Volatility

April 4, 2013

Money, Reprise

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One of the basic lies is that there’s only a “fixed” amount of money available at any given time, and that the measure of this amount is based on how much of a particular metal you have. This metal has usually been gold. According to system lies, if more paper money is issued than is justified by the amount of gold the system holds, the result is inevitably destructive inflation.
 
The lies here are that money is a real thing in itself, that this real thing is naturally based on gold, and that inflation as such is a bad thing. The goldbuggers often add an element of moralizing, that money not based on gold would be immoral and reckless, and that inflation is the consequence of a moral failure.
 
(I’ll add that the banks always overstate the amount of gold which is actually available. If at any time, including today, everyone who has invested in gold were to demand physical redemption, they’d immediately discover that they’d been sold fraudulent paper backed by nothing. So even given the framework of the gold standard, the banksters were precisely the immoral inflationists they accused others of being, along with committing flat out fraud.)
 
The truth is that money is nothing in itself, but in a normal economy would merely reflect the real production of that economy. As one Populist put it, money is just the yardstick measuring the yarn. But the goldbug ideology claims that the yardstick itself is worth as much as the yarn it measures.
 
Money’s only constructive role would be to exist in sufficient form to represent the real economy’s production, and to represent its productive capacity. This latter means that there should always be somewhat more money in circulation than the value of what the real economy is producing at the moment, since this extra money is what greases the skids of new productive investment and innovation. (I’ll add that it also means that to have legitimacy, money must always be circulating. The “velocity of money”, in the jargon, must be high. Money’s legitimate functions are as a medium of exchange and, as Graeber emphasizes, a unit of account. But to hoard money, to use it as a “store of value”, is always illegitimate. Taking money out of active circulation renders it pointless and therefore malevolent, since it’s no longer reflecting real productivity.)
 
It follows from this that if you’re going to have a central government and centralized money, the government should directly issue money in a sufficient amount to lubricate the entire productive capacity of the economy. This is called greenbackerism, named after the “greenbacks” the Lincoln administration issued to finance the Civil War (which of course couldn’t be financed with the existing gold-constrained system). This would bring only mild, constructive inflation. This mild inflation is economically healthy and good for borrowers. Real production, wages, and quality of life would increase in tandem. In fact, it’s increasing productivity which ought to dictate the pace and amount of money issuance. But the goldbug straitjacket, dedicated as it is to the artificial scarcity of money and to a generally deflationary pressure (which favors creditors over debtors), constantly puts an artificial ceiling on productivity, resulting in frequent economic crises and depressions.
 
Goldbuggery is utterly incapable of dealing with the complexities and productive surge of a modern fossil fuel economy. To maintain bankster control of the money but render this control more flexible, the banks dictated the establishment of the Fed in 1913. The Fed is nominally a hybrid government-bank institution, but is 100% under the control of Wall Street. In this way Wall Street continues to issue the money, which the government borrows.
 
(Meanwhile the silver scam has twice been the system’s response, under duress, to an uncomfortable debate and confrontation between gold and greenbacks. Most famously, in 1896 the People’s Party, having heroically forced the greenbacker idea into the public discussion, committed ignoble suicide by selling out to silver and embracing the Democratic Party instead of fighting for itself and the Populist movement which extruded it in the first place. Sound familiar? In 1896, at the LATEST, history proved that the Democratic Party was a tar pit for all human aspiration. Yet to this day people rush in droves to entomb themselves in this pit.)
 
I can’t stress enough that the money belongs to the people. We create 100% of the real productivity and wealth, of which money is a reflection. It’s OUR MONEY. If there’s to be a central government at all, then directly issuing the money is indisputably one of the core functions of this government. The Constitution itself mandates this.
 
But under all systems of bank money, including the system centered on the Fed, the government abdicates this core role, the banks illicitly usurp it, and we the people now have to pay extortion rates to rent OUR MONEY back from the banks who stole it.
 
One of the infinite vilenesses of the liberals is how we the people had a golden opportunity (pardon the pun, and note the profound corruption of the vernacular itself) in 2009 to smash this system once and for all and take back our money. But instead the liberals presided over the aggressive bailout of Wall Street, using trillions in taxpayer money to bail out the robbers who intentionally crashed the economy. This example was at least as awesomely self-destructive as 1896, and far more malevolent. Will America learn a lesson this time?

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December 4, 2010

Let’s Take Back Our Money

 

Our goal should be total relocalized control of money. The optimal amount of centralized (“federal”*) currency and taxes is zero. Even at this early stage we should look to pioneering projects like the Brixton pound (which can be used to pay local taxes). (We also ought to think in terms of economic relocalization in the form of co-ops. This would have many advantages which I’ll discuss in future posts, but the one I want to mention here is the possibility of bringing as much diversification and exchange as possible under the rubric of cooperative share schemes, so that the parasitic central structure would have trouble getting after us even through trying to tax barter.)
 
[* Going forward I'll probably be using political relocalization terms like federation and federated more often, in addition to referring to the Orwellian name "federal government". I hope context will make the difference clear enough, and at any rate I'll try to avoid using the term federal itself except to refer to the kleptocracy, even though that's unfair to the term. And a reminder, I hope the (vast) difference between democrat and Democrat is always clear.]
 
Before I get to my affirmative ideas on money reclamation, let me quickly dispose of some negation, what I’m not really advocating.
 
As I wrote in my MMT posts (parts one and two), I do want the knowledge to spread, that in principle deficit spending is unconstrained and beneficial where the economy is depressed. There Is No Deficit Problem. It’s a fiscal terrorist lie.
 
We know for a fact that no one among the elites who claims to care about the deficit or the debt actually does. The Bailout, the wars, the Pentagon budget, Big Ag subsidies, and corporate welfare in general, all prove this. No one thinks the government spends too much as such. (We know that corporatist spending does destroy the real economy by stealing real wealth from the productive people and further enriching and empowering the criminal parasites.)
 
Therefore, we know that all deficit terrorism, all calls for “fiscal responsibility” and spending cuts, all “austerity”, is nothing but a criminal LIE on the part of politicians, media hacks, and academic prostitutes.
 
But I’m not in fact calling for more deficit spending from the kleptocracy. It’s clear that any new spending this government undertakes will only be for further corporate welfare, police state expansion, and power aggrandizement. Obama’s corporatist “stimulus”, just a bailout by other means, proves that. (The fact that “stimulus” money was used by the TSA for the pork/police state purpose of buying totalitarian scanners from a connected crony corporation, in direct defiance of the will of Congress itself, which explicitly voted against allocating funds for the scanners, should be taken as the definitive characterization of Obama’s “stimulus”, and of what any kleptocracy spending will be like.)
 
I do say that we must resist all new taxes or increased taxes on the non-rich. These mean nothing but robbery. Every cent extracted from us, through for example a VAT, would simply be handed over to the banksters and to the likes of Chertoff-connected scanner contractors. Anyone who advocates a VAT or anything like it is simply advocating corporate robbery.
 
And I do say that we must draw a line against any further cuts to any public interest spending. If anyone sincerely thinks cuts are necessary, there are trillions in worthless bailout, war, and corporate welfare spending to cut. So there’s the only answer we ever need give. Anyone whose “deficit” plan is not 100% corporate welfare cuts and increased taxes on the rich is manifestly a liar and a criminal.
 
The watchword is clear:
 
The deficit and the debt are not a problem while there’s still unemployment. Absolutely refuse to even discuss public spending cuts.
 
No Taxes for the Non-Rich.
 
Total Austerity for the Criminals, Not One Cent More From the People.
 
So there’s the basic negative strategy for how the people should regard the central kleptocracy.
 
Affirmatively, we must take back our money sovereignty. Money is nothing but a unit of account among participants in a real economy, and is based on their productive activities. No one but the participants themselves has a right to create or exchange it. Money creation is a core feature of the people’s sovereignty. If a legitimate government existed, by definition it would directly issue money based upon the productivity of the real economy, toward the goal of the overall distributed health of this economy, and of the productive society at large. No “finance sector” would or could exist at all in a legitimate system.
 
So it follows that for a government to abdicate the money creation power to private banks, in the form of “the Fed”, is to abdicate sovereignty itself, and to become illegitimate. We know the Fed serves no legitimate purpose. The only reason it exists is to give the bankster racket its main rent extraction point, and indeed to enable the bank rackets to exist at all. Abolish the Fed, take back the money creation, and we abolish the banksters. Similarly, shadow banking serves only destructive, larcenous purposes and has no right to exist by any measure. So as political demands I support calling for the abolition of the Fed, repeal of the CFMA, and the reinstatement of one big bucket law.
 
Not that I expect the kleptocracy to actually do any such thing, but the Fed may be the most politic target, and the call to End the Fed may be a good wedge behind which to push the rest of the anti-bank, anti-“austerity”, and affirmative money sovereignty ideas.
 
