Signs of the Economic Apocalypse, 9-22-08

From SOTT.net:

Gold closed at 864.70 dollars an ounce Friday, up 12.5% from $768.70 for the week. The dollar closed at 0.6913 euros Friday, down 1.7% from 0.7032 at the close of the previous week. That put the euro at 1.4466 dollars compared to 1.4221 the week before. Gold in euros would be 597.75 euros an ounce, up 10.6% from 540.54 at the close of the previous Friday. Oil closed at 104.55 dollars an ounce Friday, up 3.8% from $100.69 at the end of the week before. Oil in euros would be 72.27 euros a barrel, up 2.1% from 70.80 for the week. The gold/oil ratio closed at 8.27 Friday, up 8.4% from 7.63 at the close of the previous week. In U.S. stocks, the Dow closed at 11,388.44 Friday, down 0.3% from 11,421.99 at the close of the previous Friday. The NASDAQ closed at 2,273.90 Friday, up 0.6% from 2,261.27 for the week. In U.S. interest rates, the yield on the ten-year U.S. Treasury note closed at 3.81%, up nine basis points from 3.72 the week before.

What a week! It began with Treasury Secretary Henry Paulson’s decision to let Lehman Brothers go bankrupt. Then news began to come out on Sunday and Monday about the shaky finances of the insurance giant AIG. Then the Federal Reserve took over AIG in exchange for an $85 billion loan. So the stock markets crashed as fear an panic spread, only to recover late in the week as the rescue plan to end all rescue plans was announced. They even brought Bush out of hiding to announce it. When the details were released, everyone was shocked. The U.S. government will be on the hook for at least $700 billion, but probably for more than a trillion. The taxpayers will be forced to buy whichever bad mortgage securities Henry Paulson tells them to. In other words, Bush’s friends will get bailed out again by the rest of us. Oh, also, short selling of financial firms’ stocks was banned.

Where will all this lead? It could go two ways. Since now the entire U.S. government and all the taxpayers will own shaky mortgages, if they decide to pay U.S. workers more, housing prices can start to rise again and the collapse can be prevented. If not it will probably the end of the U.S. dollar, its replacement by the Amero, the new currency of a North American Union ruled by U.S. military’s Northern Command and Blackwater Consulting. Unfortunately, given who is calling the shots, the latter plan seems more likely.

Before we look at some startling evidence for the latter scenario, let’s look at some commentary on the events of the past week. The best and calmest summary comes once again from Barry Grey:

US government to bail out Wall Street

Barry Grey

20 September 2008

The Bush administration on Friday announced plans for a massive and unprecedented federal bailout of the US banking system. In separate appearances Friday morning, Treasury Secretary Henry Paulson and President Bush announced a series of measures to shore up collapsing financial markets and called on Congress to pass legislation next week to use, in Paulson’s words, “hundreds of billions” of taxpayer dollars to buy virtually worthless mortgage-backed assets that cannot be sold on the market from banks and other financial institutions.

Paulson said he would meet over the weekend with congressional leaders to lay out the details of the government plan.

With this plan, the full cost of the immense debts piled up by the banks will be imposed on the American people. It will shift the banks’ liabilities onto the federal government, sharply increasing government budget deficits and the US debt, a process that can only further erode the creditworthiness of the United States and place a bigger question mark on the value of the US dollar.

In the past week alone, the US Treasury has announced cash injections into the Federal Reserve Board of $200 billion to bolster the sagging balance sheet of the central bank, which has already expended hundreds of billions in loans and subsidies to the major Wall Street banks and put out another $85 billion in the takeover this week of the insurance giant American International Group.

The presidential candidates of both major parties, Republican Senator John McCain and Democratic Senator Barack Obama, quickly signaled their support for the wholesale bailout of the banks and big investors, and prominent congressional Democrats issued assurances that they would obey the demands of Paulson, Federal Reserve Board Chairman Ben Bernanke and Bush and pass the required legislation by the end of next week.

The immediate line-up of both parties and the media behind the bailout plan for Wall Street stands in the starkest contrast to their indifference and inaction in regard to the plight of millions of American working people, who face a rising tide of home foreclosures, layoffs and sinking living standards. When it comes to the social needs of the people, the universal cry from corporate America and the two parties is, “There is no money,” but when the fortunes of the financial elite are threatened, the full power of the government and unlimited resources are marshaled virtually at a moment’s notice.

There was no suggestion in the statements of Bush and Paulson of any relief for the working class—nothing to stop home foreclosures or help those who have already lost their homes. Rather, hundreds of billions—and more likely trillions—of dollars in public funds will be used to prop up the banks.

The resulting bankrupting of the government will be used to justify a brutal assault on what remains of social programs, including Medicaid, Medicare and Social Security, and demand even greater financial “sacrifices” from workers, whether the next administration is headed by Obama or McCain. Nothing could more clearly demonstrate that behind the façade of American democracy there stands a dictatorship of big business.

Paulson made his announcement following a meeting Thursday night, with Bernanke and Securities and Exchange Commission Chairman Christopher Cox also in attendance, along with congressional leaders from both parties. At the meeting, Paulson warned that the US and global financial system was on the brink of collapse and outlined in general terms the plan to set up some form of government agency to take “illiquid” mortgage-backed securities off of the balance sheets of the banks.

News of the plan first broke Thursday afternoon, at a point when a massive injection of liquidity by the Federal Reserve and central banks in Europe, Canada and Japan had failed to unfreeze credit markets that had collapsed over the previous days. The Fed loaned $180 billion to the other central banks and then added another $120 billion in an attempt to get banks to lend to one another and to other companies, under conditions where confidence in the financial markets and major institutions had fallen so sharply that credit markets had ceased to function. But instead of lending the fresh money to other companies, the big banks were hoarding it to protect themselves against possible default.

The breakdown in the world capitalist system—widely acknowledged to be the worst crisis since the 1929 stock market crash and heading toward another Great Depression—came in the wake of the US government takeover of the mortgage giants Fannie Mae and Freddie Mac less than two weeks ago and the collapse this week of Wall Street icons Lehman Brothers and Merrill Lynch, followed on Tuesday by the US takeover of American International Group.

In the aftermath of these developments, other major US banks had come under immense pressure and were facing bankruptcy, including the investment bank Morgan Stanley and the savings and loan giant Washington Mutual. Both were scrambling to find buyers as their share prices plummeted. The domino effect of falling banks was threatening the biggest US investment bank, Goldman Sachs, headed by Paulson prior to his becoming treasury secretary, whose stock had suffered enormous losses in the course of the week.

The crisis reached the tipping point on Tuesday and Wednesday when major US money market funds announced losses and some were forced to close. This sparked a growing run on the funds, with $78.7 billion withdrawn from the largest funds on Wednesday and, according to one industry estimate, a total of $145.3 billion over a two-day period.

Money market funds are considered the safest form of investment, and tens of millions of Americans have their savings in them. More immediately, from the standpoint of Wall Street, the funds pump money into credit markets by buying short-term IOUs issued by banks and companies, called “commercial paper.” The growing crisis of the money market funds threatened to collapse the commercial paper market, precipitating a chain reaction of defaults and bankruptcies across the economy.

