January 4, 2011

“Build America” – or Rebuild America


A few weeks back I mentioned how one of the assaults contained in Obama’s deal with the Republicans is to gut the Build America Bonds program, one of the few reformist elements of Obama’s own phony “stimulus”.
I said there:

There’s one piece of the proposed deal which is of real interest, the allegation that it will clobber already-reeling state budgets by ending the Build America Bonds (BAB) program.

Even before this the moderate Chris Whalen has been saying he thought it won’t be long into 2011 before state governments will start telling mortgage debtors to stop paying mortgages but continue paying property taxes. The idea is that the states are increasingly being abandoned by the banks and the federal government. This abdication of legitimacy is becoming clear at the same time the states and localities are facing true fiscal crisis. So under those circumstances, rational state and local governments would want the people to keep the money local as much as possible. Paying the property tax before the mortgage, and if necessary only the property tax, while keeping up the property (which the banks themselves are prone to leave derelict after a foreclosure), is a way to accomplish that. Why should a state feel any call to enforce any “right” of Wall Street? On the contrary, they should declare such abdicated rights null and void.

If the alert about how this DC deal will further hit the states is true, that may accelerate the coming of the day Whalen was talking about.

Yet another critical piece of evidence for the already massive pile: There is absolutely no legality or legitimacy whatsoever in this bank mortgage-based land dispensation.

It is manifest nonsense to even try to claim the homeowner has any moral or legal relationship with anyone but the local government, to whom he owes property taxes, and the community, to whom he owes his good stewardship of the property.

Beyond that, to pay a cent to the banks, e.g. to keep paying on an invalid mortgage, is simply to throw money into a meaningless void.

Today James Kwak at Baseline Scenario has a good eulogy for these BABs. In my comment I didn’t focus on the defunct program itself (as Kwak admits, he’s kind of late to the party in writing about it), but on the implications of this for true federalism. Kwak, like almost everyone else, blandly gets the terms and concepts exactly backwards.
So I thought I’d reproduce the comment here, since federalism is to be a primary focus going forward. The two quotes are from Kwak’s post:
“There are various policy arguments for and against such a subsidy, but the basic fact is that we have a federal system in which power and responsibility are shared between the national, state, and local governments, and this is one way (not the only one) that the national government distributes money to state and local governments.”
No, we have anti-federalism. A truly federal system would repose all power at the level where sovereignty itself resides, in the people.
By now, with the definitive failure of trickle-down “representative” pseudo-democracy (it’s now proven this always degrades, sooner or later, into kleptocracy), the only rational alternative left is what was always the only moral and sovereign option, true federalism, that is direct participatory democracy and economic self-management. Nothing else will ever again have any legitimacy.
That in 1787-88 the anti-federalist centralizers managed to appropriate the term “federalist” for themselves and slap the term “anti-federalist” on the opponents of centralization was simply the first great terminological heist in American history.
“The simplest alternative would be for the national government to simply hold onto its money and decide how to spend it, instead of funneling it to state and local governments to let them decide how to spend it.”
No, both the simplest and the only legitimate alternative is this: Restitute all this political and economic power which was usurped upward. It was stolen under the fraudulent pretense that letting elites extract and monopolize all wealth and power and then having them trickle it back down would in some mystical way render the productive people better off economically (and be even more democratic!) than if we kept our economies and polities in our own hands and managed and distributed it on our own.
But this Big Lie has been definitively disproven. Neoliberal pseudo-democracy is nothing but a scam, a stalking horse for corporate kleptocracy and incipient fascism.
As for the gutting of BABs and how this will render the position of states and localities even more parlous, let’s make a virtue of necessity and add it as yet another reason to withdraw recognition and support from the obviously illegitimate Wall Street/Washington kleptocracy.
Even before this, the moderate Chris Whalen was predicting that in 2011 state governors would start telling people: Stop paying your mortgage, stay in the house, keep paying your property taxes.
In other words, the only possible legitimate* governments are the ones much closer to our communities; it’s to our own communities that we owe anything; it was always absurd that banks could own land anyway, even before these banks stole tens of trillions from us; we certainly owe the banks NOTHING, and it’s actually self-destructive to keep paying them anything on any debt; instead we need to draw a line and start rebuilding among ourselves, in our own communities.
Only there can we regain democracy, freedom, prosperity, and human self-respect.
So let’s take the BAB example as yet more proof of the following:
1. “Austerity” for everyone but the top kleptocrats intends to crush everyone below it, including the lower-level governments and civil societies.
2. So here’s the final proof of how the state/local dependence on “federal” trickling-down was always unhealthy and setting ourselves up for destruction. We are now being destroyed, and will be destroyed if we sit still and submit.
Let’s instead break free completely. We can start by breaking the banks. Jubilate in Place – the land always belonged to we the prodcutive people in the first place, and besides, we now own the banks as unwilling purchasers via the Bailout. So all that’s theirs is ours. Let’s restitute the land on a food production basis, and make that the rock of our redemption of democracy itself.
[*As I said, only participatory democracy is legitimate. But as this transformation no doubt will have to be undertaken in stages, we can also talk in terms of “more” or “less” legitimate. Certainly a representative local government is far closer to legitimacy than the Wall Street/Washington kleptocracy.]


