June 30, 2010

New Feudal War Part 3: “Austerity”

Filed under: Globalization, Neo-feudalism — Tags: , — Russ @ 1:21 am
By now all the major activities of big corporations and government combine in a nexus of organized crime.
In principle the finance sector’s activity is meant to help corporations and governments cover up for the fact that all sectors are mature, that it’s been many years since there’s been any real growth, and that most large entities are in the red if not insolvent. This covered up as long as it could for the structural collapse of the debt economy, resource depletion, and the fact that much of what wealth is still being produced is simply embezzled from society by a handful of gangsters. The criminals, in corporations and governments, engage in this control fraud to pretend the money is still there and growing. That’s the nominal fraud mode.
When the ponzi scheme blows up, as with American mortgages, everything shifts into disaster capitalist mode. The system pretends the blowup is some kind of act of god, force majeure which is nobody’s fault. It’s also the implicit will of god that the rich who benefited from the bubble don’t have to divest themselves to cover the losses now that all those “profits” are proven to have been fictional.
The fact that these profits and other extractions are not restituted is proof that the fiction was really an intentional fraud, and that every cent taken out was conscious stealing. Obviously, if they had taken profits in good faith, now that the paper wealth has been destroyed they’d feel compelled to return what they now admit was improperly extracted. And if someone didn’t feel so compelled, the government, if it were acting in good faith, would compel him. So that’s proof: The money was intentionally stolen, and the government was intentionally complicit.
So the Temple of Robbery decrees that all prior looting is untouchable, sacrosanct. Rather, all the pain must fall on the same people who were looted the first time around. They must undergo “austerity”, be “adjusted”.
All this is in order to prop up the fiction of the original fraud, and to enable that looting to continue.
I discussed the Bailout in Part 2 (and in many other posts). This was the next evolution of neoliberalism. Once the bubble, the bank balance sheets, and the whole corporate welfare economy which radiated out from it reached a critical mass, it became impossible for the corporate system to sustain crashes, get up and dust itself off, and continue. Either the insolvent zombie banks had to be propped up and the bubble reflated, or the whole system would collapse, vaporizing the kleptocracy’s power along with the wealth it stole. Now the government had to turn the economy into a command economy. Economically if not yet politically, Bailout America and Bailout Eurozone are no longer anything but fascist corporate states.
But now the Bailout is running up against the same limits the prior bubble economy did. Structurally it changed nothing, and thus has all the same problems as before, and faces the same crisis. The banks and governments are just as bankrupt, the ponzi economy is just as baseless, only the fraud is even bigger. The Tower of Babel is just as unstable and doomed, it’s now only higher and more top-heavy. So governments know they’re reaching the end of the Bailout’s rope. The people have dangled and thrashed for long enough at the end of the noose, the rope must break. So they’re looking to set the corpse on fire instead.
The last big juicy plums are public pensions and other existing public property. The banksters want to have their government thugs directly steal this property the people already paid for with their taxes or in contract negotiations. In Greece the target is public worker pensions and other elements of duly negotiated compensation. France, Germany, and now Britain are under the assault of specific robbery plans. Ireland and Latvia have already been torched and are nothing but writhing piles of smoking ash.
In the US Obama, acting as flunkey stooge for Pete Peterson, has taken the lead in preparing the assault. He wanted to have members of Congress set up an unconstitutional commission which would dictate legislation to be rubber-stamped, but for once Congress stuck up for itself and refused. So instead Obama convened his own Star Chamber, loaded with Republican, Democratic, and corporate thieves. They all have a special hatred for the people’s entitlement property, and the latter two were already targeting it back in the Clinton years.
The alleged rationale for this is that “deficits” are the big problem with the economy’s prospects. This is an obvious lie in three ways. 
1. We already know that the financialized economy is a giant ponzi scheme and that the dollar and the euro are bad jokes. Who can possibly take the economy seriously when as much as a quadrillion dollars nominal worth of toxic derivatives are waiting to collapse? Who can possibly take the dollar seriously when Bernanke is now saying the Fed’s going to run its own balance sheet up to $5 trillion to try to keep the Bailout going?
So while the buck’s definitely going to break, it ain’t gonna be the relatively solvent* Social Security, in itself just fine through the 2040s, which does it.
2. Both theory and the historical evidence demonstrate that when the economy is operating so far below capacity, and the government is the only possible spender, it must do so if the goal is jumping the economy’s battery. That’s the only thing which could bring recovery and restore growth. Otherwise you get Hoover, or 1937.
(Now we know “recovery” and “growth” are shams. But all these deficit terrorists claim to be seeking those. So how odd that they’re demanding a course of action which has already been proven to fail, and rejecting the course of action, stimulus, which has been proven to work, in attaining what they claim to want to attain?)
3. Obviously, anyone who sincerely was concerned about deficits and the integrity of the dollar would want to start with all the dead weight in the budget (not to mention the vast bailout and war spending which has been frauded off the budget). He’d want to end the Bailout and the war, slash bloated Pentagon budgets, institute single payer (which is far less expensive for the government and society than maintaining the insurance racket parasite), end subsidies for Big Oil, Big Ag, and simply eradicate all corporate welfare. Then we’d see how the deficit looked, before we thought about a government default on debts owed to the people, who have already paid for their Social Security and Medicare, and which Obama and the banks now want simply to steal.
That’s very clearly what any sincere budget conservative would advocate. He’d start by wanting to purge the bank rackets, insurance rackets, weapons rackets.
As I said in a comment somewhere, if you think you may be overweight and may need to go on a diet, but you also have a giant leech gouging into your throat to suck out all your blood, you better burn the leech off first.
So it’s very clear that the deficit terrorists calling for “austerity” and gutting programs like Social Security are lying about the reason they allege. On the other hand the proximate cause we keep hearing, that it’s necessary for the morale of “the markets”, while moronic (since the markets show no signs of being particularly concerned about the dollar, the pound, or the euro right now, nor did Ireland’s self-immolation do anything for the market’s confidence in its bonds), comes closer to the truth in spite of itself.
The market is a terrorist holding a detonator, and its message at every point is, “Meet my demands or I’ll blow us all up.” We’ve seen this play out many times, from the collapse of Lehman to the TARP first being voted down through many other confidence pressure points through the negotiations over a Fed audit. And the threats are always there too. How often do we see someone on Wall Street or in government say, “Such and such should be done, while this and that shouldn’t, otherwise the markets won’t like it”?
So since the banks view austerity as the next stage of kleptocracy, it follows that they’re ready to deploy the market terrorist tactic to force compliance. Dissenters like Krugman who complain that the threat makes no sense are missing the point, perhaps being willfully obtuse. The threat doesn’t need to make sense on rational or evidence-based grounds; it’s better if it doesn’t. As long as the hostages understand the underlying demands, the more irrational terrorism is, the better. So I have no doubt if Obama’s Robbery Commission can’t get the ball rolling fast in Congress, we’ll be seeing market “demonstrations”.
So there’s the austerity assault. It’s meant to free up extra loot for the Bailout and delay the destruction of the dollar for a little while. It’s also meant to further plunge the people into impoverishment, misery, demoralization, and debt servitude. That’ll be the subject of Part 4.
But it’s the Bailout itself, and the finance sector itself, which are really destroying the dollar and all other global currencies. If we really wanted to stabilize the economy, we’d start by wiping out the gangsters and restituting everything they stole which hasn’t already been destroyed. We would not let them continue to steal what little we have left.
[*From time to time I try to remind readers that while we do know that in fact everything about this economy is insolvent on account of Peak Oil and the unsustainability of exponential debt, nevertheless the time frame for the unwind, how exactly it will happen (hyperinflation, deflation, dollar default, or most likely all of the above), how precipitous the descent will be, are all still up for grabs.
So there’s still be a real question of what’s sacrificed sooner and what later, and how painful the whole descent has to be. I’d say things like Social Security or single payer, while ultimately unsustainable, could be sustained for a greater or lesser periods depending upon the political choices we make as a people, and this in turn could make a significant difference mitigating suffering, or increasing it.
Dmitri Orlov has written extensively on how residual Soviet infrastructure greatly lessened the blow of the collapse of the USSR for the Russian people. Unfortunately, it looks like we idiot Americans are intent on destroying what little buffers we have left just before the collapse. We really want to make it as hard on ourselves as possible, and for no reason at all than so that a few vermin thugs can luxuriate a few days longer.
The kleptocracy and everyone who shills for austerity are vicious sadists who want to increase the pain in order for the Blankfeins and Obamas to get to hang on a little longer in the lifestyle to which they’ve become accustomed.
So I hope it doesn’t sound inconsistent if I say in one place the system must radically decentralize while in another I call upon people the fight for their Social Security. The difference is just a matter of chronology, short/mid range vs. long range.
I’m going to devote a post to specifically that topic, boondoggles vs. bridges vs. what’s really sustainable, sometime soon.]