“It’s the ultimate nightmare to have a run on the money markets—that is truly Armageddon—and they’re not going to allow that to happen,” said Paul McCulley at Pacific Investment Management Co.

The Dow Jones Industrial Average had already lost nearly 800 points in the first three trading days of the week, and by Thursday afternoon a rally sparked by the coordinated action of the Fed and other central banks that morning was faltering. At about 3 PM news broke of the government’s plan for a bailout of the banks, the floor of the New York Stock Exchange erupted in cheers, and the market immediately reversed itself and rocketed upward in a frenzy of buying.

In the final hour of trading, the Dow Jones Industrial Average recouped most of Wednesday’s 449-point loss, rising 410.03 points in the biggest percentage gain in almost six years. From its midday low to its late-afternoon high, shortly before the finish, the Dow swung 617 points.

The biggest winners were the financial stocks, including Morgan Stanley and Washington Mutual, which lurched from heavy losses to big gains.

On Friday morning, the government announced a series of immediate measures to bail out the markets, including a temporary ban on short-selling (betting on a fall in prices) of financial stocks and a $50 billion government program to insure money market funds. The Treasury Department also announced that Fannie Mae and Freddie Mac, now under government ownership, would increase their purchases of mortgage-backed securities and the Treasury would directly buy up a larger number of such assets. The Fed added that it would extend low-cost loans to the banks to unfreeze the commercial paper market.

These moves and the statements of Paulson and Bush set off another orgy of buying on the stock exchange, with the Dow closing up 368.75 for the day.
In his statement, Paulson said “comprehensive” action was needed “to address the root cause of our financial system stresses. The underlying weakness in our financial system today is illiquid mortgage assets that have lost value as the housing correction has proceeded.”

This is a lie. The root cause of the crisis is the unbridled parasitism of American capitalism, which over a period of decades has dismantled huge sections of industry in order to reap super profits for the rich by means of financial speculation and fraud, based on a colossal buildup of debt. Now the bill is being passed to the American people.

Bush, flanked by Paulson, Bernanke and Cox, called for a government bailout of Wall Street in the name of “our system of free enterprise.”

“There will be ample opportunity to debate the origins of this problem,” he said. “Now is the time to solve it.”

There will, in fact, be no debate or discussion. Nobody will be held accountable for the greatest financial scandal in world history. There will be no penalties. No one who made tens and hundreds of millions from the plundering of America will be forced to give back a dime.

All of the financial resources of the United States are being placed at the disposal of Wall Street and every American citizen, without being asked, is being given the responsibility for covering the debts of the richest people in the country.

Certainly no debate or resistance will come from the supposed political opposition—the Democratic Party. Speaking Friday in Miami, Obama said he fully supported the bailout plan. “John McCain and I can continue to argue about our different economic agendas for next year, but we should come together now to work on what this country urgently needs this year,” he said.

Obama is no less bound to Wall Street than his Republican opponent. In fact, he has received more campaign money from the financial industry—$22.5 million—than McCain, who has taken in $19.6 million.

Democratic congressional leaders lined up Friday to back the administration plan. New York Senator Charles Schumer, who chairs the Joint Economic Committee, said he was optimistic that Congress could approve the package in a week.
House Financial Services Committee Chairman Barney Frank, Democrat of Massachusetts, said his panel could hold a vote on the package as soon as Wednesday. “They said they would like legislation to do it, and there was virtually unanimous agreement that there would be legislation to do it,” said Frank.

Rep. Nancy Pelosi, the Democratic speaker of the House of Representatives, added, “We hope to move very quickly—time is of the essence.”

All of those involved in pushing through this scheme to funnel the entire wealth of the country into the coffers of the financial elite have direct financial stakes in the outcome. Paulson made hundreds of millions of dollars as chairman of Goldman Sachs. Pelosi reportedly has major investments in American International Group. Many of the congressional leaders of both parties are themselves multi-millionaires and rely on handouts from big business to get elected. They are all ruled by personal interests that reflect the interest of the American ruling class.

The result of the government moves announced Thursday and Friday has already been to not only cover the debts of the super-rich, but to expand their stock portfolios and bank accounts by millions more through the run-up of share prices.

As for the mother of all bailout plans itself, even more shocking than the dollar amount were the terms. Glenn Greenwald summarizes:

Here is the current draft for the latest plan. It's elegantly simple. The three key provisions: (1) The Treasury Secretary is authorized to buy up to $700 billion of any mortgage-related assets (so he can just transfer that amount to any corporations in exchange for their worthless or severely crippled "assets") [Sec. 6]; (2) The ceiling on the national debt is raised to $11.3 trillion to accommodate this scheme [Sec. 10]; and (3) best of all: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency" [Sec. 8].

Put another way, this authorizes Hank Paulson to transfer $700 billion of taxpayer money to private industry in his sole discretion, and nobody has the right or ability to review or challenge any decision he makes.

More commentary from the Housing Panic blog:

The end of America as you knew it is at hand. It was a good 232 year run. But it is about to be stolen in the night.

America is about to be legally stolen from the people, and given to a very small group of powerful men.

Yes, HP can be a bit dramatic sometimes.

This is not one of those sometimes.

The Patriot Act of Finance, otherwise known as Paulson's $700 billion bailout bill, if passed in its present form will be the nail in the coffin for an America by, for and of the people.

Just like the Patriot Act appeared to be written before 9/11, so does this Patriot Act of Finance appear to be written before the housing crash. And yes, both were rushed through a panicked Congress and complacent media in the middle of the night.

A nation founded by the people, for the people will be given to a very select group of bankers. Legally. Without a shot fired. Because Americans were too distracted and too dumb to know what was going on.

Brilliant.

Here's how it will be done:

1) The key line in the proposed bill is this one:

"The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to 700,000,000,000 dollars outstanding at any one time"

What this does is give Hank Paulson, acting as an emperor with unchecked control over the nation's treasury, a $700 billion line of credit in which he can buy up toxic debt for whatever price he'd like to pay, $700 billion at a time.

In other words - he could buy trillions. Trillions and trillions and trillions. Buying and selling, buying and selling.

He can sell the junk he buys from his banker friends for whatever price he wants, saddling the taxpayers with the loss. He keeps this process going, using his $700 billion credit card. Buy for 60 cents on the dollar, sell for 30 cents on the dollar. Buy for 80 cents on the dollar, sell for 5 cents on the dollar. He's in charge.

$700 billion folks IS JUST THE LINE OF CREDIT. He can purchase trillions and trillions of bad debt with this credit card, as long as only $700 billion is OUTSTANDING at any one time.

2) Hank Paulson, CEO of Goldman Sachs on leave, has complete and total control over the nation's treasure. He would be unchecked by Congress, unchecked by the President. He will be king. Here's the text:

"The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation"

Using this power, Hank Paulson of Goldman Sachs could pay Goldman Sachs anything he wanted for their mortgage assets. Let's say the market value was 20 cents on the dollar. Hank Paulson could pay them 100 cents on the dollar. Its his decision and his alone. No oversight. No limitations. Hank Paulson could simply give the nation's treasure to Goldman Sachs.