  1. I forgot to mention – I know the comment repeats some of the same ideas from the earlier quote.

    I’m trying to find the right wording for the constant repetition of that argument, which I then want to repeat in as many places as possible.

    So if anyone wants to opine that one phrasing or the other is clearly better (or that they both suck, if that’s what you think), have at it.

    Comment by Russ — January 4, 2011 @ 6:22 am

  2. You seem to be advocating what amounts to the economic nullification of the current federal government that starts with a self-service debt jubilee with the backing/approval of the states. When the federal government is merely a proxy for Wall Street, bringing down Wall Street will necessarily bring down the federal government.

    So, perhaps “economic nullification” can be your catch phrase.

    Comment by Tao Jonesing — January 4, 2011 @ 11:14 am

    • That’s a good description, although I don’t think in terms of “bringing down” anything, as opposed to filling the void left behind by the various abdications.

      “Nullification” is a theoretically useful term, unfortunately tarnished by its association with pro-slavery ideologues. But the basic principle of withdrawal of support, and the practice thereof, is contained in the term. “Jury nullification” is a good modern example.

      Here’s a few terms I’m mulling: “Non-Importation” might sound weird, unless we could somehow successfully represent large corporations as truly alien.

      But “Non-Intercourse” has a nice resonance to it.

      In both cases, the historical parallel of boycott and economic localization as primary weapons against economic and political tyranny is precise.

      Comment by Russ — January 4, 2011 @ 2:59 pm

      • But it was the anti-federalist Jefferson who developed the theory of nullification (anonymously) as a response to the anti-sedition act of the Federalists.

        That’s one of the things I don’t like about Jefferson: the man was a snake and a coward who developed lots of theories and ideas for the sake of advancing his political ends without much thought or care about the long term practical consequences and uses of what he developed. Teddy Roosevelt viewed Jefferson to be the single worst president in American history.

        Comment by Tao Jonesing — January 5, 2011 @ 1:05 am

      • Thanks, Tao. I didn’t know that origin. That sounds like a creditable origin to me. Why do you think it’s an example of Jefferson’s perfidy? (Or do you mean that he shouldn’t have done it anonymously?)

        Comment by Russ — January 5, 2011 @ 9:32 am

      • Both, I think.

        If Jefferson had put his name to the theory, it would have been very different. He would have been more careful in shaping its confines. He could have easily limited the theory to free speech rights, which are guaranteed by the First Amendment. Instead, he chose to create a broad states’ version of judicial review, which itself had dubious political origins (created by a Federalist to counter an anti-Federalist president).

        While Jefferson was correct to fight back against the anti-sedition act, the manner in which he went about it was total overkill and sowed the seeds for the nullification showdown during Jackson’s presidency and, ultimately, the Civil War.

        The man was an odd mix of genius, arrogance, ruthlesness and petulance. He’d agree with you 100% on things until you hurt his feelings over 1%, at which time he’d try to burn down the whole thing. It is easy for me to imagine Jefferson as the main character in Poe’s “The Cask of Amantillado,” muttering “nemo me impune lacessit” as he built a tomb around a living enemy who was a friend just the day before.

        Wikipedia link (for lack of having a better resource handy):


        Comment by Tao Jonesing — January 5, 2011 @ 12:39 pm

      • For a moment I was going to infer that you must similarly reject my goal of using the concept.

        But then, contrary to Jefferson, I’m saying the “federal” government is illegitimate, period, and not being two-faced about it (“it’s legitimate, and yet anybody who wants to can nullify…”), which is what it sounds like you dislike about him.

        Comment by Russ — January 5, 2011 @ 3:21 pm

      • I don’t have a problem with the concept of federalism, in the abstract, or even how it was implemented in the early days of teh republic. In the context of how it is being implemented today, I have a big problem with it.

        Neither do I have a problem with Jefferson’s concept of nullification, in the abstract, or even with respect to the specific issue of the anti-sedition act and free speech rights. In the context of how, when and why Jefferson presented it, literally on the heels of states agreeing to be part of a federal system, I have a big problem with it, in part because it led to the expansion of slavery in the United States and the Civil War, among other evils. Southerners were threatening to rescind the social contract that is the constitution even before the ink was dry, which smacks of bad faith to me.

