Signs of the Economic Apocalypse, 4-24-06
Gold closed at 638.50 dollars an ounce on Friday, up 6.0% from $602.10 the week before. The dollar closed at 0.8103 euros, down 1.9% from 0.8258 at the close of the previous Friday. That put the euro at 1.2341 dollars, compared to 1.2110 dollars the week before. Gold in euros, then, would be 517.38 euros an ounce, up 4.1% from 497.19 at the previous week’s close. Oil closed at 75.12 dollars a barrel on Friday, up 8.2% from $69.45 the week before. Oil in euros would be 60.87 euros a barrel, up 6.1% from 57.35 euros at the end of the previous week. The gold/oil ratio closed at 8.50 on Friday, down 2.0% from 8.67 the week before. In the U.S. stock market, the Dow closed at 11,347.45 on Friday, up 1.9% from 11,137.65 the Friday before. The NASDAQ closed at 2,342.86 Friday, up 0.7% from 2,326.11 for the week. In U.S. interest rates, the yield on the ten-year U.S. Treasury note closed at 5.01% down two basis points from 5.04 the week before.
The mainstream media discovered gold and precious metals last week, having to explain the sharp rise in the last two weeks. Unfortunately for the media, the causes are hard to avoid: massive triple deficits in the United States and the apparently serious threat of an attack on Iran, or maybe Venezuela. Many analysts see no way around war in Iran short of an overthrow of the Bush/Neocon presidency, something that would also be bad for the dollar and good for gold.
The visit to the United States by Chinese president Hu this past week, had implications for all of the issues outlined above. China owns a great deal of U.S. government debt, and China’s patience with the United States is one of the main reasons the dollar hasn’t collapsed already. Maybe China, with a seat on the U.N. Security Council and a hold of the U.S. dollar by the throat, can be the one who can get a message through Bush’s thick skull not to attack Iran.
While we can only speculate on what was said about Iran and Venezuela during the meetings between Bush and Hu, the debate within the U.S. military is becoming unusually public, a fact that signifies strong opposition to further Bush/neocon wars in the military.
Could the following scenario, leaked to TBR News, be playing out?
April 17, 2006: “One of my best sources for Asian/PRC information is the bureau chief of a major international news service, now stationed in Beijing. He sent me. this morning. a thirty page email containing his views on the current Sino/US relations, both economic, political and military…
The Chinese PRC has grown tired of trying to make any sense of the weird Bush foreign policies, let alone try to come to reasonable grips with them. These two countries do an enormous amount of profitable business with each other. The PRC holds billions of dollars of U.S. Treasury notes and if they became angry and disposed of them at cheap prices on the world bourses, the result would be an economic catastrophe. China has a huge population and an enormous military establishment. China has atomic weaponry and the means to deliver them. China has no oil and needs it badly for its burgeoning economy. China buys oil from Venezuela and Iran. The Bush Administration has clearly indicated their strong desire to oust both governments by internal (read CIA) subversion or, as a final resort, threats of military action. The US has interfered with PRC/Taiwan relations, threatening the PRC with vague military action in the event of hostilities between the two entities. Now, China has determined to draw a line in the sand between themselves and the unstable Bush people. They are going to say, in public, that the PRC will certainly offer support to any other country (read Iran and Venezuela) who feel themselves physically threatened by the Bush people. Beijing has told Bush to butt out of their economic business or China will consider this continued mindless nonsense as a threat to China and act accordingly.
Egged on by the powerful Israeli political lobby and the violently pro-Israel neo cons (who basically influence Bush’s foreign policy in the Middle East to the point of absolute control) Bush has leaked information that the United States “may well” resort to nuclear attacks on Iran because of their alleged building of atomic weapons (that can only threaten nearby Israel and not the United States.) There is no doubt that such military plans exist. They were drawn up before the 9/11 disaster by the American military, at the request of Secretary Rumsfeld and the Vice President with the full concurrence of Bush. Staff talks between the IDF representatives and American military planners were instituted and the final plans were put into a safe in the Pentagon in the event that they were needed.
Bush’s growing fury with the government of Iran, for ignoring his bluster and threats, caused him to order the leakage to the US media of the Iranian Solution. There is no doubt this is a genuine plan but there is serious doubt if it will ever be implemented. From a strictly military logistical point of view, it is impossible of effective implementation. From a domestic, and foreign, political view, it has proven to be a public relations disaster.