Get it now?

3) Deputizing the banks and investment banks as "agents of the government". Seriously. Here's the text:

"Designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them"

4) Have no outside control over the firesale of assets and loss to the taxpayer. Again, Hank Paulson and Hank Paulson alone shall be in control. No auditors. No oversight. No multiple bids. No nothing. Hank Paulson and Hank Paulson alone. Here you go:

"Sale of Mortgage-Related Assets. The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act."

5) Hank Paulson has final say. Hank Paulson knows what's best. Hank Paulson cannot be reversed. Hank Paulson cannot be sued. Hank Paulson is king.

"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency"

So, what can you do? Normally here I'd say contact your corrupt Congressman or Senator. Contact the media. But folks, Congress has been bought. The media have been bought.

The American people have lost.

Deal with it.

So unless there's rage in the street, which there won't be - the new Fall TV season is starting - it's over. They win. In eight short years, they took everything they wanted. And nobody could stop them.

The only hope, for the hopeful? That we can run out the clock, and this bill doesn't pass until Bush and Paulson are gone. But if that's the case, and the bill does pass after January 2009, then the question is - who do you trust more - the outsider or the insider. And with this much on the line, will the outsider be allowed to win?

If this bill does pass ASAP, well, then watch Paulson get busy with his new credit card as fast as he can. He only has four more months. He'll be buying up crap as fast as he can in a desperate and reckless orgy of greed.

Regardless of how this plays out, prepare the best you can. Know what is happening in your former country, and do what is best for you and your family to survive.

I'm off to go find my tin foil hat now. I'm not usually one for conspiracy theories.

Until now.

Here is Mike Whitney on the consequences:

Full-Spectrum Breakdown: Grasping at Straws

Mike Whitney

September 20 / 21, 2008

On Friday morning, Senator Christopher Dodd, the head of the Senate Banking Committee, was interviewed on ABC's “Good Morning America.” Dodd revealed that just hours earlier at an emergency meeting convened by Secretary of the Treasury Henry Paulson and Federal Reserve chairman Ben Bernanke, lawmakers were told that "We’re literally maybe days away from a complete meltdown of our financial system.” Dodd added somberly, that in his three decades of serving in public office, he had "never heard language like this.”

The system is at the breaking point, and despite Wall Street's elation from the proposed $1 trillion dollar bailout to remove toxic mortgage-backed debt from banks balance sheets, the market is still correcting in what has become a vicious downward cycle. This cycle will persist until the bad debts are accounted for and written off for or until the exhausted dollar-system collapses altogether. Either way, the volatility and violent dislocations will continue for the foreseeable future.

Most people don't understand what happened on Thursday, but the build-up of bad news on the Lehman default and the $85 billion government takeover of AIG, triggered a run on the money markets and a freeze in interbank lending. The overnight LIBOR rate (London Interbank Offered Rate) more than doubled to 6.44 per cent. Bank of America reported overnight borrowing rates in excess of 6 per cent. Longer-term LIBOR rates also rose sharply. On Wednesday, jittery investors removed their money from money markets and flooded short-term US Treasurys for the assurance of a government guarantee on their savings even though interest rates had turned negative which means that their balance would actually shrink at the date of maturity. This is unprecedented, but it does help to illustrate how raw fear can drive the market.

The TED spread (the TED Spread measures market stress by revealing the reluctance of banks to lend to each other) widened and the credit markets froze in place. Borrowing three-month dollars on the interbank market and the U.S. Treasury's three-month borrowing costs widened five full percentage points. That's huge. The banking system shut down.

What does it mean? It means the Federal Reserve has lost control of the system. The market is driving interest rates now, and the market is terrified. End of story.

When the Fed announced its emergency program to dump $180 billion into the global banking system, short term Libor retreated slightly but long-term rates have remained stubbornly high. The noose continues to tighten. These rates are pinned to 6 million US mortgages which will be resetting in the next few years. That's more bad news for the housing industry.

The entire system is deleveraging with the ferocity of a Force-5 gale touching down in the Gulf, and yet, Henry Paulson has decided that the prudent thing to do is build levees around the system with paper dollars. Naturally, many people who understand the power of market-corrections are skeptical. It won't work. Libor is pushing rates upwards--that's the "true" cost of money. The Fed Funds rate (2 per cent) is supported by infusions of paper dollars into the banking system to keep interest rates artificially low. Now the extreme pace of deleveraging has the Fed on the ropes. Trillions of dollars of credit is being sucked into a black hole which is raising the price of money. It's out of Bernanke's control. He needs to step out of the way and let prices fall or the dollar system will vanish in a deflationary vacuum.

The problems cannot be resolved by shifting the debts of the banks onto the taxpayer. That's an illusion. By adding another $1 or $2 trillion dollars to the National Debt, Paulson is just ensuring that interest rates will go up, real estate will crash, unemployment will soar, and foreign central banks will abandon the dollar. In truth, there is no fix for a deleveraging market anymore than there is a fix for gravity. The belief that massive debts and insolvency can be erased by increasing liquidity just shows a fundamental misunderstanding of economics. That's why Henry Paulson is the worst possible person to be orchestrating the so called rescue project. Paulson comes from a business culture which rewards deception, personal acquisitiveness, and extreme risk-taking. Paulson is to finance capitalism what Rumsfeld is to military strategy. His leadership, and the congress' pathetic abdication of responsibility, assures disaster. Besides, why should the taxpayers be happy that the stocks of Morgan Stanley, Washington Mutual and Goldman Sachs surged on the news that there would be a government bailout yesterday? These banks are essentially bankrupt and their business models are broken. Keeping insolvent banks on life support is not a rescue plan; it's insanity.

No one has any idea of the magnitude of the deleveraging ahead or the size of the debts that will have to be written down. That's because 30 years of deregulation has allowed a parallel financial system to arise in which over $500 trillion dollars in derivatives are traded without any government supervision or accounting. These counterparty transactions are interwoven throughout the entire "regulated" system in a way that poses a clear and present danger to the broader economy. It's a mess. For example, there are an estimated $62 trillion of Credit Default Swaps (CDS) alone, which are basically insurance policies for defaulting bonds. AIG was as heavily involved in CDS as they were in regulated insurance products. So why would AIG sell CDS rather than conventional insurance?

Because, just like the banks, AIG could maximize its profits by minimizing its capital cushion. In other words, it didn't really have the capital to pay off claims when its CDS contracts began to blow up. If it had been properly regulated, then government regulators would have made sure that it was sufficiently capitalized with adequate reserves to pay off claims in a down-market. Now taxpayers will pay for the lawless system which men like "industry rep" Henry Paulson put in place. That's deregulation in a nutshell; a system that allows Wall Street banksters to create credit out of thin air and then run weeping to Congress when their swindles backfire.