June 28, 2010

Krugman Watch June 28 (Sarajevo Day)

Filed under: Corporatism, Globalization, Health Racket Bailout — Tags: , — Russ @ 6:27 am


The significance of Paul Krugman is that he’s the most prestigious of the corporate liberal hacks. This is on account of what the general quasi-educated readership believes to be his great intellectual accomplishments. (Burnished by his alleged Nobel Prize; but in fact the economics Prize is really a pseudo-prize which was fabricated in the 70s for precisely this purpose, to bestow fraudulent authority upon neoclassical economists; and by now all nobble prices are fraudulent anyway, as proven by their giving the “peace” prize to a war criminal. This was intended to encourage and whitewash further war.)
It’s also because of Krugman’s excellent record of opposition to Bush and the Republicans. He was so cogent and often eloquent in his attacks on Bush that many people who don’t know the history or forgot it believe he opposed Bush policies as opposed to supporting the policies but attacking as a partisan Democrat. And what about those who remembered the real Krugman from the 90s?
The globalization hawk who wrote “in praise of cheap labor” (the same piece where he lasciviously indulged his fantasy of people having to literally live in toxic waste dumps and proclaimed that working at McDonald’s should be the normative job condition; of course he claimed to seek improvements on this, but actions and results are always the proof, never bogus caveats) and proclaimed his vision of utopia:

A highway interchange, a parking lot filled with cars, a traffic jam, suburban tract housing, an apartment building with numerous satellite dishes, an office with many computer screens, office workers on a busy street, high-rise office buildings, a “factory farm” with many chickens, a supermarket aisle, a McDonald’s arch.

Many who remembered this thought Bush had made him see the error of his ways and that he repented. I too thought it might be possible.
Of course we know today that the New Progressive Krugman is the same old neoliberal Thugman. Since Obama came in Krugman has done five things:
1. He has supported the Bailout and supports its perpetuation forever.
2. In particular, he was lead propagandist floating the scam of Swedish-style nationalization. needless to say the kleptocracy would never have taken big banks into receivership and either liquidated them or nursed them back to health, either way on terms favorable to the people. (And of course even real Swedishism would still never work outside Sweden. Here the rackets are too existentially thuggish and even if resolved and reinstated on a Swedish basis would quickly go back to their old crimes. It really didn’t work even in Sweden, as we see from the Swedish banks’ Baltic depredations. No, you can never “resolve” or temporarily “nationalize” private bank rackets. They have to be absolutely eradicated.)
The system never wanted to do anything like this, but Krugman was there as ringleader of the idea, just in case Obama felt politically pressed enough that he had to pretend to do it.
Of course it would only have been a pretense. Just as in practice Bagehot’s rule (lend freely, only to solvent banks at penalty rates on good collateral) was transformed to “give freely to insolvent banks at near-zero rates on no collateral at all”, so in Obama and Geithner’s hands “nationalization” would have been just a pure unloading of all toxic assets off the balance sheets and onto the public, at which point the banks would have gotten off scot free.
That was Krugman’s notion of the ideal Bailout.
3. He was lead agitator among the “educated liberals” on behalf of the health racket bailout. He knows this is a vicious reactionary assault and simply systematically lied about it, out of his corporatist ideology and Democrat partisanship.
Read here for what the Bush-era Krugman thought about health reform and about possible political scams the Republicans might try. How strange, that he flipped 180 degrees on both the policy and the tactics as soon as a Democrat came back in.
4. Simpatico with administration rhetoric, he’s tried to play astroturfer on the China currency manipulation issue. The goal of Obama, Geithner, and Krugman is good old misdirection by xenophobia. Demonize the (non-white) foreigner. It’s the Yellow Peril again.
The truth is that the US and Chinese kleptocracies together comprise the Chimerica entity, which wages war on the peoples of both America and China. The US gangsters want the American people to blame this vague but menacing nebula, “China”, for what are actually US system crimes. The same dynamic occurs in China.
Just as the real business of the Chinese people is to get rid of the Chinese gangs, so the real business of the American people is to get rid of the home-grown US rackets. Propaganda criminals like Krugman want to distract us from our interests. We mustn’t let them.
5. Krugman now supports the war. Now that Obama has taken full personal ownership of the war, and did so with great glee and gusto, now that it’s a Democrat war, Thugman supports it.
But he doesn’t say so. He, who wrote so often and with such passion on this allegedly non-economic issue during Bush (of course it really is a fully economic issue), has suddenly gone suspiciously silent. Suddenly he implicitly agrees with all the critics who whined during the Bush years that he shouldn’t be writing about war or anything other than straight economic topics. 
That’s because he wants to keep basking in the reputational nimbus of his anti-war heroism. He thinks if he had to join in with all the other liberal hacks who have been reborn as jingos, it would harm his brand and impair his effectiveness as an economic hack astroturfer. So now he keeps his mouth shut.
So that lays bare the real Thugman agenda. But lately his main preoccupation has been an internecine squabble over the timing of “austerity”. I wrote about this before, describing how where it comes to “austerity” Krugman objects to the timing of a particular class war tactic, but does not object to the class war assault as such, and that’s why he argues the way he does, refusing call austerity by its rightful name, robbery, and refusing to call his colleagues in crime “class warriors”, because he actually agrees with them on principle and strategy and only disagrees on tactical tempo. Today I wanted to revisit and refine the message, as well as place it within the real Krugman Context.
In today’s column Krugman again affirms his overall support for the Permanent Bailout:

In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.

It looks like we’re even making some progress in forcing some marginal honesty out of his rhetoric. Where before he would fraudulently blame Republicans for Democratic actions where the Dems had total licence to do whatever they wanted and therefore by definition did do whatever they wanted, today he says:

The Obama administration understands the dangers of premature fiscal austerity — but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.

This is still a lie. The Reps still have zero power to do anything the Dems don’t let them do, and the agenda here is being driven not by alleged “conservative” Dems but by the Dems period. What he’s calling conservative is the Dem establishment mainstream, as well as what the alleged “progressive” Dems agree to every time.
So existentially there’s no such thing as relative “conservatives” among the Democrats, while “progressives” are nonexistent in both relative and absolute terms. There are simply the Democrats as such, who economically and in war are a right wing conservative party in an absolute sense.
The recap of this column, as a Krugman update, is simple.
1. He still credits “invisible bond vigilantes” as representing a real motivation, albeit a wrongheaded one.

Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine.

It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.

He still refuses to speak the truth:
Austerity is robbery.
Those who advocate austerity are robbers.
Any excuse like “invisible bond vigilantes” is nothing but a pretext to try to justify robbery.
But they really want austerity for its own sake because they want to continue robbing.
2. Thugman doesn’t object to the robbery as such. That’s proven by his support for the Bailout as such, as well as such crimes as his astroturfing for the health racket bailout.
3. It’s just that in this case he thinks it’s tactically premature for the US as well as trade surplus countries to undergo the austerity stripping. The column basically says as much. To requote:

In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.

The Bailout plus the hijacked Obama stimulus = Krugman’s idea of the correct looting policy for now. He thinks the Bailout stage still has further legs.
(Here’s a broader analysis of Krugman’s looter ideology, his place as neoclassical synthesist.

The reality of the Great Depression convinced many economists and business observers in the late 1930s that Keynes was right, and led to widespread references to the “Keynesian revolution.” Keynes’s proposals related to stimulating effective demand through civilian government spending were not directly applied in the 1930s, however, and it was the Second World War that lifted the United States and other advanced capitalist economies out of the Great Depression. After the war, Keynes’s analysis was debased by such figures as Paul Samuelson at MIT, leading to what was sometimes called the “neoclassical-Keynesian synthesis,” or more frequently the “neoclassical synthesis.” In what Keynes’s younger colleague, Joan Robinson, famously dubbed “bastard Keynesianism,” Keynes’s more revolutionary insights were all excluded and his analysis was reincorporated with the neoclassical theory in a subordinate form.9 Mainstream economists came to the conclusion that the capitalist economy could be effectively managed by monetary and fiscal policy fine tuning, with an emphasis on the former. This was because the economy was once again implicitly assumed to act in accordance with Say’s Law, moving naturally toward a full-employment equilibrium, now redefined as a “natural rate of unemployment.” Neoliberal globalization, deregulation, the removal of all restrictions on the movement of capital, the creation of sophisticated new financial architectures, were seen as constituting the essence of all economic logic on a world scale.

