Signs of the Economic Apocalypse, 11-19-07

From Signs of the Times:

Gold closed at 787.00 dollars an ounce Friday, down 6.1% from $834.70 at the close of the previous week. The dollar closed at 0.6821 euros Friday, up 0.1% from 0.6814 at the close of the previous Friday. That put the euro at 1.4662 dollars compared to 1.4676 the Friday before. Gold in euros would be 536.76 euros an ounce, down 6.0% from 568.71 for the week. Oil closed at 93.84 dollar a barrel Friday, down 2.6% from $96.32 at the close of the week before. Oil in euros would be 64.00 euros a barrel, down 2.5% from 65.63 for the week. The gold/oil ratio closed at 8.39 Friday, down 3.3% from 8.67 at the end of the week before. In U.S. stocks, the Dow closed at 13,176.79 Friday, up 1.0% from 13,042.74 for the week. The NASDAQ closed at 2,637.24 Friday, up 0.4% from 2,627.94 at the close of the week before. In U.S. interest rates, the yield on the ten-year U.S. Treasury note closed at 4.15% Friday, down six basis points from 4.21 for the week.

Gold fell sharply last week, pulling back in a correction after many weeks of steady increase. Oil eased off a bit, too, and the dollar stopped dropping. All in all a welcome respite from some frightening trends. But, most likely only a respite. The bad fundamentals haven’t changed.

George Ure published a letter from his attorney that sums up the fundamentals pretty well:

My more "back of the envelope" math from last week about the extent of the "problem"

Amount of basic paper supporting the derivatives game $9 trillion dollars

Approximate amount of large firm write downs to date from the sub-prime fall out; $25 Billion Dollars

Assumptions:

1) Generally only the better paper was held "in house" so the quality of the paper held by so far unreporting third parties is worse

2) Amount of paper retained in house would be 5% or less of the paper generated (probably more like 2.5% but that would make the final numbers even worse so I will stick at 5% for these assumptions)

3) Amount of writedowns still to come from the large firms ... approximately equal to that which have already been reported (ie: large firms that have not yet reported and the ones that have will be increasing the amounts of their writedowns as time moves forward)

25 billion (5% of the paper generated) x 20 (the total amount of paper generated) = $500 billion dollars losses so far x 2 (write-offs at the big firms will eventually be twice what they have taken so far) = 1 Trillion dollars in losses by all holders.

Oh ... and this does NOT add in any losses on consumer debt paper, leverage buy out paper, etc.. If the economy tanks big time those items may add in several hundred more billion in losses thus raising the ultimate loss amount to the 1.3 to 1.5 trillion level +-

Of course this is a "back of the envelope" look at the problem but I think I can for sure say that we are probably looking at $1 trillion dollars +- of paper destruction as this unwinding works it's way through the system.

One thing to keep in mind: While the overall paper "debt" load supporting the derivatives game stands at about 9 trillion dollars much of that is US Government securities, the basic amount of which which will NOT be written down at all since that is solid paper (though the Dollar itself may drop precipitously) ... so this write down will ALL come out of the public side of the debt, which will actually make the write down amounts VERY HIGH as a percentage of public debt out there which supports the derivatives markets…

Instead of a potential death by one cut, such as the system was looking at with LTCM a few years back, this time around the potential may be death by a thousand cuts as smaller risk assumer after risk assumer bites the dust as the underlying securities supporting the derivatives pyramid fall into insolvency and liquidation situations.

I assume the FED will provide enough liquidity during this collapse to keep the system from locking up, but such a liquidity injection will have to be so massive that it will probably further fuel the fires causing the Dollar collapse and could easily stoke massive internal inflation within the US.

Just a country attorney who is sitting out here scratching my head and amazed that others are actually amazed at what is happening. Stripped down to its basics this is actually a very simple and easily foreseeable problem.

So the bottom line is that “the system,” the one that works for the interests of those who contol inconceivable amounts of wealth, will be prevented from locking up by collapsing the dollar and destroying the standard of living of nearly everyone. And at this point, who could blame the Fed, since not flooding the system with money would cause massive deflation which would also destroy the standard of living of nearly everyone. This is the end result of neoliberal financial deregulation, or “innovation” as the neolibs call it.

Given that, why would anyone want to adopt this system? The only ones who would are the few who would stand to gain unimaginable wealth. The rest would ultimately have their lives ruined. It is hard for Americans who have lived through all this to sit back and watch France begin to go down this path. The stage was set for a showdown last week between Sarkozy and the transit workers, but, as happened so often in the United States, the strikers were betrayed by the union leaders.

France: Sarkozy seeks confrontation with the working class

Peter Schwarz

14 November, 2007

France faces a confrontation between its right-wing president, Nicolas Sarkozy, and the working class which could develop into one of the bitterest social clashes in recent French history.

On Tuesday evening employees of the national railway company (SNCF) stopped work. Seven of the eight trade unions represented in the SNCF have called an unlimited strike, the course of which is to be decided on by the unions on a daily basis. On Wednesday the staff of the Paris Metro, as well as gas and electricity workers, are to join the strikers.

A week from Wednesday, November 21, will see a day of action by public service workers to defend wages, and on November 29 employees of the French judicial system plan to demonstrate against a planned judicial “reform.” French students have already been protesting in recent days against a “reform” of the universities, and several universities have been taken over by protesting students.

At the heart of the various disputes are the special pensions paid to state-employed workers. The so-called “régimes spéciaux” have their roots in the 19th century and allow state employees engaged in particularly arduous occupations to retire at either 50 or 55. Those with 37.5 years seniority are entitled to a full pension (i.e., 75 percent of the wage level at the time of retirement).

Such régimes spéciaux exist for a variety of professions in France, although the most significant groups of workers affected are the railway workers and employees of the gas and electricity companies. In the case of French Railways, a workforce of 164,000 is complemented by a total of 300,000 pensioners.

Gas and electricity companies have a total workforce of 145,000 and an equal number of retired workers. The Metro employs 45,000 workers and has an equivalent number of retirees.