Inflating the currency, printing more money, and increasing the deficits won't help. The bad debts have to be accounted for and liquidated. The Paulson strategy is to create another ocean of red ink while refusing to face the underlying problem head-on. This just further exacerbates the consumer-led recession which economists know is already setting in everywhere across the country. Demand is down and consumer spending is off due to falling home equity, job losses, and tighter lending standards at the banks. The broader economy does not need the added downward pressure from higher taxes, bigger deficits, or inflation. Paulson's plan is a band-aid approach to a sucking chest wound. The debts are enormous and the pain will be substantial, but the problem cannot be resolved by crushing the middle class or destroying the currency.

The malfunctioning of the markets and the freeze-over in the banking system are the outcome of a massive credit unwind instigated by trillions of dollars of low interest credit from the Federal Reserve which was magnified many times over via complex derivatives contracts and extreme leveraging by speculative investment bankers. This has generated the biggest equity bubble in history. That bubble is now set for a "hard-landing" which is the predictable result of an unsupervised marketplace where individual players are allowed to create as much credit as they choose.

Stef Zucconi has some fun with the statement sometimes heard in the mainstream media that no one could have predicted it would get this bad.

Rambling #2 - aka The Genius of Darwin

… As it happens, whether Darwin was right or wrong about the Evolution of Life makes virtually bugger all difference to most people's daily lives. However, Darwinism has affected the way people interpret tangible events that do impact on their daily lives.

Before Darwinism and the Enlightenment, most people believed that someone, or some entity, was responsible for everything that happened. The weather, the outcome of battles, the shape of tea leaves in a cup, the outcome of the throw of some dice; all was the Will of some god or other.

There was no such thing as chance. Everything that happened was the predetermined outcome of a controlling intelligence.

After Darwin, it was considered very clever to believe that everything of any importance or scale was the result of blind chance. Any pattern of events that appeared to be result of design was simply the result of blind chance combined with some kind of selection mechanism.

The result was that, in the act of denying the Hand of God in natural affairs, Darwinism also had the consequence of denying the Hand of Man in human affairs.

Anyone who suggests that the course of human, or natural affairs, may be the result of the interplay of intelligent planning and the natural selection of random events is now branded an irrational religious lunatic or a conspiracy theorist.

Shit just happens.

And if you don't believe that Shit just happens then you're only fit for the Funny Farm.

Because I'm a Loon I believe that the promotion of this kind of thinking, as an essentially exclusive model to explain how the world works, was an entirely deliberate course of action - but I would wouldn't I?

If you would like to witness a nice example of what I'm talking about, the mainstream coverage of the recent financial turmoil is a nice case history.

The unwavering message of the mainstream coverage of the 'Credit Crunch' is...

-- The impending implosion of our financial system is an unintended consequence of unreasoning, animalistic, undirected greed and fear.

-- No-one could have predicted it.

-- There is no predetermined objective.

-- The people responsible for our great financial institutions are honestly trying to unf*** things as best as they can for the Common Good.

The possibility that the crisis could have been deliberately engineered in some way, and that some very clever, powerful people knew exactly what was going to happen, is deemed so unlikely it is not raised even to be debunked.

Presumably, the fact that so many on-line Conspiranauts have been predicting this crash for years, in accordance with their insane models of how the world really works, is merely blind luck.

And if all those CCTV cameras, databases, terrorism laws and detention infrastructure are turned towards, instead of the shadowy terrorists, a general public f*****-off with being robbed blind that will be an unintended outcome too.

Speaking of “detention infrastructure,” here is a bit of news courtesy of the U.S. Army Times (thanks to Cryptagon for finding this), that might offer some clues as to the future planned for the U.S. if the economy should collapse:

Brigade homeland tours start Oct. 1

3rd Infantry’s 1st BCT trains for a new dwell-time mission. Helping ‘people at home’ may become a permanent part of the active Army

Gina Cavallaro

Monday Sep 8, 2008

The 3rd Infantry Division’s 1st Brigade Combat Team has spent 35 of the last 60 months in Iraq patrolling in full battle rattle, helping restore essential services and escorting supply convoys.

Now they’re training for the same mission — with a twist — at home.

Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.

It is not the first time an active-duty unit has been tapped to help at home. In August 2005, for example, when Hurricane Katrina unleashed hell in Mississippi and Louisiana, several active-duty units were pulled from various posts and mobilized to those areas.

But this new mission marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.

After 1st BCT finishes its dwell-time mission, expectations are that another, as yet unnamed, active-duty brigade will take over and that the mission will be a permanent one.

“Right now, the response force requirement will be an enduring mission. How the [Defense Department] chooses to source that and whether or not they continue to assign them to NorthCom, that could change in the future,” said Army Col. Louis Vogler, chief of NorthCom future operations. “Now, the plan is to assign a force every year.”

…They may be called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack.

Training for homeland scenarios has already begun at Fort Stewart and includes specialty tasks such as knowing how to use the “jaws of life” to extract a person from a mangled vehicle; extra medical training for a CBRNE incident; and working with U.S. Forestry Service experts on how to go in with chainsaws and cut and clear trees to clear a road or area.

The 1st BCT’s soldiers also will learn how to use “the first ever nonlethal package that the Army has fielded,” 1st BCT commander Col. Roger Cloutier said, referring to crowd and traffic control equipment and nonlethal weapons designed to subdue unruly or dangerous individuals without killing them.

“It’s a new modular package of nonlethal capabilities that they’re fielding. They’ve been using pieces of it in Iraq, but this is the first time that these modules were consolidated and this package fielded, and because of this mission we’re undertaking we were the first to get it.”

The package includes equipment to stand up a hasty road block; spike strips for slowing, stopping or controlling traffic; shields and batons; and, beanbag bullets.

“I was the first guy in the brigade to get Tasered,” said Cloutier, describing the experience as “your worst muscle cramp ever — times 10 throughout your whole body.

“I’m not a small guy, I weigh 230 pounds ... it put me on my knees in seconds.”

The brigade will not change its name, but the force will be known for the next year as a CBRNE Consequence Management Response Force, or CCMRF (pronounced “sea-smurf”).

“I can’t think of a more noble mission than this,” said Cloutier, who took command in July. “We’ve been all over the world during this time of conflict, but now our mission is to take care of citizens at home ... and depending on where an event occurred, you’re going home to take care of your home town, your loved ones.”

While soldiers’ combat training is applicable, he said, some nuances don’t apply.

“If we go in, we’re going in to help American citizens on American soil, to save lives, provide critical life support, help clear debris, restore normalcy and support whatever local agencies need us to do, so it’s kind of a different role,” said Cloutier, who, as the division operations officer on the last rotation, learned of the homeland mission a few months ago while they were still in Iraq.

Some brigade elements will be on call around the clock, during which time they’ll do their regular marksmanship, gunnery and other deployment training. That’s because the unit will continue to train and reset for the next deployment, even as it serves in its CCMRF mission.

Should personnel be needed at an earthquake in California, for example, all or part of the brigade could be scrambled there, depending on the extent of the need and the specialties involved.