The basic principle and practice of money distribution including credit must be that the community lends to itself, on collateral of future productivity. One existing blueprint for this, alas never put into practice, was Charles Macune’s sub-treasury idea. As described in Lawrence Goodwyn’s The Populist Moment:
 

Through [Macune's] sub-treasury system, the federal government would underwrite the cooperatives by issuing greenbacks to provide credit for the farmer’s crops, creating the basis of a more flexible national currency in the process; the necessary marketing and purchasing facilities would be achieved through government-owned warehouses, or “sub-treasuries”, and through federal sub-treasury certificates paid to the farmer for his produce – credit which would remove furnishing merchants, commercial banks, and chattel mortgage companies from American agriculture. The sub-treasury “certificates” would be government-issued greenbacks, “full legal tender for all debts, public and private”…

 
In principle, this can be done at the local, state, or federal level. But I think it’s a lost cause to do more than state the possibilities for federal money creation. We should focus more practical work at the state level, where public banking is an idea on the rise.
 

North Dakota broke new ground nearly a century ago, but the true potential of publicly-owned banks remains to be explored. Nearly all of our money today is created by banks when they extend loans. We the people have given away our sovereign money-creating power to private, for-profit lending institutions, which have used it to siphon wealth from the productive economy. If we were to take that power back, we could generate the credit we need to underwrite a whole cornucopia of projects that we don’t even consider because we think we lack the “money.” We have the labor and we have the materials; we just lack the “liquidity” necessary to put them together to create products and services.

 
North Dakota provides proof of principle: State-level public banking works. Banks have been proposed in California, Washington, Michigan, Illinois, Vermont, and elsewhere.
 
This could be a big decentralizing step. The basic idea as it exists is for the state to lend for productive purposes within the state’s real economy. This could easily be ramified into something like a state subtreasury system.
 
From there the possibilities roll out to distant vistas. Perhaps the next step, or better yet a concurrent one, would be for the state to issue its own currency for use within the statewide co-op, certainly for state and local taxes. This could dovetail with a state breaking Wall Street at least within its borders by calling upon the people to Jubilate In Place: stop paying their mortgages, stay in the house, keep paying property taxes. Such an economy could largely sustain itself, and encourage collaborative efforts in other states.
 
This is to envision steps toward decentralization, anti-corporate liberation, relocalization. Of course the road from centralized kleptocracy and corporate tyranny to full relocalization and democracy is a long one.

October 24, 2010

Transparency, Wikileaks, and Odious Secrecy

 

Today the people are the beneficiaries of the latest Wikileaks document delivery, nearly 400,000 pieces of information touching on every aspect of the horrors of the Iraq war of aggression. I’ve previously written about Wikileaks here and here.
 
We ought to be the beneficiaries, if we choose to use this opportunity to learn about the crimes of this system. Unfortunately the previous deliveries didn’t have much immediate effect on the shocking complacency of what may be a terminal slave populace. But it’s too early to know how the beer will taste until it’s fully brewed. These things sometimes fester underground, like the flame that can slowly smoulder its way invisible through miles of subterranean pine needles before it bursts into the air as wildfire.
 
We have no idea what the tipping points will be, and what gradual, organic forces and tensions will have undermined the balance to the point of sudden imbalance.
 
However that may be, sunlight is a pure value. It warms, it invigorates the air, conjures the photosynthetic basis of complex life. It illuminates, it directs, it teaches, it inspires.
 
And while as individual human beings we also need and are entitled to our shade and shadow and our night as well, no one has the right to block out the sun. The information our society creates belongs to us all. It is our property as citizens. It’s our social sunlight, which illumines our collective truths. Top down secrecy is odious. It’s a theft of public property. It’s a characteristic crime of tyranny, committed for the obvious reason of concealing from us the rest of their crimes against us. It’s also done for its own sake, out of the inertia of power and the haughty sense of entitlement of elitism itself. It’s the smothering fog coughed up to obscure our sun. It’s shoving us into the grave dug for us, and the shoveling of sterile dirt upon our heads. Secrecy is death.
 
There’s certainly no “practical” reason for it. America has no existential enemies, except the criminals themselves. And even its lesser terrorist enemies are not a threat worth all we’ve pusillanimously surrendered to them. They’re mostly a threat to the elite empire, not to the citizenry. And it’s the empire’s war which creates the terrorists anyway. The Arab world long ago got sick of jihad. Only US aggression still fans those flames. So the pretext for the secrets is the same crime which generates the opposition whose alleged threat is supposed to justify the secrets. This is the same crime whose details the secrecy seeks to cover up. We’ll find that this applies in every example, not just the war.
 
So secrecy has no practical purpose or moral validity. Secrecy can only be part of legitimate sovereignty to the point it is absolutely necessary on account of some existential threat. Where, as in our case, this threat is nonexistent, the justification is nonexistent. So to the rest of our indictment we can add that a secretive government is an illegitimate government. In our case secrecy is not part of sovereignty, but is only instrumental toward tyranny.
 
Julian Assange of Wikileaks is an eloquent articulator and relentless activist of this ideal.
 

WikiLeaks receives about thirty submissions a day, and typically posts the ones it deems credible in their raw, unedited state, with commentary alongside. Assange told me, “I want to set up a new standard: ‘scientific journalism.’ If you publish a paper on DNA, you are required, by all the good biological journals, to submit the data that has informed your research—the idea being that people will replicate it, check it, verify it. So this is something that needs to be done for journalism as well. There is an immediate power imbalance, in that readers are unable to verify what they are being told, and that leads to abuse.” Because Assange publishes his source material, he believes that WikiLeaks is free to offer its analysis, no matter how speculative…..

Assange does not believe that the military acts in good faith with the media. He said to me, “What right does this institution have to know the story before the public?”…….

In some respects, Assange appeared to be most annoyed by the journalistic process itself—“a craven sucking up to official sources to imbue the eventual story with some kind of official basis,” as he once put it. WikiLeaks has long maintained a complicated relationship with conventional journalism. When, in 2008, the site was sued after publishing confidential documents from a Swiss bank, the Los Angeles Times, the Associated Press, and ten other news organizations filed amicus briefs in support. (The bank later withdrew its suit.) But, in the Bunker one evening, Gonggrijp told me, “We are not the press.” He considers WikiLeaks an advocacy group for sources; within the framework of the Web site, he said, “the source is no longer dependent on finding a journalist who may or may not do something good with his document.”

Assange, despite his claims to scientific journalism, emphasized to me that his mission is to expose injustice, not to provide an even-handed record of events. In an invitation to potential collaborators in 2006, he wrote, “Our primary targets are those highly oppressive regimes in China, Russia and Central Eurasia, but we also expect to be of assistance to those in the West who wish to reveal illegal or immoral behavior in their own governments and corporations.” He has argued that a “social movement” to expose secrets could “bring down many administrations that rely on concealing reality—including the US administration.”

 
And here:
 

This information has reform potential. And the information which is concealed or suppressed is concealed or suppressed because the people who know it best understand that it has the ability to reform. So they engage in work to prevent that reform . . . .

There are reasons I do it that have to do with wanting to reform civilization, and selectively targeting information will do that — understanding that quality information is what every decision is based on, and all the decisions taken together is what “civilization” is, so if you want to improve civilization, you have to remove some of the basic constraints, which is the quality of information that civilization has at its disposal to make decisions. Of course, there’s a personal psychology to it, that I enjoy crushing bastards, I like a good challenge, so do a lot of the other people involved in WikiLeaks. We like the challenge.

 
He writes in his manifesto, “Conspiracy as Governance”,
 

He had come to understand the defining human struggle not as left versus right, or faith versus reason, but as individual versus institution. As a student of Kafka, Koestler, and Solzhenitsyn, he believed that truth, creativity, love, and compassion are corrupted by institutional hierarchies, and by “patronage networks”—one of his favorite expressions—that contort the human spirit. He sketched out a manifesto of sorts, titled “Conspiracy as Governance,” which sought to apply graph theory to politics. Assange wrote that illegitimate governance was by definition conspiratorial—the product of functionaries in “collaborative secrecy, working to the detriment of a population.” He argued that, when a regime’s lines of internal communication are disrupted, the information flow among conspirators must dwindle, and that, as the flow approaches zero, the conspiracy dissolves. Leaks were an instrument of information warfare.

