, the Washington Post quoted an unnamed official who described one component of the program:
"There's a video piece produced by a contractor showing a family being attacked by a group of bad guys, and their daughter being taken off. The message is: You've got to stand up against the enemy." The professionally produced vignette, he said, "is offered for airing on various (television) stations in Iraq. They don't know that the originator of the content is the U.S. government. If they did, they would never run anything.
"If you asked most Iraqis," he said, "they would say, 'It came from the government, our own government.'"
A pretty blunt admission, to be sure, and one that lays bare the dubious ethical nature of the program (not to mention the extent that the military recognizes Iraqis' antipathy for the U.S. government). But it's not the first time the U.S. government has sought to play hand puppet with Iraqi media. Last spring, the NSA obtained and made public a document, along with a PowerPoint presentation, that revealed the Pentagon's plans in the run-up to the war to create a "Rapid Reaction Media Team." Jim Lobe, D.C. bureau chief of InterPress Services, covered the revelation in May 2007; as he wrote, the proposal was for a "six-month, $51 million budget for the RRMT operation, apparently the first phase in a one- to two-year 'strategic information campaign'":
Among other items, the budget called for the hiring of two U.S. ''media consultants'' who were to be paid $140,000 each for six months' work. A further $800,000 were to be paid for six Iraqi "media consultants" over the same period.
Both the paper and the slide presentation were prepared by two Pentagon offices -- Special Operations and Low-Intensity Conflict, which, among other things, specialize in psychological warfare, and the Office of Special Plans under then undersecretary of defense for policy, Douglas Feith -- in mid-January, 2003, two months before the invasion, according to NSA analyst Joyce Battle.
''The RRMT concept focuses on USG-UK pre- and post-hostilities efforts to develop programming, train talent, and rapidly deploy a team of U.S./UK media experts with a team of 'hand selected' Iraqi media experts to communicate immediately with the Iraqi public opinion upon liberation of Iraq,'' according to the paper.
The ''hand-picked'' Iraqi experts, according to the paper, would provide planning and program guidance for the U.S. experts and help ''select and train the Iraqi broadcasters and publishers ('the face') for the USG/coalition sponsored information effort.'' USG is an abbreviation for U.S. government.
In a rather extraordinary quote, the document boasted, ''It will be as if, after another day of deadly agit-prop, the North Korean people turned off their TVs at night, and turned them on in the morning to find the rich fare of South Korean TV spread before them as their very own."
In the United States, few lawmakers have had a chance to scrutinize this latest deployment of public funds for propaganda. (Like so many other contracts awarded to private defense corporations, this one was awarded with no Congressional approval.) But Webb's letter to Defense Secretary Robert Gates suggests that it could become an issue.
At a time when this country is facing such a grave economic crisis, and at a time when the government of Iraq now shows at least a $79 billion surplus from recent oil revenues, in my view it makes little sense for the U.S. Department of Defense to be spending hundreds of millions of dollars to propagandize the Iraqi people. There is now an elected government in Iraq, which is recognized to have the power and authority to negotiate a long-term security agreement with the government of the United States. Clearly that government is capable, both politically and financially, of communicating with its own people in the manner now contemplated by these DOD contracts -- and without being accused by adversaries of being a foreign government that is fulminating internal conditions through propaganda.
Laudable as his efforts to reign in contractors may be -- much of Webb's letter was devoted to military contractors more generally, and Blackwater specifically -- his letter made no mention of the myriad ethical questions raised by the propaganda contract. To name a few, says Farsetta, "the fact that the media produced is overwhelmingly not attributed to the U.S. government;" "the fact that one of the 'strategic audiences' listed in the contract is 'U.S. audiences,' in apparent violation of U.S. law;" and "the difficulties in holding private contractors operating in war zones accountable to any standard (ethical, performance or otherwise)."
Webb, who first learned about this contract as did most Americans, from the Washington Post, has called for a thorough review of the Pentagon's "strategic communications" initiatives, including Congressional hearings." Were this to happen, says Farsetta, "I would love for those hearings to include representatives from foreign governments and civil society groups where the U.S. has major propaganda operations, including Iraq and Afghanistan. The heads of firms like the Lincoln Group, L-3 and Rendon should also testify, under oath."
But, she says, "What really bothers me is that Webb's using the "we've given Iraq so much and now it's time for them to step up" argument. That argument never fails to amaze and anger me. We bombed them in 1991, then for more than a decade placed them under such devastating sanctions that hundreds of thousands of children died, then bombed them more ferociously over a longer period of time. Yet some politicians have the gall to complain that the Iraqis aren't doing enough now? That's not to mention that the argument assumes that Iraqi leaders have the same priorities as U.S. officials. Personally, I say we need to get our propaganda and troops out of Iraq and pay them reparations."
Thursday, 16 October 2008
How to arrest worldwide monetary collapse in a day, and establish real, sustainable economy in little longer
BACKGROUND EXPLANATION OF USURY AND USURPATION
Like the gaudy titles by which phonies of every kind attempt to insulate so many deceptions today, the names given to the recent emergency legislation play to a world whom their authors hope will never grasp, understand, or heed a proposition or fact of one real, integral solution.
All of the purposed names given to this transgression together will never lend credibility to those who can never prove the pretentious things that panderers will assert, yet which can only hinge entirely upon the legislation's wholly devoid integrity. Instead of proving pander, this infamous extension of theft from the people will provide a future icon of today's delinquent, self-interested clowns, dupes, and shills, who meant together to profess to us falsely, to rule us by keeping the truth from us forever if possible, and to steal from us with such unwise and blatant abandon, so long as we remain so ignorant.
But this day was bound to come not just from the excesses of so many usurpers and perpetrators of fraud.
They who are against us, dipped of course always as deeply as we tolerated, while they obstructed us in every possible way from stopping them. Cries of excess were hardly heeded. And yet, even if none of them dipped ever so deeply from the well which could only drain all other wells dry, this day was always the inevitable culmination of that underlying well.
No matter the ways of dipping, or the names which takers give to them, the well of unearned taking itself sucks everything else dry. Superficial furtherances of the crime of course may indeed pick away at what else can be stolen from the pool of wealth — further depriving true producers of just reward for production, with the glee of participation granting free reign for the underlying drain to work the primary means of our demise, which is multiplication of indebtedness. But still, all dependent forms of unearned taking inevitably succumb too to the omnipotent, primary obligation to service a sum of debt multiplied perpetually and purposely by the very nature of the imposed currency.
All of us succumb then to an alpha taker, more immense, more unduly powerful, more entrenched, and even more unassented than however many dippings from its irreversible drainage.
While any further unearned taking then could itself otherwise engender terminal failure, the alpha well is the ultimate ruin of all.
Those who claim regulation is the issue have no leg to stand on.
There is of course no reasonable dream of regulating away the iniquities of inherently multiplying debt, without eradicating the very thing we might regulate. So long as the primary process takes unearned profit, terminal culmination of the process is ensured by the fact that either by greater increments or by lesser, irreversible multiplication of debt in proportion to the obligated circulation eventually exceeds the finite potential of the circulation to service debt.
We can readily understand this, as the instrument of the process is in fact endowed with few elementary powers, because just such few, comprehensible irregularities are necessary to its insurmountable purposes. The well that drains all other things can prevent or allow us from drinking from it, and it can regulate the rate at which it multiplies a sum of debt which ever moreso sucks the life out of everything.
But regardless even of presumably minimal rates of multiplication which might ostensibly justify the purpose of unearned taking, the process is ultimately terminal, and manifests its final stages of failure at inherently escalating rates.