…“I don’t know what America’s overall plan is — I just know that 24 hours a day, seven days a week, there are soldiers, sailors, airmen and Marines that are standing by to come and help if they’re called,” Cloutier said. “It makes me feel good as an American to know that my country has dedicated a force to come in and help the people at home.”

Any questions?

Signs of the Economic Apocalypse, 4-14-08

From SOTT.net:

Gold closed at 927.00 dollars an ounce Friday, up 1.5% from $913.20 for the week. The dollar closed at 0.6325 euros Friday, down 0.5% from 0.6356 at the close of the previous Friday. That put the euro at 1.5810 dollars compared to 1.5734 the week before. Gold in euros would be 586.34 euros an ounce, up 1.0% from 580.40 at the close of the previous week. Oil closed at 110.14 dollars a barrel Friday, up 3.8% from $106.14 for the week. Oil in euros would be 69.66 euros a barrel, up 3.3% from 67.46 at the close of the Friday before. The gold/oil ratio closed at 8.42 Friday, down 2.1% from 8.60 for the week. In U.S. stocks, the Dow Jones Industrial Average closed at 12,325.42 Friday, down 2.3% from 12,609.42 at the close of the previous Friday. The NASDAQ closed at 2,290.24 Friday, down 3.5% from 2,370.98 at the close of the week before. In U.S. interest rates, the yield on the ten-year U.S. Treasury note closed at 3.47%, up one basis point from 3.46 for the week.

World economic leaders, meeting in the G7 ministerial level gathering last week, expressed concern about the possibility that a rapid fall in the value of major currencies like the dollar and pound sterling could lead to economic collapse:

G7 fears sudden slide in main currencies

Krishna Guha and Chris Giles

April 13 2008

The Group of Seven industrialised nations has signalled shared concern over the danger of a disorderly slide in the dollar and sterling, following bouts of extreme weakness in the two currencies in recent months.

The warning came in a new sentence of the G7 communiqué, which said “there have been at times sharp movements in major currencies, and we are concerned about their possible implications for economic and financial stability”.

The G7 pledged as before to “monitor exchange markets closely and co-operate as appropriate”.

This is the biggest shift in the G7 language on currencies since the Boca Raton summit in February 2004. It signals the emergence of a new consensus on the risks posed by extreme currency weakness following months of disagreement between economies with appreciating and depreciating currencies.

Up to this point the US had rebuffed pressure from the eurozone to express concern about currency movements. The US government and the Federal Reserve see currency weakness as an essential prop to growth.

But the US government has started to worry more that dollar weakness could run out of control, exacerbating problems in financial markets. The Fed is concerned about the interaction of a weak dollar, global commodity prices and inflation expectations at home.

The US remains unconcerned about the level of the dollar. But it is bothered about the pace of decline.

The UK, meanwhile, also sees benefits from a weaker currency in supporting growth and creating more balance in the economy. But policymakers are concerned that the level of the pound does not slide too far, and are anxious about the risk of a sudden fall.

Officials from one G7 country said the UK was very worried about the potential inflationary consequences of a further big decline in the pound.

Officials in the eurozone and Japan have become increasingly concerned about the effect of currency appreciation on growth.

Eurozone policymakers – with the partial exception of German officials – believe the costs of euro appreciation to growth now outweigh the benefits of downward pressure on inflation.

The eurozone believes the level of exchange rates is a problem, not just the volatility, and hopes the US will eventually come round to this view. But for now European officials have decided to cement the consensus on volatility rather than press publicly for an acknowledgement that exchange rates themselves are out of kilter.

“The words are like a poem, they speak for themselves,” said Jean-Claude Trichet, ECB president.

The G7 stopped well short of threatening to intervene in currency markets. There was no discussion of intervention at the G7 meeting and the prospect of such action still looks remote.

Hank Paulson, US Treasury secretary, remains sceptical of the view that policymakers should try to second-guess market-determined exchange rates. There is no consensus as to the correct exchange rate levels, and Fed and ECB monetary policies are not consistent with an effort to push up the dollar against the euro.

However, some analysts interpreted the new language as an attempt to moderate the pace of currency movements by raising the possibility authorities might intervene in the event of extreme market volatility, even if not to defend any particular exchange rate.

If the strategy succeeds, it could make a sudden collapse in the dollar or pound less likely. But it is also possible traders could see these comments as a minimal response to market movements, and keep pressing the dollar and pound lower. If that happens, the G7 could find its newfound harmony on currencies soon tested.

The rapid rise in food and fuel costs is causing concern in developed countries and riots in poor countries. Food riots have been reported in Haiti, Yemen, Ivory Coast, Senegal, Bolivia, Indonesia, Mexico, Morocco, Guinea, Mauritania, and Cameroon, among other countries in recent weeks. These are some of the world’s poorest countries, so they function as canaries in the coal mine, since a high percentage of people’s income in those countries goes to food. Somewhat less poor countries like Egypt, India, and the Philippines have seen “unrest” over higher food prices. But even in the developed world “discomfort” is being felt and, soon enough, will unrest, then pain will be felt.

The leaders of the world economy reacted in different ways. Again there was a split between the U.S. Treasury Secretary Henry Paulson and the Europeans over what to do. Dominique Strauss-Kahn, the head of the International Monetary Fund leaned towards intervention:

Strauss-Kahn Warns Food-Price Inflation May Trigger Starvation

Christopher Swann

April 12 (Bloomberg) -- Further gains in food prices would be “terrible” for the world’s poor and throw hundreds of thousands of them into starvation, International Monetary Fund Managing Director Dominique Strauss-Kahn said.

Governments throughout Asia, Africa and the Middle East are seeking to combat food inflation and avoid social unrest by curbing exports or lifting import duties on basic food staples such as rice. Global food prices surged 57 percent last month from a year earlier, according to the United Nations, and the World Bank warns civil disturbances may be triggered in 33 countries.

If food inflation keeps accelerating at its current rate “the consequences will be terrible,” Strauss-Kahn told reporters at the IMF’s semi-annual meeting in Washington today. “Hundreds of thousands of people will be starving, leading to a disruption in the economic environment.”

Haitian Prime Minister Jacques Edouard Alexis was voted out of office by the country’s senate today after violent protests over rising food prices, news agencies reported today.

President Rene Preval, who called the no-confidence vote “unjust,” announced a 15 percent cut in the price of rice, which had doubled this week to $70 for a 50-kilogram (110-pound) bag, Agence France-Presse reported. No replacement for Alexis was announced.

Price Outlook

Consumer-price inflation in poor or so-called developing countries will accelerate this year to 7.4 percent, compared with a January forecast of 6.4 percent, the IMF said this week. Food prices will probably remain comparatively high until at least 2015, the World Bank said in a separate report.

“Economic progress made over the last years could be destroyed,” Strauss-Kahn said.

Rice, the staple food for half the world, has surged 96 percent in the past year, reaching a record $21.60 per 100 pounds on April 8. That’s forced China, Egypt, Vietnam and India, which export more than a third of the world’s rice, to curb shipments of the grain. Argentina and Russia have also sought to discourage food exports in a bid to boost domestic supplies.