The deficit arising from the special pension schemes is drawn from the national budget and it is reckoned that the state contribution this year to the pension scheme of just the SNCF will total 2.7 billion euros.

For the French ruling elite, the abolition of such régimes spéciaux is a crucial step in cutting back all forms of social welfare—even more for political than for economic reasons.

The railway, gas and electricity workers traditionally are among the most militant layers of the French working class. When former president Jacques Chirac and his prime minister at the time, Alain Juppé, sought to eliminate the régimes spéciaux in 1995 they were met with a strike wave that paralyzed France for a period of weeks.

Juppé was obliged to make a partial retreat and Chirac never again dared to challenge the special pensions. Even when the social minister at the time (now the prime minister), François Fillon, implemented an unpopular pension reform in 2003, he made an exception for the régimes spéciaux.

Sarkozy now wants to bite the bullet. In a clear allusion to the back-down by Chirac and Juppé, he declared last Friday, “I will not do what others have done before.” He called the abolition of the special pensions to be a test case for the “rupture” he had promised in the election campaign, thereby investing his entire personal prestige in carrying through such a policy.

It is highly unusual for a French president to intervene so publicly and directly into a dispute relating to domestic affairs or industrial relations. This is usually the task of the prime minister. Traditionally, this gives the president room to replace the government should the planned confrontation not go as planned.

This is not the path chosen by Sarkozy. “It’s either you or me,” is his message to railway workers, and he has left little room for compromise or retreat.

“Victory or the premature end of Sarkozyism. It is in these terms and with a high level of risk for himself that the president has defined the framework of the first major social conflict he confronts,” wrote Liberation.

During a visit to Germany on Monday, Sarkozy stressed his determination to remain firm. He praised the “great reforms” carried out in Germany as a model for France, and added that now was the time to be “cold blooded.”

“We were elected to change France,” he said, “and we are carrying out these reforms, because they have to be made.”

One of the closest advisors to the president, Henri Guaino, was even more explicit. “If we are incapable of carrying out this reform then we might as well just give up, because we will be unable to carry out any sort of reform,” he said.

One-and-a-half years ago, Sarkozy demonstrated a degree of flexibility following mass demonstrations against the “first job contract” (CPE), but now he is utterly unyielding. At that time, he had his eye on the post of president and, according to Le Monde, the issue “was to get rid of his image as an uncompromising advocate of law-and-order and win support from the left... Today the calculation is completely different. Even the smallest deviation from such a symbolic project as the régimes spéciaux would seriously weaken his ability to reform the country.”

The conservative Le Figaro newspaper noted that in France, a president wins his “true legitimacy” only by confrontation on the streets. The newspaper added: “And through victory on the streets wins (or loses) his ability to push ahead further with his reforms and put into practice the rupture he announced more than a year ago.”

Le Figaro continued, “If Nicolas Sarkozy is victorious in his first attempt, when everybody forecast a dead end, the way is free to challenge many of the outdated relics of the French social model.”

Thus, there is much more at stake in the dispute over the régimes spéciaux than the pensions of railway workers.

Sarkozy is able to base his offensive against the working class on two factors: the bankruptcy of the Socialist Party and the treacherous role of the trade unions. His election victory in May was primarily due to the fact that the Socialist Party had completely discredited itself with its right-wing policies. Since the election, the party has drifted even further to the right and is rent by internal divisions.

Six months after taking over as president, and in the absence of any serious opposition from within the political establishment or from the unions, Sarkozy has been able to maintain a certain degree of popularity. According to a recent poll by Libération, 59 percent of those polled supported his stand against the régimes spéciaux.

Libération also pointed out, however, that the tide is shifting against Sarkozy. More than half of those polled declared he had failed in the spheres of employment and budgetary policy. With regard to purchasing power, 79 percent expressed criticism of the president—a clear consequence of rising inflation, which has created problems for an increasing share of the population. In total, just 54 percent expressed a positive opinion about the president—his lowest rating since the election. In September, the figure had stood at 66 percent.

The trade union leaders are aware of the fact that the dispute over the régimes spéciaux constitutes a struggle against Sarkozy and his government. This is something they wish to avoid at all costs, and all of their comments have stressed this point. They bitterly deplore the way in which the government has worked to exacerbate the conflict for political purposes, and they plead for an opportunity to sit down around the negotiating table.

In an interview with Libération, the leader of the Communist Party-dominated CGT (General Confederation of Labor) railway union, Didier Le Reste, declared that he “regretted this instrumentalisation for political purposes.” There were “possibilities for resolving this conflict situation at a leadership level,” he said, but it was necessary “to put an end to all the secretiveness and bilateral meetings” and “call a national round table.”

The general secretary of the Force Ouvrière union federation, Jean Claude Mailly, stressed to Le Monde that his organization did not want any “a priori connection with the strike by state employees” on November 21, nor with the protests by students. “We are not an anti- Sarkozy movement with a political character,” he stated. In addition, he said, there were clear differences between régimes spéciaux applying to Metro and electricity workers—meaning every company had to carry out separate negotiations.

The leader of the Socialist Party-influenced CFDT (French Democratic Confederation of Labour), François Chérèque, went even further and threatened: “If it comes down to a combination of movements against the régimes spéciaux involving state employees and who knows what, we reserve the right to withdraw [from the strike movement].”

The trade union leaderships are gripped by panic at the prospect that the dispute over Sarkozy’s “reforms” could broaden into a mass movement which could challenge the authority of the government and the president. This would inevitably lead to a political crisis and rock the entire political system upon which the power of the ruling elite is based.

But, in fact, there is no other way for workers to conduct the struggle. Sarkozy has long since transformed it into a question of power.

It is already clear that the trade unions, with the backing tacitly or openly of the Socialist Party and Communist Party, will do everything in their power to sabotage the movement as it grows in strength.

And, just as predicted, later in the week the union leadership began to betray the strikers:

French union leaders seek to strangle rail strike

Peter Schwarz and Antoine Lerougetel

16 November 2007

A number of commentaries in the French press on Thursday make clear that the General Confederation of Labour (CGT) is preparing a betrayal of historic proportions.