To whatever degree we are compelled to maintain a vital circulation by re-borrowing principal and interest as subsequent sums of debt, the sum of debt increases irreversibly by ever greater increments of ever greater periodic interest on an ever greater sum of debt. As principal is re-borrowed, it is impossible to pay down the sum of debt; and it is impossible to sustain the vital circulation without further borrowing. Whatever interest we must re-borrow thus increases the sum of debt, escalating the onset of terminal failure.
So long as we maintain the vital circulation so, the process is irreversible. All the while, ever more of the obligated circulation is inherently dedicated to servicing debt, leaving ever less of the circulation to sustain the industry which is obligated to do so.
All of us can readily understand the singular possible outcome of this process. Being the primary obligation, these takings consume all other taking. Whether further thieves dip from the alpha well, we succumb to a system which in fact was engineered and imposed upon us for the very purpose of multiplying debt in proportion to the obligated circulation.
Such a system therefore can only expire at a maximum practical lifespan, at which it imposes upon its unwitting subjects a terminal sum of debt. When the music stops playing, no chairs are left, because they have all been taken by inherent, escalating dispossession, which of course ultimately results in complete dispossession. When the music stops, all the players trying to sit can only fall down. By only subverting the nature of currency, the central bank ultimately makes itself the real owner of all the chairs.
You yourself are headed there, until a prevailing majority of us understand solution. If you are not ready to do so, you are part of the problem. Otherwise, you won't mind my repeating the few principles which deliver the fact of solution to the present, or perhaps to any heedful posterity.
According to this thesis that such pretended economies ultimately engender unsurvivable sums of terminal debt, the purported bailout can only reasonably hope to let some of the bad guys out of town "with whole skins," as Congressman Louis T. McFadden put it, reporting to Congress on June 10, 1932 from the midst of the first Great Depression.
The events and causes of then however, were no different and no greater mystery than their present reiteration. And so in fact, because the species of perpetrators and necessary methods of perpetration have no truly different manifestations, Mr. McFadden actually reported something further that we can only find even more familiar — that as the curtain dropped then too as an inevitable consequence of the same, terminal multiplication of indebtedness, the very perpetrators not only "got out with whole skins," they "left the people of the United States to pay the piper."
More correctly, as the final curtain fell, to save themselves at the end of that lifespan as well, the very perpetrators left the people with a further measure of debt, beyond the terminal sums of debt which the perpetrators had already imposed, and beyond therefore what had been proven by the events of the moment, was already such an excessive, insoluble sum of debt as the people already could not even afford to service.
Yet as I have said, this is the very nature and purpose of the system, even if the final act, in attempting to preserve the system for all this, is something like a murderer going through the motions of killing the victim again, after the fact. So it is not at all surprising that even in the end, consistent with that intrinsic purpose, the perpetrators seek to preserve their takings and even the means of those takings, by a coup de grace which sustains only the pattern of taking as if perpetual multiplication of artificial sums of debt is natural, normal, or just.
But obviously then, nothing could be further from solution than the present farce of a bailout. We only know from the facade of it what we are up against, should the people of the world storm their capitols, armed even with the only prescription for absolute solution.
So indeed, in the present replay of the scantly described, terminal cycle of taking, there is no mystery why the term "bailout" suggests that fools allow the perpetrators to prove for a while longer what they can never prove.
They say to you, save the banks, that the banks can continue to serve you. But they mean, save the subverted form of "money" which can only multiply debt into terminal sums of insoluble debt.
You are not faced with terminal failure because some of the outer institutions which steal from you are failing, having "invested" in the success the multiplication of debt denies you. You are at the brink of world-wide failure because even despite all the artificial means of sustention which can be tried, the alpha well ultimately succeeds in a vaster drainage, achieved by generating the terminal sums of debt everywhere around us.
The very perpetrators say to you now, take on the bad debts of these banks of every river draining into the alpha well, so that the banks might still for some little while even remain capable of giving you your own little remaining money. But your money is gone already, only because they have "invested" it in the water rushing into the alpha well.
The perpetrators of course want, forever if possible, to preserve their gargantuan parasite. Once the present lifespan is concluded, they would like to remain the publishers of that same kind of currency which can only convey all the wealth we produce to them, leaving us again and again in the wake of inevitable failure.
To sway the kind of fool who will never know better, they will give each further manifestation of that illegitimate currency a different name; they will tell us it is a new, better currency; they will assure us they have somehow prevented further failure. But they will never tell us how, because it will be the same currency — still having the singularly terminal power to multiply debt in proportion to a vital circulation.
The parasite can never afford to tell you how, because there is no how in retaining the process by which they intend to profit illimitably, and unjustifiably.
On the contrary then, not only is it completely unnecessary to save the parasite; we only ensure failure by its preservation.
Moreover, we certainly preserve the parasite by retaining the institutions which embody the very processes which can only engender our present problems. Our quest instead is to overrule those institutions and their bogus advocates, that we can solve the few rudimentary crimes imposed upon us.
Of course then, for leaving the very rats which steal so in charge of the hen house... preserving the parasite which can only multiply debt all the further, is all the purported bailout even pretends to do.
To understand this means of multiplying debt therefore, is to hold both solution and renegade government by the only grip which can set the hen house straight.
Which do you keep? And which do you eradicate?
If the perpetrators did not know the choice we should make, they would not prepare for what we have not yet done.
Yet if there were any police force or military or government which could hope to prevail in further preserving this system of stealing by openly declaring its means and purposes, there would be no reason to choose evasion and deception instead.
It is not then a matter of if the betrayers can rectify the "monetary" systems imposed upon the world, for we can clearly show the betrayers exactly how they can. With only rats in charge, to continue pretending representation then, they have no choice but to simply pretend they have never heard: there is of course no veritable argument which can invalidate the mathematic perfection of economy.
Realizing solution then is a matter of either a) what might possibly force the betrayers to abide by their obligations of representation, or b) how we will restore lawful government to ourselves — hopefully before the plans of an unlawful, self-appointed elite make that too late. But we are capable of solving the monetary calamity before us immediately, and without cost.
And we can prove how.
A magician has no power of magic. Nor of course does legislature.
And nor of course do I.
Mechanics rather, are the substance of succeeding, failing, or betraying processes. Thus a failing process, or a process of betrayal, can only be understood and solved by discerning its actual mechanics. Nothing is solved by facades and deceptions — particularly which certify not that we cannot solve our problems, but that the facades and deceptions of renegade governments are the problem.
A republic therefore succeeds only as its whole populace recognizes and adheres itself to the only principles and mechanics which can serve the whole.
It is not enough to say "understanding" is only so much as perceiving our problem is a parasitic process which can only multiply itself until the host dies. We must understand the subject mechanics of the process well enough to understand what is solution; for if there is but one integral solution — and I will sufficiently establish that fact — then a republic can never solve its problem of the particular parasite until it understands altogether what comprises that one integral solution.
Then and then alone can we unite upon solution in such a way that no renegade government would risk its neck in the final days of the calamity they have imposed upon us, to resist or evade solution.
If all of us together already understood what the vital monetary principles of salvation are, we would already be united against the violations of our laws and principles of sustenance.
That is of course, "if" the present seeming absence of solution is a matter of betrayal.
If on the other hand, the system of stealing which has been imposed upon us were sustainable, neither is that evident in the obvious present deterioration, or in the first, original fact that the field we so erroneously refer to as "economics" is not only wholly bereft of formal proof and theorem; it is wholly bereft even of a principle to deliver what is economic.