The head of the United Nations Food and Agriculture Organization advocated price subsidies in poor countries:

Food riots to worsen without global action: U.N.

Robin Pomeroy

Fri Apr 11

ROME (Reuters) - Food riots in developing countries will spread unless world leaders take major steps to reduce prices for the poor, the head of the United Nations Food and Agriculture Organisation (FAO) said on Friday.

Despite a forecast 2.6 percent hike in global cereal output this year, record prices are unlikely to fall, forcing poorer countries' food import bills up 56 percent and hungry people on to the streets, FAO Director General Jacques Diouf said.

"The reality is that people are dying already in the riots," Diouf told a news conference.

"They are dying because of their reaction to the situation and if we don't take the necessary action there is certainly the possibility that they might die of starvation. Naturally people won't be sitting dying of starvation, they will react."

The FAO said food riots had broken out in several African countries, Indonesia, the Philippines and Haiti. Thirty-seven countries face food crises, it said in its latest World Food Situation report.

Some of the worst tensions have been in Haiti where protests at high cost of living descended into riots last week and four people were killed in clashes with security forces. There is concern about rising prices in the Philippines, but it was not clear what incidents FAO was referring to there.

"I am surprised that I have not been summoned to the U.N. Security Council as many of the problems being discussed there would not have the same consequences on peace, security and human rights (without the food crisis)," Diouf said.

Increased food demand from rapidly developing countries such as China and India, the use of crops for biofuels, global stocks at 25-year lows and market speculation are all blamed for pushing prices of staples like wheat, maize and rice to record highs.

While people in richer countries have noticed higher supermarket prices, the effect is far more pronounced in developing countries where 50-60 percent of income goes to food compared with just 10-20 percent in the developed world.

Food Crisis Summit

Diouf called on heads of state and government to attend a food crisis summit at FAO headquarters in Rome on June 3-5.

He said the priority was a "massive seed transfer" -- to ensure farmers in poor countries could buy seeds, fertilizer and feed at prices they could afford.

Other necessary measures include creating financial mechanisms to ensure poorer food importing countries could continue to buy the food they need and give a larger proportion of aid budgets to agriculture, Diouf said.

The comments echoed those of British Prime Minister Gordon Brown, who called this week for a coordinated response to the food crisis which would include reaching a deal on the Doha trade talks and the possible use of market-based risk management instruments to avert food price volatility.

Diouf said it was normal to expect developing countries to put controls on food exports, even if that exacerbated global food prices. The price of rice jumped 40 percent in three days recently when India and Vietnam banned exports, an FAO official said.

"Export bans are a normal reaction for any government that has a prime responsibility to its people," he said.

Expanded crop plantings this year should mean a 2.6 percent increase in cereal output, with wheat up 6.8 percent on last year, FAO has forecast. But with only a small proportion of that reaching the open market, the effect on prices will be negligible as other prices pressure remain, it said.

What did the top economic member of the Bush administration say? What else – food price controls on food in poor countries would be a bad idea. U.S. Treasury Secretary Paulson saw economic danger in helping millions of people avoid starvation and ruin. The economic machine might suffer “distortion,” or there would be “fiscal burdens” (rich people might have to pay some taxes and redistribute some of their income!):

Paulson says food price controls won't work

Sun Apr 13

WASHINGTON (Reuters) - Treasury Secretary Henry Paulson warned on Sunday that governments should resist temptation to try to control soaring food costs through price controls, which he said would likely make the situation worse.

In remarks prepared for delivery to the World Bank's development committee, Paulson said such measures were "generally not effective and efficient" at protecting people likely to suffer the most.

"They tend to create fiscal burdens and economic distortions while often providing aid to higher-income consumers or commercial interests other than the intended beneficiaries," Paulson said.

World Bank President Robert Zoellick warned earlier this month that soaring food and energy prices were a serious concern that threatened to foster social unrest in an estimated 33 countries.
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Zoellick called on rich countries including the United States, Japan and European Union to immediately fill a $500 million funding gap at the United Nations World Food Programme to offer food aid to the world's poorest.

Paulson said countries suffering "severe negative shifts in the terms of trade due to higher commodity prices including higher food prices" should focus on policies to control energy use and consider measures to boost agricultural production.

"Governments, however, need to resist the temptation of price controls and consumption subsidies that are methods of protecting vulnerable groups," he said.

The World Bank has similarly advised that, despite the fact that several countries are trying price controls to curb food costs, it is unlikely to be effective in the longer term.

"Income transfers or food assistance for poor people will work more efficiently and sustainably than more general steps at the national level," World Bank economist Don Mitchell said recently.

So the World Bank is now advocating social democracy? Income transfers, food assistance? Apparently Paulson and the Bush adminstration, with their “Shock Therapy” style neoliberalism, are also at odds with institutions controlled by the U.S. establishment.

Speaking of income transfers, if the problem with the world’s credit system began when Americans could no longer pay their bills after years of falling income and rising prices, what better way to solve it than by letting the pay of workers rise?

Want to Save the Economy? Spread the Wealth and Give Workers a Raise

Mike Whitney

Apri1 12 / 13, 2008

Insolvency's dark shadow hangs over Wall Street. One major player, Bear Stearns, has already gone under, and from the looks of it, another investment giant may be on the way down. It's getting ugly out there. The so-called TED spread, which measures the reluctance of banks to lend to each other, has begun to widen ominously suggesting that the money markets think another dead body will be floating to the surface any day now.

The ongoing deleveraging of financial institutions and the persistent downgrading of assets has the Fed in a tizzy. Bernanke has backed himself into a corner by stretching the Fed's mandate to include everyone on Wall Street with a mailing address and a begging bowl. Now he's taken on the even larger task of fixing the plumbing that keeps credit flowing between the various investment banks. Good luck. There's plenty of more pain ahead. The IMF expects the final tally will be $945 billion, that means $3 trillion in lost loans for the banks. Bernanke better pace himself; this mess could last for years.

The US subprime fiasco has spiraled into what the IMF is calling "the largest financial shock since the Great Depression." America's capital markets are on the fritz. The corporate bond market is frozen, the banks are buckling from their losses, and the housing market is in a shambles. No one is buying and no one is lending. Private equity deals are off 75 per cent from last year and no one will touch a mortgage-backed security (MBS) with a ten foot pole. The mighty wheel of modern finance is grinding to a standstill and no one's quite sure how to rev it up again.

The US consumers are feeling the pinch, too. Credit cards are maxed out, student loans overdue, car payments in arrears, and mortgages entering foreclosure. Also, wages haven't kept pace with production and and the home-equity ATM has been shut down. Now that the credit tap has been turned off; the American worker is hurting, but no one is offering a bailout or a even helping hand; just a few table-scraps from Bush's "surplus package". 500 bucks will just about fill the tank of a normal-sized SUV. A new survey from the Pew research Center "Inside the Middle Class-Bad Times Hit the Good Life", shows that working families are in debt up to their ears and that fewer Americans "believe they are moving forward" than anytime in the last half century. The study also shows that most people believe "it's harder to maintain a middle class life style" and that "since 1999, they have not made economic gains." Average families are struggling just to make ends meet.