On Tuesday, on the eve of strikes by rail workers and gas and electrical employees in defence of the régimes spéciaux—special pensions for certain public sector employees—CGT leader Bernard Thibault asked for a discussion with French Employment Minister Xavier Betrand in order to smooth the way for negotiations.

Since the outbreak of the strikes, which have shut down much of the country’s transport system, the government of President Nicolas Sarkozy has responded to Thibault’s initiative and offered the unions one month of negotiations at either an industry or factory level. The government has said that should there be no agreement after one month, it will unilaterally impose its pension “reform,” i.e., major cuts in pension benefits.

Thibault’s initiative is being treated by the press as a bid to effect a speedy end to the strike movement, which threatens to develop into the biggest social conflict in more than a decade. It is also being hailed as the herald of a “new social culture,” in which militant strikes will be a thing of the past and the unions will cooperate “responsibly” with companies and the government.

The newspaper Libération points out that Thibault’s initiative is unprecedented. It writes, “Never before has a general secretary of the CGT personally called the employment minister of a right-wing government, as did Bernard Thibault on Tuesday, to propose a meeting... and the beginning of negotiations while, as an indication of good will, making an important concession.”

According to Libération, the leadership of the CGT “made a strategic choice with its opening to the government, i.e., the rejection of an ‘all or nothing attitude.’”

The newspaper makes clear that Thibault’s initiative has helped the government out of a fix. Libération writes that the team led by Sarkozy feared “that the crisis could go on for some time and the strike over the régimes spéciaux could coincide with the action planned by state administrators next Tuesday.”

It continues: “Sarkozy’s power has lost credibility with regard to economic questions. All recent polls demonstrate that the French do not expect his government to bring about any improvement in their living conditions. It was therefore necessary to prevent the current conflicts from expanding into other branches and a situation where all those dissatisfied layers of every variety took to the streets...”

Similar comments have appeared in other newspapers.

The editor-in-chief of the Nouvel Observateur, Jean Marcel Bouguereau, declared: “With his proposal to the government on Tuesday evening, the boss of the CGT has broken a taboo in a manner without precedent just a few hours before a major strike.”

If one reads the editorials of the pro-government Le Figaro, one can almost hear the sound of champagne corks popping in the salons of the rich and powerful. The conservative newspaper is already celebrating the “victory” of Sarkozy and calls it “an important stage in the development in our ‘social model’ and a crucial date in the history of social relations in our country—a diminution of the trade union strike culture, of the power to systematically say no and resort to the barricades.” The situation provides proof, the newspaper continued, “that with will and method, one can reform France.”

When it refers to “reform,” this mouthpiece of big business means the dismantling of social security benefits and employees’ rights and the removal of all obstacles to the unrestrained attainment of wealth by a small minority. According to a recently published social analysis, the richest ten percent of Frenchmen earn “only” 3.15 times as much as the poorest ten percent. That is less than ten years ago, when the factor was 3.35. In other countries, such as Germany and the US, the gulf between the earnings of the rich and poor is much greater.

The findings of this study seem to be belied by conditions in France, where the sharp disparities in wealth are very evident. Nevertheless, such a state of affairs is intolerable for the ruling elite. They feel handicapped in their quest for ever greater wealth by the demands made by workers, and now detect a chance to finally turn things around. This mood is shared by Sarkozy, who recently increased his own presidential salary by 172 percent and is friendly with some of the richest men in the country.

Figaro represents the views of such layers when it writes: “The French have changed. One sees the awakening of a genuine sense of responsibility instead of the simple repetition of outdated slogans—the French social model, the right to a pension, the unrestricted right to strike, free health care for all, an unchallengeable right to work. They know that one cannot evade a reality which our neighbours have already embraced.”

All of the press commentaries are united in regarding the main problem for Thibault and Sarkozy to be the determined resistance of union members and strikers, who reject the capitulation being prepared by the CGT.

The CGT “must still convince its troops to follow its lead,” Libération writes. “This is not clear in advance under conditions where a political culture prevailed for many decades over union realism.”

Le Figaro declares: “To accept the negotiations proposed by the government at a factory level, without at the same time losing control of its own troops, is the challenge confronting the union leaders, and in particular Bernard Thibault and the railway workers [officials]…”

Sarkozy, representing the interests of the wealthy who would like to become super-wealthy, shrewdly decided to begin the “reform” process by going after the social benefits that are the hardest to justify, special arrangements with particular occupations for early retirement. This makes sense for Sarkozy because these are not benefits available to all. He can then divide and conquer. And, “reasonable” union leaders may decide that these special benefits are not the best ones to make a last stand on. But once the “reform” process gathers steam, it becomes harder and harder to stop, so the French would be well-advised to take a firm stand earlier rather than later.

As someone from the United States who commented on this article in the Signs of the Times Forum wrote:

There are several things I like about France, however there are two that I truly ADMIRE about the French.

1) The General Strike.

2) The 4 to 7 weeks VACATION + holidays a year.

The General strike is the only equalizing instrument of power that the working classes have in this global elite nightmare paradigm. I pray/meditate the French do not allow Sar-Cold-zy to rape them. I so wish we could call a general nationwide strike here in the USA, where we could shut down the entire country for 2-3 days to regain what power the working class has lost in the past 70 years. Then, the PTB will finally be challenged. It has been far too easy for these reptiles.

The U.S.A. has been so thoroughly sucked dry of reason that people here believe that 4 - 7 weeks VACATION + holidays is BAD! I am not joking. Americans who have lived overseas though and have returned really UNDERSTAND how completely insane the labor situation is, and can SEE the government propaganda concerning work, work, work - the American Way – work, work, work for no vacation - work for no living wage - work for a 30 minute lunch or no lunch - work overtime - work for no insurance - work and just be grateful you have job!!! Now Work!