On the contrary, what we so erroneously refer to as "economics" is strictly a device for imposing oppression by multiplying indebtedness.
A practically unbelievable controversy thus exists between the utter facade of "economics" and mathematically perfected economy™. What are the differences? Where are the arguments?
The arguments of mathematically perfected economy™ are sufficiently documented by the work which compels this appeal to you [these pages].
Briefly however, the thesis identifies a potential for any purported economy subject to interest to terminate itself under insoluble debt. The subsequent solution of this process and the further problems imposable by the few powers of contemporary monetary systems, then build upon categorically ascertained faults of 1) inflation and deflation, 2) systemic manipulation of the cost or value of money or property, and 3) inherent, irreversible multiplication of debt in proportion to a circulation:
1. Inflation and deflation in respect to whatever wealth the circulation is intended to represent are solved by paying off monetary obligations comprised only of principal, at the rate of consumption or depreciation of the related asset.
It is impossible to solve inflation and deflation without eradicating interest, because monetary obligations subject to interest require paying out of circulation more than the original value of the related asset.
2. Inherent, irreversible multiplication of debt in proportion to a circulation is solved by eradicating interest, which of course is the very singular process which irreversibly multiplies debt in proportion to the obligated circulation. This of course is the very cause of the present final, terminal sums of debt.
3. Systemic manipulation of the cost or value of money or property is solved by the combined solutions of inflation and deflation (1) and inherent multiplication of debt by interest (3), which are the only powers these pretended monetary systems have to manipulate the cost or value of money or property.
By eliminating extrinsic costs, mathematically perfected economy™ therefore is absolutely "economic." There is no multiplication of debt, no terminal multiplication of debt, no inherent devaluation of the currency, and no systemic manipulation of the cost or value of money or property whatever. The very powers of all these evils are simply stripped from mathematically perfected economy™.
Contemporary usury ("economy") of course lacks any corresponding theorems or proofs, because in fact interest makes every aspect of the one integral solution impossible.
This, together with the assumable distribution of this unearned taking of course, explain why the advocates of usury even at its end, can only meet the proposition of mathematically perfected economy™ with evasion.
HOW I WOULD ARREST WORLD WIDE MONETARY COLLAPSE IN A DAY, AND ESTABLISH REAL ECONOMY IN LITTLE LONGER
If I were President, I assert that by exercising the following prescription, I could arrest the present monetary failure in less than a day; and I could establish a perpetual, sustainable solution, or absolute economy, in perhaps less than a month.
You may of course never elect me. But still the purpose of this page is to explain how to do so — how to immediately transform unsustainable systems of usury into mathematically perfected economy™. We have already sufficiently explained why.
This program of course could be implemented by any nation, collection of nations, continent, and so forth. While world leaders can and have stood in the way of mathematically perfected economy™, nonetheless I further assert that mathematically perfected economy™ is inevitable not only for the reasons given already, but those to follow as well.
Obviously, present world conditions call for this resolution loudly; and so, unless mathematically perfected economy™ can indeed be invalidated, those who will neither hear nor heed immediately, therefore condemn the rest of us to the calamity before us.
This proposition is no casual or recent matter of relatively little development or survival of test cases. Its initial form was developed seriously since early 1979, before I provided computer models to the Reagan Administration, just a few years later. Those models of course readily tested for interest free cases. Primarily however, they projected not only the otherwise unforeseen federal debt which President Reagan's two terms eventually accumulated. They further anticipated in 1983 that for expected interest rates and growth, that public and private debt would multiply at rates which would develop terminal sums of U.S. debt, and potential world wide monetary failure. Our projections determined this would occur at approximately 2010 AD.
Essentially then, the designed power of those elementary but potentially exceedingly accurate models, was to calculate the maximum possible lifespan of any purported economy subject to interest. You can still download the models from our pages.
All subjects of contemporary, pretended economies have critical interests in veritable solution; and rightly, only by prevailing understanding can a publicly approved solution ever have emerged.
That we can say there are legitimate representative governments, true representation always seeks and finds not only the ideal, but the due, certifiable approval of their apprised people. Given the critical circumstances, just such a process is to be expected now more than ever.
Because the problems and consequences before us are universal, a model for real solution must solve for the innate, sustainable interests of all. That is, it must solve for the world — not just a country, not just a generation, not just a time, not just a class, not just a disposition.
Effectively then, we can only seek to prosper so much as our contribution to the pool of wealth; and we must seek to prosper only so much, in whatever way cannot and will not deprive others of the opportunity to prosper likewise.
No matter the issues necessarily addressed then, this is the primary object and final test not only of this proposition, but of any prospective/purported solution.
WHAT IS THE CAUSE OF FAILURE WHICH WE MUST MOST URGENTLY ARREST?
As we have said, the critical breaking point of the pretended financial systems of the world is predicated by irreversible, perpetual escalation of artificial sums of debt, which ultimately exceed a finite capacity to service debt. Vast, persistent housing foreclosures, marginalization of industry, and destruction of credit-worthiness are obvious, inevitable consequences of the final stages of this artificial, escalated multiplication.
In the terminal stages of its practical lifespan, such a system requires paying the vastest costs of servicing debt out of circulation. Yet these very same terminal sums of debt finally destroy the last remaining possibility of sufficient credit worthiness to assume further debt. So much as the vital circulation can only be replenished by further borrowing then, the very multiplied indebtedness of the final state makes it impossible to justify "credit" as would maintain a vital circulation. It is at this juncture then that "the economy" suddenly collapses.
To prevent this final, potentially sudden collapse, it is necessary therefore to prevent a final/terminal cycle of deflation.
HOW TO ARREST THIS DEFLATION AND FURTHER DEVELOPMENT OF THE FAILURE IMMEDIATELY
1. To avert a terminal cycle of deflation, and to arrest further development of the failure by further multiplication of indebtedness, we must immediately suspend all payments against debts subject to interest to "banks" (or "credit"/"lending" institutions), and from all intermediate "banks" to the "central bank."
a. To sustain other incidental lenders across a brief period of transition to mathematically perfected economy™, the accounts of small, private creditors (home owners carrying the paper on a sale of their home for instance) would be credited (artificially) with so much as the payments they are accustomed to receiving, without taking these payments from the debtor.
b. Any other possible conduits of deflation are sealed, including taxation. Federal taxes are suspended and the states are asked or required to suspend state and local taxations.
c. Accounts of retired persons are credited with advance sustenance as will be completed in later stages of what yet amounts to a more or less immediate recovery (4.g.), not just to pre-collapse conditions, but to a level of prosperity several times that.
d. Necessary government programs are funded temporarily by new circulation, with the tolerance for this brief measure to sustain necessary government activities being the tremendous present deflation of the circulation.
Effective immediately then, not only would critically marginalized home owners be able to stay in their homes, *all* home owners and all surviving industry would immediately have the entire former costs of servicing debt available instead to sustain necessary commerce. Immediately, industry would not only avoid and survive the imminent failure, but prosper across the transition period to substantial further extents which have otherwise been impossible.
A capacity to sustain unlimited further prosperity is eventually provided by converting the present system to mathematically perfected economy™ — effectively concluding a transition period existing only so long as necessary to set up accounting infrastructures, and to refinance debt under mathematically perfected economy™.
Meanwhile, there is no deflation; no need to borrow further to maintain a vital circulation; and we immediately prosper to whatever further degree we are relieved of servicing the existent sums of artificially multiplied debt.
