Economic and political analysis-Window on culture-Media criticism

Sunday, September 28, 2008

Trouble ahead, bailout or not

My article "Fear peddling can't save Paulson plan" was published at OpEdNews yesterday.

Basically what we have is an administration resorting to fear mongering to force support for a massive bailout. As I write, the Congress and White House have agreed to some sort of deal, on the weekend like the Bear Stearns and Freddie Fannie.

Deception is the method by which the Bush administration does business. By hiding what should be the people's business, criticism can be avoided. Aristocratic, contempt for the little people is a trait of a government which serves the interests of the ruling class.

Whatever deal Paulson can spring will benefit the wealthy, just as taxes on higher income people--the investor class--have fallen under Bush. Why would the last days of the regime be any different? Since the 5-4 ruling by the Supreme Court disallowed a Gore victory, we've seen the White House pursue an agenda of de-regulation and fiscal irresponsibility which are reaching their climax now.

I've been thinking of the bailout as a massive trap for the next President, like Afghanistan is becoming. (The public release of a National Intelligence Estimate on the situation there has been suspended.) The Bush legacy will be one that could doom his successor politically.

The doubling of the federal deficit we've seen under Bush will do tremendous damage to our ability to afford future government expenditures, part of a plan to "starve the beast" by burdening our government with too much debt.

Regardless of the passage of a bailout, we are seeing the red ink pile up just as fast as the blood of innocents in open-ended wars abroad. Last week, over $130 billion A DAY went to private companies in newly opened discount windows, through the Supplementary Financing Program, announced just two weeks ago by the Department of the Treasury.

The Republicans are playing a dangerous game by creating so much debt. While they might weaken the ability of the Democrats to fund their hated "social programs," they might create an economic crisis of such massive proportions that even their beloved defense programs and wars will go underfunded. (The Democrats support these too, giving creedence to the idea of an all-powerful military-industrial complex and War Party.)

I hope that reason can win in the argument that will come concerning fiscal accountability. If we are to preserve the American way of life, we must learn to borrow less. If we can live within our means, we can live a more sustainable lifestyle. Our government needs to help lead us towards a more fruitful life, or at least not create massive problems that sabotage our financial future.

Just how bad can it get? We can't say for sure, but there's no doubt the American standard of living will decline, which is perhaps a good thing as we spend too much, and suck in too many of the world's resources the way we live now.

I want to provide original content here, so I've been working on an essay to complement that article. I'll post it here.

Saturday, September 20, 2008

Paulson & friends, Plunge Protection, and commodities speculation

My article, "Capitalism kills itself" just got published in OpEdNews.com. The article talks about the AIG bailout, and the broader contagion threat posed by de-regulation and capitalism on steroids.

A point I want to reiterate is the fact that the bailout is really a move meant to benefit the financial service companies, which took on too much risk. Because Paulson is one of them--arguably taking a breather from his job as Goldman Sach's CEO to serve as our Secretary of the Treasury--his real loyalties lie with fellow bankers. To Paulson and his cronies, the needs of the Little People simply aren't as important as protecting his Wall Street friends. The federal money--taxed from the Little People and borrowed from foreigners--follows the priority, flowing into the coffers of companies too big to fail. It's worth realizing that it was their greed and mismangement that created the problem, alongside deregulation efforts cheered on by Republicans!

This really is quite a time to be a social capitalist! The monetary capitalist (shall we say the capitalist pigs?) are showing their real intent, to turn government into fascism--which has been defined as the perfect alignment of state and corporate interest. Dazzled with patriotism and intoxicated with nationalism, the public fails to see war ultimately as a tool meant to enlarge the state and restrict freedoms.

Another damning piece of evidence against the communist-style bailouts are the Bush administration's previous abuses of power. The American people simply can't assume their leadership intends to help them, much less really protect them.

Amazing it is how the mainstream media acts like a lapdog whenever it scents a real crisis. We're told how a bailout is necessary to stabilize the economy--well, what if it isn't? I mean sure, a limited collapse of the financial markets won't exaclty help the Little People, but just what will a bailout do for them? Unpunished, the companies that precipitated the crisis will now have the contrived financial authority of the state at their bidding. Knowing this, they'll surely take on ever greater risks in the future, knwoing they are simply too important to the economy--or key politicians--to be allowed to fail.