Bush is seen by an increasing number of domestic and foreign leaders as mad as Caligula and someone who will lead this country into a hecatomb from which it might never recover.
The Italian prime minister is now afraid to leave office because there is a very probable criminal indictment waiting for him once his immunity has been lifted. A number of the Bush people, viz Cheney, Rice, Rumsfeld, Rove and the leadership of the neo cons strongly fear that some such public vengeance will be wreaked on them if and when Bush leaves the scene. This is the main reason why ultra-right Republicans introduced a measure in Congress to repeal the 22nd Amendment to the Constitution that limits a president to two terms. This failed to loud laughter but the idea is still there.
Bush, who is a terrible physical and moral coward, has similar fears of retribution for the enormous death tolls he has become responsible for plus the incredible looting of the public treasury and embezzlement of public funds by his loyal, and greedy, supporters.
Men afraid of retribution can be very dangerous and now that China is calling Bush’s bluff, it will be interesting to see what he and his poison dwarves will do next.”
According to George Ure,
The visit of Chinese president Hu Jintao with Bill Gates up in Seattle is important. What's being said publicly is that US-China ties must be strengthened. But there's a lot more to it than that.
China is in the position of being a shoemaker for poor people, when it comes to US trade. Right now, China has been lending the poor people (the US) money (buying our debt) in order that the shoemaker can keep making shoes.
But at some juncture - and we think it's close at hand - the shoemaker will say "we have other people who want to buy our shoes, so we won't lend you poor people are much money to buy shoes.
Then the roof falls in on the poor people and the dollar collapses as ever bigger piles of paper are printed. you don't want to see what hgappens when the music stops.
The other warning likely delivered by Hu is that Condi and the neoCON's better watch their step in trying to whip up/create a frenzy to bomb Iran. China is strengthening ties with Iran by pushing for their membership in the Asian Bloc, and I wouldn't be surprised to see China sign mutual defense pacts with Iran, Venezuela, and any other resource rich country the neoCON's are drooling over. Peg that somewhere between a guess and prediction.
Events taking place right now in Nepal can only add to the impression that China is on the rise and the U.S. empire is falling. According to Wayne Madsen,
A real "themed" revolution now taking place in Nepal. Pro-democracy and leftist forces in Nepal are poised to oust Nepal's King Gyanendra in a bona fide "people's revolution". This is not a neocon-engineered public relations stunt like the "Rose Revolution" in Georgia and the "Orange Revolution"" in Ukraine, but an actual grass roots revolution to oust a royal dictator who took power after a U.S. and Indian engineered coup saw the mass regicide of the former royal family in June 2001. The genocide was automatically blamed on a drunken Crown Prince Dipendra. However, as WMR has reported, the coup was actually engineered by Gyanendra and Pentagon and Indian intelligence agents who did not like the policies of the murdered King Birendra (presumably supported by his heir Dipendra) in pursuing a power sharing arrangement with Maoist guerrillas. The course of action taken was to eliminate Birendra's entire line of succession to the throne. Although the international media bought the "Crown Prince kills family" story, many papers and wire services are now using the words "alleged" and "purported" in referring to the "official story" of the regicide.
Although the Bush administration has rushed military equipment and mercenary advisers to bail out Gyanendra, who is an old friend of arch-war criminal Henry Kissinger, the United States, bogged down in Iraq and Afghanistan, is in no position to save the "God King" of Nepal. Soon, the Bush administration will have to contend with a new "people's republic" on the Indian subcontinent.