 
The organization is a model of rhizomatic resilience and redundancy:
 

Assange is an international trafficker, of sorts. He and his colleagues collect documents and imagery that governments and other institutions regard as confidential and publish them on a Web site called WikiLeaks.org. Since it went online, three and a half years ago, the site has published an extensive catalogue of secret material, ranging from the Standard Operating Procedures at Camp Delta, in Guantánamo Bay, and the “Climategate” e-mails from the University of East Anglia, in England, to the contents of Sarah Palin’s private Yahoo account. The catalogue is especially remarkable because WikiLeaks is not quite an organization; it is better described as a media insurgency. It has no paid staff, no copiers, no desks, no office. Assange does not even have a home. He travels from country to country, staying with supporters, or friends of friends—as he once put it to me, “I’m living in airports these days.” He is the operation’s prime mover, and it is fair to say that WikiLeaks exists wherever he does. At the same time, hundreds of volunteers from around the world help maintain the Web site’s complicated infrastructure; many participate in small ways, and between three and five people dedicate themselves to it full time. Key members are known only by initials—M, for instance—even deep within WikiLeaks, where communications are conducted by encrypted online chat services. The secretiveness stems from the belief that a populist intelligence operation with virtually no resources, designed to publicize information that powerful institutions do not want public, will have serious adversaries……

Assange also wanted to insure that, once the video was posted online, it would be impossible to remove. He told me that WikiLeaks maintains its content on more than twenty servers around the world and on hundreds of domain names. (Expenses are paid by donations, and a few independent well-wishers also run “mirror sites” in support.) Assange calls the site “an uncensorable system for untraceable mass document leaking and public analysis,” and a government or company that wanted to remove content from WikiLeaks would have to practically dismantle the Internet itself……..

As it now functions, the Web site is primarily hosted on a Swedish Internet service provider called PRQ.se, which was created to withstand both legal pressure and cyber attacks, and which fiercely preserves the anonymity of its clients. Submissions are routed first through PRQ, then to a WikiLeaks server in Belgium, and then on to “another country that has some beneficial laws,” Assange told me, where they are removed at “end-point machines” and stored elsewhere. These machines are maintained by exceptionally secretive engineers, the high priesthood of WikiLeaks. One of them, who would speak only by encrypted chat, told me that Assange and the other public members of WikiLeaks “do not have access to certain parts of the system as a measure to protect them and us.” The entire pipeline, along with the submissions moving through it, is encrypted, and the traffic is kept anonymous by means of a modified version of the Tor network, which sends Internet traffic through “virtual tunnels” that are extremely private. Moreover, at any given time WikiLeaks computers are feeding hundreds of thousands of fake submissions through these tunnels, obscuring the real documents. Assange told me that there are still vulnerabilities, but “this is vastly more secure than any banking network.”

 
This is a new model for the kind of sunlight activism we need. Imagine a whole media system dedicated to such recovery of the people’s stolen information. (I’m of course referring to collective public information, regarding politics, the economy, business, foreign policy. Just as with property in general, the personally used item or information belongs to the individual; the collective infrastructure belongs to those who build it.) We can know our need for so many suns as we survey the wasteland of odious secrecy. I’ll just select some of the examples from some of the fronts.
 
The Banks:
 
So many secrets of the Bailout. The Fed’s still stonewalling the fight for sunlight which has outlived its originator, Bloomberg reporter Mark Pittman. Will we ever know how much taxpayer money was embezzled by the Fed’s “facilities” and arcane Treasury programs? How much was handed to the banks practically for free to let them gamble against our economy, prosperity, and society?
 
No sooner was the sham finance bill passed than it came to light (heh) that the bill contained a provision allowing the SEC to keep practically all of its activities veiled from the FOIA. Although Congress went through the charade of “fixing” this “oversight”, even the fix still adjures the SEC to protect the secrets of hedge funds.
 
So there’s a good example of what the sham finance “reform” bill was really about. Since they were worried that SEC activities which were subject to FOIA requests could become a conduit for throwing sunlight on the shadow banking system, they used the bill as a mechanism for indirectly gutting the FOIA where it comes to the finance sector. We should look for such anti-FOIA gambits in every other kind of bill.
 
Mortgages:
 
Among its many vectors of criminality, the MERS system is meant to cause all mortgage information to disappear down a black hole. But the land belongs to the people, and the banks have no right to secrets over it. Why should we ever agree that some secret system vouches for the ownership of land? It’s not bad enough we have private property in land on the part of unproductive bankster “owners”, but this system of ownership is also being kept secret from we the people, from whom this potentially productive land was stolen in the first place?
 
The truth is that the banks themselves have long since lost track of this ownership, and abrogated the chain of title beyond redemption. Part of the point of MERS was to carry that out, and now part of its point is to conceal it.
 
Even a neoliberal propertarian like Hernando de Soto deplores this assault on transparency, considering it subversive of property rights. Among the criteria he lists for stability of the property regime are that all assets and transactions be listed on publicly accessible registries, that all finance deals must stay closely tied to the real value of the underlying asset (so it follows that this value must be transparent), and that government must forbid opacity and obfuscation in the language of market transactions.
 
(I mention de Soto to demonstrate that a leading neoliberal concurs in the assessment that the MERS system, including its secretiveness, has called landed property itself into quesion.)
 
The Health “Insurance” Rackets:
 
They’re notorious for total darkness where it comes to pricing. (Doctors and hospitals are guilty of that too.) The customer has practically no basis for cost comparison or any kind of understanding of why he’s being quoted the rate he’s experiencing. The racket bailout bill alleges it will change that, but we’re already seeing how well the bill’s provisions are being enforced.
 
Internet Access and Participation:
 
The telecoms and cable companies have so far mostly refrained from transmission discrimination because they fear political fallout and a consumer backlash. But the formal enshrinement of net neutrality has become all the more critical as the technology now exists to let the telecoms discriminate in a secretive manner.
 
(The FCC’s proposed net neutrality principles, even if enshrined, may actually be pretty weak against such secret discrimination. But one fight at a time. Let’s get a basic net neutrality enshrinement, and then we’ll improve it.)
 
Food:
 
The FDA, a corporate tool, has done all it can to keep secrets from the American people about the safety and costs of their own food. It seeks to ban GMO-free labeling. Although it hasn’t (yet) banned bovine growth hormone labeling, it allows and is encouraging states to do so. Recently a federal court overturned an Ohio state ban where the Agriculture Department sought to intervene on behalf of the state.
 
The Obama administration also continues the Bush tradition of refusing to update public environmental databases even where required by law. In this case the USDA has refused to update its pesticide use database since 2007.
 
The Gulf Oil Eruption:
 
Perhaps the most chilling secrecy event, imposed not by stealth and bureaucracy but by brute force, was Obama’s literal handing over of (anti-)sovereign jurisdiction over much of the US part of the Gulf of Mexico to BP. Federal employees openly said they could only do or allow what BP authorized, and federal agents became de facto privatized deputiesWe still know almost nothing about what’s really happening in the Gulf, and while we’ll eventually know the full effects if only by experience, the system criminals will do all they can to keep our information from us as long as they can, to our economic and health detriment.
 
(With all of these, we should recall the sick joke out of Chicago, how markets were going to be “free” and “efficient” and “rational” since all “participants” would have all the necessary information. But as I described in my deconstruction of the ideological and “constitutional” rationale for the Stamp mandate, we were really never considered participants in this utopian market, but passive subjects, clay to be worked, a resource to be mined, victims. That’s the full Orwellian truth of neoclassical economics. So there also lies their explanation for how Secrecy = Transparency. Their theory was only ever meant to apply to the elites themselves.)
 
It’s easy to see how many powerful interests are ranged against the people’s sunlight. So it’s also no surprise that Assange and Wikileaks have been demonized by the government, the MSM, and conservative and liberal hacks alike. (Including quite a few of the “real progressives” who oppose Obama, but who nevertheless as liberals remain elitists and still viscerally abhor the ideal that the elites are entitled to no secrets at all.)
 
The fact that such an array of criminals has assembled against Wikileaks is a metric of its effectiveness, and even more, of its perceived threat, and a badge of honor. We can expect every kind of tactic to be deployed against Assange and the rest of the team, but the aspirations of the organization and the task may just withstand the onslaught. It’ll help if more people and organizations follow on this path.
 
We who reject the existence of the “elites” also reject their nonexistent right to keep secrets. Every leak against the will of the elites is a restitution of stolen property. Wikileaks is in fact an agent of law and order, and its people are part of the human citizenry.

October 5, 2010

Bailout Lies – Corporate Paper Version

Filed under: Corporatism — Tags: — Russ @ 2:52 am

 

The NYT had a piece yesterday about another crime of the Bailout. Since 2008 the government has been stealing taxpayer money to prop up the corporate paper market. The lie was that without this bailout this essential market would collapse, you won’t have an economy, smoking crater, dogs and cats living together, mass hysteria, etc., etc.
 
Instead, as any honest observer could have predicted, the program has simply been used as a looting binge by big corporations. The NYT piece has economists calling this “rational”. It quotes a more honest corporate flack calling it “opportunistic borrowing”. Another commenter says corporations will use it to cut jobs. It is indeed a windfall. It proves that this aspect of the Bailout, like every other, was never needed or intended to help the American people, but only to enable corporate looting. Like with everything else this government does, the intent is to loot the people.
 
And as usual the NYT’s intent is to whitewash it. The piece is actually a good example of how we can get the truth out of it as long as we ignore the propaganda. Here’s a good summary of the truth slathered with lies:
 

As many households and small businesses are being turned away by bank loan officers, large corporations are borrowing vast sums of money for next to nothing — simply because they can.

Companies like Microsoft are raising billions of dollars by issuing bonds at ultra-low interest rates, but few of them are actually spending the money on new factories, equipment or jobs. Instead, they are stockpiling the cash until the economy improves.