That's why so many people bought homes when they should have opened savings accounts. They were duped into speculating on housing so they could get a chunk of money. It looked like a good way to overcome stagnant wages and crappy hours. The cheer-leading TV pundits offered assurances that "housing prices never go down". It was all baloney. Now 15 million homeowners are upside-down on their mortgages and the very same experts are scolding workers for fudging the facts on their income disclosure forms. It's all backwards.

No wonder consumer confidence has dropped to record lows. Working people don't need lectures on saving money; they need a raise. The big-wigs at Bear Stearns are still dining on crab-cakes at the Four Seasons while the working folk are just trying to make their way through Greenspan's nuclear winter living on beef jerky and Big Gulps. Where's the justice?

Volumes have been written about the current crisis; subprime-this, subprime that. Everything that can be said about collateralized debt obligations (CDOs) credit default swaps(CDS) and mortgage-backed securities (MBS) has already been said. Yes, they are exotic "financial innovations" and, no, they are not regulated.
But what difference does that make? There's always been snake oil and there have always been snake oil salesmen. Greenspan simply raised the bar a notch, but he's not the first huckster and he won't be the last. What really matters is underlying ideology; that's the root from which this economy-busting hydra sprung. 30 years of trickle down, supply-side gibberish; 30 years of idol worship for the waxy-haired reactionary, Ronald Reagun; 30 years of unrelenting anti-labor, free market, deregulated orthodoxy which inflated the biggest equity-Zeppelin in history.

Now the bubble is hissing out of the blimp and the escaping gas is wreaking havoc across the planet. There are food riots in Haiti, Egypt, and Kuwait. Wherever the local currency is pegged to the falling dollar, inflation is soaring and trouble is brewing. Also, European banks are listing from the mortgage-backed garbage they bought from brokerages in the US and need central bank bailouts to stay afloat. It's just more fallout from the subprime swindle. Finance ministers in every capital in every country are getting ready for a 1930's-type typhoon that could send equities crashing and food and energy prices rocketing into the stratosphere. And it can all be traced back to the wacko doctrines of neoliberalism. These are the theories that guide America's "screw-thy-neighbor" monetary policies and spread financial turmoil to every city and hamlet around the world.

The present stewards of the system are incapable of fixing the problem because they represent the interests of the people who benefit most from the disruptions. Paulson's latest "blueprint" for the financial markets is a good example; a more pro-business, self-serving scheme has never been put to paper. Gary North sums it up in his article "Really Stupid Loans":

"With the Federal Reserve System's latest proposal, presented to the public by Secretary of the Treasury Henry "Goldman Sachs" Paulson, the Fed is asking the United States government to make it the Great Protector of Capital....The new proposals will centralize power over finance in the hands of an agency that is officially run by the government but in fact is run by agents of the largest fractional reserve banks. ...Regulation by tenured staff economists will not make the system less fragile. It will make it more top-heavy and less flexible.."

Some version of this plan will probably pass in the next Congress. No matter whether it does or does not, the direction is the same: toward an economy controlled by the federal government in conjunction with titular private ownership of the means of production, that is, toward fascism." (Gary North, "Really Stupid loans" lewrockwell.com)

The whole point is to put the markets in the Fed's control so that when the next financial crisis arises (from the next swindle) the Fed can bailout the bankers and hedge fund managers without consulting Congress.

Paulson's plan is a power-play; nothing more. The investment Mafia wants to take over the whole financial system lock, stock and barrel. They want to liquidate the SEC and any other government watchdog and put the investment banks, hedge funds and brokerages on the honor system. It's the end of transparency and accountability which, of course, are already in short supply.

Currently, Paulson and Bernanke are expanding the balance sheets of the Government Sponsored Enterprises (GSEs) so that Fannie Mae and Freddie Mac will underwrite 85 per cent of all mortgages while FHA will cover 10 per cent more. The mortgage industry is being nationalized to save banking fellowship while the taxpayer is on the hook for another $4.4 trillion of dodgy loans. Paulson doesn't care if the taxpayer gets stuck with the bill. What bothers him is the prospect that, somewhere along the line, workers will demand higher wages to keep pace with inflation. Then all hell will break loose. Paulson and Co. would rather see the economy perish in a deflationary holocaust than add another farthing to a working person's salary. He and his ilk take class warfare seriously; that's why they are winning. But their strategy also creates problems. When wages don't keep pace with production, demand decreases and the economy falters. That's what's happening now and Paulson knows it. Workers are over-extended and can't buy the things they make. They barely have enough to feed the kids and fill the tank for work. Consumer spending (which is 72 per cent of GDP) is nose-diving at the very same time the Fed's equity bubble is exploding.

Neoliberalism has a twenty-year record of producing the very same economic calamities. Why is this crisis different? Why should the US be spared the same predatory treatment as the many other victims of the global corporate oligarchy? After the Fed's equity bubble bursts, the corporate vultures will swoop down and buy up vital resources and industries for pennies on the dollar.

Economist Michael Hudson anticipated many of the present-day developments in the financial markets in an amazingly prescient interview in CounterPunch in 2003 called "The Coming Financial Reality":

Michael Hudson: "Free enterprise under today's financial conditions threatens to bring about an unprecedented centralization of planning, not in the hands of government but by the financial conglomerates and money managers. Whatever government planning power is destroyed becomes available for them to appropriate, with plenty of vigorish left for the politicians whose campaigns they back and who will "descend from heaven" into high-paying private-sector jobs, Japanese style, after having performed their service for the new regime.

Question: The financial regime is nothing but parasites?

Michael Hudson: "The problem with parasites is not merely that they siphon off the food and nourishment of their host, crippling its reproductive power, but that they take over the host's brain as well. The parasite tricks the host into thinking that it is feeding itself.

"Something like this is happening today as the financial sector is devouring the industrial sector. Finance capital pretends that its growth is that of industrial capital formation. That is why the financial bubble is called 'wealth creation,' as if it were what progressive economic reformers envisioned a century ago. They condemned rent and monopoly profit, but never dreamed that the financiers would end up devouring landlord and industrialist alike. Emperors of Finance have trumped Barons of Property and Captains of Industry." (Michael Hudson, "The Coming Financial Reality", counterpunch, interviewed by Standard Schaefer.)

Bingo. Hudson not only explains how finance capitalism is inserting itself into the governmental power structure but, also predicts that "industrial capital formation" -- which is the production of things that people can really use to improve their lives -- will be replaced with complex debt-instruments and derivatives that add no tangible value to people's lives and merely serve to expand the wealth of an entrenched and increasingly powerful investor class.

Finance capitalism has "devoured landlord and industrialist alike" and created a galaxy of seductive liabilities which masquerade as assets. Derivatives contracts, for example, represent over $500 trillion of unregulated counterparty transactions; a "shadow banking system" completely disconnected from the underlying "real" economy, but large enough to send the world into a agonizing depression for years to come.