HOW TO AVOID "CAPITALIZATION" OF (STEALING) THE LIQUIDITY SUDDENLY REALIZED
To avoid theft of the liquidity which would suddenly be realized:
2. Prices would be frozen. Commodities traders would be eliminated from the chain of purchase. Products would be directly delivered to markets by natural processes of distribution, without unearned taking. Commodities traders would be paid for their existing assets with a separate currency, temporarily at least dedicated to unearned taking. Just settlement of their unearned wealth would be settled later.
Having relieved not only the pressures of escalation, but the whole weight of servicing existent debt, no reason persists for bona fide industry to raise prices; and, granted such substantial further liquidity under existing price states, industry would immediately be free to sustain and generate further employment, while sustaining profit margins substantially beyond what was previously possible — if and only if truly free markets are liberated from predation.
"REPAYMENT" OF ARTIFICIAL DEBTS TO THE CENTRAL BANK(S)
3. To resolve all debt to the unassented and unlawful central bank(s), I would scribble onto a piece of paper, "Will pay to the bearer upon demand, infinity."
This like irredeemable promise to pay would be offered with a cordial invitation to challenge this resolution of all debt in a fitting court of law (manned of course and accountable to the people), where on behalf of the people we would argue:
a. that inherently no private entity has any right deprivable from any other private entity or person to issue irredeemable promises to pay ("Federal Reserve Notes");
b. that therefore on the one hand, the paper I have submitted satisfies the purported obligations;
c. or on the other hand, there is no legal basis whatever for the purported debts;
d. and most of all, that as the implementation of interest inherently multiplies debt in proportion to an obligated circulation, the imposed currency cannot constitute lawful obligations to "repay" debts which ultimately are purposely made insoluble by the very artificial conditions imposed upon the arrangement.
This of course would not resolve whatever assets have been acquired by equally/potentially illegitimate, unlawful means.
For now, like the resolution of assets acquired by commodities traders, I leave it to the people ultimately to determine whether they want to go after these assets, or whether we shall just call termination of all this good enough.
But should these banks or any advocate of the currency they have imposed upon us make any substantial effort from this time forth to obstruct or even discourage us from solution, I recommend instead not only to recover the assets/profits which have been dispossessed from us, but to try all persisting advocates for crimes against humanity — these being explicitly, whatever perpetuation of damages is suffered since these systems were imposed.
These measures, necessarily carried out before the onset of fatal deflation, arrest further failure within a day, with the additional liquidity immediately established being capable of sustaining multiples of present industry.
Those who delay implementation of this proposition therefore are responsible for the consequences this measure would avoid — 10,000 homes daily going into foreclosure, vast further dispossession, inevitable further failures of industry, and so forth. As the present arguments sufficiently demonstrate, all of said detrimental consequences can be arrested in less than a day.
ESTABLISHING AN EMERGENCY, TRIAL IMPLEMENTATION OF MATHEMATICALLY PERFECTED ECONOMY™
4. As soon as possible, to restore and sustain the industry we are capable of, an initial implementation of mathematically perfected economy™ is established under emergency conditions. Once electronic infrastructures are established to maintain the people's accounts, that initial implementation comprises:
a. refinancing of all private debt without interest, with schedules of payment being the rate of consumption or depreciation (which are to be understood to be equivalent);
1. a general, de-escalated formula for depreciation shall be used for the initial implementation. Specialized formulas may be implemented thereafter;
2. the remaining value of the related property shall be the refinanced sum, as determined by the general formula for depreciation;
b. any payments so far made beyond the depreciation so far incurred and up to the full remaining value of the property shall be considered accumulated equity, counted against the balance of the remaining debt;
1. equity in all property as determined by the general formula for depreciation can be financed likewise;
thus the whole effective circulation is equal to the whole value of related wealth; and the remaining circulation is always equal to and redeemable in the very remaining value of the represented wealth, with this itself eliminating any cause or need for ostensible alternate monetary standards;
c. debts which have been paid, in principal and interest both, to the extent of the remaining value of the property, shall be considered fulfilled;
d. further financing for further production shall be made available under the same terms;
e. private savings are converted into the new currency;
f. otherwise, MPE™ currency is not interchangeable with the former Federal Reserve Note;
mathematically perfected economy™ divorces itself from the previous, imposed system;
g. to restore sustainable conditions with regard to retirement, the accounts of all working-age people are eventually to be credited with a facsimile of what they would have saved and could therefore have lived on should they have benefitted from mathematically perfected economy™ their whole working lives;
To replace social programs which are unsustainable as a consequence of unfunded near term federal liabilities, a mandatory savings program is implemented in which the private individual takes an interest in preservation of the value of the currency (which is sustained by MPE™), and by which the individual is compelled to save some portion of their income over working years, which they may spend in retirement.
For example, if for the purposes of calculation, working years are taken as the years 20 through 60, and savings are taken to necessarily account for 20 years thereafter, compulsive savings of 1/3 of income may be enforced across the 40 years to render the same standard of living across the latter 20. The ultimate terms of such a program are to be determined in the final implementation of MPE™ as agreed by the public.
All people beyond the age of 20 then are to be credited so much, to establish a sustainable condition akin to what would have existed in mathematically perfected economy™ all this while. These savings of course are to serve in lieu of inherently unsustainable "social security."
Sustainable conditions are thus immediately established; illimitable further prosperity is readily funded; and all this costs us nothing.
Under mathematically perfected economy™ then, a $100,000 home with a hundred year lifespan for instance would be financed at the overall rate of $1,000 per year or $83.33 per month, with the initial/general formula for depreciation dictating higher rates of payment in the initial phases of the debt, and substantially lower payments in the latter phases.
The emergency implementation of mathematically perfected economy™ serves as a proving or trial period, after which the subject populace may determine to retain or reject the proposition, optionally returning to the conditions formerly imposed by the previous system, or electing to adopt any other potential solution.
The time required to implement this trial depends upon development or adaptation of existing hardware and software technology to maintain the necessary accounts. Roughly a month of operation under emergency deflation prevention measures might be required before the necessary infrastructure can be developed/adapted, so that this perpetually sustainable trial phase of mathematically perfected economy™ can begin, for whatever duration the people elect to preserve it.
PERMANENTLY ESTABLISHING MATHEMATICALLY PERFECTED ECONOMY™
5. Should the public elect to retain mathematically perfected economy™ after the emergency trial, its ultimate implementation is determined in regard to specialized rates of depreciation, scope of financed wealth, and potential relationships with other programs.
It can be said that no risk is involved, because in all respects, emergency or otherwise, by eliminating the vast costs and destructive consequences of "interest," these provisions generally engender as much as a dozen times the liquidity possible under the conditions of interest-bearing systems — particularly of course, prior to the present and ensuing phases of failure.
6. Ostensible "foreign" debt of the people shall be collected from the sellers of the debt in the currency of which the debts were issued.
No one will ever stand for your liberation from usury so long as you, the people, fail to master the problem and its solution. When, and only when you will settle for nothing but the latter, none of the foes of justifiable economy can afford to stand against you.
It is your obligation then to broadcast this proposition of solution if you so see fit. We have no candidate to serve us. None apparently dare respond; and yet we have a critical election just weeks away. But if each of us immediately sent this proposition of solution to our entire address books, the entire country could be prepared to vote for solution in only days.
Shame on us then, if we can do no better.
This page can be copied and pasted into an email; or the permalink to its online instance may be sent; and/or its zip (compressed) file can be distributed freely; or the link to download the compressed distributable may be sent. The recommended procedure is to send this page copied into a text email, complete with the following permalink to the page. Please see the distribution instructions below for further information. Many articles at the PFMPE™ web site (perfecteconomy.com) answer virtually any further conceivable question or issue.