The fact that Bush chose this point of weakness to insult and snub the Chinese president boggles the mind. Bush seems to be trying as hard as he can to crash the economy, insulting an increasingly powerful lender and business partner and scaring the daylights out of the world with war talk that will only send oil and gold skyrocketing. Xymphora thinks that is the point:
The oil reason for Iran talk
Oil companies pump oil out of the ground, refine it, and move it. They pay a pittance to the countries they lift it from (Chavez is on the hot seat, mainly because he is trying to change this), and a relatively small amount on their other costs, which are pretty much fixed. The supply is always about the same, and the demand is always about the same. Oil is an addictive substance, and people seem prepared to pay whatever they can be fooled into paying, until they are literally incapable of paying more and the economy collapses. If oil is $10 a barrel, oil companies lose money; if it is $60 or $70 a barrel, they make hundreds of billions of dollars a year. The job of oil company executives is to arrange for people to pay the higher amount, which they do through various kinds of advertising and spin, largely based on raising questions of possible future supply problems. The actual day-to-day amounts of oil available on the market varies very little, due to the fact that enormous amounts of it are always available in storage, but the executives have to find varied ways to make people think there is an upcoming crisis. This scam works until they cause a recession. During the recession they sell much less oil at a much lower price, thus keeping the oil in the ground for when they can sell it at a higher price.
Oil prices were sagging, so we recently heard, out of the blue, that the Kuwaiti oil fields were failing. There was no evidence for this, but it succeeded in keeping the price up for a while. Keeping the price per barrel as high as possible is the single most important reason for all the talk about Iran. All the talk about the United States wanting to control the oil fields of Iraq or Iran is more spin; the key is to control the oil market.
Meanwhile average families are feeling the squeeze of trying to fund record profits for the oil industry and nine figure payouts for their CEO’s.
19 April 2006
“Let me tell you about the very rich,” F. Scott Fitzgerald famously wrote in a 1926 story, “They are different from you and me.” But even Fitzgerald could not have imagined how different “from you and me” the very rich would become in America eight decades later.
The sums that the very wealthy have at their disposal in the US are almost unimaginable: Oil executive Lee Raymond receiving some $400 million in a retirement package; the 2005 compensation of bank chairman Richard Fairbank totaling some $280 million; Omid Korestani, head of Google’s global sales, exercising stock options providing him with $288 million last year.
The accumulation is brazen. What once would have been considered a somewhat discreditable fact of social life, the proliferation of billionaires, is now hailed as a sign of America’s success. The demise of the Soviet Union and the supposed absence of any alternative to capitalism, the putrefaction of the AFL-CIO trade unions, the ignominious collapse of American liberalism and the lack to this point of broad-based, organized political opposition to the ruling elite and its two parties have rendered the American financial aristocracy “dizzy with success.” These people have lost their heads.
In the face of public outrage over oil company profits and soaring gasoline prices, Exxon arrogantly defended Raymond’s hundreds of millions, arguing that they were rewarding the executive’s “outstanding leadership of the business, continued strengthening of our worldwide competitive position, and continuing progress toward achieving long-range strategic goals.” The company added that it considered Raymond’s compensation package “appropriately positioned.”
In a study published in October 2005, three accounting professors reported that negative, even occasionally scathing press coverage, “does not substantively change corporate behaviour with regard to pay packages.” The American establishment is all but impervious to the sentiments of the broad masses of the population. In response to a recent report detailing the immense and growing social gap, a spokesman for New York state’s Business Council told a reporter that the incomes earned by his state’s rich were “something that everybody who cares about New York should be pleased about.”
An insulated world of immense wealth exists as never before, at least in modern US history. The number of Americans with assets of $1 million or more reached 7.5 million in 2004, according to a survey conducted by the Spectrem Group. Beyond that, however, are those who possess “Ultra High Net Worth” (a mellifluous term invented by Merrill Lynch circa 2001): individuals in households with $5 million or more in net worth. In a country of 300 million people, the UHNW form a very small percentage of the population, but a not insignificant number in absolute terms. Economic, political and cultural life in America is to an enormous extent organized for their benefit.
This is not simply obscene or unjust, it is socially irrational and immensely destructive. How is it possible to allocate resources, repair and renew the infrastructure, carry out any type of long-term economic planning, cure any social ills, when the official guiding principle is the ability of an oligarchic elite to accumulate ever-greater personal wealth? The gravitational pull of such wealth asserts itself in every aspect of life.
…So we learn that Microsoft’s Paul Allen owns a $250-million, 414-foot “gigayacht,” with seven decks, two helicopter landing pads, a swimming pool, a basketball court, an infirmary, a garage for Land Rovers, a movie theater, a concert space for 260 and a recording studio. Not to be outdone, Larry Ellison of software giant Oracle had his giant yacht built 452 feet long. Ellison’s vessel has five stories, 82 rooms, “a wine cellar the size of most beach bungalows, a dozen yacht-length tenders, and a generator capable of providing enough electricity for a small town in Idaho or Maine... Final cost: $377 million.” (Associated Press)
The wealthy elite are also purchasing their own widebody airplanes, reports Business Week—Airbus A340s and Boeing 777s, which list for over $100 million—as “airborne penthouses.” Customized outfitting may add $25 to $30 million to the cost.