Since the 80’s, vacation time hasn't increased as one might suspect in the "richest" country in the world, but rather decreased to the all time low of NO vacation to 5 days a year + some holidays. 5 DAMN days a year and you can almost guarantee 3 of those days it's going to rain! And here is the most unbelievable of all, many Americans aren’t using all the vacation days they do have because they fear losing money and/or their job!?!

I am here to write in big bold letters that, 4 - 7 WEEKS VACATION A YEAR ISSSSSS GOOD!!! YES, IT IS CIVILIZED - IT IS ETHICAL - IT IS HUMAN. The Europeans have gotten this right. I am not a Euro-phille, I am simply stating TRUTH.

For those who have never visited the USA and have wondered why so many people are clueless about so many things that really matter....well, part of the reason why is that - generally speaking - we HAVE NO TIME TO THINK because we are working - working - working for reptiles. We haven't any time to reflect on a subject/topic/issue domestically or internationally or to read in-depth magazines or books.

If every HUMAN being in the working class in the USA had 4 - 7 weeks vacation a year + holidays, to travel at LEISURE in their own country and abroad, and so had enough RELAX time to read, think, dialogue, and ponder the actions of both their local community and national leaders, IMO the USA would be a more civilized country and not the Frankenstein nation it has become.

I am with the French and the German workers completely. To me though, France is the frontline, however this fight I feel is bigger than the country of France alone since this latest elizard-ist attack is really an attack on the whole of humanity, and its last citadel of CIVILIZED labor law. Imo, it will take ALL of the grit, determination, and persistence of the French to persevere.

Sar-Cold-zy has laid down the gauntlet, now let the French people pick it up and smack him in the face with it! Otherwise… the French could end up with the American Labor Scam: a descending octave, and as history demonstrates, when American reality becomes YOUR reality, there’s really no way back.

IMO, France you REALLY don’t wanna go there.

Signs of the Economic Apocalypse, 5-7-07

From Signs of the Times:

Gold closed at 689.70 dollars an ounce Friday, up 0.7% from $684.70 at the close of the previous Friday. The dollar closed at 0.7358 euros Friday, up 0.5% from 0.7325 at the previous week’s close. That put the euro at 1.3591 compared to 1.3652 the Friday before. Gold in euros would be 507.47 euros an ounce, up 1.2% from 501.54 euros for the week. Oil closed at 61.93 dollars a barrel Friday, down 7.3% from $66.46 at the close of the week before. Oil in euros would be 45.57 euros a barrel, down 6.8% from 48.68 for the week. The gold/oil ratio closed at 11.14 Friday, up 8.2% from 10.30 at the close of the previous Friday. In U.S. stocks, the Dow closed at 13,264.62 Friday, up 1.1% from 13,120.94 for the week. The NASDAQ closed at 2,572.15 Friday, up 0.6% from 2,557.21 at the end of the week before. In U.S. interest rates, the yield on the ten-year U.S. Treasury note closed at 4.64%, down five basis points from 4.69 for the week.

A depressing week, with bad economic news on several fronts, ended with a discouraging victory for predatory capitalism and neoconservative foreign policy: the election of the fascist Sarkozy as president of France. France, which until now seemed immune from the twin diseases of neoliberalism and neoconservatism, is about to experience what those of us in the United States, United Kingdom, Australia and other countries have experienced for decades.

The plan is to force the ratification of the EU constitution over the wishes of the voters. Capitalism will be unchained and let loose on France. The people of France will be told that There Is No Alternative:

An Unsustainable System
Anti-Capitalism in Five Minutes

By Robert Jensen
April 30, 2007

We know that capitalism is not just the most sensible way to organize an economy but is now the only possible way to organize an economy. We know that dissenters to this conventional wisdom can, and should, be ignored. There's no longer even any need to persecute such heretics; they are obviously irrelevant.

How do we know all this? Because we are told so, relentlessly -- typically by those who have the most to gain from such a claim, most notably those in the business world and their functionaries and apologists in the schools, universities, mass media, and mainstream politics. Capitalism is not a choice, but rather simply is, like a state of nature. Maybe not like a state of nature, but the state of nature. To contest capitalism these days is like arguing against the air that we breathe. Arguing against capitalism, we're told, is simply crazy.

We are told, over and over, that capitalism is not just the system we have, but the only system we can ever have. Yet for many, something nags at us about such a claim. Could this really be the only option? We're told we shouldn't even think about such things. But we can't help thinking -- is this really the "end of history," in the sense that big thinkers have used that phrase to signal the final victory of global capitalism? If this is the end of history in that sense, we wonder, can the actual end of the planet far behind?

We wonder, we fret, and these thoughts nag at us -- for good reason. Capitalism -- or, more accurately, the predatory corporate capitalism that defines and dominates our lives -- will be our death if we don't escape it. Crucial to progressive politics is finding the language to articulate that reality, not in outdated dogma that alienates but in plain language that resonates with people. We should be searching for ways to explain to co-workers in water-cooler conversations -- radical politics in five minutes or less -- why we must abandon predatory corporate capitalism. If we don't, we may well be facing the end times, and such an end will bring rupture not rapture.

Here's my shot at the language for this argument.

Capitalism is admittedly an incredibly productive system that has created a flood of goods unlike anything the world has ever seen. It also is a system that is fundamentally (1) inhuman, (2) anti-democratic, and (3) unsustainable. Capitalism has given those of us in the First World lots of stuff (most of it of marginal or questionable value) in exchange for our souls, our hope for progressive politics, and the possibility of a decent future for children.

In short, either we change or we die -- spiritually, politically, literally.

1. Capitalism is inhuman

There is a theory behind contemporary capitalism. We're told that because we are greedy, self-interested animals, an economic system must reward greedy, self-interested behavior if we are to thrive economically.

Are we greedy and self-interested? Of course. At least I am, sometimes. But we also just as obviously are capable of compassion and selflessness. We certainly can act competitively and aggressively, but we also have the capacity for solidarity and cooperation. In short, human nature is wide-ranging. Our actions are certainly rooted in our nature, but all we really know about that nature is that it is widely variable. In situations where compassion and solidarity are the norm, we tend to act that way. In situations where competitiveness and aggression are rewarded, most people tend toward such behavior.