This of course is a serious appeal. Usury is not only terminal; its perpetuation requires usurpation, and that usurpation largely explains the undesirable world as it is. You will have no representation so long as there is apathy toward privatized currencies, which obviously have been imposed upon us for the very purpose of the multiplication of unearned profit which is responsible for the specter of world wide monetary failure before us.
In the introductory quotes with which I began this page, Ayn Rand tells us that "Whenever destroyers appear among men, they start by destroying money." I translate this and the rest to mean, "they start by imposing interest to multiply debt upon the circulation, for money free from that multiplication is mankind's only protection from those men, and so, it is the only possible harbor of unsubverted moral existence."
At present, while 10,000 homes a day are going into foreclosure, the media those men own suppresses the truth, saying such remarkable, ongoing events — and all the related evidence not just of depression, but of utter world-wide failure — are only fueling "fears" of a severe recession. On the contrary, no distortion could be more conducive itself to engendering failure, because it asks us to remain ignorant of all the things we can no longer afford apathy.
Before putting this matter to rest then, let us consider the opposite, positive case of Rand's postulate:
When we are ready to deliver ourselves from oppression, necessarily, we will so understand first and foremost that "interest" can only multiply debt upon the obligated circulation, that no just person will refrain for a moment from assimilating the opposing, vital principle.
A succeeding republic of course must meet necessary minimal standards, first for deserving, and then for enforcing representation.
A truly positive people are not deterred from unity and purpose by a handful of usurers and whatever panderers, generations, or classes tie themselves to purse strings at so much cost to all the rest; they are not discouraged by anything from the good and due things people can readily achieve. Especially, they do not settle for less than ideals, when the ideal can be handed to them.
Here that ideal is. America used to be such a place; and no one in history has to look far to find that out.
Don't trust me as a gambler. You'd probably make more by putting your money into credit-default swaps. Nonetheless, I'd like to make a small wager on who the single significant holdover from the Bush administration might be should an Obama presidency actually happen. Keep a close eye on Secretary of Defense Robert Gates. He was clearly sent into the Rumsfeld breach back at the end of 2006 to begin the clean-up of the Bush administration's foreign policy mess and -- my guess -- to prevent Dick Cheney and pals from attacking Iran. And this, with a little help from onrushing reality, he seems to have accomplished. He remains the singular adult in the Bush foreign policy playpen, a skilled bureaucratic maneuverer from his CIA days, who claims he plans to leave Washington in January but would never say "never" to an offer ahead of time.
Like Obama, he's plunked for an intensified Afghan War and, just last week, a key national security advisor to the candidate, former Navy Secretary Richard Danzig, praised Gates, suggesting he had been a splendid secretary of defense and adding that "he'd be an even better one in an Obama administration."
So, when Gates gives a speech aimed at the Pentagon's future, it's worth listening carefully. On September 29th, he went to the National Defense University and offered a peek into that future as he imagines it. Now remember, the U.S. financial meltdown was already underway and, after seven unbelievably fat years, Pentagon weapons contractors were starting to express worries about possible future cutbacks. Nonetheless, Gates offered a vision of a U.S. military-plus. There was the usual support for a range of conventional weapons systems for wars that will never be fought and their futuristic equivalents, as well as for a larger Army, a larger Marine Corps, and a larger Navy. (The Air Force, except for unmanned aerial vehicles, looks to be in trouble in Gatesworld.) But above all, the once and (possibly) future secretary of defense wants to invest in "institutionalizing counterinsurgency skills, and our ability to conduct stability and support operations." Backed by a growing lobby eager to put ever more warm bodies in the military, he's opting for a major build-up to deal with future insurgencies out there in the global badlands. Think… gulp… "nation building." Think, as well, future Afghanistans and Iraqs.
Though Gates has also claimed of late that the Pentagon's gargantuan budget will no longer outpace inflation, that growth in military spending is "probably a thing of the past," this is still a recipe for a relatively unrestrained imperial future that, as Aziz Huq, author of Unchecked and Unbalanced: Presidential Power in a Time of Terror, points out below is a disaster waiting to happen. It is, in fact, a potential recipe for American bankruptcy. Tom
How to Manage an Imperial Decline
By Aziz Huq
Do empires end with a bang, a whimper, or the sibilant hiss of financial deflation?
We may be about to find out. Right now, in the midst of the financial whirlwind, it's been hard in the United States to see much past the moment. Yet the ongoing economic meltdown has raised a range of non-financial issues of great importance for our future. Uncertainty and anxiety about the prospects for global financial markets -- given the present liquidity crunch -- have left little space for serious consideration of issues of American global power and influence.
So let's start with the economic meltdown at hand -- but not end there -- and try to offer a modest initial assessment of how the crumbling U.S. economy might change America's global stance.
From its inception, the financial panic stemmed from, and also exposed, a form of imperial overstretch -- that of Wall Street's giant financial firms. For them, it took the form of highly leveraged positions grounded on fragile, poorly assessed collateralized debt. As John Grey recently observed in the British Guardian, however, the panic also uncovered another kind of imperial overstretch -- that of American geostrategic power, raising questions about how the gap between stressed political and military assets and Washington's global ambitions will be resolved.
It's important to clarify what's currently at stake globally. Otherwise, depending on one's druthers, this is a subject that tends to be either overblown or underplayed. Few in the mainstream media even countenance the possibility of catastrophic changes in the U.S. position in the world. On the other hand, some in that world are already ascribing seismic significance to what's happening, before the dust has even settled. As historian Andrew Bacevich cautions, the future has yet to be written and so neither outcome is -- as yet -- a foregone conclusion.
Nonetheless, it's worth trying to grasp just how today's financial crisis is converging with two other trends -- the weakening of American hard and soft power -- to transform the geopolitical landscape.
Start with the financial crisis, which emerged from an industry-wide mismanagement of credit and risk. Sophisticated instruments such as credit-default swaps were intended to cushion institutions from default risk on speculative housing assets by breaking those assets into small bits and spreading them widely among financial institutions. Like any kind of insurance, this was a way of spreading risk around to minimize the consequences of catastrophe.
Instead, of course, those "instruments" seem to have cushioned investors only from a frank assessment of risk. Worse, the very splintering of risk, originally designed to insulate financial merchants from too-hard blows, meant that it would prove exceedingly difficult to assess the soundness of all sorts of other institutions.
Paradoxically, what were fashioned as tools to eliminate risk became tools for risk contagion. As a consequence, it is still unclear whether the tumbling of world markets was a consequence of a confidence-based liquidity crunch, or of a more fundamental problem of worthless assets.
For all but a hardline core of Republicans in the House of Representatives, the ten-pin-style collapse or near-collapse of Lehman Brothers, A.I.G., WaMu, Wachovia, and other outfits signaled the failure of a decades-old deregulatory approach to finance. (The credit-default swap market, in large measure the font of today's crisis, has never been regulated thanks in important part to former Fed chief Alan Greenspan's confidence in them.) The distinctively modern American model of deregulatory fervor reached its fever point in the Bush years, and has now broken. The crisis of finance, however, was also a crisis of national governance, highlighting structural weaknesses in the national political system that render a president a lame-duck months before his term in office ends. The crisis has also highlighted the striking difficulty Congress has in sustaining meaningful legislative inquiry and action on complex issues. Since the panic began, its leaders have proven incapable of imagining alternatives to a deeply regressive and barely re-regulatory response. Not only is the nation's financial framework unsustainable, its political architecture seems seriously flawed.