The “supercar” business is also thriving. Ocean Drive, one of the new magazines aimed at the affluent, carries a piece on Michael Fux, whose Sleep Innovations manufactures Memory Foam products. Fux has collected some 50 luxury cars. He recently took possession of a $2 million Ferrari FXX, one of only 20 in the world.
USA Today, in a piece describing the new “super-rich supercar fanatics” who collect Ferraris and Maseratis and Bugattis, cites the comments of one auto broker in southern California, “There’s a whole new breed of collector that has emerged in the last three-four years. Almost all make the kind of money you cannot comprehend.”
Yet great unease persists in these circles. A yacht broker told Associated Press that “a sea change in attitude among America’s superrich” has taken place in the wake of September 11. “Clients are telling me, ‘Hey, I could have been in the Twin Towers. That could have been me jumping out a window.’ The thinking among wealthy people now is, you can die anytime. Nobody can protect you. So you might as well spend your money now and enjoy it.”
…The term “conspicuous consumption,” coined by Thorstein Veblen in The Theory of the Leisure Class (1899), hardly does justice to the current situation. There is a considerable element of recklessness, even desperation, in the obsessive spending. Throwing money to the wind hardly speaks to a sense of historic optimism or confidence among the elite in its own future or the general health of the American social order.
At the height of US global economic hegemony, in the 1950s, corporate directors were expected to lead rather sedate lives, modestly tending to the nation’s economy. Of course they lined their pockets, but they were not expected to live like pharaohs.
In 1957, Fortune magazine reported that some 250 or so individuals in the US were worth $50 million or more. The wealthiest of them, oil tycoon J. Paul Getty, stood all alone in the $700 million to $1 billion category. The equivalent of $50 million today—some $350 million—would not place an individual anywhere near the richest 400 people in the US, according to Forbes’s 2005 list (which begins at $900 million). Getty would find himself somewhere between 31st and 42nd on the list.
The roll call of the wealthiest Americans a half-century ago included famous names—Rockefeller, Harriman, Mellon, duPont, Astor, Whitney and Ford, along with a quartet associated with General Motors, Alfred P. Sloan Jr., Charles F. Kettering, John L. Pratt and Charles S. Mott. These were all ruthless capitalists, but their fortunes were based, directly or indirectly, on the growth of the productive forces.
Today, the list of the super-rich reveals an extraordinary growth of parasitism. One indication is Forbes’ listing of the “400,” which includes an extraordinary number of people whose wealth, according to the publication, is derived from “Investments,” “Hedge Funds,” “Leveraged buyouts,” “Real estate,” “Fashion,” etc. The “captains of industry” of old are few and far between.
If trends continue there will be only owners and the owned. How does it feel to be a comfortable wage slave in the United States? Julian Edney shows how a small but significant number of pathological people in key positions in the workplace can sap the energy and creativity of the normal majority:
Slaves to Debt: Can Our Economy Run Without Fear?
By Julian Edney
April 22 / 23, 2006
A survey question that is becoming increasingly popular asks people if they like their jobs. Depending on which survey you read, somewhere between 40% and 50% of American workers say they don't like their work (1,2).
What is it exactly people don't like at work? We get a clue from the survey that asked what people liked best about their jobs (3). The one aspect respondents liked was not being there. Funny perhaps, but apparently it is something to be found at the job site that makes work so bad. We find out from other sources (4,5) that it's the people.
Fear comes in varieties. Humans can experience a whole botany of these feelings, varying from flicks of worry to cross-eyed terror, but stresses on the job are now so serious, according to a New York Times report by John Schwartz titled "Sick Of Work," that 53% of people keep going back to the job, that "echo chamber of angst," despite feeling overwhelmed (6). We do it so regularly that eight hours of loathing is an everyday routine. CNN now offers how-to-cope tips for workers who hate their jobs in the same dandy, colorful format as the weather and entertainment (7).