Hence, by the 1970s (and even more so after the stagflation crisis of that decade) Keynes had been relegated to a “special case theory of Depression economics,” applicable only when monetary policy could no longer be effectively used to boost the economy.10 But such a condition was no longer believed to be relevant, since, as University of Chicago economist Robert Lucas declared in 2003 in his presidential address to the American Economic Association, the problem of depression and even of the business cycle had essentially been solved. This view was reiterated in 2004 by Ben Bernanke, then a Federal Reserve Board governor, now chairman of the Federal Reserve Board. For Bernanke the Great Depression was no longer of theoretical interest; rather the problem to solve was the “Great Moderation,” i.e., the reduced volatility of the capitalist economy in the 1980s and ’90s. What needed investigating, he argued, were the reasons for the effective end of the business cycle, which he attributed to more sophisticated monetary policy, arising initially out of the insights of Milton Friedman’s monetarism.11

Today figures like Krugman are seen as partly challenging these conclusions, and as representing the return of Keynesian economics. But this is not a return to Keynes in the sense of his general theoretical critique of capitalism’s fundamental flaws. Rather it is a return to Keynesianism as a “special case” of “depression economics,” where monetary policy is ineffective and expansive fiscal policy needs to be given priority.12 The ascendancy of neoclassical economics, which bastardized and subordinated Keynes’s mildly critical view of capitalism, is not itself challenged. Nor is capitalism questioned. Rather it is assumed that mistakes were made in monetary policy and in regulatory systems that have pulled the economy back down into the “special case” of Keynesian “depression economics.”

Hence, what Keynes called the “outstanding faults” of the capitalist economy are hardly addressed as such.

He believes in Keynesianism, yes. But only in its corporatist looting form. Maybe at best he dreams that some of the bounty will trickle down. That’s definitely what he claims to believe.)
4. So while he objects to austerity in this context, he has to find grounds to do so which still obfuscate the fact that everything the system is doing, from globalization and financialization as such to lies like trickle-down to the Bailout to “austerity” and onward through the corporate nightmare, is ROBBERY.
Paul Krugman strives to whitewash this because he’s a trickle-down corporatist ideologue and Democrat partisan, both of which mean in practice he supports the worst economic crimes in history. It means he’s a hardened activist of kleptocracy, and he’s doing everything he can to serve it. 

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.

Darah’s Baptismal Sky (a poem)

Filed under: Poetry — Russ @ 2:54 am
As Darah sits at the window,
Her eyes scan dreamward,
Scanning the sky for a space which pleads for an image.
She searches through her hours,
For the recollective moment which redeems her faith
And offers a glimpse.
We only paint our own portraits,
Each moment just a subtle stroke,
Just a tangent in the tinge.
What does she hope for, what does she dream?
Which is the image she yearns to see
When she regards the cloudy sky?
Does she dream of flying
In revelatory invisible suns,
Looping them into her hair in braided halos,
Sparking glints of her own light,
Because she despairs of an afternoon’s image?
Does she fantasize Michelangelo’s sinews
To wield the chisel of freedom,
To liberate the latent form?
We can only read ourselves in anything,
And any word is lost in translation.
I can only dream of a moment felt, not spoken.
Our expressions betray and limit us,
But that’s all we have.
So Darah will paint again,
And I try to dream of what she dreams,
I dream each painting a baptism of sight,
Willed by hope onto the world’s bleak ceiling,
Baptized in the gentle bath of her soul.
I’ve also seen the gray canvas in the sky
And I’ve wondered, what shall I see there?
What dream do I wish to paint?
Darah dreams, as she ponders her new dawn,
And her sky is only her own,
Beholden only to her dreams.
Darah wants to paint the sky with her dreams,
And her dreams are just ready to fly,
Just now, as her new sun rises.
She’s still at the window,
And she still sees gray,
But that’s only her canvas,
Waiting to receive her eternal voice,
Dreaming of speaking her dreams.

June 24, 2010

Nothing Works Anymore


Obama’s offshore drilling exploration moratorium was typical of him – too late, too limited, anodyne, more talk than action, taken only under extreme political duress though he obviously didn’t believe in it, so he couldn’t achieve any goodwill from it anyway. Yet even in that meager way it’s still something worthwhile.
Or it was for a few days before a federal judge, at the request of a minor special interest, the ferries serving drill workers, overturned the moratorium, declaring it “arbitrary and capricious”. People are having trouble following the judge’s reasoning, since it’s self-evident that deepwater drilling cannot be done safely and with all the risk accounted for by voluntary market participants. In principle, not just an exploratory moratorium but banning it completely is exactly what the executive branch should do as steward of these waters and resources. The only thing which looks arbitrary and capricious is the judicial activism here. (Unless you look at the judge’s oil investments. Then perhaps the decision might not seem so arbitrary.)
Corporatist judicial activism has been on a roll since the Citizens United decision. The SCOTUS seems especially keen to smash all attempts to impose any sort of rational limits on election buying, no matter how modest. Now, there’s no doubt about the “supreme” court’s conscious malevolence; four of the cadre are hard-bitten corporate activists, while the other four including Stevens (leaving out Sotomayor on account of insufficient data as of yet) are at best passively corporatist*, with demented prima donna Kennedy flipping back and forth based on whatever lets him be the center of attention. 
[* I’ve previously proposed that the right classification of judges is not something phony like “strict” vs. “loose” construction, let alone idiocy like conservative vs. liberal.
Rather, since the struggle of freedom and humanity vs. tyranny as crystallized in the struggle vs. corporatism is the defining issue of our time, and since the courts are today a lawless no man’s land where the civil war is already being fought out with one judge ruling that 2 + 2 = 4, while in adjoining courtrooms on either side his “colleagues” are saying it equals 3 or 5, so it follows that the only meaningful classification of jurists is as: either corporate activists on the bench (like the Citizens United majority), or as passive corporatists (those who accept corporate personhood and the basic corporatist structure, but who oppose judicial activism on its behalf), with perhaps a diminishing few public interest advocates and even anti-corporatists here and there.]
The SCOTUS as a whole is by now firmly against the people and for the tyrants. We should always remember that just as we can never expect there to ever again be good legislation from the Congress, so we can’t expect any kind of systematic good from the courts, only evil.
But even though the court is malevolent, by now money is so entrenched in the electioneering process that these decisions will probably make little practical difference. Here as everywhere else extortion is institutionalized.
But even given this level of conscious malevolence and entrenched corruption, there are still those like Glenn Greenwald whose public interest good will seems strong enough, but who often remain mired in the process mentality, such as in Greenwald’s case his myopic fetishized version of the 1st Amendment. As I said in my post on Constitution and Process, this fetish of process over substance and result ends up betraying the substance and helps guarantee a result which makes a repugnant mockery of the original ideal. The 1st Amendment, like0 the Constitution itself, is not a suicide pact, but the process myopics seem intent on making it one.
So it’s not just malevolence, but process issues as well which congeal as a blockage in many minds to constitute an objective barrier to political transformation.
Every attempt at reform is always opposed by one or more selfish, sociopathic special interests. The result is always at least one versus zero (the atomized mass which today passes for “democracy” and the public interest equals zero). In the case of the upset drilling moratorium it wasn’t even Big Oil who brought the suit (though I suppose they financed it), but some rinky-dink boats which ferry oil workers to the rigs. So there will always be someone, no matter how small, ready to assert the aggregate corporate prerogative against any value no matter how critical, like the very life of the sea itself, or humanly majestic, like democracy and the public welfare. These are all helpless in the clutches of this system.
I’ve written plenty of times about malevolence, and that will remain my focus. But for today I wanted to point out how the problem runs even beyond malevolence. I especially reject the notion that if the problem is “just” the criminal intent of gangsters, we can simply undertake the “reform” of replacing them, but otherwise leave the structure intact, and everything will be fine from there. No. The problem is the structure. Once we have  this combination of outdated structures and longstanding organized crime having suffused the structure with its mindset for so long and so deeply that the structure has become a veritable kleptocracy, and all institutions and processes within it are systematically corrupt, hijacked and suborned, or just plain rotted, the whole thing is beyond reform and beyond redemption.
So for the sake of argument, for the rest of this post let’s assume no criminal intent but simply the “innocent” process mentality and the “just doing my job” mentality. We can see how, no matter where we turn, no matter what we try, there’s always a seemingly insurmountable impediment to reform. We are bottlenecked. Even leaving aside actual assaults like the health racket mandate or “austerity”, nothing can be fixed.
I was thinking about this as I pondered the moratorium overthrow when I read a fascinating chapter early in Tocqueville’s The Ancien Regime and the Revolution. In Book 1, chapter 4, Tocqueville describes how the institutions and laws converged in all European countries, especially France, Germany, and England. By the 18th century, although everyone still was acting in accordance with the same Middle Age forms which once used to be progressive*, these now constituted stagnation. They were blocking movement, innovation, freedom.
[*I’ll take this opportunity to introduce one of my basic ideas. I think all historical threads (forces, ideas, entities) follow at best a life cycle of four stages. These stages are those of discovery, or when it is first evolving and pioneering; the progressive stage, where it reaches the best combination of healthfulness and utility; the decadent stage, where although its “quantity” may still be increasing, its quality stagnates, its usefulness hits diminishing returns, and it becomes a drag on motion and health; and the malevolent stage where all its effects are actively counterproductive and harmful to the people as a whole. (Throughout I’m of course speaking of the welfare and vibrance of the people, not of racketeers; their “welfare” tends to improve as the life cycle becomes decadent and then malevolent. Indeed their toxic flourishing is inversely proportional to a thing’s existential benevolence.)
Some obvious examples of spent life cycles are those of oil-fueled industrialism, mass capitalism, oil-fueled technology. Even the corporation may have had its brief progressive period, when it was still restrained within the bounds of the Constitution, before it quickly skipped decadence completely and became malevolent. Mass democracy first became corrupted and decadent and now, in its hijacked “inverted totalitarian” form, pseudo-democracy, is actually malevolent because it continues to prop up faith in vain reformism.]
So let’s read some Tocqueville. In several places I find myself substituting “Founding Fathers” for “Men of the Middle Ages” and today’s kleptocracy for sclerotic 18th century European structures.