        I have no problem at all with your concept of “economic nullification.” It can only work if the federal government has reneged on its constitutional obligations to its citizens and exceeded the powers the people granted it.

        The federal government should be beholden to the people, not the other way around.

        Comment by Tao Jonesing — January 5, 2011 @ 4:41 pm

      • It certainly has reneged.

        Of course, by now I reject “representation” in itself, even if the representatives didn’t always renege. They always do, so it ought to be a moot point, except that there’s still so many who agree that these elites are all criminals, but whose own ideology seems to boil down to, “we need better elites!”

        So optimally I’d like to convince people that representative government is illegitimate in principle, in addition to the fact that even the best representatives will always be corrupted in practice.

        Comment by Russ — January 6, 2011 @ 6:25 am

  3. Keep at it, Russ. The idea of a new federalism, a federation of locally-administered, sovereign political/economic groups of the people, is an exciting one. I hope that the increasing insolvency of the local governments in the US will eventually lead to the disintegration of the status quo in favour of sovereign local governments, but I wonder how hard the elites will fight to prevent this from happening.

    Your series on the health care Stamp mandate has been really interesting so far, I’m looking forward to the last installment. It seems to present a model of elite reaction to disengagement by the wider population from systems which benefit the kleptocracy- to legislate participation and use the full weight of the “federal” government to enforce it. Confrontation on one of these fronts seems inevitable, but I don’t have any clear ideas about how that will pan out- what will be the factors which make successful relocalisation movements successful? What resources (legal, societal, economic, ?) need to be marshalled before any confrontation occurs?

    Comment by paper mac — January 4, 2011 @ 7:39 pm

    • Thanks paper mac. Those are the questions we’ll have to explore.

      I should have part 4 (or poll taxes and how poll taxes have been resisted) ready in a few days.

      I doubt the elites would be able to fight effectively against a large enough withdrawal and refusal (non-intercourse). So it seems to me more of a question of whether or not the people will actively refuse support. If everyone who already despises the system in words and thought took that action, it ought to be enough.

      Comment by Russ — January 5, 2011 @ 9:37 am

  4. Here is something from Catherine Austin Fitts that seems consistent with what you hope to achieve. Includes some concrete examples on how to bring power back to communities . . .

    Comment by Tao Jonesing — January 6, 2011 @ 12:05 pm

    • Thanks, Tao. I’ll check it out.

      Comment by Russ — January 6, 2011 @ 3:14 pm

      • It’s pretty long. I posted it after watching the first 10 minutes. She hits a LOT of topics that you’ve written about, including GM plants.

        Comment by Tao Jonesing — January 6, 2011 @ 7:01 pm

      • I’ve read a few pieces by her before. What she says about GMOs ought to be interesting.

        Comment by Russ — January 8, 2011 @ 6:53 am

    • Tao; Have you posted this on Yves’ blog? Or is this wonderfully lucid lady too much a competitor of Yves?

      This is a fantastic explanation and should be on every financial site on the internet. Thanks for posting.

      Comment by Paul Repstock — January 9, 2011 @ 2:04 am

  5. Rus: I must most humbly ask if you realize how naive your post sounds?
    “We can start by breaking the banks. Jubilate in Place …”

    To me this sounds like an increasingly remote possibility. Given the mutual support and dependancy arrangements between governments and banks: any such event could only be realized by total revolt. Bank bailouts and Tarp schemes appear to have been only window dressing. The TBTF could only be at risk if the governments were willing to collapse the fiat money system, which I doubt is on the table. Voluntarily colapsing the fiat money system would remove large part of their debt slavery??

    Comment by Paul Repstock — January 9, 2011 @ 1:25 am

    • LOL…Speaking of naive, I have to confess that after atching the Cathrine Fitts video above, I have obviously been more naive than you, in that I have constantly tried to lend some sense of legitimacy to the human faces of governments and corporations. Just as obviously there can be no middle ground. It will be either our revolt or their total domination. Meaning that 5+ billions of us will die by one means or another, and most of the remainder will be alowed to exist only as servants.

      Comment by Paul Repstock — January 9, 2011 @ 3:07 am

      • I still haven’t had time to watch the video, but I’ll try to do it today. It sure sounds good.

        I do think it’s more naive to believe in the already failed path of reformism, counting on the same criminals to voluntarily repent of their crimes (because they discover a conscience?), then to look for transformative solutions, which don’t always succeed, but are the only thing which ever has.

        “We can start by breaking the banks. Jubilate in Place …”

        To me this sounds like an increasingly remote possibility.