I had some additional comments that I wanted to publish at OpEdNEws but couldn't out of considerations of length. They are presented below as an exclusive. One section deals with the President's Working Group on the Financial Markets, which is an shadowy group formed after the October 1987 market collapse, the other on commodities specualtion, a topic largely undercovered by the press, and replaced by the rhetorically effective "drill-drill-drill" expedient.

More popularly known as the Plunge Protection Team, this gathering can intervene in any market meltdown, and purchase stocks to run up the Dow just as it should go down.

This week saw highs and lows that may have been manipulated by the PPT. I didn't see sufficient reason for the massive spikes in the Dow following Monday's 504 point plunge (it was up over 100 Tuesday) and its 400+ point dive on Wednesday (Thursday the Dow was up over 400.)

Quite conceivably, the PPT could have been meddling in the markets, trying to slow the market trend which is clearly negative.

Despite the broader market recovery, many financial stocks were decimated. As I say below, there are limits to how much the PPT can do after the fact. If a company is worthless, no amount of intervention in the markets can revive it--only direct handouts can, which are hardly opague, which would destroy the secretive nature with which the PPT works its dark magic.

Expanded article:
Backdoor intervention

One possibility is that our government has been actively meddling in the stock market for years, ever since the 1987 stock crash. One shadowy body controlled by the White House has been acting completely in secret, propping up stocks, and selling assets in accordance with informal Presidential directives.

Writing in truthout earlier this year, Kevin Philips takes a thorough look at the President's Working Group on the Financial Markets, more commonly referred to as the Plunge Protection Team. Philips takes up the general frame of mind held by PPT:
"Over the last decade or so, the Treasury Dept. and the Fed have both developed something of a scofflaw attitude toward strict interpretation of federal statutes and regulations. For example, both winked in the late 1990s, as federal regulators allowed Citibank to merge with Travelers Insurance, despite contrary law still on the books."

Phillips goes on to bring up a 1997 article in the Australian Financial review: "'There is a belief that this team represents a powerful and secretive hand that is ready to act any time the Dow looks ready to tank big time.'"

Scarily, Paulson's Blueprint offered in March, 2008, advocates an larger role for the President's Working Group, expandind membership in the organization. All their dealings would be kept behind closed doors.

The are limits to this group's effectiveness. Even if the Plunge Protection Team has infinite cash, it can only do so much to smooth over volatility in the stock market. It is possible however to use the power of the PPT to protect crony companies which have a good relationship with the White House. Also, it's feasible that the PPT did what it could to damage commodity prices, possibly by manipulating the markets (as everything it does is conducted in secret, any moves it makes could be considered manipulations.) Sabotaging commodity prices is a tall order--if the rest of the world lacks confidence in the dollar, there's little the PPT or anyone in Washington can do about. Even the Fed can't control interest rates--its overnight lending rate is just a quarter of what banks charge other banks.
De-regulation has played a prominent role in allowing derivatives to be created and sold with virtually no oversight. Here is another section which I omitted from my OpEdNews.com article:

Commodity market linkage

Coincidentally, the Republicans' ritual debasement of regulation helped speed speculation. Phil Gramm, who was an economic adviser to John McCain until he referred to the current economic environment as a "mental recession," relaxed numerous restrictions on commodities speculation. See more on the freeing of regulatory oversights on speculation in my post on the Commodities Futures Trading Commission, with special attention on comments by Michael Greenberger, a former chairperson at the CFTC. In his prepared statement before a Senate committe in June, Greenberger cites a Senate report from June 2006 that attributed "$20 to $30 dollars of that cost [$77/barrel at that time] was due to excessive speculation and/or manipulation on unregulated exchanges."
Greenberger's oral testimony delivered at the hearing on June 3rd is also worth seeing (within this C-Span video), as it's quite blunt and to the point yet was not widely disseminated. Greenberger has his own site, which offers links to numerous appearances in the media.

The massive run-up in commodoties began as a natural reaction to the debasement of paper-based assets, which rise or fall based on the demand for money, rather than real goods on which commodity values are based. While we need money, we need it for its ability to act as a store of value. As the dollar weakens, commodities like the precious metals, real estate (non-residential), and agricultural products become more attactive. Speculation naturally accelerated this trend.