All of this has an immediate, practical aspect, which has not exactly gone unnoticed in the rest of a panic-stricken world. For decades, the United States has run consistent and growing current-account deficits -- basically a measure of how indebted over time a country is in relation to its foreign trading partners -- to the tune of $6.7 trillion since 1982. That was then, though. This is now, and the sustainability of a political economy, no less a global geopolitical strategy that hinges on international credit markets, is today in question.
Even before the mid-September unraveling began, international creditor goodwill toward the "sole superpower" and its fiscal overreach seemed to be evaporating fast. Asian investors, for instance, were quick to evince "unprecedented" skepticism about U.S. assets in the opening moments of the crisis. Earlier this year, vast Middle Eastern and Asian sovereign wealth funds, many bloated by petrodollars, were still willing to furnish crucial injections of capital to U.S. banks, probably staving off the current liquidity crunch. (Paradoxically, their help may only have pushed the onrushing crisis back to a point where it became even more politically toxic to the still-ruling Republican Party.)
Since September, however, the same sovereign wealth funds have proved skittish indeed about helping U.S. financial outfits, thus eliminating another possible resource for responding to credit shortfalls.
American Power on the Wane
At some point, tighter global credit conditions are sure to significantly constrain America's freedom of action internationally. After all, Chinese and East Asian investors, to offer but one example, are now quite capable of reining in, and even undermining, the federal government (if they choose to), rather than vice versa.
Though it may not yet have penetrated American consciousness, a national fiscal crisis is also bound to be a crisis of national security. In the coming years, a new president will have to deal with a growing disparity between the historically hegemonic role of this country on the world stage and its diminishing capacity. Simply put, the U.S. will have to do more with less, even to maintain a semblance of its current strategic profile. What effect this has on geopolitical stability, on the number of small and big wars that occur globally, and on collective problems ranging from climate change to human rights remains to be seen.
This might not matter so much if it hadn't been for the Bush administration's myopic focus on the Middle East as the sum of all evils and the bind it has put future policymakers in by shredding U.S. capacity elsewhere. The recent Russian invasion of Georgia offered a graphic illustration of just how hobbled American power had become even before the present financial crisis hit. Apart from a spasm of vice-presidential denunciations, American has not taken and cannot take action in response to Russian moves in Georgia. Indeed, the White House has found itself in a situation uncomfortably like that of our erstwhile European allies, who have been confined to plaintive whining.
Worse, the Bush administration may have been fully complicit in Georgia's strategic error that precipitated the crisis: As military analyst George Friedman has noted, the U.S. had 130 military "observers" in Georgia, who knew of its military deployments and also had the satellite capacity to view Russia's buildup in North Ossetia. Despite this knowledge, the U.S. failed to restrain its ally from launching its forces against that breakaway region. Indeed, it may have been American training and support for the Georgian army (in exchange for its contributions to "the coalition of the willing" in Iraq) that emboldened President Saakashvili to invade. In which case, the administration succeeded only in enticing an important ally to throw egg in our face.
Nor is the U.S. position in the Middle East any more impressive. However successful the "surge" has been in the American partisan political theater, it has not resolved the fundamental sectarian instabilities in Iraq, nor has it altered a growing regional imbalance as Iran gains unprecedented influence.
The mountainous Pashtun border areas in Afghanistan's east and Pakistan's west, by contrast, are in a state of open revolt against U.S. regional desires, while the Pakistani regime favored by the Bush administration has collapsed. Obituaries are now being written for Afghanistan's Karzai regime (for those who didn't notice that it was moribund on arrival six-plus years ago).
Diminishing U.S. economic and military influence only underscores a third trend: the wilting of America's "soft power." At the U.N. in September, for instance, President Bush faced a tsunami of whispered complaints about America's flawed stewardship of the global economy. Manifest failure in an area in which Americans took such pride saps Washington's ability to persuade and build alliances in areas like resisting slaughter in Darfur, fighting piracy in the Gulf of Aden, or stemming Russian designs on what it calls its "near abroad."
What, in retrospect, must be termed the Cheney White House has reduced America's reputation as a moral beacon to junk-bond level. As senators Obama and McCain have both recognized, any claim to human rights leadership the United States may have once possessed has run aground on the shoals of its torture and "extraordinary rendition" policies, all approved at the highest government levels.
In addition, the insular parochialism of the country's increasingly conservative judiciary has sliced away at the nation's reputation as a font of constitutionalism. It remains to be seen whether similar judicial parochialism will help undermine the country's attractiveness as an entrepôt for financial deal-making.
Managing Imperial Decline
The United States today stands in a position somewhat reminiscent of imperial Great Britain after the Second World War: its currency no longer the pillar of global financial stability, its armies and navies no longer capable of enforcing its policy desires, and its reputation battered by formally successful but functionally catastrophic military conflicts.
Britain's World War II-eviscerated economy and infrastructure can't, of course, be compared to its present-day American equivalents, even glutted with the detritus of two successive boom-and-bust cycles. Nonetheless, the analogy may be suggestive for Washington when it comes to possible shifts in geopolitical and economic tectonics.
As was true in the Britain of those years, so today, even as the U.S. position in the world undergoes a radical diminishment, the extent to which this is being grasped by a policymaking establishment in Washington unused to dealing with uncertainty remains unclear.
In foreign policy terms, the overextended nature of British imperial power only struck home in 1956, nine years after the world war ended. That was the moment when British Prime Minister Anthony Eden fundamentally miscalculated British power in response to Egyptian President Abdul Nasser's nationalization of the Suez Canal Company. With the French and Israelis at his back, Eden reckoned that Nasser was overreaching and saw an opportunity to undermine the Egyptian regime in an area where British power had long been dominant.
Eden reckoned, however, without a newly dominant United States. American President Dwight D. Eisenhower, angry at being cut out of Middle Eastern affairs, threatened Eden. He would, he indicated, "pull the plug" on the British pound by withdrawing American fiscal support for the recovering British economy. The country's monetary weakness led directly to its military collapse in the crisis. The Suez fiasco not only destroyed Eden's prime ministership, it also marked the end of British imperial ambitions.
How, then, will the United States deal with the uncertainty attendant on its present declining fortunes? A "virtual" history of parallel events featuring a new American president is not hard to imagine, with the weak dollar playing a starring role similar to that of the vulnerable pound back in 1956. Suez was, of course, disastrous for the British exactly because Eden so dramatically misjudged the gap between British assets and his version of its national ambitions. The question today is whether a new American president might do the same.
The most obvious temptation remains an attack on Iran, which would almost certainly fail, even as it exposed U.S. operations in Iraq, Afghanistan, and elsewhere to blowback of a magnitude hard for many American politicians to conceptualize at the moment. It would just as surely mark an unpredictable reordering of political relations in the Middle East and possibly, like Suez, the end of American global imperial pretensions as well.
Iran is but one possible place for a new Suez. Others, from Pakistan to the Straits of Taiwan, abound. Such dramatic miscalculations are easy to imagine, especially if the nationalistic pressures of inside-the-Beltway politics drive international commitments. In addition, other global actors recognizing American weakness in ways Americans may not could add to the mayhem.
In a fast-transforming economic climate, a new president will be faced with a difficult balancing act: exercising flexibility while coming to terms with weakness, compensating for strengths lost during the past eight years while giving up ground in pragmatic ways. If that doesn't happen, then hard questions will linger, even after the last credit-default swaps have been unwound, about America's capacity to project influence in the world.