It is no part of my theme to relate how this former European constitution gradually lost its power and fell into decay. I simply state that in the 18th century it was in partial ruins everywhere. The disintegration was generally less pronounced in the east of the continent and more so in the west but every country manifested this process of aging and disintegration.

This gradual collapse of the institutions peculiar to the Middle Ages can be followed in their archives. We know that each manor owned registers of land ownership called “terriers” in which, through the centuries, they recorded the boundaries of the fiefs, the holdings paying rent, the dues payable, the obligatory feudal services and the local customs. I have seen the terriers of the 14th century which are masterpieces of drafting, clarity, precision and intelligence. They become obscure, ill-formed, incomplete and muddled as they move into more recent times, despite the general progress of knowledge. It would appear that political society drifted down into barbarism at the very time when civil society was finally achieving enlightenment.

(I interject, this sounds similar to the current disposition of mortgage notes, specifically that the MERS regime was set up to systematically hide and lose those notes while the mortgages themselves became discorporated quiddities meant to fictively constitute “securities”, MBS and CDOs.
It’s part of Hernando de Soto’s depiction of the collapse of the rule of law itself through the destruction of the paper files.)

Even in Germany, where the old European Constitution had maintained its original features more effectively than in France, some of the institutions it had created were already everywhere being destroyed. But we can best judge the ravages of time less by observing its losses than by viewing the state of its remaining features.

Those urban institutions, which in the 13th and 14th centuries had transposed the chief German towns into small, prosperous and enlightened republics, still existed in the 18th but offered nothing more than an empty show. Their legal conditions appeared to be as vigorous as ever – the magistrates they appointed had the same names and appeared to perform the same functions – but the activity, energy, shared patriotic feeling, virile and productive virtues which they inspired had vanished. These ancient institutions had inwardly collapsed without losing their original shape.

All the powers of the Middle Ages that still remained were attacked by the same disease and displayed the same disintegration and the same slow decline. Still more, everything which was associated with the old constitution and had retained an almost clear imprint of it, without exactly belonging to it, directly lost its vitality. From that contact the aristocracy became infected with senile decay. Political liberty itself, whose achievements had permeated the whole Middle Ages, appeared to be stricken by barrenness wherever it still bore the particular characteristics it had gained from the medieval period. Wherever provincial assemblies had preserved their ancient constitution in an unchanged state they halted the progress of civilization rather than fostered it. It might be said that they were alien and almost impervious to the new spirit of the time. The antiquity of these institutions had not made them respected. Quite the contrary, they lost any credit even as they grew old and, strange to relate, they inspired all the more hatred as they seemed less capable of causing harm through their increasing decay. “The present state of things”, said a German writer, a contemporary and friend of this old regime, “appears to have become generally painful for everyone and occasionally contemptible. It is strange to see how people now judge unfavorably everything that is old. New impressions come to light at the heart of our families and upset their orderliness. Even our housewives no longer wish to put up with their old furniture.” Yet in Germany, at the same time as in France, society was thriving and enjoyed a growing prosperity. But everything which was alive, active, and creative was recent in origin, not only new but in conflict with the past.

Royalty shared nothing in common with the royalty of the Middle Ages, possessed other powers, occupied another position, had another spirit and inspired other feelings; the administration of the state extended everywhere, settling upon the remnants of local powers; the hierarchy of public officials increasingly replaced the government of the nobility. All these new powers acted according to procedures and followed ideas which men of the Middle Ages had either not known of had condemned. These had their links in fact to a state of society beyond their experience.

Let’s look briefly at a few examples. Again, I’m trying to leave out the main factor, intentional gangsterism and greed, and just mention the underlying structure and process factors, as well as some “innocent” motivations.
We started out with Obama’s energy policy, if one wants to call it that. Really Obama has no energy policy other than continuing the doomed status quo of corporatism, the technology cult, and massive consumption. It’s these very prejudices, ingrained far beyond the imperatives of greed, which help set up such objective psychological barriers to a rational energy policy. There’s also the refusal to accept resource constraints like Peak Oil, this refusal bolstered by all the dogmas and delusions of economic ideology (as well as the delusion that economics is a science). There’s also the tremendous sunk cost of cars and suburbia and the mass-energy infrastructure, entrenched Big Oil and Big Coal (not referring to their greed but their silhouette on the cultural horizon) and the new ethanol racket, trying to become Big Ethanol through the nurturing of its father, Big Ag and its mother, corporate environmentalism.
All of these represent big chunks of existence whose gravity serves as a form of propaganda in itself. People look at the sheer size and media presence of structures and become resigned, even if they wish they could sweep the landscape clean. They end up passively embracing what they consider laws of being.
As for the legal laws, everywhere you look these are set up to put up massive passive resistance to change even where the enemies of change don’t actively attack. Thus the 2005 and 2007 energy bills massively entrenched existing rackets and set what are meant to be “accepted” levels of renewable energy development. Since these were bipartisan bills enacted with great media fanfare, they’re meant to encode the status quo energy regime in our very spiritual and political DNA. Obama’s would-be energy bill is meant to continue this totalitarian process, adding cap and trade to the racketeering mix. (Needless to say, it would do nothing to mitigate greenhouse gases nor is it meant to.)
The same enshrinement exercise played out with the Bailout, with the health racket bailout, and is now continuing with the sham finance bill. The way the bills have been negotiated is also meant to further entrench the new legislative paradigm (there was a time where majorities sometimes really did want to legislate as per their constitutional mandate; no more) where everyone commences in the full understanding  either that nothing in the Status Quo will be changed, or else its assault on the people will be escalated. Maybe nobody even knows which of these it’ll end up being; either way the process is to put on a political show, with various cadres either delegated or self-appointed to play doomed heroes or misdirectional villains, while in the end they try to smear out responsibility for the real villainy among themselves while the flacks call it all “progress”. I stress that although everyone’s intent may be villainous, they’re also enshrining a process whose mechanism is meant to be immutable. Even if you came into Congress sincerely seeking reform, you’re quickly made to understand that that’s not Congress’s business, and you can either fall into line or get out. So far they’ve all fallen into line.
A similar but cross-branch process boondoggle is the net neutrality mess, where nobody in the government can seem to figure out for themselves where the power should be – with the executive (the FCC)? or the Congress? or the lawless courts (as the DC appellate court recently claimed in its own piece of judicial activism)? The result, of course, is that the telecom rackets win. All this squabbling imprints people with the process notion that process is both inscrutable and critically important, thereby fogging their eyes against the fact that either the FCC or Congress can enforce net neutrality at will; who does it doesn’t matter much; the point is for someone to do it.
Those are a few examples of how the existing system, not only on account of the malign intent of the actors, but also on account of its own inertial processes and mindsets, is a pit of stagnation and obstruction where no constructive change can be accomplished. It’s the same existential congealment as that which confronted the rising people of France and Europe in the 18th century.
There’s one big difference between the world Tocqueville described and today. Writing of the days of the ascent of fossil fuels, the ascent of the Industrial Revolution, of mass democracy, of the aspirations of the Enlightenment, he described an ascending new vibrance running into a bottleneck. But today, in the time of Peak Oil, the collapse of exponential debt, the permanent stagnation of capitalism and its calcification into corporatist oligopoly, in our post-democratic, neo-feudal time, we’re more like fugitives who are bottlenecked as we try to escape.
Can we find our own vibrance? Something like the cooperative movement of the 19th century Farmers’ Alliance, and the political self-respect it engendered according to author Lawrence Goodwyn? Relocalization as a movement needs a focusing action which involves cooperative work toward real economic self-reliance and political rediscovery. Such a movement, flowing as water around and under the dead rock of the kleptocracy (in the best Sun-Tzu tradition), is clearly the only possible solution. But we need to find the ideas and actions to render it vibrant. 