Why is it that we must choose an economic system that undermines the most decent aspects of our nature and strengthens the most inhuman? Because, we're told, that's just the way people are. What evidence is there of that? Look around, we're told, at how people behave. Everywhere we look, we see greed and the pursuit of self-interest. So, the proof that these greedy, self-interested aspects of our nature are dominant is that, when forced into a system that rewards greed and self-interested behavior, people often act that way. Doesn't that seem just a bit circular?

2. Capitalism is anti-democratic

This one is easy. Capitalism is a wealth-concentrating system. If you concentrate wealth in a society, you concentrate power. Is there any historical example to the contrary?

For all the trappings of formal democracy in the contemporary United States, everyone understands that the wealthy dictates the basic outlines of the public policies that are acceptable to the vast majority of elected officials. People can and do resist, and an occasional politician joins the fight, but such resistance takes extraordinary effort. Those who resist win victories, some of them inspiring, but to date concentrated wealth continues to dominate. Is this any way to run a democracy?

If we understand democracy as a system that gives ordinary people a meaningful way to participate in the formation of public policy, rather than just a role in ratifying decisions made by the powerful, then it's clear that capitalism and democracy are mutually exclusive.

Let's make this concrete. In our system, we believe that regular elections with the one-person/one-vote rule, along with protections for freedom of speech and association, guarantee political equality. When I go to the polls, I have one vote. When Bill Gates goes the polls, he has one vote. Bill and I both can speak freely and associate with others for political purposes. Therefore, as equal citizens in our fine democracy, Bill and I have equal opportunities for political power. Right?

3. Capitalism is unsustainable

This one is even easier. Capitalism is a system based on the idea of unlimited growth. The last time I checked, this is a finite planet. There are only two ways out of this one. Perhaps we will be hopping to a new planet soon. Or perhaps, because we need to figure out ways to cope with these physical limits, we will invent ever-more complex technologies to transcend those limits.

Both those positions are equally delusional. Delusions may bring temporary comfort, but they don't solve problems. They tend, in fact, to cause more problems. Those problems seem to be piling up.

Capitalism is not, of course, the only unsustainable system that humans have devised, but it is the most obviously unsustainable system, and it's the one in which we are stuck. It's the one that we are told is inevitable and natural, like the air.

A tale of two acronyms: TGIF and TINA

Former British Prime Minister Margaret Thatcher's famous response to a question about challenges to capitalism was TINA -- There Is No Alternative. If there is no alternative, anyone who questions capitalism is crazy.

Here's another, more common, acronym about life under a predatory corporate capitalism: TGIF -- Thank God It's Friday. It's a phrase that communicates a sad reality for many working in this economy -- the jobs we do are not rewarding, not enjoyable, and fundamentally not worth doing. We do them to survive. Then on Friday we go out and get drunk to forget about that reality, hoping we can find something during the weekend that makes it possible on Monday to, in the words of one songwriter, "get up and do it again."

Remember, an economic system doesn't just produce goods. It produces people as well. Our experience of work shapes us. Our experience of consuming those goods shapes us. Increasingly, we are a nation of unhappy people consuming miles of aisles of cheap consumer goods, hoping to dull the pain of unfulfilling work. Is this who we want to be?

We're told TINA in a TGIF world. Doesn't that seem a bit strange? Is there really no alternative to such a world? Of course there is. Anything that is the product of human choices can be chosen differently. We don't need to spell out a new system in all its specifics to realize there always are alternatives. We can encourage the existing institutions that provide a site of resistance (such as labor unions) while we experiment with new forms (such as local cooperatives). But the first step is calling out the system for what it is, without guarantees of what's to come.

Home and abroad

In the First World, we struggle with this alienation and fear. We often don't like the values of the world around us; we often don't like the people we've become; we often are afraid of what's to come of us. But in the First World, most of us eat regularly. That's not the case everywhere. Let's focus not only on the conditions we face within a predatory corporate capitalist system, living in the most affluent country in the history of the world, but also put this in a global context.

Half the world's population lives on less than $2 a day. That's more than 3 billion people. Just over half of the population of sub-Saharan Africa lives on less than $1 a day. That's more than 300 million people.

How about one more statistic: About 500 children in Africa die from poverty-related diseases, and the majority of those deaths could be averted with simple medicines or insecticide-treated nets. That's 500 children -- not every year, or every month or every week. That's not 500 children every day. Poverty-related diseases claim the lives of 500 children an hour in Africa.

When we try to hold onto our humanity, statistics like that can make us crazy. But don't get any crazy ideas about changing this system. Remember TINA: There is no alternative to predatory corporate capitalism.

TGILS: Thank God It's Last Sunday

We have been gathering on Last Sunday precisely to be crazy together. We've come together to give voice to things that we know and feel, even when the dominant culture tells us that to believe and feel such things is crazy. Maybe everyone here is a little crazy. So, let's make sure we're being realistic. It's important to be realistic.

One of the common responses I hear when I critique capitalism is, "Well, that may all be true, but we have to be realistic and do what's possible." By that logic, to be realistic is to accept a system that is inhuman, anti-democratic, and unsustainable. To be realistic we are told we must capitulate to a system that steals our souls, enslaves us to concentrated power, and will someday destroy the planet.

But rejecting and resisting a predatory corporate capitalism is not crazy. It is an eminently sane position. Holding onto our humanity is not crazy. Defending democracy is not crazy. And struggling for a sustainable future is not crazy.

What is truly crazy is falling for the con that an inhuman, anti-democratic, and unsustainable system -- one that leaves half the world's people in abject poverty -- is all that there is, all that there ever can be, all that there ever will be.

If that were true, then soon there will be nothing left, for anyone.

I do not believe it is realistic to accept such a fate. If that's being realistic, I'll take crazy any day of the week, every Sunday of the month.