The development presents something of a chicken-and-egg situation: Corporations keep saving, waiting for the economy to perk up — but the economy is unlikely to perk up if corporations keep saving.

This situation underscores the limits of Washington policy makers’ power to stimulate the economy. The Federal Reserve has held official interest rates near zero for almost two years, which allows corporations to sell bonds with only slightly higher returns — even below 1 percent. But most companies are not doing what the easy monetary policy was intended to get them to do: invest and create jobs.

The Fed’s low rates have in fact hurt many Americans, especially retirees whose incomes from savings have fallen substantially. Big companies like Johnson & Johnson, PepsiCo and I.B.M. seem to have been among the major beneficiaries……

That is part of what has become the great question of this long, jobless recovery: When will corporate America start to feel confident enough to put its cash to work, building factories and putting some of the nation’s 14.9 million unemployed to work?

Businesses are holding on to their protective cash cushions, worried perhaps that the economy could slip back into recession or at least grow too lethargically to make an investment worthwhile.

The nation’s corporations will be strong, well capitalized and ready to act aggressively when executives finally decide it is time to expand their businesses……

In addition, many of the new machines and computers may be replacing older machines companies put off retiring in the recession. Businesses are playing catch-up, and little expansion is occurring.

“They may actually be using this new investment to be more efficient and cut jobs,” said Michael Gapen, an economist at Barclays Capital. “The mix of signals right now is still telling corporations to sit tight and wait.”

 
It’s a lie. On its face it’s obvious that they’re doing exactly what the government intended, because if the government didn’t intend this, why are they allowing it?
 
Why isn’t Steve Ballmer under arrest? If the government props up cheap corporate paper on the premise that the money will be productively invested, if that’s the intent, then anyone borrowing money under the program is at least implicitly affirming that he’ll use it for immediate investment.
 
If he instead hoards it, that’s a criminal fraud. So why aren’t Steve Ballmer and the rest on trial? Why is taxpayer money still being handed out under these circumstances?
 
Simple: No part of the Bailout, including the corporate paper backstop, ever had any purpose but robbery. That’s the one and only intent of this criminal government and of both criminal Washington parties.

August 10, 2010

Bailout War: All QE on the Western Front

Filed under: Bailouts Only Propped Up Zombies — Tags: , — Russ @ 2:54 pm

 

So after a brief stint on the wagon the Fed’s off on the binge again. The FOMC announced Tuesday that they’re going to recycle $250 billion worth of MBS cash flow into a heroic new push on that darn string.
 
I don’t think many people doubted this day would come sooner rather than later, since the Bailout is the core policy of the government and the core feature of what is now a command economy. Since the two imperatives of policy are to prop up the zombie banks’ balance sheets and try to reflate asset bubbles (or in the case of stocks keep the rally bubble reflated), and since the “private sector” is unable and unwilling to do this on its own, the only mechanisms available are the Fed’s festering balance sheet and the laundering of MBS through the GSEs.
 
(On that GSE front, no new word on last weeks rumors of a general rate reduction, though we’re waiting on the next GSE policy huddle on the 17th for definite news on what’s happening if anything. Meanwhile yesterday Freddie Mac outdid its sister Fannie in their latest disgrace, announcing a $4.7 billion loss for the quarter and opening up its mooching sack for another $1.8 billion mugging of the taxpayer. This comes a week after Fannie’s $1.2 billion loss and $1.5 billion suck.
 
These losses are all incurred on MBS they bought from the banks at intentionally bloated prices. That’s yet more Bailout robbery.)
 
So the Fed will dole out another quarter trillion in free money to the banksters, who will lend it back to the government at a higher rate. I still can’t get over that scam. I feel like if I read it in a satire I’d think it skirts the bounds of heavy-handedness. Yet this really happened on our Earth…
 
They say this signifies that most within the Fed have finally accepted (at least privately and in action, if not in public rhetoric) that inflation is about as much of a threat as the Hottentots as America sinks into the Second Great Depression and deflation tugs ever more insistently at the bubbles and the balance sheets.
 
I used to joke that the creationists would reject gravity as well if there was a monetary or religious angle. Well, the inflationistas have been propagating a figurative denial of gravity for a long time now with these bubbles, and since the crash they’ve striven with great mysticism to regain the faith. These hippies didn’t join hands to chant and levitate the Pentagon, but the towers and mints of Wall Street and Washington.
 
What’s really going on here is a struggle for control. The system wants a basic, consistent, low inflation rate for assets and the economy in general. (Spikes and volatility for necessities like food are OK.) So staying that course constitutes maintaining control, while capitulating to deflation, or sprawling into hyperinflation, are the forms of losing control.
 
Reality wants to deflate, and these bubbles will all go flat. Asset prices are still bloated way beyond any physically anchored economic value. But at the same time there’s far too much funny money in circulation even at this level of oil production, let alone once descent sets in over the next five years. And now the Fed will bloat even further? While there’s little possibility of conventional inflation, there’s an excellent chance of a bout of hyperinflation before the final deflation sets in.
 
(That deflation is where we’re inevitably headed in the end is a key reason we need the bottom-up debt jubilee.)
 
At least at first it won’t be these criminals, this vile combination of robber, psychopath, and concentration camp doctor, who feel the pain. We the liquidated will get pummeled and ravaged. That’s what the elites of finance and government impose upon us. What happens after that, though, is 100% up to us.

June 26, 2010

Bailout World, 2nd Stage of Kleptocracy (New Feudal War 2 of 4)

 

The fictive “growth” which was really nothing but the result of asset bubbles peaked and started to be rolled back in 2007. The rout temporarily climaxed in 2008, as trillions in phony wealth disappeared when the hologram machine went dead. This laid bare the true extremism of the “Great Moderation”, really a crazed raging of booms and busts, bubbles and crashes, all this throbbing over the backbeat of an inexorable debt curve trending terrifyingly, impossibly upward since the 1980s. It was impossible to sustain, and nobody meant for it to be sustained. It was just supposed to carry the middle class along while this doomed cohort’s political and economic strongholds were destroyed. The steady degradation of wages and job security, the assault on the unions, the co-opting of pension systems into stock market thralldom, Walmartization and offshoring, and the “ownership society” propaganda offensive including the systematic demonization of all values other than Social Darwinism; all this combined to reduce the people to a mass of totally dependent and antisocial atoms. It was a comprehensive top-down strategy.
 
This rendered them incapable of resisting the kleptocracy’s next step. Since the ponzi debt bubble was unsustainable both in itself as well as on account of the physical limits of Peak Oil, the bank rackets and their prostitute government knew the system must crash. I don’t know if they intentionally crashed it at that time it did, but it doesn’t matter. They knew global financialization was (and is) nothing but a monumental ponzi scheme; they knew it would crash, just as they know it will crash again. So all their actions were and are full of intent with regard to the coming, premeditated crash. They intentionally crashed the economy and they’ll intentionally crash it again.
 
What came next was the ultimate disaster capitalist operation: the Bailout.
 
It started out gradually with the Fed “facilities” and the creeping oozes of “forbearance” and QE. It had to be stepped up with high-profile bailouts like those of Fannie and Freddie and AIG. Then with considerable fanfare and a propaganda campaign, the TARP was launched. Since then the plan has been to equate the fraudulent TARP with the Bailout itself, although the Bailout has since moved on to other avenues. The system tries to pretend the TARP is just about paid back, at minimal taxpayer cost (though even this is a lie). Meanwhile the main conduits of looting the taxpayer have been free money from the Fed (much of it directly lent back to the government at a higher rate); laundering Bailout loot through the MBS purchases and guarantees of Fannie and Freddie (whose official exposure limits were raised literally to infinity at the end of 2009, rendering quaint TARP inspector Barofsky’s previous exposure estimate of $23.7 trillion), the Fed, and Treasury; and the Too Big to Fail premium.
 
What has the Bailout cost so far? Including amount of at-risk exposure, TARP inspector Neil Barofsky put it at $23.7 trillion, while Nomi Prins estimated $14.4 trillion. These were both prior to the exposure limits on the GSEs being raised to infinity at the end of 2009. A more recent tally is that of SourceWatch (updated monthly). They didn’t know how to tally the new infinity so seem to have assimilated it to the status quo ante, coming up with a number close to that of Prins, $13.89 trillion.
 
Those are nominal numbere but don’t represent the real value to the banks. How do we measure how much each dollar stolen is really worth? I’m not sure. One metric that occurred to me is to take the interest Goldman Sachs had to pay Warren Buffett in fall 2008, add to that the Too Big to Fail premium, and prorate all the Bailout trillions according to it. Another possible measure might be how much MBS should really cost according to the market, “the terms private uninsured investors would require” as Yves Smith put it. Or perhaps a combination of metrics, depending on which is most accurate for a particular part of the Bailout.
 