Two Poems

Filed under: Poetry — Russ @ 1:01 am


Spirit beckons future, where it’s calling us to hear
The force which hails us forward as we meet the rising years.
Run to meet the bugle dawn, time won’t wait much longer;
We must arise, transcend, alive,
Uplift our eyes toward rising suns.
The call resounds from future dawns where our voice will ring stronger,
And stronger still beyond this strength the surge of freedom runs.
Fate corrects the fables as men wrote of them before;
Our songs were searching higher winds up where the brethren soar.
The dream demands conviction, thought demands a mandate.
We must rewrite the future word,
Not fantasy but genesis;
Our minds expanding toward the vistas we create,
Our ears hearken to nature from the radiance and bliss.
Freedom’s wine will flow from where its fermentation dates,
The new spirit beckons where the enemy deflates.
We sing the constitution, the medley of our hearts.
We shall reprise America,
A generation shall expose
The new fault lines of justice where the will’s endurance starts;
The dream recedes, the darkness flees, the vision grows.
Your eyes were always filled with light,
Reflecting what you always dreamed
And could sense in your soul was true.
The light always led you forward,
Toward a vantage where you hoped to see
The meaning you always sensed,
Where your gaze would stagger dazzled
As all horizons streamed away,
Revealing the endless seas.
In your dream’s eye,
You long watched the scenes proceeding by,
Exotic lights, the moon and stars,
Their shimmer over a painted water,
And a gentle darkness implying peace in the scene;
An implied peace whose only belying hint
Was the breeze you could sometimes sense at night,
Implying a world beyond.
How long have you dreamt of this day?
This day which symbolizes
All the rays of hope aligned,
Where you now set off to find yourself,
Commit your sails to the singing winds
And cast your nets to the sparkling waves
To capture some of the light for yourself,
To match the light
Which has long adorned your eyes.

June 22, 2010

How Kleptocracy Congealed (The New Feudal War 1 of 4)


Beyond the simplest town hall and tribal communities, all governments are to some extent corrupt, and all economies contain legalized racketeering. But this doesn’t mean every system is a kleptocracy. We can’t be so profligate with superlatives without rendering concepts useless, although that too is a common modern disease. I’d wager it’s part of the indoctrination plan to have the perception spread that “everything has always been like this”. It fits in with the Status Quo Lie, that today’s status quo is really the normal baseline, a law of the universe. If people believe the situation is not just superficially similar to e.g. the Gilded Age, but exactly the same, then they can believe the solution is the same – time and “reform”. But this is not in fact the case.
The fundamental difference between today’s situation and that of past corruptions is its basis in the physical limits of Peak Oil. To describe the process one way, throughout the ascent of the oil age, the overall economic pie was getting bigger, and the goal of the elite gangsters was to steal from this growing pie. Although the goal of capitalism is always to either exacerbate existing scarcities or artificially generate scarcity where the natural state is abundance, cheap oil afforded such a surplus that it was actually difficult enough to generate artificial scarcity that it was politically easier for the elites to let the workers keep a relatively high proportion. This people’s piece of the pie wasn’t remotely proportional to their rightful share (that would be 100%), but it was still high by historic standards. This was the basis of the West’s mid-20th century temporary mass middle class.The gangsters temporarily had greater leeway to both satiate their avarice (within the political limits they temporarily acknowledged, which were also imposed by the Cold War, as I’ll get to below) and allow a broad wealth distribution.
That’s one way to look at the effect of the oil surplus. A parallel process was how all economic sectors were temporarily able to use cheap oil to undergo exponential “growth”. This temporarily generated what we call capitalist profits. (The classical economists like Smith and Ricardo and the critics like Marx never understood how they were really discussing an economic system based on investment and distribution of surplus from the fossil fuel drawdown. A “special case” economics indeed.)
The first thing to give was this economic growth process. Even if the oil surplus had been infinite, the sectors of the economy do have limits to entrepreneurial innovation. At some point the major innovations are complete, what’s left is more or less pointless tinkering, and the sector is mature.
In a previous post I summarized what happens next, and rather than reinvent the wheel I’ll just present it again here, if it pleases the court.

1. As capitalism matured it should, according to reality and to its own textbooks, have seen profits fall to marginal levels. There should be very little profit left in the economy by now. Instead, the entire economy should have long since been functioning smoothly and efficiently, with sufficient goods and services in every sector, while government largely shrunk as it would have little role to play as economic arbiter. There would be rough equality of wealth and power distribution, little wealth and power concentration. Democracy would become steadily more healthy and strong.

This is how capitalism was supposed to function. This is what its promoters always promised. This is what would have happened, if every word hadn’t always been a lie.

2. In the reality of greed fundamentalism, elites were never textbook capitalists but always gangsters. No one ever wanted to be a capitalist. No one ever wanted to compete and innovate. They wanted to concentrate wealth and power, period.

As capitalism reached its terminal profit crisis in the latter 20th century, the power elites resolved to deploy an ever more aggressive command economy. They’d use the power of government to substitute extorted and stolen rents for their diminishing “capitalist” profits.

This was happening in tandem with other political processes. Even during the time of the expanding pie, America was completing the sellout of its revolutionary birthright. As Hannah Arendt discusses in On Revolution, at the end of WWII it was clear that the colonial empires of Europe would be challenged everywhere by revolutionary movements. These would all necessarily be nationalist in part, but the rest of their ideological content was up for grabs. That many like the Vietminh would become communist was not a foregone conclusion. Among many anti-colonial insurgents, the American Revolutionary tradition was held in high esteem. America had total freedom to choose the path of encouraging these national revolutions along the lines of its own heritage.
Instead the US government chose the opposite path. It chose to trash its own revolutionary heritage, go rogue against its own best angels, and become the ultimate counter-revolutionary power. It chose everywhere to try to help sclerotic, decrepit Europe prop up its vapid imperialism. Although the propaganda lie was that this had to be done to counteract communist aggression, in fact communism instead was the beneficiary of America’s abandoning the field. Given the anti-colonial movements of the Global South, looking to the competing revolutionary heritage powers for assistance and inspiration, America simply punted and betrayed itself, and communism entered the vacuum left behind.
So to sum up, post-WWII, with the advent of the Cold War and the inevitable liquidation of the anachronistic colonial empires, America chose the path of counter-revolution rather than to compete as a revolutionary power. Meanwhile domestically it sought to co-opt the workers.
Vietnam was a milestone toward greater aggression and unsustainability for this reactionary agenda. It was an exercise in consolidating the military-industrial complex and in driving fiscal recklessness, which would culminate in Nixon closing the gold window in 1971. So the Vietnam-driven deficits were already unsustainable while the dollar could still be redeemed for gold, such that the system had to retrench even before the oil shocks set in starting in 1973, although this was foreshadowed by the American production Peak in 1970. (To get a little ahead of myself, we can compare this to the financial collapse of 2007-08 and say that in both cases the unsustainability of the finance structure in itself brought on the crisis before the energy fundamentals forced it. So in both cases the reckless financial “choice” preceded the structural change, but only as a preview.)    
As I said, this was bound to happen even without the looming end of the oil age. But in fact the US oil Peak was an alarm bell. Not that the system widely consciously registered it, but everyone sensed that oil supplies would be getting tighter in the future. Combining this with the end of “legitimate capitalist profits”, the system was clear in its mind that the temporary middle class would now have to be liquidated.
Here’s how I described how this was planned out, and how it’s been done:

Globalization and financialization comprised the campaign of oligopoly capitalism to prop itself up while stringing along the Western middle classes. They substituted debt for production while obscuring the assault on all public amenities and power. Real wages have steadily eroded since the 70s while wealth concentration has exponentially risen. (That juxtaposition right there is a basic metric of robbery.) The system attacked unions on every political and “legal” level. Social Security has been steadily undermined via ploys like the rigging of inflation metrics (to fraudulently depress COLA increases). Other entitlements have been similarly eroded. Globalization’s open border for unskilled labor provides the basic force of gravitation for all wages, while outsourcing and offshoring destroyed many mid-level jobs completely, forcing and ever greater number of workers into the undifferentiated unskilled mass. (The system did somewhat protect most kinds of professionals for a long time, but now that’s been eroding for many as well.) Walmartization provides a kind of linchpin, the direct conduit for addicting ex-citizens to cheap consumerism while directly destroying self-proprietors and middle class jobs in general, along with the communities anchored by the people who held such jobs.

In this way the temporary “middle class”, fueled by debt and cheap oil, had the carpet slowly pulled out from under it. Meanwhile the basic unproductivity of the Western system was covered up by bubbles, culminating in the housing bubble (itself fueled propagandistically by the Big Lie that you should rely on your house to provide for your retirement, not any other pension; this nicely provided cover while public entitlements and private pensions were gradually being subverted).