There will no doubt be a push in France to privatize things that were until now public trusts. At first they will try to privatize things that might seem reasonable to privatize. But beware, the process will never end. In the United States, jails have been privatized (and inmates charged rent) and now even the roads are being privatized:

Roads To Riches

Why investors are clamoring to take over America's highways, bridges, and airports—and why the public should be nervous

Emily Thornton

May 7, 2007

Steve Hogan was in a bind. The executive director of Colorado's Northwest Parkway Public Highway Authority had run up $416 million in debt to build the 10-mile toll road between north Denver and the Boulder Turnpike, and he was starting to worry about the high payments. So he tried to refinance, asking bankers in late 2005 to pitch investors on new, lower-interest-rate bonds. But none of the hundreds of investors canvassed was interested.

Then, one day last spring, Hogan got a letter from Morgan Stanley that promised to solve all of his problems. The bank suggested Hogan could lease the road to a private investor and raise enough money to pay off the whole chunk of debt. Now Hogan, after being inundated with proposals, is in hot-and-heavy negotiations with a team of bidders from Portugal and Brazil. "We literally got responses from around the world," he says.

In the past year, banks and private investment firms have fallen in love with public infrastructure. They're smitten by the rich cash flows that roads, bridges, airports, parking garages, and shipping ports generate—and the monopolistic advantages that keep those cash flows as steady as a beating heart. Firms are so enamored, in fact, that they're beginning to consider infrastructure a brand new asset class in itself.

With state and local leaders scrambling for cash to solve short-term fiscal problems, the conditions are ripe for an unprecedented burst of buying and selling. All told, some $100 billion worth of public property could change hands in the next two years, up from less than $7 billion over the past two years; a lease for the Pennsylvania Turnpike could go for more than $30 billion all by itself. "There's a lot of value trapped in these assets," says Mark Florian, head of North American infrastructure banking at Goldman, Sachs & Co.

There are some advantages to private control of roads, utilities, lotteries, parking garages, water systems, airports, and other properties. To pay for upkeep, private firms can raise rates at the tollbooth without fear of being penalized in the voting booth. Privateers are also freer to experiment with ideas like peak pricing, a market-based approach to relieving traffic jams. And governments are making use of the cash they're pulling in—balancing budgets, retiring debt, investing in social programs, and on and on.

But are investors getting an even better deal? It's a question with major policy implications as governments relinquish control of major public assets for years to come. The aggressive toll hikes embedded in deals all but guarantee pain for lower-income citizens—and enormous profits for the buyers. For example, the investors in the $3.8 billion deal for the Indiana Toll Road, struck in 2006, could break even in year 15 of the 75-year lease, on the way to reaping as much as $21 billion in profits, estimates Merrill Lynch & Co. What's more, some public interest groups complain that the revenue from the higher tolls inflicted on all citizens will benefit only a handful of private investors, not the commonweal.

There's also reason to worry about the quality of service on deals that can span 100 years. The newly private toll roads are being managed well now, but owners could sell them to other parties that might not operate them as capably in the future. Already, the experience outside of toll roads has been mixed: The Atlanta city water system, for example, was so poorly managed by private owners that the government reclaimed it.

Such concerns weigh on the minds of public officials like Hogan. He intends to negotiate aggressively with corporate suitors and has decreed that the buyer must share future toll-hike revenues with the local governments that built the highway. But with the market for infrastructure still in its infancy, every deal is different. The ideal blend of up-front payment, toll hikes, and revenue sharing hasn't been found.

FLOOD OF MONEY

The nascent market in roads and bridges in the U.S. follows the shift toward privatization in Europe and Australia that began with British Prime Minister Margaret Thatcher in the 1980s. It took longer to develop in the U.S. because of the $383 billion municipal bond market, which has been an efficient source of capital for governments over the years.

But with the explosion of money flowing into private investments recently, fund managers have been exploring the fringes of the investing world in search of fresh opportunities. Now a slew of Wall Street firms—Goldman, Morgan Stanley, the Carlyle Group, Citigroup, and many others—is piling into infrastructure, following the lead of pioneers like Australia's Macquarie Group. Rob Collins, head of infrastructure mergers and acquisitions at Morgan Stanley, estimates that 30 funds are being raised around the world that could wield as much as $500 billion in buying power for U.S. assets.

Many investors think of infrastructure investing as a natural extension of the private equity model, which is based on rich cash flows and lots of debt. But there are important differences. Private equity deals typically play out over 5 to 10 years; infrastructure deals run for decades. And the risk levels are vastly different. Infrastructure is ultra-low-risk because competition is limited by a host of forces that make it difficult to build, say, a rival toll road. With captive customers, the cash flows are virtually guaranteed. The only major variables are the initial prices paid, the amount of debt used for financing, and the pace and magnitude of toll hikes—easy things for Wall Street to model. "With each passing week, there are more parties expressing unsolicited interest in some kind of a financial transaction that will involve one of our assets directly or indirectly," says Anthony R. Coscia, chairman of the Port Authority of New York & New Jersey.

Firms are even beginning to market infrastructure to investors as a separate asset class, safe like high-grade bonds but with stock market-like returns—and no correlation with either. The Standard & Poor's 500-stock index has returned about 10% a year, counting dividends, since 1926. Bonds have returned about 5%. Firms say infrastructure will beat both, and without having to sweat out market dips along the way. That's a huge selling point at a time when stock, bond, and commodity markets around the world are becoming increasingly interconnected.

Investors can't get in fast enough. They recently deluged Goldman Sachs with $6.5 billion for its new infrastructure fund, more than twice the $3 billion it was seeking. "We're using [infrastructure] as a fixed-income proxy," says William R. Atwood, executive director of the Illinois State Board of Investment, who plans to invest $600 million to $650 million, or 5% of its portfolio, in infrastructure funds over the next three years. "We're hoping to get 11% to 12% returns and lower risk." Pension funds in particular like the long-term investment horizons, which match their funding needs well. Infrastructure "delivers similar yield expectations to high-yield bonds and real estate, with less risk," says Cynthia F. Steer, chief research strategist at pension consulting firm Rogerscasey.