Aziz Huq, author of Unchecked and Unbalanced: Presidential Power in a Time of Terror (The New Press, 2007), directs the liberty and national security project of the Brennan Center for Justice at New York University. He is counsel in several cases involving post-9/11 detentions, including Omar v. Geren, Munaf v. Geren, and al Marri v. Puciarrelli.
This week, financial markets truly succumbed to The Panic. The US Dow Jones and S&P500 Indices lost 21%; Australia’s All Ordinaries fell 16%. “Buy and Hold” gave way to “Get Out At All Costs”.
When we look back with the eyes of history, the ninth day of the tenth month of 2008 will be the Black Thursday on which the world’s biggest ever speculative bubble finally burst.
Friday’s wild gyrations on Wall Street–which saw the Dow down as much as 700 points and up as much as 140, before closing down 128 points for another 1.5% loss on the day–are aftershocks from a financial earthquake driven by tectonic shifts that have a long, long way to go.
The US markets are down 21% for this week alone, and 45% from their peak; the Australian market has fallen 16% this week, and 42% from its peak. The only other stock market crash that compares with this is, of course, 1929.
The fall in 1929 itself was much more sudden–the fall from the market peak of 381 to Black Tuesday’s plunge to 230 points took just over a month, versus over a year this time. But the long grind to the bottom in the 1930s took three years (and the market didn’t revisit its 1929 peak until 1957). We may well face as long a wait before a new world financial order is established.
If we can gain our senses this time, we may be able to establish a financial system that serves capitalism rather than subverts it. We need, as Hyman Minsky argued, a good financial society in which the tendency of markets to indulge in speculative behavior is constrained.
It is obvious now that this will not be a deregulated market. But can it merely be a regulated one? Will regulations alone–bans on short selling, “Chinese Walls” between investment and merchant banking, quantitative regulation of lenders, etc.–be enough?
Clearly they were not this time round. That is the world constructed after the Great Depression (and its political aftermath, the Second World War) when Keynes ruled economics. It fell apart over time because, as Minsky put it, “stability is destabilizing”. A period of economic tranquility ushered in by drastic reductions in debt levels and firm regulation of financial markets leads us to forget the tragedies of The Bust, and to believe that markets are inherently stable.
This delusion was aided and abetted by the economics profession, which reacted to Keynes’s arguments about the inherent instability of markets like an immune system repelling a virus
Economics dreamt up such absurd notions as the “Efficient Markets Hypothesis” (which assumes that markets accurately predict future earnings and value shares on that basis), the Modigliani-Miller Hypothesis (that the most rational funding model for firms is 100% debt if interest payments are tax-deductible), and Rational Expectations (markets are always in long run general equilibrium, and government is impotent to affect real economic activity), and even invented asset market valuation concepts (such as the Black-Scholes Options Pricing Model) that were integral to the development of the derivatives market, the most destabilising force of all in modern capitalism.
Capitalism will survive this crisis, as it survived 1929; and it will be reformed, as was the sober post-WWII system after its profligate predecessor of the Roaring Twenties. But with speculation on assets still a potential path to individual riches–and with a drastically lower level of gearing, as the Great Depression level of debt unwound from its 215% of GDP peak in 1932 to a mere 45% at the start of 1945–the seeds for today’s repeat of the tragedy of speculation were sown.
We need instead to consider redesigning the financial system so that the currently inherent profitability of leveraged speculation on asset prices (when debt levels are low) is constrained.
I propose three such reforms, in full knowledge that they have Buckley’s of being implemented now–but hopefully they will be considered more seriously when this crisis reaches its second or third birthday.
- To redefine shares so that, as do corporate bonds, they have a defined expiry date at which time the issuing company repurchases them at their issue price;
- To impose “caveat emptor” on mortgage agreements, so that the lender’s security is limited if poor credit evaluations were done of the borrower’s capacity to meet the payment commitments in the contract (this will be further explained below); and
- To base house price valuations on a multiple of the imputed yearly rental of a property, rather than its potential resale price.
The intention of the first redefinition of capital assets (this is much more than a mere reform) is to put some effective ceiling on how high a share price can be expected to go, and to therefore force valuations to be based more on soberly estimated future earnings (of the sort Warren Buffett now does) than on the prospects of selling a share to a Greater Fool–which is the real basis of modern-day valuations.
The intention of the second, which may look paradoxical, is to impose the risk of reckless lending on the lender. Note that a sale of a house by the lender is called a MortgagEE sale–where the suffix indicates that the BUYER is selling the house. The borrower, on the other hand, is known as the MortgagOR–where the suffix indicates that the borrower is the SELLER.
What’s going on? Simple: in a mortgage contract, the lender BUYS a promise by the borrower to provide a stream of payments in the future in return for a sum of money now. The lender is the buyer.
What if the lender didn’t properly check the capacity of the borrower to meet this commitment? If we imposed the old Common Law principle of caveat emptor–”Buyer Beware”–the consequences would fall on the buyer. At the moment, lenders avoid the consequences of poor research into a borrower’s capacity to meet the payments by getting absolute security over the asset the borrower subsequently purchased with the lender’s payment.
Were caveat emptor imposed by the courts, I think that lenders would be rather less willing to indulge in the frenzy of irresponsible lending that has marked the end of this long speculative bubble.
The intention of the third reform is to base lending for house purchases on the income-generating capacity of the asset being bought, rather than as now on the resale price potential. If a multiple of, for example, ten times annual imputed rental income were the basis of valuation, then it would be more than possible for a landlord to borrow money to buy a property, and rent that property out at a profit.
This would establish a firm link between the valuation of a house, its rental income, and the maximum loan one could secure to buy it. It would forge a link between an assets valuation and its income earning potential–a link that is so fragile in today’s speculation driven market. It would also establish a class of wealthy agents–landlords–who have vested interest in keeping house prices and loan levels low.
With such reforms, there is at least some prospect that I will not have a successor writing of the follies of the Stock Market and Housing Market Bubbles of 2060. Without them or similarly effective structural alterations, with merely regulations as were imposed after the Great Depression, we will be here again some time in the future.
All that is, of course, for the future. The immediate problem is what to do now, if, as so many more expect than once did, this market crash is the prelude to the world’s second Great Depression.
In Part 2, we hosted journalist Jonathan Cook’s splendid analysis in response. Cook’s main point was that media managers rarely have to take such extreme measures because few journalists “make it to senior positions unless they have already learnt how to toe the line.”
An interesting question arises, then, in the age of the internet: To what extent will these same ultra-sensitive media companies tolerate public criticism? For example, will they allow visitors to their websites to post material that is critical of their journalism, and perhaps even damaging to their interests? Last month, we tested the limits of dissent on the Guardian's Comment Is Free (CiF) website.
On September 20, we posted a message on CiF in response to an article written by Guardian journalist Emma Brockes. Brockes had commented wryly on Tania Head, a 9/11 survivor, “of whom it has been alleged that she was not on the 78th floor of the South Tower on September 11th as she claimed, but may have been in Spain at the time...”
"But well below the level of mental illness a lot of low-level fakery is actively embraced and rewarded." (http://www.guardian.co.uk/
We posted the following comment:
“This is from the same journalist [Brockes] who wrote in October 2005:
"'[Noam] Chomsky uses quotations marks to undermine things he disagrees with and, in print at least, it can come across less as academic than as witheringly teenage; like, Srebrenica was so not a massacre.'”