So we had the basic structural change. Peak Oil meant an expanding pie would first stop expanding and then start shrinking. This would radically exacerbate the dropping of the profit rate. This was structurally challenging a system whose “normal” aggression and greed had already been stepped up in the post-war era.
Combining these three determinants, two structural and one political, the gangsters saw that the only way they could continue large-scale extractions at all would be to radically intensify them. Since stealing each dollar would get harder and harder, it followed that you no longer had the luxury of conceding any wealth to the people who actually produce it. Allowing the existence of a middle class in principle was a luxury of the mid-century. The gangster elite no longer saw itself as having that luxury. You now had to try to steal every cent, and you had to be as systematic and ruthless as possible in doing it.
History since the 1970s has been primarily the playing out of this endgame. I’ll just describe the strategy and tactics as they were conceived and played, though they’re mostly epiphenomena of the structural forces of Peak Oil and the transformation from alleged capitalism to confirmed corporatism.
The ideology and strategy for all this was neoliberalism.  This was accompanied by such strands as economic “libertarianism”, AKA anarcho-capitalism as its more honest adherents called it, and neoclassical economics, AKA monetarism (with its “liberal” variant, the “neoclassical synthesis”). Buckley conservatism gave it a culturally respectable sheen, while Goldwater and later Reagan added a nimbus of pseudo-heroism. At the more scurrilous level, the Big Lies included the “ownership society”, “trickle-down” supply-side economics, the Laffer curve, and later “third way” politics and “compassionate conservatism”. We were allegedly going to move from a manufacturing economy to a “service economy”, and later to an “information economy”.
Maybe the most concise expression of the battle plan written up in one place was Lewis Powell’s 1971 corporatist strategy memo. This is a classical example of totalitarian reversal – for every word of its accusations against the enemies of American business, it’s meant to be read, “this is what we should be doing”. (He stays in character throughout.) 
All of this was enlisted to justify the replacement of a human society with the exponential debt treadmill. The now targeted middle class was supposed to go into debt and look to its “investments”, while quietly social spending was diverted to gangster plunder, regulation of the corporate gangs was gutted, public property was everywhere given away to private looters at pennies on the dollar, public spaces everywhere were privatized, and democracy itself was completely pimped out.
Everything was wrapped up in a propaganda package which justified intensifying wealth concentration, skyrocketing executive extractions, a war of extermination against unions, and the offshoring/outsourcing/downsizing of all decent American jobs. Globalization shills like Mankiw and Krugman promised all of these were temporary growing pains on the road to paradise, but like all totalitarian flacks they were simply lying about this.
All of this was worked out in principle in the 70s. The oil shocks gave the project new urgency, as the global rape wouldn’t work without ready cheap oil. The Nixon administration worked out the deal with OPEC whereby its oil would be priced and purchased with dollars. This gave the now fiat reserve currency a de facto “real” basis to replace the gold-based Bretton Woods basis Nixon had just abrogated. In return the US promised to prop up the undemocratic plutocracies of the Middle East against all democratic pressures. This was formally enshrined in the Carter Doctrine, which declared that anything which could interfere with the flow of Mideast oil was aggression against the US. Although advertised against foreign troublemakers, the real target was clearly people’s activists among the Arabs. There was probably also an implied military threat if OPEC producers didn’t deal.
Meanwhile under the scheme of petrodollar recycling, the dollars the West paid for oil would be put right back in the Western banks, who would lend it at predatory rates to developing countries for their own oil purchases. Every time OPEC received the dollars they’d extract some and send the rest back to the banks, who would extract some and lend the rest to third world elites, who would extract some and send the rest back to OPEC while saddling their own hapless peoples, who received none of the benefits, with the debt.
The goal was for the banks and OPEC to profit, for the West and corrupt regimes around the undeveloped world to get their oil, while the poor of the world would be forced to pay for all of it. Since they could never actually pay these odious debts, neoliberalism in the guise of its thug organizations the IMF and World Bank would stand ready to swoop in with a “structural adjustment”, which basically meant the complete looting of the helpless country. All its natural resources, and what little public property the people may have managed to accumulate, and what little social safety net they may have managed to stitch together, would all be confiscated to pay the debts these people never incurred, but which were criminally inflicted upon them.
(In part 3 of this series I’ll describe how, under the new name “austerity”, this same structural adjustment is being brought home to the Western countries themselves.)
Another detail was the transformation of the finance sector. It was of course always a gang of thieves, but it didn’t fully rationalize itself until the 70s and 80s. This was the period of the switch from partnerships as the common organizational model to limited liability corporations, and later to public corporations. The trend here is clear – enabling first the owners, and eventually the officers, to unshoulder all responsibility and risk, first on society, and later on the “owners” themselves (shareholders).
At the behest of Wall Street this drive to send every corporation public added the feature that stock price became the most important measure of a firm’s “health”. Productivity, real innovation and profitability, meant nothing next to short-run goosing of the stock price. Needless to say the welfare of the workers meant nothing. The goal here was to transform the entire economy into a casino for the benefit of the gamblers of the finance sector. They figured, with the end of the oil age the real economy as we’ve known it is doomed anyway, so we might as well run the risk of blowing it up prematurely for the sake of our personal profit.
The also had the benefit of setting up the stock market as a combination of dictator and terrorist. Even politicians who might have wanted to act in the public interest against the banks were prone to be intimidated by the market’s threats and tantrums. Most pols, of course, were happy to use the market’s “expected” reactions as a pretext for the crimes they already wanted to commit. This is taking on especially chilling significance today in the runup to “austerity”, as I’ll describe in part 3. The stock market terrorist also holds hostage the middle class in the form of its promised pensions, which have all been inextricably linked with the fortunes of the market. The message has long been clear – don’t get uppity, worker bee, or your 401(k) gets it.
This was all part of financialization, whose structural basis was the previously mentioned impossibility of keeping “real” profits up. Turning the flow of capital itself, previously a mechanism of capitalism, into the very core and purpose of the machine, was a way to temporarily garner fabulous rents. Again, since the real economy was doomed anyway, there was no reason not to take the finance sector, previously a periodically troublesome epiphenomenon of capitalism’s normal boom-bust cycle, and turn it into a pure extortion racket and con ring to maximize profiteering off the ultimate bubble and the ultimate bust, both of which would be engineered by this very racket.
(The exponential surge of “innovation” in financial “products” was part of this as well, a primary mechanism of its functioning.)  
All of this was already progressing through the 1980s. But the Cold War still imposed some restraints upon it, both because of the direct threat of the Soviet bloc and also because as long as the USSR existed it offered a political alternative to Western neoliberalism. With the collapse of the Soviet Union and the end of the Cold War this last restraint was removed. Now Western corporate aggression could rage forth in its full fury. In spite of the Big Lie, no “peace dividend” ever materialized, nor was it ever intended to. Irving Kristol wrote a manifesto openly declaring that with the Soviet Union gone, the West must greatly increase its military spending and aggression. This is exactly what was done, as planned. Thus every allegation throughout the Cold War about the West’s fundamental aggression was fully confirmed. It was a textbook example of what Arendt called a core trait of totalitarianism, that it steps up its aggression and its terror after the war has been won. So it was with neoliberalism.
From here on there was no restraint on plundering expeditions, especially in the former Soviet bloc countries; on terrorism and war as the response to any resistance or dissent; on disaster capitalism as the response to any opportunity anywhere which left people damaged and weakened. There is never a moment where any consideration enters the minds of Western leaders other than power and plunder. Everything is gauged at every moment according to those vicious imperatives.
And so today we have the full-blown kleptocracy. It rose out of, first, the imperative of gangsterism to survive as long as possible in the face of Peak Oil and the stagnation of the capitalist profit rate, and second to profiteer as much as possible off the final big binge and bubble which oil and debt were going to afford before burning out. The goal for the elites was simply to loot as much as possible, amass as much power as possible, impoverish and disempower the people as much as possible, undermine or destroy democracy; and to position themselves to prevent any democratic adaptation to the post-oil world, but instead to reimpose feudalism, constituting themselves as a new version of the medieval elite.
In parts 2-4 I’ll describe how this is meant to play out. Part 2 will recap the Bailout and describe its status today.

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.”