And today? The government’s political ability to pass TARPs is probably exhausted, while Obama failed in last autumn’s attempt to get dictator power for the Treasury secretary to enact them on his own. But no matter. Today the main Bailout conveyances are free money from the Fed (QE), and MBS purchases at inflated prices by the Fed and Fannie and Freddie. These are intended to both directly convey loot to the banks and to prop up the prices of all the worthless toxic garbage on their truly bankrupt balance sheets. This in turn enables the insolvent banks to engage in accounting fraud (allowed both directly, as when Congress bullies the FASB or when the “supreme” court soon overturns Sarbanes-Oxley, and also indirectly under the rubric of “forbearance”, which is a fancy way of saying the government turns its head while the bank perpetrate fraud) which enables management to massively embezzle on a personal level in the form of “bonuses”.
 
The other day, after all the fanfare about the (also insolvent) Fed ending its QE and purchase programs, “Heckuva job Bennie” Bernanke announced that he might expand the Fed’s balance sheet (currently at $2 trillion, an already fearful number) to $5 trillion! That’s the level of support he’s thinking would be necessary to sustain the Bailout. There followed articles wondering if he’s suffering from nervous exhaustion. It wouldn’t be surprising if Bennie’s nerves are cracking. He’s got one huge zombie to keep propped up and ambulating. 
 
The Bailout is now the permanent socioeconomic paradigm in the US and Europe. The new regime is Bailout America. Globalization was the final frontier for one last massive colonial plunder expedition at the summit of the oil age. Now there’s no longer a new plunder frontier over the horizon. All sectors are in decay, and we’re at Peak Oil. There won’t and can’t be any more shifting costs to the outside. Now the gangsters can only terminally cannibalize the inside. Western domestic corporatism was the first level of this assault, and the Bailout is the accelerated and intensified version.
 
Proximately, the bailouts were supposed to solve an alleged “liquidity crisis” and “get the banks lending again”, which would trickle down to “Main Street”. It was the prospect of this failing to happen which was alleged to make these bank rackets “too big to fail.”
 
But every word of it was a lie. There was never a liquidity crisis; the banks are just bankrupt. They cannot lend and never intended to lend, and there’s no one to lend to anyway. The massive amounts of taxpayer money being conveyed to them was simply to be hoarded, gambled, and used for monopoly consolidation (M&As).
 
This is the new order, for as long as the system can be zombified this way. The government simply hands the banks free money through various conveyances. It allows systemic accounting fraud to represent the rackets’ balance sheets as solvent. It even actively abets the fraud with phony “stress tests”. The banks do whatever they want with the handouts. The government even covers some of their gambling “losses” via loan guarantees and other scams. It lets them fraudulently report the returns as “profit”. This in turn allows the banksters themselves to completely loot their own banks on a personal level, in the form of “bonuses”. It doesn’t matter because there’s more government-stolen public money being conveyed in tomorrow.
 
This is it. Obama, Treasury, the Fed, Congress, and their European counterparts, are fully committed to Bailout America and Bailout Europe. They have no ideas left and no alternative policy which could either keep the financialization tower propped up, or which would be ideologically/kleptocratically acceptable now that they’re fully committed to gangster psychopathy.
 
This is not and was never intended to be some temporary crisis measure. Just as the Global War on Terror is intended to be the permanent basis of foreign policy and domestic intimidation, so the Bailout is meant to be the permanent basis of US government and economic policy as such. The two combine as the twin vehicles of radical corporatism.
 
(The so-called domestic economy has become completely intermingled with the Pentagon budget by now. Any large “civilian” corporation you can think of, e.g. in the food or entertainment sectors, is likely to have fat Pentagon contracts.
 
So the Permanent War itself is a key part of the general corporatist Bailout.)
 
Wall Street spins from the center of a web of corporate welfare. The government exists only as the threads, along which all the people’s wealth and freedom slide away. Every other racket ramifies out along the lines directed by the finance sector. It’s a command economy which maintains private rent extractions. That’s the economic definition of fascism. So this is in fact “Bailout America” in the same way you might call another fascist regime “fascist Italy” or “Nazi Germany.”
 
Meanwhile unemployment goes up with grim implications of permanency, while public spending and programs everywhere are decimated. For good measure we’re insulted and laughed at with taunts like “green shoots” and “recovery”. The truly demented can even spew the atrocious oxymoron, “jobless recovery.”
 
So we see how every cent of the Bailout was not just a total loss to us, but how that money is being used as a weapon against us, as the feudalists further entrench their position. The big banks have never added social value, only destroyed. From the social point of view, they were not only never Too Big to Fail, they were always too predatory and destructive to be allowed to exist.
 
The worst delusion of all is that anything could possibly have been better for America than to let the whole parasite sector go down in 2008 while the government (if we the people actually had a government) did whatever was necessary to bolster Main Street through whatever level of hardship we had to endure.
 
That pain would’ve been far less than that to which we’ve now been doomed since the US was transformed into Bailout America. Now the only possible outcome remains the collapse of the sector, which is just as terminally insolvent as ever. But this inevitable eventual collapse is now bound to be far more painful, far more total, than ever would have been the case if the bubble had been allowed to burst and reality to resume in 2008.
 
But in the meantime we’ve added the horrors of whatever level of robbery and tyranny the kleptocracy will be able to resort to once the Bailout itself becomes insufficient to keep everything propped up. As the Bailout becomes fiscally and politically impossible to sustain, the system moves on to the next step, direct liquidation of pensions, public amenities, all public property, civil society itself. This is Austerity. (Again, never for the rich and powerful themselves; just for humanity.) I’ll deal with that in Part 3.
 
This is the infinite crime of all the Bailout leaders, and it remains the insanity and depravity of anyone who still thinks the Bailout was/is “necessary” or “helpful.”
 
This is the Bailout: A fully rationalized command economy dedicated to maximizing loot extraction from the country by the big banks, under conditions of Peak Oil and debt’s attempt to deflate.
 
It’s a disaster capitalist adaptation of prior “normal” financialization, which was in turn the form of neoliberal kleptocracy, which was the system’s adaptation to the terminal stagnation of capitalism commencing in the late 1960s.
.
.
 
 

June 18, 2010

Democracy Sausage

 

“If enacted, Brown-Kaufman would have broken up the six biggest banks in America,” a senior Treasury official said. “If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.”

 
I’d love for this quote to be the epitaph for this administration.
 
This open gloat that “We could have fought for the people and chose to fight against them.” It should be applied not just to the Kaufmann-Brown Break-Up-the-Banks amendment, but to everything (not an exhaustive list, but just some highlights) – single-payer instead of handing over the American people as a cash cow to the insurance gangsters, ending the war instead of escalating it, restoring civil liberties instead of further assaulting them, restoring the rule of law instead of further destroying it, breaking our captivity to oil and the oil rackets instead of tightening the bonds, ending corporate welfare instead of opening the sluice gates even wider, smashing all rackets instead of further entrenching them, eradicating the finance parasite instead of defending and further empowering it, thereby guaranteeing that the final crash and Depression will be as destructive and painful as possible.
 

“If enacted, Brown-Kaufman would have broken up the six biggest banks in America,” a senior Treasury official said. “If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.”

 
That brings us to the sham finance sausage squeezing through the corporate congressional processors. Sinclair’s descriptions in The Jungle are apt but as metaphors still fall short of really capturing the evil and gutter repugnance of this magnitude of crime in action, the utter subhuman smallness of the criminals involved, the blackness of the primate heart.
 
They still keep trying to pretend. Today we learn that the conferencers really want an expanded Fed audit. But we already know that the Senate rejects this. That’s why Sanders had to pre-gut his amendment to even get a vote. (And what a vote! 96-0. It’s not just Soviet elections and Nazi plebiscites which can do that.) So this is just Frank putting on a show for the loser “progressives” in the House, so they can feel validated before they cave in and vote for a gutted audit or none at all.
 
The record is almost a clean sweep – this sausage-maker expelled all actual meat and squeezed together only the most filth-ridden fragments of snout, fatback, entrails, feces……
 
1. The critical thing is of course breaking up the Too Big To Fail banks. This was rejected completely in the form of the Kaufmann-Brown amendment. As we see with his self-written epitaph, the Obama administration is bragging about having killed it. Here Obama is eager to take personal responsibility.
 
Right there, it’s already game over. So long as the rackets exist, they will function as an extortion racket and general arsonist, raised to the level of tyranny. This is Bailout America. The 96-0 vote can stand in as a symbolic 30s style plebiscite, to give us that old European flavor.
 
2. Second most important would be derivatives reform, and here true reform would be nothing less than demolition of the casino. Only legitimate hedging by legitimate businesses should have legal status, while all mere betting should be relegated to the back alleys where it belongs. Outlaw all speculation. Simple bucket laws, and non-enforcement of sham “contracts” which are nothing but infinitely more destructive versions of sports betting, are what we need.
 
The bill does nothing remotely like this. The House version pretended, not to outlaw speculation but merely to place it on public exchanges. But even this meager measure was gutting by exempting, not just legitimate hedging, but “currency hedging”, which can pretty much be defined to include anything and everything. Which was the intent.
 