On the other side of the bargaining table from the investment firms sit struggling governments suddenly amenable to the idea of selling control of assets to solve short-term problems. The burden of maintaining roads, bridges, and other facilities, many built during the 1950s, is becoming difficult to bear. Federal, state, and local governments need to spend an estimated $155.5 billion improving highways and bridges in 2007, according to transportation officials, up 50% over the past 10 years. And that's hardly the only obstacle they face. In 2006 alone, states increased their Medicaid spending by an estimated 7.7%, to $132 billion. And state and local governments could be on the hook for up to $1.5 trillion in retiree liabilities, estimates Credit Suisse. At the same time, politicians find it difficult to raise taxes. Chicago's former chief financial officer, Dana R. Levenson, sums up the situation: "There is money to be had, and cities need money." U.S. Representative Chaka Fattah, a Pennsylvania Democrat who is running for mayor of Philadelphia, proposes to privatize the Philadelphia International Airport and use the proceeds to fund poverty programs—a much easier sell than a tax increase.

The combination of eager sellers and hungry buyers is shaking loose public assets across the country. The 99-year lease of the Chicago Skyway that went for $1.8 billion in 2005 was the first major transaction. Last year came the Indiana deal. Now states and cities are exploring the sale of leases for the turnpikes in New Jersey and Pennsylvania, a toll road in Texas, Chicago Midway Airport, and several state lotteries. Suddenly politicians around the country are wondering how much cash they might be sitting on. Based on the going rate of about 40 times toll revenues, the iconic Golden Gate Bridge could probably fetch $3.4 billion were California interested in selling. The Brooklyn Bridge? If permission were granted by New York City to charge the same tolls as the George Washington Bridge, a private owner might shell out as much as $3.5 billion for it.

…The certainty of future toll hikes doesn't jibe with the uncertainty of service quality. Assets sold now could change hands many times over the next 50 years, with each new buyer feeling increasing pressure to make the deal work financially. It's hardly a stretch to imagine service suffering in such a scenario; already, the record in the U.S. has been spotty. In 2003 the city of Atlanta ended a lease of its water system after receiving complaints about everything from billing disputes to water-main breaks. The city wrestled with the owner, United Water Inc., over basics like the percentage of water meters it should monitor. Both parties acknowledge that the contract lacked specifics. In the end, "we didn't believe we were getting performance," says Robert Hunter, commissioner for Atlanta's Dept. of Watershed Management. "I don't believe the city will ever look at privatizing essential services again." United Water says the contract wasn't financially feasible because Atlanta's water system was in worse shape than the city had represented.

A CHAMPION'S PERSPECTIVE

States are wrestling with other public policy issues, too. Bankers say New York could reap a combined $70 billion for long-term leases on a bunch of assets, including the state's lottery, the Tappan Zee Bridge, and the New York State Thruway. New York state officials have looked into the option of leasing the lottery, which itself might command $35 billion—a sum that could substantially upgrade, say, New York's higher education system. The downside? The state would probably have to remove constraints on the lottery's marketing designed to discourage people from gambling more than they can afford. If the state insists on keeping the constraints in place, it could reduce the value of selling it.

Chicago's experience shows the possibilities and the pitfalls of privatization. Former CFO Levenson has been one of the movement's biggest champions. He was an architect of the Skyway deal, which kicked off the market. Then he sold control of parking garages to Morgan Stanley for $563 million. Next, he started shopping around a lease for Midway Airport that could fetch as much as $3 billion. And soon the city hopes to auction off rights to operate some recycling plants. Levenson dismisses critics who argue that he has dumped prized assets. "This is not like where a person goes in and buys a loaf of bread from a store and walks out with that loaf of bread," he says. "Some entity, we expect, will make an offer to lease the Midway Airport for 75 to 99 years, and the following day I'm pretty sure it will still be there."

Wearing a crisp suit and stylish eyeglasses, Levenson looks like the Wall Streeter he once was, working for Bank One Corp. and Bank of America Corp. before taking the Chicago city job in 2004. In April he returned to banking: As a managing director at the Royal Bank of Scotland Group, he now beats the bushes for infrastructure deals. Levenson doesn't understand how local governments can afford not to put public works up for sale. Thanks to the 99-year lease for the Skyway, Chicago has paid off its debt and handed over $100 million to social programs like Meals on Wheels. Plus, says Levenson, it's earning as much in annual interest on the $500 million it has banked from the transaction as it used to earn from running the Skyway ($25 million).

In some ways, Levenson argues, the city still has control over the highway. The agreement with the new owners spells out guidelines in mind-numbing detail, dictating everything from how quickly potholes must be filled (24 hours) to how rapidly squirrel carcasses must be removed (8 hours). If Macquarie and Cintra violate those conditions, the city can take back the road.

So far, the buyers have strictly adhered to the rules. At 7 a.m. on a Wednesday in March, five workers begin another day at the Chicago Skyway's Snow Command. On their to-do list are potholes to be checked and cracks to be sealed. Juan Rodriguez used to patrol the freeway for Chicago city. Today, he cruises the road for private owners. He discovers some potholes have grown unacceptably large because of salt that was spread the previous night. There's some tire debris that must be removed, and a disabled vehicle holding up traffic.

A SMOOTH RIDE?

In the past, Rodriguez says, he had to write out a ticket for each problem, which would be added to a long list of chores. Addressing problems often took days, Rodriguez recalls. But by 10:25 a.m., all of this morning's issues on the Skyway's 7.8-mile stretch of pavement are resolved. "The new owners are taking the Skyway to a whole new level," he says.

They've certainly spent money on improvements. The message "a clean workplace is a happy workplace" is scrawled on a whiteboard in a freshly painted and ventilated garage where workers meet. There's electronic tolling, which didn't exist before. A bunch of new lanes are under construction. The investments seem to be paying off: Since taking over two years ago, the Skyway's operators estimate traffic has risen 5%.