June 16, 2010

The Afghanistan Decay


Contrary to initial suspicions, General David Petraeus did not in fact pass out in a moment of clarity when his delusions fell away and he beheld the insanity and wickedness of the Global War on Terror in its full truth. It was just dehydration. Apparently he doesn’t know how to drink enough water in the desert. That sounds about right for the jokers running this war.
In a criminal system, every new piece of evidence that you’re on the wrong path is taken as a pretext to accelerate down that path. So it’s likely to be in Afghanistan, even as contrary evidence – on the strategy, on the tactics, on Karzai – continues to pile up. Obama still claims to be sticking to his 2011 partial withdrawal timetable although they’ll “review” in December. Never mind that the touted “withdrawal” from Iraq is already proving to be bogus.
So everyone’s probably seen the big “news”, that the US claims to have discovered vast mineral reserves all over Afghanistan. It’s not in fact news, since the original discoveries were by the Soviets in the 1980s, and Afghan engineers told the Americans about them in 2004. The Americans apparently ignored this information until 2007, when they carried out aerial surveys to augment the data. Now they’re claiming to have located upwards of $11 trillion worth of gold, copper, cobalt, iron, and lithium. The lithium deposit supposedly rivals that of Bolivia, the world’s largest. Electric car believers, rejoice! If the lithium really is there, I’m sure it’ll be used for low-cost mass EV production and not weaponry or luxuries for the rich.
The proximate cause for this old news being announced now is that the much-hyped Kandahar offensive has been postponed and downgraded to an “operation” or dawdle or whatever they’re now calling it. Even the MSM is prognosticating failure, as it ruminates on the fact that the model operation in Marja has already failed.
It looks like they’re trying to artificially stimulate a new pretext for a lost war. (The GWOT itself was in part a textbook foreign distraction from a domestic problem in the first place, in Bush’s case that he wanted to turn the people’s eyes away from his pre-Bailout looting of the country. Sounds quaint today. And yet now the diversionary GWOT needs its own meta-diversion.)
Lots of people had the initial reaction that “now we’ll never leave”. The intention of never leaving was already the case, so this doesn’t really change anything there. But I suppose it may harden the resolve on both sides, in which case it favors the insurgents.
This is because, in spite of idiotic Western hubris, wars of attrition in the Global South always favor the insurgency wherever it fights with resolve. Anywhere this is the case, “You can kill ten of ours for every one of yours we kill, and you’ll still give up and we’ll still win”, as Ho Chi Minh said. Any reason to fight will always be more deeply and ferociously felt in the man fighting for his homeland than in the mercenary/tourist who couldn’t even tell you why he’s there, no matter how professional he is. So it follows that any new reason, in this case fighting to hang onto the mineral wealth of one’s homeland vs. fighting to steal resources from a foreign country, will add to the insurgents’ preponderance of resolve, and thus increase the pro-insurgency attrition spread.
Of course we have no idea whether these mineral reserves exist in such quantity at all, and if they do exist, whether they can ever be extracted under conditions of war and Peak Oil.
And if they do exist and are extracted, who’s likely to be doing the extracting? That would be China, who already deftly picked up many of the Iraqi oil contracts the US had fought so hard to “liberate” for its own oil rackets. Instead the Chinese rackets are looking to rake in the profit after the US expended the blood and money. The same thing is already happening in Afghanistan, where the biggest Karzai mining concession was awarded not to his erstwhile US masters but to the Chinese.
Given the abysmal relations between the US and Karzai, another heckuva job on Obama’s part, there’s no good reason to think US mining interests will have any inside track on any future concessions.
But the Democrats remain stoic. Representative Ike Skelton even saw fit to channel Donald Rumsfeld: “Karzai’s a challenge. But you work with what you have.”
Yes, you launch imperial wars with the stooges you have, not the ones you want.
And how well is this war of aggression going? About as well as can be expected under the circumstances. Petraeus wrote the counterinsurgency (COIN) manual, and it’s Stanley McChrystal’s bible. A basic axiom: You need twenty soldiers per one thousand of the populace. In Afghanistan that means half a million troops. This is a prerequisite, as the commanders decreed.
“I see. So can you do effective counterinsurgency with one hundred thousand?”
Petraeus and McC: “Sure!”
That’s why Marja’s going the way it is, and that’s why Kandahar’s a pipe dream.
I was contrasting Patton, who had the will to fight and was good at it, with Petraeus and McChrystal, who seem to be both lacking in will and incompetent. Patton would be the first to say drone warfare* is cowardly and ineffective. The fact that they’re emphasizing it is evidence of the decayed moral fiber of the army, and reliance upon such gadgetry only furthers the rot. If you want to fight the war, if you have the will to fight the war, you’d say forget the drones, which are counterproductive (as the CIA itself admits), and instead commit to massive force on the ground. If you’re not willing to do that then you’re not serious, you really lack the will to fight, in which case you simply shouldn’t do it period, instead of being half-assed about it.
I’m not saying such ground warfare would work either, but that’s the point. These COIN wars fought for purely piratic, corporate ends, are not winnable. And they’re really not supposed to be. The point of such a war is to hijack the public armed forces as the vehicle of corporate looting, from the weapons contractors to the mercenary and support rackets to the extractive rackets. The war is fought with taxpayer money and public blood while the rackets rake in pure profit. That’s what corporatism’s all about. That’s why the war is meant to be permanent for as long as it can be sustained. It’s a second Bailout alongside the finance Bailout.
(There’s a clear parallel between the expensive, bloody pointlessness of the Global War on Terror and the expensive, economically destructive pointlessness of HFT, bond vigilantism, the carry trade, and all the other games of the Bailout casino. In both cases taxpayer money, in principle infinite, is used as play money by favored rackets. But they get to keep the winnings as real money. The people are stuck with all the real losses.)
So there’s the state of the Afghan bailout. I suppose the services can be compared to the riot police in Greece. It’s unfortunate to have to see things that way, but that’s where the kleptocracy is leading us and will to continue to lead for as long as people follow and obey gangsters.
[* In a chilling but predictable detail, the plans are already being laid to bring the drones home. Soon they won’t need to send a SWAT team to kick down the wrong door and shoot down an innocent homeowner because they wrongly think he’s growing weed. They’ll just target him with a drone instead. That’s the clear logic here.]

June 14, 2010

Notes Toward a New Constitutional Convention


John Jay opens Federalist #2 with an encomium to public interest government.

WHEN the people of America reflect that they are now called upon to decide a question, which, in its consequences, must prove one of the most important that ever engaged their attention, the propriety of their taking a very comprehensive, as well as a very serious, view of it, will be evident.

Nothing is more certain than the indispensable necessity of government, and it is equally undeniable, that whenever and however it is instituted, the people must cede to it some of their natural rights in order to vest it with requisite powers. It is well worthy of consideration therefore, whether it would conduce more to the interest of the people of America that they should, to all general purposes, be one nation, under one federal government, or that they should divide themselves into separate confederacies, and give to the head of each the same kind of powers which they are advised to place in one national government.

I’d say there’s one thing we’ve learned which is also certain, and which the American revolutionaries themselves self-evidently understood, that rogue government is worse than nothing.
Or, to put it a different way (since we often hear expressions of an elemental fear of the political unknown): Given kleptocracy and incipient tyranny, to bow and submit, out of whatever discreditable emotion, is worse than to run the risks inherent in casting off the illegitimate system and building a new one. The colonists heard the jeers of the loyalists and the fears of the stagnant and cowardly, and probably the whining of sheer laziness as well. But they were willing to run the risks Hamilton described in #1, just as they were again choosing to run them in admitting the failure of the Articles and reassembling to frame a new Constitution. Jay now resumes this theme in #2.

It has until lately been a received and uncontradicted opinion that the prosperity of the people of America depended on their continuing firmly united, and the wishes, prayers, and efforts of our best and wisest citizens have been constantly directed to that object. But politicians now appear, who insist that this opinion is erroneous, and that instead of looking for safety and happiness in union, we ought to seek it in a division of the States into distinct confederacies or sovereignties. However extraordinary this new doctrine may appear, it nevertheless has its advocates; and certain characters who were much opposed to it formerly, are at present of the number.

This is true of today’s situation, as evinced by several examples. The Civil War supposedly settled the secession question. It really only settled might making right, but at any rate that stasis settled in for a long time. But today we have intellectual discussion of secession and even nascent movements, and the rationale for these arises at different points along a wide ideological spectrum.
The phrase “of their number” brings to mind the tea potters who had no problem with Bush policies but suddenly hate those same policies now that they’re Obama policies. But the example shows again the fraying of the alleged bonds of politics.
And then there’s Peak Oil and relocalization. Are we questioning union as well? Yes, we regard the top-heavy, bloated centralized system as unsustainable. It will have to simplify and decentralize whether it’s willing to or not, simply out of its inability to prop up its own weight and complexity. Do we also call for simplification and decentralization as a moral and political imperative in itself? Some of us do that as well. It’s evident that the corporate debt/”growth” economy has done nothing but concentrate wealth and power in the hands of a few gangsters while stealing the people’s wealth and destroying our quality of life, our sense of well-being, our very democracy and freedom.
We can win these all back, but it’ll have to be done fighting on the line of building new power at a lower level of government and smaller, simpler level of political and socioeconomic organization. A relocalized economy and a decentralized, participatory democracy, are the two broad goals we must seek. Of course this still leaves open a vast number of possible details and ways of achieving those.
But first we must consider the difference between today and the original Convention. Consider Jay’s encomium to the land and the people.