The Senate version, pushed by Blanche Lincoln under the duress of her primary campaign, is also loaded with loopholes and Trojan horses. But it does contain one strong piece – banks who want to play in the casino would have to give up their Fed window access. In other words, you can be a gambler or a welfare queen, but not both.
 
That this is the only piece in the entire mess with real bite is evidenced by the report that the banks are willing to concede the sham version of the “Volcker Rule” in order to focus their energies on defeating this gambling restriction. How can the congress possibly contemplate not letting the banksters keep playing casino games with free public money? That would strike at the core of their business model. Capitalism, right?
 
Lincoln herself, having won the primary but facing almost-certain defeat in November, looks ready to abandon her own amendment. I’d say there’s about zero chance anything better than the sham House version will be in the final bill, maybe with some of the bad parts of the Senate version added.
 
3. We already discussed the Fed audit. This looks like where they’ll play their political pretense game.
 
4. “Resolution authority” is a fraud in principle, since we already know from the 2008 experience that in the crisis nothing will be “resolved”, everyone will be bailed out, no matter what law is in place. The PCA law already confers resolution authority and requires that it be exercised. Why would anyone think a new law would be any different.
 
(Still believing or not believing in resolution authority is a good metric for one’s ability to learn from experience. As is everything involving racket “reform”.)
 
Both bills pretended to set up this sham authority. The House version pretended it would collect funds from the banks ahead of time to facilitate the resolutions. In this space I called it a sham “Financial Superfund”. Since the tax would be levied on banks far smaller than the TBTFs, it was even in principle another monopoly-entrenching measure, another socializing of risk and cost. And we know that in practice even if they did pre-collect such a fund and even if they did use it to take TBTFs into receivership, it wouldn’t be remotely sufficient, and the taxpayers would end up making up the massive difference. Just like with the original Superfund.
 
Meanwhile the Senate version was more honest and dropped the superfund idea, implicitly acknowledging that the taxpayers would be on the hook for the resolutions.
 
Obama, of course, prefers the Senate version.
 
And we know that in practice no collapsing TBTF will be “resolved”. To the extent it’s within the system’s power, it will always be bailed out as is. (Even the administration admits this.)
 
5. The vaunted CFPA has been a joke from the start. Obama pretended to want strong vanilla requirements, even said so in a white paper.
 
But remember:
 

“If enacted, [a real CFPA] would have [imposed real restrictions on] the six biggest banks in America,” a senior Treasury official said. “If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.”

 
Obama didn’t fight for a strong, independent CFPA; by his own testimony that means he didn’t want a strong, independent CFPA.
 
Now he says that out of competing sham versions, he prefers the Senate version which includes car dealers but would be housed in the Fed, which guarantees it will do nothing at all no matter what its theoretical scope, over the House version which is loaded with more loopholes (the Senate version has many of those too) and is more overtly pre-emptive of stronger state laws, but would stand alone as a regulator, outside the Fed.
 
We already know Dodd would prefer to get rid of it completely, while Frank is presumably content with his kabuki version, playing to that House crowd again. So I expect something like the Senate version to be in the final bill.
 
6. There’s lots of other nonsense. The Franken amendment which would’ve tried to fix the absurd situation of the credit-rated hiring their own credit raters (even Dodd admits it’s ridiculous: “just saying it alone, it screams out for a resolution”) was thrown out. None of the Senate’s aspiring Glass-Steagal type amendments even made it into the Senate version, let alone having a chance in the conference.
 
I already mentioned how Wall Street is said to have decided to let Obama have his little volcker rule, which is also laden with enough loopholes that nobody has to worry about it cramping the banks’ style in any real way. (In the Senate version, it wouldn’t even be enacted until after a period of “study”, i.e. post-legislative lobbying.)
 
 
The NYT has been peddling hype about how hard the poor lobbyists are having it. All that means at most is that having gotten 95% of what they wanted, that last 5% gets more difficult. Diminishing returns, E=mc2 and all. After all, the politicians have to pretend, and then there’s randomness such that something small might squeeze through the nets. On the whole, I’d say the lobbyists can congratulate themselves on a (mostly easy) job well done, and it’s a testament to their professionalism that they’re still fighting hard for that last 5% and whining about it to the MSM. And how compassionate of the papers to report so sensitively on that whining.
 
But nobody has to worry. If it goes through, the volcker rule isn’t going to hurt anybody. After all, it’s Obama’s baby.
 
And what do we know about Obama, where it comes to anything which could possibly constrain the rackets and empower democracy?
 

“If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.”

May 20, 2010

Trading, Drilling, Technology, and Kleptocracy

 

The other day Barry Ritholz had a brief post expressing his skepticism about some Tradebot self-hype:
 
The founder of Tradebot, in Kansas City, Mo., told students in 2008 that his firm typically held stocks for 11 seconds. Tradebot, one of the biggest high-frequency traders around, had not had a losing day in four years, he said.
 
True, exaggerated, or bullshit, any way it’s another example of the unproductive, parasitic nature of these outfits, and of how they operate in a totally rigged market which is the opposite of a “free” market.
 
Using the word “risk” as part of the English language, how is it possible to profit every day and yet still be running “risks”? It’s statistically impossible. If you win every time, by definition you’re not running risks. By definition you’re playing a game rigged in your favor.
 
How is HFT not insider trading and market manipulation? It is obviously those things. If the system is rigged so that it’s possible for computers to do this, and this method then becomes the monopoly of those who can afford the hardware and the quant “talent” to perform these manipulations, by any objective measure it’s a rigged insider-trading market. The fact that the “law” has failed to adequately criminalize it doesn’t change its criminality. (And meanwhile the neoclassical ideologues will still prate on about the “information” of the “free market”.)
 
What value does this activity create for the economy and society? Obviously none. I doubt that much of the alleged well-planned, constructive capital investment which is supposed to justify the existence of the stock market occurs at 11 second intervals. I’m pretty sure the vaunted “market making” and “liquidity provision” will always be likely to disappear exactly when it’s called upon, as we saw on May 6.
 
That’s the state of affairs when we look at just the “shadow banking” side of it. When we look at this kind of market manipulation from the TBTFs Goldman, JPM, Citi, and BofA (all also perfect last quarter; by contrast Morgan Stanley was downright pathetic with four losing days), and we see how they’re not only playing the same rigged market games but doing it with free money from the Fed, the only question to ask is, How can they lose? On the contrary, if anything they should be far more “profitable” than they actually are, if they’re really as “talented” and smart as they’re cracked up to be, and not just a bunch of thugs leveraging an entrenched monopoly position. For example, according to this Zero Hedge analysis, Goldman’s performance is actually mediocre given its advantages. (And MS must be really incompetent, to have lost at all under these circumstances.)
 
As for whether it’s really possible to be perfect, to rig the market to the point of total domination, I wish they could and would. That would simply be the end of this rotten currency, since if one man sits on an infinite pile of paper dollars while everyone else has none, then the dollars are worthless. That’s simply the core contradiction of capitalism at work once again. The core logic of all these crimes. The only real issue is to what extent they use the ephemeral fake wealth to buy and try to hold real assets like farmland, watersheds, the means of production for post-oil craftwork, toolmaking, etc. From that point of view I suppose it’s good news when we see the banksters still using the looted “bonuses” to buy mansions and yachts and Ferraris and such, the way all the media reports say. While the bank rackets as a whole are positioning themselves for the return to feudalism, apparently most of the individual cadres still consciously think it’s business as usual.
 
Meanwhile, the HFT issue is a distillation of the absurd power we’re giving these criminals and their machines. We see how technocracy in action will always be the tool of corporatism. What could these computers and the “talent” which programs them do if put to socially productive purposes? I suppose the propaganda tracts are full of highfalutin visions, but in real life we’ll never know. All those high-flying promises were nothing but lies.
 
An even more tremendous example of prostituted technology run amok is currently injecting poison into our ocean at an unfathomable rate. It looks like my post which I whimsically named after a volcano erupting forever was more prescient more quickly than I thought. I just mistook which volcano it would be (though ominous Katla’s been rumbling).
 
I just used the word “unfathomable” to describe the rate of the oil’s eruption from the wound, because that’s literally true. Not because the technology to gauge the flow with considerable precision doesn’t exist, but because the government is allowing BP to veto such measurements. (Is anybody still going to say something about this technology existing for the public good, and not purely as a racketeering tool?)
 
Finally, under extreme duress, BP enabled an improved view of the hemorrhage, and what does it show? Although the lying MSM continues to parrot the 5000 barrels/210,000 gallons fraud, which the NOAA itself at first contradicted weeks ago before falling into line, the new view proves that it’s bleeding out at least 20K barrels a day, as independent commentators have been saying, and probably far more. Some estimate the current flood at 70K per day. And it can get a lot worse. BP itself estimates the maximum likely flow at 163 thousand barrels per day.
 