In our post, we described Chomsky's outrage at the suggestion that he had denied that the Serb killings of Bosnians at Srebrenica in 1995 constituted a massacre. In 2005, Chomsky wrote to us of Brockes's article:
“Even when the words attributed to me have some resemblance to accuracy, I take no responsibility for them, because of the invented contexts in which they appear... her piece de resistance, the claim that I put the word 'massacre' in quotes. Sheer fabrication.”
Chomsky described his treatment by Brockes and the Guardian as "one of the most dishonest and cowardly performances I recall ever having seen in the media.” (See our media alerts: http://www.medialens.org/
We were interested to see how these comments would be received by the Guardian website. In the event, our message remained in place for 48 hours but was then deleted. The site moderator explained in an email:
“The article that Medialens replied to was about emotional fakery and its role in American political culture. The comment that was removed did not address this topic but instead raised a past journalistic error by the author.” (Email to Media Lens, September 23, 2008)
In fact, while Brockes +had+ discussed emotional fakery, focusing on “self dramatisation”, she had also written: “fakery no less shameless goes on every day in the political debate and the way we the audience internalise it. McCain flatly contradicts himself within the space of a single day.”
Political fakery and self-contradiction were exactly the themes of our post, but it was deleted as “off topic” by the Guardian gatekeepers.
Only a handful of comments had been posted in response to Brockes’s article. When we and one or two other people posted messages protesting the deletions, these were also deleted and someone called the Community Moderator shut down the debate, writing: “This discussion will now close, as it has mostly been off topic.” A final message appeared: “Comments are now closed for this entry.”
The website shows five messages deleted alongside just nine posts remaining. Other posts had been removed altogether: http://www.guardian.co.uk/
Self-Deceits Held In Common - Groupthink
We have seen how the propaganda system is filtered by a range of carrot and stick pressures: professional training, selection for obedience, promotions and demotions, sackings, legal pressures, and the rest. The final piece of the jigsaw is much more elusive and mysterious.
In his book Vital Lies, Simple Truths, psychologist Daniel Goleman examined the human capacity for self-deception. According to Goleman, we build our version of reality around key frameworks of understanding, or “schemas”, which we then protect from conflicting facts and ideas. The more important a schema is for our sense of identity and security, the less likely we are to accept evidence contradicting it. Goleman wrote:
“Foremost among these shared, yet unspoken, schemas are those that designate what is worthy of attention, how it is to be attended to - and what we choose to ignore or deny... People in groups also learn together how not to see - how aspects of shared experience can be veiled by self-deceits held in common." (Goleman, Vital Lies, Simple Truths - The Psychology of Self-Deception, Bloomsbury 1997, p.158)
Goleman concluded: "The ease with which we deny and dissemble - and deny and dissemble to ourselves that we have denied or dissembled - is remarkable."
Psychologist Donald Spence noted the sophistication of this process:
“We are tempted to conclude that the avoidance is not random but highly efficient - the person knows just where not to look.” (Ibid, p.107)
This tendency to self-deception appears to be greatly increased when we join as part of a group. Groups create a sense of belonging, a “we-feeling”, which can provide even greater incentives to reject painful truths. As psychologist Irving Janis reports, the 'we-feeling' lends “a sense of belonging to a powerful, protective group that in some vague way opens up new potentials for each of them.” (Ibid, p.186)
Members are thus reluctant to say or do anything that might lessen these feelings of security and empowerment. In this situation, even pointing out the risks surrounding a group decision may seem to represent an unforgivable attack on the group itself. This is 'groupthink'. Individual self-deception, combined with groupthink, helps explain why journalists are able to ignore even the most obvious facts.
In our September 16 Media Alert, we wrote that the Independent had devoted 153 words in the first two weeks of September to the flooding catastrophe in Haiti. By that time, 1,000 people were reported killed with 1 million made homeless out of a population of 9 million. (http://www.medialens.org/
In response, the Independent's former Washington correspondent, now Asia correspondent, Andrew Buncombe, wrote to us:
Dear Davids, Hello and best wishes. Hope all is well. Your latest alert about Haiti is as thought-provoking as ever but I think there are a couple of clear errors you've made that ought to be cleared up. Firstly you say The Independent did not report the hurricanes raging down on the country and that "the Independent has not mentioned Haiti since September 5. But the paper has at least helped explain its own prejudice". That simple point clearly is not true. Guy Adams filed on September 7 a page lead pointing out the chaos facing untold thousands.http://www.
But beyond that you also claim "This indifference has led to an appalling level of non-reporting, not just of the latest floods, but also of the killing of unarmed civilians by United Nations forces (Minustah), the Haitian National Police, and death squads". You say a raid in Cite Soleil in July 2005 was reported only by a few US newspapers but that is not the case. The Independent reported on the raid and revealed evidence collated by Kevin Pina that unarmed civilians were killed.
This was followed up in Feb 2007 by more details of civilians being killed by UN troops.
You're correct in saying that Haiti does not get as much coverage as the US but your claim that the paper has not reported on Haiti, its problems and its ongoing challenges is not true. A simple search on Google for articles about Haiti over the last few years would quickly show that. Best wishes, Andy Buncombe
We replied on September 21:
Many thanks for your email. You're right about Guy Adams' September 7 article. For some reason, that wasn't picked up by our LexisNexis search. We note, though, that the piece devoted 360 words to the disaster in Haiti. At the time we wrote the alert, that figure could have been added to the 153 words mentioning Haiti in the paper that month. That would have totalled 513 words for a 16-day period when perhaps 1000 people died and utter catastrophe befell the island.
"You say a raid in Cite Soleil in July 2005 was reported only by a few US newspapers but that is not the case."
In fact we weren't commenting on UK reporting in that section. We were describing research presented in Dan Beeton's report on +US+ media performance: 'Bad News From Haiti: U.S. Press Misses the Story.' We wrote:
"... only a few US newspapers mentioned the incident. These mostly portrayed the incident as a successful UN attempt to eliminate gang members - reports of civilian deaths were ignored.
"The US press has given similar treatment to atrocities committed by the Haitian National Police."
We thought it was clear that we were referring to Beeton's analysis solely of the US press, but perhaps we could have been clearer.
It's hard not to reflect on the deeper significance of your response. You're right that the Independent devoted 513 rather than 153 words to the devastation of Haiti from September 1-16. But, really, so what? Would you be focusing on this tiny difference in assessing the Independent's performance if you were not working for the paper? Wouldn't a dispassionate, rational observer join with us in criticising the Independent's appalling indifference to the disaster this month rather than arguing that "your claim that the paper has not reported on Haiti, its problems and its ongoing challenges is not true"? We did not argue that the Independent has "not reported on Haiti". We argued that its performance, particularly this month in offering a few hundred words - less than one word per death - was pitiful. We have a great deal of respect for you. But isn't your response on this occasion an example of a kind of corporate 'groupthink'?
David Edwards and David Cromwell
It is painful for a journalist to be aware of both his or her employer's shortcomings and his or her powerlessness to remedy them. As Daniel Goleman has noted, “when one can't do anything to change the situation, the other recourse is to change how one perceives it.” (Goleman, op. cit, p.148)
This, finally, is the key human trait that enables "brainwashing under freedom" - journalists are able to perceive as important only that which allows them to thrive as successful components of the corporate system. The price is high, as Norman Mailer noted:
"There is an odour to any Press Headquarters that is unmistakeable... the unavoidable smell of flesh burning quietly and slowly in the service of a machine." (Mailer, The Time of Our Time, Little Brown, 1998, p.457)
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