Fear on the job? Of course there are other difficulties, the eyestrain, the hurried meals when meeting deadlines. But frequent descriptions of supervisors and coworkers at some job sites are frightful, in fact they sometimes sound like a tribe of mutants. In her book Red Ink Behaviors, Jean Hollands gives illustrations. The Intimidator (loud, domineering, abusive, throws tantrums), the Stressor (spills her chronic frustration over coworkers in sarcasm and unending interruptions), the Micromanager (requires written reports at every turn) the Withholder (has data necessary for operations which she will not share), the Inconsistent (high drama, unpredictable hysteric, lapses into stream-of-consciousness communications) and the brilliant but hostile Techno-specialist (8).
These personalities can be extremely judgmental and may turn rabid when confronted, sending waves of anxiety across the office. Ranting supervisors and other rageaholics are so frequently listed that "the office bully" is now a cliché (9,10). This is what many workers fear, and they begin to sprout everyday symptoms: chronic fatigue, suspiciousness, depression (11). These bullies are devastating to company morale. (We may try the nice middle-class term, anxiety. But anxiety is fear about the future.) Cubicle workers patch their emotions together to get through the day.
In their book Driving Fear Out of the Workplace, Ryan and Oestreich further explain this is difficult to change because the perpetrators are often hard-to-replace specialists. They are often extremely competitive personalities, interpreting every successful intimidation as a personal win (12).
So why do workers go back?The simple answer is, we owe.
It turns out that the average American is also about $8,500 in debt (aside from mortgage--mostly on credit cards), and if payments are late, interest charges up to 30% are common, but many states have no usury laws, so credit card companies can charge what the market will bear. A debt can grow by leaps. Bankruptcy laws have recently been changed, so now there is little or no escape; lenders can pursue debtors for life. Many credit card holders get on a financial treadmill that requires them to make ever larger monthly payments to keep themselves solvent. Eventually we are up to our nostrils in obligation.
If you fall behind on your debt payments, you'll meet another bully, the debt collector. From distant phones which nobody can trace, these unblinking intimidators wait until you get home and then call you persistently to make sure you never forget about the money you owe. Legally or illegally, they threaten criminal charges, garnishment, property confiscation, or revealing your purchases to your boss and relatives (13). About half of Americans say they worry about debt, and 2 in 10 say they worry about debt most or all of the time (14).
Debt payments are a scourge.
Back at work, the manager understands. In 1960 Douglas McGregor wrote a book The Human Side of Enterprise detailing two different management styles. The more common (especially in bigger companies) he dubbed "Theory X," a theory managers carry around in their heads: that humans inherently dislike work, and they have to be threatened and coerced. These managers openly use a hard, punishing style to get people to produce; they also believe people like being controlled. (Theory Y bosses are convinced people are naturally happy and creative, and that job satisfaction is a motivator)(15). Theory X supervisors are very common. They can induce saturnine hopelessness in the easiest of jobs.
From intimidation at work, to debt fears at home, and back again. People bear these fears in an ancient silence born of shame, believing they are failures in a system which otherwise seems free and open because everybody else on TV looks like they're having a good time.
Some Americans are making good money on the job, but at the other end, according to a Pew Survey, roughly 20% of people say they have insufficient funds to buy needed clothing and food (16). Many people are worried about losing their jobs (60% see a job scarcity, with so many jobs going overseas (17)).So we can add to the catalog of fears another type, the fear of consequences. "What would happen if?" I'm guessing most people in debt have let their minds stray over the changes of scenery that would ensue if they lost their jobs, lost their credit, lost the car, wound up in court, lost the house, etc. all the more possible if they have divorce stresses, support payments, large medical costs, or are in a legal suit.
The manager understands.
Which is why he can act with impunity.If the stress is temporary, we may feel temporarily ill, but people who bear this for years develop other signs: a few drinks each lunch, the inaudible voice of the seriously depressed, the trembling hands. The effects of stressful events add up. Later, the praying on the way to work, the paranoia, road rage, alcoholism, the sobbing in the toilets, and domestic violence. An astonishing 30 million Americans are now swallowing prescription antidepressants. The same New York Times report says "Workplace stress costs the nation $300 billion each year in health care, missed work, and the stress reduction industry that has grown up to soothe workers and keep production high"(18).Most of us work because we have no other choice (19). It is economic coercion. The less money you have the less liberty you have. Millions of people lead torn up lives in which pursuit of a personal ideal, or dream, or self-actualization, is a grim joke. Instead, as Studs Terkel reported after interviewing hundreds of people for his book Working, "To survive the day is triumph enough for the walking wounded among the great many of us"(20).