It's all encouraging, except that Chicago "probably could have gotten more without privatizing," according to Dennis J. Enright, a principal and founder of NW Financial. His firm's analysis shows that Chicago could have done a lot better by handling the whole deal itself. It could have raised tolls and sold tax-exempt municipal bonds backed by the scheduled hikes. That would have given the city the up-front cash it needed while preserving some of the income from the toll hikes. Instead, that money will go to Macquarie and Cintra.

Meanwhile, the higher tolls will take a big bite out of lower-income people's wallets. "You have to ask yourself if you want roads that used to be considered a public service to be rationed by income class," says Princeton University economics professor Uwe E. Reinhardt. Chicago says it hasn't received any formal complaints from citizens, though two different drivers recently went to extremes to avoid tolls, says Skyway maintenance manager Michael S. Lowrey. When the new owners introduced free towing for broken-down vehicles, the drivers called the Skyway for help, claiming to be stranded. After workers hauled the vehicles past the tollbooths, they hopped in their cars and sped away.

For workers, the privatization wave has wrought many changes. Skyway toll takers used to be full-time city employees with rich benefits. Now most are part-time independent contractors without benefits. Brian Rainville, executive director of the Chicago Teamsters Joint Council 25, helps manage the union's pension fund. When he listened to a recent pitch from a pension consultant about infrastructure funds, it sparked a realization: The returns he might generate for his pensioners could be canceled out by the union's shrinking number of contributors. "It's pretty obvious that it's not sound fiscal policy for the [pension] fund to undercut the people it's serving," Rainville says.

Pushback against private investors is now playing out in different ways elsewhere. In Pennsylvania, the state turnpike commission is going head-to-head with private bidders for the right to operate the state's 537-mile toll road. Pennsylvania desperately needs cash to repair its nearly 6,000 structurally deficient bridges. Some pundits expected Pennsylvania Governor Edward G. Rendell to propose hikes in gas taxes and other fees to fund the projects. But in December, Rendell unexpectedly announced plans to privatize the turnpike. Timothy J. Carson, vice-chairman of the commission, scrambled to submit an expression of interest for the turnpike to continue to run itself. His proposal is being judged against many others, including those from big Wall Street firms.

Carson isn't dissuaded by arguments that investors are better qualified to run turnpikes profitably. "There's no magic here," he says. "These [deals] are largely driven by one factor: the permitted toll increases." Carson says the state doesn't need to hand over the turnpike to private owners. Historically, he says, the state wanted the turnpike to collect only enough money to break even. But it could just as easily adopt its own toll-hike schedule. The state could also charge tolls on more roads. In other words, the public could remain in control simply by changing the turnpike's mission. That would ensure that the benefits of the toll hikes were spread throughout the populace, says Carson.

Pennsylvania's isn't the only turnpike authority exploring the possibility of bidding for roads. The North Texas Tollway Authority calculated in March that it would have valued a partially constructed 25-mile stretch of highway near Dallas 26% more than a private investor had bid. Now it's considering making a formal bid. And on Apr. 11, the Texas House of Representatives passed an amendment by a vote of 134 to 5 to impose a two-year moratorium on privatizing state toll roads. "We need to put the brakes on these private toll contracts before we sign away half a century of future revenues," said representative Lois W. Kolkhorst, who proposed the bill. A similar bill was passed in the state senate on Apr. 19.

With so much money at stake and so many options available to states, it's impossible to know how the great infrastructure craze may play out. But this much is certain, says Pennsylvania's Carson: "People are willing to pay more than they are currently being charged. The only question is to what extent you're willing to take advantage of that."

Blackwater shows how the military and police can be privatized. Wal-Mart is paving the way for the privatization of intelligence and policing, something that has a long history in the United States (see Pinkerton, for example):

Wanted: Global threat analysts

Wal-Mart seeks former intelligence officers for security

Marcus Kabel

Associated Press

April 24, 2007

BENTONVILLE, ARK. — Wal-Mart Stores has been recruiting former military and government intelligence officers for a branch of its global security office aimed at identifying threats to the world's largest retailer, including from "suspect individuals and groups."

Wal-Mart's interest in intelligence operatives comes at a time when the retailer is defending itself against allegations by a fired security employee that it ran surveillance operations against targets including critics, dissident shareholders, employees and suppliers. Wal-Mart denied any wrongdoing.

Wal-Mart posted ads in March on its Web site and sites for security professionals, including the bulletin of the Association of Former Intelligence Officers, for "global threat analysts" with backgrounds in government or military intelligence work.

The jobs were listed with the Analytical Research Center, part of Wal-Mart's Global Security division, which is headed by former senior CIA and FBI senior officer Kenneth Senser. The analytical unit was created over the past year and a half, according to published comments by its head, Army Special Operations veteran David Harrison.

The job description includes collecting information from "professional contacts" and public data to anticipate and assess threats stemming from "world events, regional/national security climates, and suspect individuals and groups."

"Familiarity with a broad spectrum of information resources and data-mining techniques" is listed among the skills sought, along with a foreign language, preferably Chinese or Spanish.

A Wal-Mart spokesman declined to comment on the Analytical Research Center for this story or to make any security executives available for interviews.

Many corporations hire law enforcement officers for their security departments. But Steven Aftergood, who runs the government secrecy project for the Washington-based Federation of American Scientists, said Wal-Mart's efforts appear to go beyond what most companies are doing, raising questions about corporate intelligence work outside of the oversight process in place for government spying.

France may be the last place where all these things will happen, but the danger is clear. Most likely, the French people will fight hard to preserve their social benefits and labor rights. Can they prevail over those who are putting Sarkozys in power all over the world? It’s hard to believe that the combination of neoliberal economic policy and neoconservative foreign policy will be popular in France. But once Sarkozy’s people get even more control of the media and penetrate further the state security system, all efforts will be made to bring France along with the neocon “clash of civilizations” (i.e., Christians, Jews and Hindus against the Muslims). A shocking false flag event cannot be ruled out. Sarkozy has been lucky when it comes to conveniently timed unrest in recent years. Let’s hope his luck runs out.