        On the contrary, in a very precise sense it’s still remote, but decreasingly remote.

        A year ago, so-called “strategic defaults” were highly controversial. By now, thanks in part to public education about the issue and the further publicity of bank crimes, it’s uncommon to see much argument about it.

        And last summer even I was hesitant to suggest the Jubilate in Place idea, since I saw literally no one else suggesting it. But over the months, little by little, I see others suggest the possibility.

        And as I keep citing as my “mainstream/moderate” authority, even Chris Whalen predicted that soon governors would be telling people to do it.


        It seems to me that the idea is gaining ground. Very slowly, but gaining nonetheless. And all it requires to succeed is a critical mass in a given locality to band together and do it. (I’m of course not calling for isolated individuals to go off half-cocked and do it unilaterally.)

        It’s a classic nonviolent civil disobedience tactic, and it has the added political attraction of being flexible on the question of “property”, since it can be cited as either the first stage toward the full liberation of the land from its current unproductive shackles, or as the highest assertion of local property rights vs. the alien depredations of the banks and federal government.

        As far as the property argument itself goes, we’ll see how long I have to keep plugging away at it until I start to find agreement. I’ll grant it’s nothing but crickets so far, but I bet there’s a lot of people who need only to shake off a thin gauze of ideology to find an interesting question there.

        Comment by Russ — January 9, 2011 @ 3:46 am

      • My freind, I’m not disputing your logic or morality. What I’m saying is that “They” will not surrender. They dare not! If what you suggest is done, their whole house of ‘marked cards’ collapses. The streets will run red with the blood of the innocent and the guilty alike. I’m not joking, I know a bit about the irrationallity of mobs.

        Allowing the banks to collapse would expose and invalidate the governing structure itself. One the government is defrocked, a lot of people may go crazy like that sorry fellow in Tucon. Remember what I was posting on a few days ago about the dangers of people loosing their context in the world. The more sane amounst us may be able to withstand the vertigo because we always knew that the situation was based on convention. But, for many, when a financial and government collapse occurs, taking their position and pensions down the drain, the fear of an uncertain future will drive them insane.

        Comment by Paul Repstock — January 9, 2011 @ 4:16 am

      • Certainly, this place is already insane. Everything the system’s doing is deranged, and there’s bound to be lots of individual derangement as well.

        I hope to cobble together some ideas and some things people can do which, put together, might at least provide a path of sanity and self-respect, even if the odds against ultimate success look long at first.

        Comment by Russ — January 9, 2011 @ 7:29 am

      • A couple of thoughts for inclusion in your “to do list”:
        1)Make a physical/paper list of those things one depends on other people for…
        -very important to admit one’s weaknesses and to know the people one should ingratiate too.

        2)Break out of your ‘rugged individualist’ mode. No man/woman is an island and we nolonger have the luxury of pretending this is the case. ‘Me first’ is part of the mindset which has allowed these messes to grow. The Iron curtain collapsed some time ago so people nolonger need to fear being “communist”, just because they adopt a cooperative rather than competitive stance.

        3)Never allow or facilitate the abuse (by any power) of your neighbour. Know that if you do, your own abuse is coming down the pipe. Abuse is a learned behavior and flourishes best when ignored.

        These are basic concepts but really hard for most people to accept??

        Comment by Paul Repstock — January 9, 2011 @ 12:26 pm

      • Ooops one more and a very important one: Open a community dialogue with your local law enforcement. These people are also your neighbours. It is important that they feel like part of the community. It is important for you to understand their point of view, and for them to understand your concerns.

        Comment by Paul Repstock — January 9, 2011 @ 12:33 pm

      • Thanks Paul, those are all excellent guidelines (if not always easy for everyone to do).

        I just watched the Fitts video. She sure covers it all. I defy anyone to watch it and still think humanity can coexist with corporations and this federal government.

        Comment by Russ — January 9, 2011 @ 3:45 pm

      • Well. the only one I see a big problem with is #3, humanity is constantly conditioned to keep their heads down. Part of the ancient herd survival mechanism I suppose. The trouble is that generally the predator animals were not psycopatic killers. Modern man seems to have perfected that technique. For us, I think it will be a matter of ‘we all swim or we all sink’. I think that the optimal ‘herd size’ our opponents have in mind is so small that few of the commoners have any degree of security. And certainly not any of those who claim to independant thought.

        Comment by Paul Repstock — January 9, 2011 @ 10:30 pm

      • There’s plenty of past examples of such a simple thing as the entire neighborhood resisting any eviction, even in the US.

        But today it’s hard to picture even that. Still, it’s early yet as far as the coalescing of resistance.

        Comment by Russ — January 10, 2011 @ 1:22 am

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