The goal should be to dismantle this corrupt Ponzi-system, which merely wraps debt in a ribbon, and rebuild the economy on a solid foundation of productive labor, worker solidarity and and above all the redistribution of income and hence purchasing power away from the system which now flow to the top two or three per cent.

Political power has to be taken from the financial mandarins or the disparity of wealth will continue to grow and democracy will wither. We've already seen our main institutions -- the courts, the congress, the media, and the presidency -- polluted by the steady flow of corporate contributions which only serve the narrow interests of elites.

Henry Liu expands on this idea in his excellent article "A Panic-stricken Federal Reserve":

"In the 1920s, the wide disparity of wealth between the rich and the average wage earner increased the vulnerability of the economy. For an economy to function with stability on a macro scale, total demand needs to equal total supply. Disparity of income eventually will result in demand deficiency, causing over-supply. The extension of credit to consumers can extend the supply/demand imbalance but if credit is extended beyond the ability of income to sustain, a debt bubble will result that will inevitably burst with economic pain that can only be relieved by inflation.....More investment normally increases productivity. However, if the rewards of the increased productivity are not distributed fairly to workers, production will soon outpace demand. The search for high returns in a low demand market will lead to consumer debt bubbles with wide-spread speculation .... Today, outstanding consumer credit besides home mortgages adds up to about $14 trillion, about the same as the annual GDP. "

Voila. A strong economy requires a strong workforce and an equitable distribution of wealth. When money is concentrated in too few hands, the political system atrophies and becomes unresponsive to the needs of its people. That's when the nation's laws and institutions are reshaped to reflect the ambitions of rich and powerful.

The financial system is doing exactly what it was designed to do, it is crumbling from the decades-long trickle-down experiment. Social programs have been gutted, civil infrastructure is in tatters, legal protections have been savaged, and workers rights have been trounced. Is it any wonder why we're embroiled in an unwinnable war and the financial system is on its last legs?

The only way to break the stranglehold of Wall Street's financial Politburo is to level the playing field through greater wealth distribution. That's the best way to rekindle democracy and make America the land of opportunity again. And it all starts with giving America's workers a raise.

Sounds nice, but how would this come about? Stef Zucconi tells us bluntly what we’re up against:

For those of us with a less, um, stochastic view of how the world works and who believe that s*** doesn’t always ‘just happen’, mainstream media accounts of what’s going on in the world are often frustrating and, occasionally, amusing – but only in a very dark way.

The coverage of the state of the British and World economy being the most immediate example that comes to mind.

The British media has recently finally woken up to some key economic trends which have been noticeable for some time now but there has been far too much other, much more important stuff to report on. Those key economic trends include...

· The price of oil is going up lots
· The price of rice is going up lots
· The price of wheat is going up lots
· The price of gold is going up lots
· The value of the dollar is going down lots
· The value of the pound is going down lots
· The availability of retail credit is going down lots

And not only has the British media been rather slow in reporting these movements it is also meticulous about reporting these movements as unconnected events and giving some frankly bollocks explanations as to the causes.

Last night, on Channel 4 News for example, we were treated to appearances from representative jackals from both the World Bank and the IMF; in two scrupulously separated news items, lying through their f****** teeth about why the British/ European/ World economy is going to go t*** up and why people can’t afford food in a growing number of regions of the world.

What neither owned up to is that the underlying reason why all these things are happening is that a massive re-balancing of the world’s already unequal distribution of wealth is now well under way.

Re-balancing is, of course, a euphemism for naked theft.

UK interest rates have just been cut by another 0.25% and even before the cut the media whores were warning people that this cut, as with the previous cuts, would probably not be passed onto ordinary borrowers and that banks would continue to cut back on the volume of mortgages they are lending to people.

Which is all very strange when you think about. Central banks have been creating and pumping money into the global economic system but the stuff is, so we are told, still thin on the ground

Where’s it all going?

I’d suggest a good place to start looking is in the markets that speculate in the price of things none of us can do without. Right now, borrowing made-up money at 5% to punt on and drive up the price of food or oil another 20, 30, 40 or 50% is pretty much a one way bet.

...only your average person hasn’t got the resources or the means to buy their food six months forward. So, they’ll just have to take it up the rear end when the prices rise won’t they?

We are repeatedly told, from cradle to grave, that the cost of the things we need is driven by supply and demand. For example, the price of houses in the UK and the US was driven by population pressure, the increase in the number of households and a failure to build enough new housing.

Bollocks

That’s only half the story – and not the interesting half.

The other key driver for the £ or $ price of a commodity is the supply and demand of the money used to pay for it. And if you can force up the price of something by flooding a market with money, whilst restricting increases in what people earn, you end ******** those people big time

and you can flatten the price of anything just as easily.

The need for housing in the US or UK didn’t suddenly drop overnight.

In the same way that the need for rice or wheat didn’t suddenly leap up overnight either.

There are some very, very evil f****** manipulating both the supply of the essentials of Life and the money used to pay for that supply. Those of us on the demand side are currently at their mercy. A quality that oligarchs are not exactly renowned for.

The only hope of dismantling the “corrupt Ponzi-system” Whitney refers to lies with a more accurate understanding of human nature. One that takes into account the nature of normal humans as well as the nature of the “other human race,” the psychopaths. As Laura Knight-Jadczyk put it,

If the existence of psychopaths and their ability to play us is denied, then their role in government, in business, in the media, in the military, in the police and law, in education, in any place where power is to be had, cannot be understood… Fortunately, researchers such as Łobaczewski, Robert Hare and Paul Babiak are bringing to light the nefarious influence these pathological types play in society. We are beginning to have an understanding of the dynamic between psychopath and non-psychopath, between predator and prey, in individual lives and in society at large.

That is the environment in which we live. If you wish to understand how we are influenced by evil, it is the fact of the existence of the pole of the conscienceless that you must understand. It is the existence of this pole that explains the horrors of human history, not some incurable or permanent predatorial nature at the heart of every human being.

This conscienceless reality continues to exist because the majority of people are ignorant of the facts. They have no knowledge of psychopathy and the role it plays in shaping society. They do not understand that their ideas, their opinions, their thoughts, their dreams, their goals in life are all broadcast out from a group of people who either have no conscience and are incapable of it, or who are willing to do whatever they are asked in order to preserve their own comfort.

To break the rule of the pathocrats, we need knowledge: the knowledge about them and how they work, both on an individual level and on the level of society as a whole. Knowledge, scientific knowledge on psychopathy and ponerology, will permit us to create a pole of conscience that can serve as a counterweight to the pole of the conscienceless. The goal of this knowledge is to eliminate the influence from the other pole by facilitating people to pull themselves out of its field of influence. The 17% or so percent who support the pathocracy would be won away if they were to feel that their security and comfort was bettered served by supporting the other pole.

The goal is not to eliminate physically the psychopaths but to render their manipulations fruitless as more and more people see through them. Knowledge of them and how they manipulate and deceive serves as an inoculation. We can learn to become immune. As this occurs, the weight of the left pole will decrease. If the pathological have no influence, if they can no longer have access to positions of power, gradually, consciencelessness will become nothing but an idea. It will lose its physical manifestations.