But few writers have stopped to make the broader point, that this large proportion of the population living in degrees of coercion and fear is incompatible with enlightened democracy. Barbara Ehrenreich did, in her book Nickle and Dimed: "We can hardly pride ourselves on being the world's preeminent democracy, after all, if large numbers of citizens spend half their waking hours in what amounts, in plain terms, to a dictatorship"(21).
Despite the staggering losses in production revenues and the emotional and medical costs, it doesn't look as if all this is going to change soon. Rather than taking the steps to change these toxic personalities, we rationalize. We lurch forward another year under the banner, business is business.
It is fear. If workers had no fear of the consequences, they would not work.
Could our economy run without fear? It is a practical question. What if all people living in this quiet desperation stopped working? True, our economy is not entirely composed of fear, indeed it is not entirely composed of workers. But if you removed fear of consequences, we don't need calculators to figure that the system would come to a collapsing halt.
There is a powerful resistance to change. From the point of view of employers, of course, fear is useful. It is a goad. It keeps workers pulling at the oars.
The science of economics will not truck with this, of course. Fear is not a rational factor. They call it an "externality," because it will not fit into their dry formulas.
Perhaps we can try this image. We have been talking about 40% to 50% of the population, so perhaps the economy floats on fear like a boat half in, half out of the water. Technically the water is 'external' to it. Then, like a boat, the economy doesn't need fear to exist; but it works much better with it.
Julian Edney is the author of Greed: a Treatise in Two Essays. Born in Uganda, he now teaches college in southern California and can be contacted through his website.
1. Many employees dislike their job and employers. (2005, May 17). Wall Street Journal.com This is a report and summary of a Harris Poll. 2. Only half of Americans like their jobs. (2002, August 21) FoxNews: Reuters report of survey conducted by the Conference Board.
4. Ryan, K and Oestreich, D. Driving fear out of the workplace. San Francisco: Jossey-Bass Publishers, 1998.
5. Hollands, J.A. Red ink behaviors: Measuring the surprisingly high cost of problem behaviors in valuable employees. Mountain View, CA: Blake/Madsen Publishers, 1997.
6. Schwartz, J. Sick of work.(2004, September 5). New York Times, Health section. A series of three articles about the enormous costs of stress at work.
7. Lorenz, K. Hate your job? 10 ways to cope. (2005, July 15). CNN.com.
8. Hollands, Ibid.
9. Workplace stress self assessment.(2006, April 11). MayoClinic.com 10. Getting along with your co-workers. (2004 September 17). CNN.com.
11. Neils, H. 13 signs of burnout and how to help you avoid it. (Undated). Assessment.com. 12. Ryan, K and Oestreich, D. Ibid.
13. Lazaroni, l. Debt collector horror stories. (20054, September 20) Bankrate.com. 14. Lester, W. Half of Americans worry about debts. (Undated). AP report on AP-Ipsos poll.15. McGregor, D. The human side of enterprise. (1960/2005) New York: McGraw-Hill.
16. Economic concerns fueled by many woes.(2005, June 1). Pew Research Center survey reports on economy-related sources of worry for Americans.
18 Schwartz, J. Ibid.
19. Curry, A. Why we work. ( 2004, February 3) US News and World Report.com.
20. Terkel, S. Working. New York: The New Press, 1972.
21. Ehrenreich, B. Nickel and dimed: On (not) getting by in America. New York: Henry Holt and Company, 2001.
Author: Julian Edney teaches college. His recent book Greed: A Treatise in Two Essays picks up these arguments in 'Greed II'. He can be contacted through his website.
What Edney has described is the results of a process of ponerization, a term coined by the Lobaczewski in Political Ponerology. Edney in fact succumbs to the hopelessness engendered by ponerization (the careful takeover of organizations by psychopaths who can cooperate with each other) by failing to conceive of an economy of confident creativity. The economy we have now may need fear, but we can imagine one that doesn’t.