It has often given me pleasure to observe that independent America was not composed of detached and distant territories, but that one connected, fertile, widespreading country was the portion of our western sons of liberty. Providence has in a particular manner blessed it with a variety of soils and productions, and watered it with innumerable streams, for the delight and accommodation of its inhabitants. A succession of navigable waters forms a kind of chain round its borders, as if to bind it together; while the most noble rivers in the world, running at convenient distances, present them with highways for the easy communication of friendly aids, and the mutual transportation and exchange of their various commodities.

With equal pleasure I have as often taken notice that Providence has been pleased to give this one connected country to one united people — a people descended from the same ancestors, speaking the same language, professing the same religion, attached to the same principles of government, very similar in their manners and customs, and who, by their joint counsels, arms, and efforts, fighting side by side throughout a long and bloody war, have nobly established general liberty and independence.

He goes on to echo the long cherished idea of America as a promised land for freedom I briefly discussed in my previous piece on the Convention.
Today we no longer enjoy the conditions Jay could boast about. The relatively low virulence of socioeconomic conflict back then was primarily because of natural abundance, the resources and the sheer magnitude of open land (if one left out the Indians). Jay was more correct than he probably knew when he mentioned the soil and waters even ahead of the unity of the people. There just wasn’t much scarcity to fight over.
Today it’s a radical injustice to still demand, and an evil deception and depravity to exalt, the economic version of the ideology of the frontiersman (so-called conservatism, “free market”, economic “libertarianism”). This could in theory have worked on an actual physical frontier where land was open to the rugged homesteader willing to work it. (But anyone who really knows American history knows what a complete myth this actually is to describe the settling of the West, which actually involved big government handing over all the best land and massive corporate welfare on top to the railroads, the agricultural rackets, real estate speculators, and other gangsters.)
Like I said this could in theory have worked back then. It can’t possibly work in today’s depleted world where there’s no room left and we all squirm or suffocate or thrash in a sardine can. (And none of us even own the can.) Whatever validity “capitalist” notions may have theoretically had in an empty, bounteous land, they have zero validity in an enclosed, seething cattle car. Today we no longer have capitalism because even in principle there’s no room for it in a centralized oligopoly. So just like with every other non-corporatist ideal, if you want real capitalism you have to want economic relocalization.
Jay describes how the founders, having embarked upon the great trial, recognized their error with the Articles and reconvened to try again.

A strong sense of the value and blessings of union induced the people, at a very early period, to institute a federal government to preserve and perpetuate it. They formed it almost as soon as they had a political existence; nay, at a time when their habitations were in flames, when many of their citizens were bleeding, and when the progress of hostility and desolation left little room for those calm and mature inquiries and reflections which must ever precede the formation of a wise and well-balanced government for a free people. It is not to be wondered at, that a government instituted in times so inauspicious, should on experiment be found greatly deficient and inadequate to the purpose it was intended to answer.

This intelligent people perceived and regretted these defects. Still continuing no less attached to union than enamored of liberty, they observed the danger which immediately threatened the former and more remotely the latter; and being pursuaded that ample security for both could only be found in a national government more wisely framed, they as with one voice, convened the late convention at Philadelphia, to take that important subject under consideration.

These are the things we have to hash out. A new Convention will have to reclaim true federalism and decentralize it beyond what the original Framers considered appropriate for their own time.
The two main circumstances which have changed are the changed material dispensation, as I mentioned above, and the current tyranny of corporate rackets. This is the proximate cause of the federal government’s abdication of sovereignty and its malignant metastasis into a kleptocracy.
I’ll give another brief exposition on corporatism, this time a riff on “Too Big to Fail”. We all say, and even the cadres of government say, “TBTF is unacceptable.” But look at it this way – is the government itself Too Big to Fail? In a sense, yes. Most of the things the people currently consider non-negotiable are completely dependent upon a big, aggressive federal government, everything from entitlements to cheap consumer goods. It’s in fact false that we need anything this system provides, or that we couldn’t find better ways of providing it for ourselves. But of course the system propaganda seeks to suppress realization of the truth. And the government will reject “failure” wherever it can even if it is proven beyond any doubt that society would survive this government’s failure and would even be much better off for it. So they want the continued existence of the government for its own sake.
The government’s actions in bailing out the banks and dispensing massive corporate welfare prove that where it comes to corporate TBTF, in the case of specific big banks and corporations and sectors, here too the government simply wants to maintain these rackets in parasitic existence and loot the real economy on their behalf, just for its own sake. It’s all one unified corporatist governing structure. The kleptocratic system’s only goals are self-preservation and maximizing robbery.
The difference is that in theory government is constitutional and partakes of the sovereign authority, whereas by definition no corporation can ever be sovereign. By definition it can only tyrannically usurp governing power. This can happen only where it destroys the legitimate government, or where legitimate government has abdicated, alienated its legitimacy, and become illegitimate.
That’s what we have today. In that case, we have tyranny exercising power while authority is replaced by a void. In that case, by default, sovereignty falls back into the hands of the people as a mass of clay for them to fashion as they will, if they will. Otherwise they cease to be a people and become an atomized rabble of slaves.
Jay then recommends the new Constitution. He compares its genesis to the work of the First Continental Congress back in 1774. He compares how that earlier work, like the work of his day, faced the opprobrium of liars and criminals, especially in the press.

It is not yet forgotten that well-grounded apprehensions of imminent danger induced the people of America to form the memorable Congress of 1774. That body recommended certain measures to their constituents, and the event proved their wisdom; yet it is fresh in our memories how soon the press began to teem with pamphlets and weekly papers against those very measures. Not only many of the officers of government, who obeyed the dictates of personal interest, but others, from a mistaken estimate of consequences, or the undue influence of former attachments, or whose ambition aimed at objects which did not correspond with the public good, were indefatigable in their efforts to pursuade the people to reject the advice of that patriotic Congress. Many, indeed, were deceived and deluded, but the great majority of the people reasoned and decided judiciously; and happy they are in reflecting that they did so.

 But most of all he lauds the mettle of the brave, conscientious activists who worked so hard to produce something of value for the people.

They considered that the Congress was composed of many wise and experienced men. That, being convened from different parts of the country, they brought with them and communicated to each other a variety of useful information. That, in the course of the time they passed together in inquiring into and discussing the true interests of their country, they must have acquired very accurate knowledge on that head. That they were individually interested in the public liberty and prosperity, and therefore that it was not less their inclination than their duty to recommend only such measures as, after the most mature deliberation, they really thought prudent and advisable.

These and similar considerations then induced the people to rely greatly on the judgment and integrity of the Congress; and they took their advice, notwithstanding the various arts and endeavors used to deter them from it. But if the people at large had reason to confide in the men of that Congress, few of whom had been fully tried or generally known, still greater reason have they now to respect the judgment and advice of the convention, for it is well known that some of the most distinguished members of that Congress, who have been since tried and justly approved for patriotism and abilities, and who have grown old in acquiring political information, were also members of this convention, and carried into it their accumulated knowledge and experience.

Contrast this with the minions of the kleptocracy. All the vile cadres of corporations, government, media, academia, the professions….the combination of gutter greed and powerlust, chickenhawk jingoism, tinpot arrogance and whiny sense of entitlement, loutish pride in ignorance, mediocrity, and stupidity, comes together to form what must be the most repulsive assemblage of subhumanity in all of history.
Contrast today’s gangster cesspool with the bright panoply of political heroism Jay evokes. Even allowing for rhetorical airbrushing, the difference beckons from across such an abyss as to seem infinite.
But perhaps the chasm isn’t so wide if we move away to a different vantage? Such people as Jay evoked can never again be produced by this system, but perhaps we the people can still find such character among ourselves.
We the people must reassert sovereignty. The legitimate government space is now vacant. Certainly we must beware of the kleptocracy’s capacity for force, but nevertheless we have to assert our sovereignty to the full extent of the possible, and then some. Only this can prove that those who stole our country are wrong when they call us slaves who deserve our fate.
So a new Convention shall have the mission of reconstituting the constitution. Its strategy shall be a new conception of federalism, explicitly devolving power to lower levels of the federal structure. This shall be part of a general movement of economic and political relocalization. Indeed, relocalized politics shall be a necessary precondition for any new convention which isn’t Astroturf. So it follows that the first order of business is to reconstitute something along the lines of town hall government. Other models include the medieval city, the American and French revolutionary clubs, the Russian soviets, the anarcho-syndicalist communes, and political manifestation of the Populist cooperatives. Tactically, anything seems possible, and part of the whole point of participatory democracy is experimentation.
That’s the way, if the seedlings are hardy enough to take full advantage of what soil and sun and rain are left, and I think even today these are still ample if the seed is sound, they can grow and flourish and eventually come together to comprise a vibrant forest.
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