So having triggered an absolute economic and environmental catastrophe, what do BP and Obama do? Do they want to fix it at all costs? Do they feel remorse? No, they have one overriding priority – lies and secrecy. Just as the purpose of the MMS was never to regulate Big Oil but to facilitate its looting, so Obama sees the government’s purpose as to run propaganda interference for BP. He apes its lies, supports its spin, accedes to its information blackout, and even lets BP deputize the Coast Guard as a private thug to smack down any would-be accurate media coverage.
 
The fact is that just as corporatized technology could financialize and loot the economy, but can never repair any of the damage it’s caused, indeed can only complete the destruction on a one-way track (the Bailout), so BP’s technology could tear this hole in the bottom of the sea causing energy concentrated to the point of poison to hemorrhage out into the lifeblood of the earth itself, its allegedly infinitely renewable seas. But the same technology cannot fix it, and can’t even accurately look at it. (Physical and political impossibilities are the same thing if we refuse to change the latter.) Once Humpty Dumpty falls off the wall, all the kings horses and men wouldn’t be able to put him together again even if they wanted to.
 
But of course they don’t want to. They want to lie and say he’s fine, that they’ve restored him to his perch, that he never even fell off the wall in the first place. In Lewis Carroll’s great parable, Alice isn’t actually talking to Humpty Dumpty at all when he tells her “When I say a word, it means whatever I want it to mean, nothing more and nothing less. The question is who is to be Master.” She’s talking to a hologram, with the words being thrown to the image by the spinmasters. The real Humpty is on the ground, dead and in pieces, on the other side of the wall where she can’t see.
 
So it is today with our politics and our economy. And now with the sea itself.
 
Obama’s and the system’s lies for BP and Drill Baby Drill are typical. They’re the only response the system has available as each new disaster hits. It’s just like the Bailout secrecy: How much public money has the Fed allowed the big banks to steal via its “facilities” and MBS buys and QE? Who were the robbers and to what extent? They know their actions constitute history’s greatest robbery, and they have no defense other than secrecy and stonewalling. They even wanted to declare the details of the AIG money laundering scam a matter of “national security”, that’s how hysterical Geithner was about trying to cover his criminal tracks. It’s the same instinct of gangsters everywhere. As Jimmy says in Goodfellas, “Never rat on your friends, and always keep your mouth shut.”
 
Let’s get it straight once and for all. Nothing works anymore. Corporations, government, system technology – it all exists for no purpose other than to steal, and in the process it can do nothing but destroy. It can never again create, never distribute, never fix or heal. It can steal and destroy and then lie and cover up. That’s kleptocracy. It can never be “reformed”. Anyone who doesn’t want to live forever as its slave has to do all he can to break free of it. We have to go “off-grid” as completely as possible – economically, socially, and politically. We have to work to strengthen relocalized ties, and to defend what we build from the system’s inevitable attempts to crush us in the cataclysm of its own collapse.

May 7, 2010

A Rocky Day For the Bailout

 

Yesterday was quite a day, with lots of sound and fury signifying in the end very little other than reinforcement of what we already know about this busted system.
 
The biggest headline among several big stories was the Dow’s temporary plunge almost 1000 points followed by an equally dramatic recovery of much of the lost position. The market still ended up down 347 points. The media’s all aflutter with descriptions of this which hardly reach the level of explanations. The most absurd way of looking at it is to blame it on an alleged trader error. Even if this discrete “error” actually happened at all, it’s still not an accident by any means.
 
There are three structural explanations here. One regards the actual mechanism of HFT trading. It’s largely based on pro-cyclical computer algorithms which respond to stimuli by accelerating the trend of those stimuli. So if a large dip occurs, the computers automatically start selling off in compliance with the dip, thereby exacerbating it. This is characteristic of our whole fragile, interdependent system. At every level, from the way our desperation to keep the oil flowing at the same rate through ever more tenuous extraction lines increases the chances of catastrophic failures like the Gulf blowout (where there are reports that the situation is far worse than BP and the administration are allowing to be made public) to the way the Bailout keeps requiring ever more thin, expansive band-aids to cover the rapidly expanding cracks in the Tower walls (I’ll get to Greece in a moment), to the minute-to-minute falls and surges of the computer trading lemmings, everywhere we’ve become critically exposed, critically vulnerable, utterly fragile.
 
The other explanation of the stock lurch is the market’s political terrorism function. Throughout the crisis the market has always stood ready to punish any sign of the government acting in the public interest (for example rejecting the TARP, or contemplating Bernanke’s rejection, or the SEC’s suit against Goldman), or even looking irresolute in its will to the infinite Bailout (letting Lehman go down, or when early in 2009 Geithner looked tentative in laying out the administration’s plan to aggressively further the Bailout). So yesterday there was lots of buzz about Congress possibly “doing something” for once. The market had the attitude that this must be punished, and so it was. Not that I think Brown-Kaufmann would have passed, or that we’d be getting a full audit plan, if yesterday’s crash hadn’t occurred. But it provided reinforcement for the general Capitol Hill attitude that Congress must never do anything to upset Wall Street or the markets, and it’s that attitude which causes these attempts to be defeated, even when they seem buoyed by such a surge of public enthusiasm that it seems to penetrate even the hermetic vaults of the corporatist Congress. I’ll get to Congress in a minute.
 
(I’m not saying there’s a specific cabal on Wall Street which decrees when the market must tank. There doesn’t have to be – all the big players understand that signs of government wobbling need to be punished with a sell order. Many of them probably don’t even consciously see it as punishment. It’s simple ideology that government must be flamboyantly pro-bank, and that wherever this enthusiasm seems to be flagging, that’s a bad sign, and it’s probably best to start liquidating positions to take profits now. The aggregate effect is terrorist extortion. The market holds a gun to the head of the country. That’s the way they want us to see things, and for as long as we continue to cave in and not call the bluff, we’ll remain under the market’s thumb. [If you want to read a disgusting example of this ideology, the mindset of these cretins, check this out.])
 
Third, the markets must become ever more jittery as the Zombie Debt Monster becomes harder and harder to keep upright and in motion. Everybody knows it must collapse once and for all, which could happen at any time, so everyone who’s riding what they know is a phony, purely Bailout-driven rally looks anxiously to every moment wondering when will be the right moment to sell once and for all. Greece, the Gulf of Mexico, and even the sham Congress are indicators which render the moment full of portent. Anything can trigger a sell-off. And someday soon the terminal sell-off must commence. 
 
As for public enthusiasm and the isolation of Congress, by yesterday there did seem to be such a surge and such a penetration. While I still don’t expect a real bill, I’ll grant that yesterday they put on the best show yet. Senator Feingold now proclaims that he’ll join a filibuster of any sham bill. (Of course, I’ll believe that when I see it.) A few days ago Brown-Kaufmann looked like it wouldn’t be allowed to come up for a vote at all. Yesterday, in what I suppose is mild progress, it did get a vote. It was still resoundingly defeated, with the No votes including half the Democrats. So there the show was a little better than expected, but it was still all show.
 
Meanwhile Bernie Sanders seems to have made a deal which will greatly cut back the scope of his proposed Audit the Fed amendment but preserve one good part. The deal would direct the GAO to conduct a one time only audit of the existing and previous Fed lending facilities by December, at which time we’d learn who was handed trillions in public money. This would be good to know, but the deal meanwhile guts the plans to audit the Fed’s embezzlement going forward. It would leave the existing politicization of the FOMC sacrosanct and unaccountable. So if this ends up being the deal, we’d end up with a mostly gutted audit. It would be better than nothing, but still a defeat. That’s if this ends up being the deal. They’re not expecting to vote on it till next week, so that’s plenty of time for the deal to be altered further, or for Sanders to cave in completely.
 
I’ll conclude with Greece, which is currently the raging battlefront where the Bailout’s vanguard is facing stiffening resistance, both politically and from economic reality. The Greek parliament voted Yes to the economic immolation of the people, in direct flouting of the people’s will as expressed by the rage in the streets. This is reminiscent of the similarly rogue US Congress voting Yes on the TARP, though of course we cannot compare the resolve of American protest. (Pro-bank commentators keep saying protest is common in Greece, as if that’s a bad thing which somehow invalidates the protests of today. On the contrary, that’s a barometer of a far more vigorous populace among whom the spirit of democracy is not completely quenched. Chronic street protest is one of the correct, rational, virtuous responses to chronic kleptocracy and creeping police statism at the top. To say that in general Greeks protest far more than Americans does not condemn the Greeks, but the Americans. To imply the opposite is simply another way of alleging that the power structure is truthful and sound and right and should be obeyed.) Next up will be the vote in Germany, where the people are also hostile to the Bailout.
 
A “Greek” bailout, like every other specific manifestation of the Bailout, is simply another bailout for the big banks, in this case the German and French banks who hold the largest part of the debt. I’ll again link to this graphic which lays out the debt relations. The entire Bailout is nothing but:
 
1. the now permanent looting expedition of the bank rackets, and
 
2. the only way the whole structure of the globalized debt economy, which is one big zombie, can be propped up and ambulated at all.
 
Every iteration of the Bailout serves only these two goals.
 
So it follows in parallel with these two goals that we the non-rich are:
 
1. slated to be the permanent victims and slave stock for this permanent looting, and
 
2. the only way to save ourselves to arrest the progress of the Bailout so that the whole zombie collapses.
 
The structure is existentially unsustainable and must collapse of its own weight, but how long this will take is unknown. We don’t know to what extent political resistance can accelerate the process, or even to what extent political resistance is dialectically hardwired into the unsustainability function itself.
 
Either way, political resistance is helpful and morally necessary.
 
So that’s a brief recap. Despite some political theater in Congress and some real action in Greece, the Bailout is still hacking its way forward and reform is still stalled. The structural fraudulence of the system is being physically embodied in the oil eruption of the Gulf, economically and politically embodied in the Bailout’s torturous progress in the Eurozone. Even in America, little by little things are getting tougher for them.
 
The day ended as another loss for humanity, but we put up a slightly better fight this time, while we continue to receive indications that the planet and history itself are weighing in on our side.
 
No matter what happens in the short run, in the end the Earth will always win out over the petty insults of a few of its ugliest creatures. The Bailout will fail, and the kleptocracy will perish.

April 1, 2010

The Joke’s On…..

 

So I took a break for a few days, and came back today, on April Fools’, to check out a joke newspaper’s headlines for the day. They actually didn’t look all that different from the normal headlines.
 
“Uncle Sam’s Citi exit partly vindicates Bailout” 
 
“Hedge Fund Managers’ Pay Roared Back Last Year”
 
“Risk Is Clear In Drilling; Payoff Isn’t”
 
“Pfizer Chief Says Growth Is Imminent” (I don’t doubt “growth” in extortion is expected; but that’s not what the NYT wants you to read from that.)
 
“Deadlock Is Ending On Labor Board” (Here the blurb contains the punchline: “The National Labor Relations Board will soon have three Democrats and one Republican, and businesses are bracing for a wave of pro-union rulings.”) 
 
But here’s my favorite joke piece, though the headline’s flatly descriptive enough: “Fed Ends Its Purchasing of Mortgage Securities”.
 

The Federal Reserve’s single largest intervention to prop up the American economy, its $1.25 trillion program to buy mortgage-backed securities, came to a long-anticipated end on Wednesday.
The program has been credited with holding mortgage interest rates at near-record lows and slowing the nationwide decline in home prices that threatened to send the economy into an extended slump.

 
In other words, as a key part of history’s greatest robbery, it helped prevent to restoration of economic reality, so that when reality inevitably does impose itself, the result will be experienced by most people as far more disastrous.
 
The government sentenced the people to this fate in order that the banks could steal yet further trillions. It’s part of the official establishment of Bailout Nation, Bailout America.
 
The academic prostitutes are out shilling:
 

Demand for mortgage bonds had been frozen since the federal takeover of Fannie Mae and Freddie Mac, the giant mortgage-finance companies, in September 2008. “We were in a deflationary spiral, causing mortgages to go underwater, more foreclosures and a further decline in housing prices,” said Susan M. Wachter, professor of real estate and finance at the Wharton School of the University of Pennsylvania. “The potential maelstrom of destruction was out there, bringing down not only the housing market but the overall economy. That’s what was stopped.”

She called the Fed’s mortgage purchases “the single most important move to stabilize the economy and to prevent a debacle.”

 
(That’s a joke in itself, that we now have such a thing as a “FIRE sector professor”.  Of course all such quotes have to be read in Orwellian code. “The maelstrom of destruction, currently decimating the jobs of the real economy and sending it into the Second Great Depression, had to be segregated from the housing market in order to enable further FIRE sector looting. That’s what we accomplished. It was the single most important move to temporarily stabilize the financial (as opposed to real) indicators and prevent a debacle for Wall Street. Thus we’ve been trying and so far succeeding in shifting the entire bankster-created debacle from Wall Street onto the people. We’ll now attempt to make the people of America sustain the entire maelstrom of destruction, while the banksters and government criminals abscond with the loot. Hopefully they’ll still need a few whores and take me along.”)
 
The Fed is leading this propaganda offensive:
 

“Financial markets have improved considerably over the last year, and I am hopeful that mortgages will remain highly affordable even after our purchases cease,” Janet L. Yellen, the president of the Federal Reserve Bank of San Francisco, said in a speech on March 23. “Any significant run-up in mortgage rates would create risks for a housing recovery.”

Ms. Yellen is President Obama’s choice to be the next vice chairwoman of the Fed, after Donald L. Kohn retires in June, but she has not been formally nominated.

 
What’s left out of this quote from “Obama’s choice”, i.e. from Obama himself? As with everything else these criminals say, it has zero to do with the real economy, with economic, energy, or resource fundamentals, with anything which has anything at all to do with the lives of actual Americans or of actual people anywhere.
 
That’s because to a sociopath like Obama, and to a gangster like anyone at the fed, real people simply don’t exist other than as a cash cow to be milked and then bloodlet and then skinned and then roasted.
 
The whole MBS conveyor is simply the ongoing main vehicle of the Bailout:
 

A major factor in that recovery was the government’s announcement last December that it would guarantee debts owed by and securities issued by Fannie and Freddie, according to David Crowe, chief economist at the National Association of Home Builders.

While the future of the two mortgage-finance entities remains uncertain, the government backing has been particularly reassuring for foreign investors, including the Chinese and Japanese central banks, that hold securities based on mortgages originated in the United States, Mr. Crowe said.

 
It’s been particularly reassuring for the attempt to prop up the insolvent debt zombie of America as a whole, as well as its insolvent zombie banks.
 
These are the same Fannie and Freddie who keep hemorrhaging taxpayer money, intentionally buying MBS from sleazy lenders at far-above-market rates. This is simple embezzlement, simple theft, and simple money-laundering, being committed by what is simply a criminal government, orchestrator of a criminal system.
 
Bailout America is a de jure kleptocracy. Neither the government, nor the political nor media nor academic class, nor the top-down economy in general, any longer even pretend to have any rationale other than to loot the productive activity of society. Since people still work in order to eat and shelter themselves and raise their children, as well as because they labor under the brainwashing of consumerism, once a gangster parasite has successfully planted itself on the people’s backs, it can suck their blood for as long as the sucking’s good. Only two things can put an end to it: When and if the people fight back to kill the parasite; or once the blood has all been sucked.
 
Meanwhile the parasite may reach the point where it becomes so drunk on the blood of its host, and so incapable of even pretending to generate any value whatsoever, that it goes insane in its psychopathy. No longer content to just extract at a constant rate, it must rend and flay, beat the people, burn the crops, salt the land. We’ve been seeing this saturnalia set in with the rush to resume bankster bonuses, the more brazen and obscene the better (that it’s as open and obnoxious as possible is clearly a value to them), and the health racketeering bill. And right in the middle of it, the massive escalation of the already unsustainable, losing imperial war.
 
Between these there can no longer be any doubt whatsoever about this government and the so-called “two” party system which is really as calcified a one-party system as the decrepit stage of the Soviet Union was. There can be no doubt that this is not just a criminal finance sector and a criminal government but that it has gone insane in its orgy of looting. This is a whole globalized finance economy now dancing its Dance of Death.
 
Nor can there be any doubt about the unspeakable vile MSM, the corruption of the universities, the prostitution of “culture”, or the treason of almost all existing political activist leadership. The end result on the extension of the Bailout to the insurance rackets is the final, irrevocable divide. Kucinich’s treason made it literally unanimous among existing politicians. The same treason was almost unanimous among existing “progressive” groups of almost every stripe and alleged focus. We now know they’re all sellouts, all Astroturfs, all corporatized traitors.
 
The defining abyss which slashes its bloody gouge across every arena of our lives is corporate tyranny vs. freedom and humanity itself. The great virtue of the Bailout and its health racket microcosm is the cosmic lucidity with which it has cleared the air and defined the positions. The clarity through which it has rendered the great fault line.
 
The definition of economic Fascism is a command economy based upon private profits and socialized costs. While there can be debate on when exactly America became this fascist country, there can be no debate whatsoever on the fact that the Bailout enshrined it once and for all. That the Fed has today temporarily ended its trillions in MBS buys (though it ostentatiously reserves the right to resume at any time, and with infinite boundaries), even as Fannie and Freddie continue with their infinite guarantees of this worthless paper, doesn’t change anything at all. On the contrary it simply highlights how, as with every other totalitarian system, the tactics are flexible even as the nefarious goal is always one and the same.
 
So we know what America has become, and we know that all existing leadership has declared for crime, for tyranny, for the great enemies of the people, for treason.
 
Meanwhile, the people…this bent-backed peasant with the bloodsucker on its back….all this peasant need do is shrug to rid itself of this parasite. Is the people’s refusal to do so our own Dance of Death? Are we really no longer citizens, no longer human, but just the husks of “consumers”, and soon no longer even able to pretend any longer at being that?
 
Only we can answer that for ourselves. Our actions shall be our testimony before history, before the universe itself……
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