Sky-rocketing commodity prices may have been a symptom of serious problems with the dollar--a currency whose value is tied to the price of oil, which we saw skyrocket. As a matter of fact, the lower dollar means oil is more expensive. One ounce of silver buys about 4 gallons of gasoline--a ratio of exchange that's been true for at least 100 years, with few exceptions.

The collapse in commodities prices that began about six weeks ago could be a response to the recent restrictions placed on futures and derivatives-based trading. Typically the speculative frenzy destabilizes the market, exacerbating huge swings in prices.

Low interest rates buoyed the recent speculative frenzy, encouraged by the lax enforcement of regulatory constraints. More expensive oil has made a more rational commodites trading scheme more politically acceptable. No longer is it enough to borrow at record low rates of 2% and speculate on rising prices without owning anything. Until recently, it bears mentioning that Morgan Stanley owned more oil than anyone else in North America. Rather than get the stuff out of the ground, it's become far more lucrative to invest in oil production and sell forward contracts with oil that has yet to be extracted.

The lower interest rates helped housing values. The government has long valued the home construction industry because it stimulates a number of industries. Yet the lower rates also made speculation easier, since speculators could get money for essentially nothing. Once the commodities train got rolling, speculators could simply throw more easily borrowed money on the fire and enjoy the run-up. The Fed may have been trying to forestall commodity speculation that accompanied the low interest rates, but the political will to regulate dissipated to the point that a speculative frenzy could occur. Even now, commodities prices are positioned to roar back, as politicians want to forestall a recession by keeping interest rates low. Another aim is to keep the economy rolling along until a new president takes over, and inherits the problem. Whoever it is will be forced to choose between a recession or rising prices and inflation--not an easy choice. In the worst case scenario--short of a full collapse of our monetary system, they could face stagflation, rising commodity prices with slow growth.

Also worth mentioning, the huge run-up in commodity prices is the result of a speculative craze which came before it--one which expanded the monetary base exponentially: the derivatives craze.

The spike in commodity prices revealed how weak the dollar really was. The dollar had become weak largely because of the creation of over $600 trillion in derivates products, an amount far surpassing the size of the world economy or its combines money supply. This completely unrealistic ratio of exchange meant that ultimately more people were owed more dollars than were avialable, spurring a liquidity crisis to cover the gap. If over-stretched creditors couldn't back up a large enough proportion of their borrowings--by selling some or securing new sources of capital--their debts could be called.

The threat of inflation compelled the government to head off speculation. Commodity speculation unmasked the quickly deteriorating positions of the major derivates players. Had the speculators not tried to profit from the massive run-up in oil prices, the derivatives crisis may have been much later in emerging. This means that the dollar will take a hit sooner and bigger, which could bode well for commodity prices. Still, at least the size of the problem is now know, which will hopefully limit the fiscal damage and amount of repairs needed. This could limit the safe haven appeal of commodities.
Finally, here are a few of the articles that came out in the beginning of this crisis:

"McCain Blasts Wall Street Failure, Neglects To Mention His Adviser Helped Cause It," by David Corn, Mother Jones

"Let the bank runs begin!" by Patrick Wood, August Review

"US Economy: Rudderless and Reeling From Direct Hits," by Paul Craig Roberts, InformationClearingHouse

"Who's to Blame for Market Failure? Clue: Not the Bankers" by Jeremy Seabrook, The Guardian


Labels: ,

Wednesday, September 10, 2008

Cops clamp down at GOP Convention; Palin family values

As far as the size of demonstrations, the 2008 Republican National Convention was hardly exceptional. Yet eight hundred people were arrested during the course of last week's event, which ended last Thursday. In terms of police tactics, St. Paul has distinguished itself by arresting and detaining journalists.

Typical of bland, dumber down news, absent from the media narrative is any substantive inquiry into the protests outside the--mostly sanitized--interior of the Xcel center, where the Convention was held. I say mostly sanitized because two protestors did interrupt John McCain's acceptance speech which came at the end of the event.

Last year, I'd read that a Secret Service manual advocates the use of the chant "USA, USA, USA" by 'rally squads' in chanting down these demonstrators, should they appear at a Presidential event. A Salon article cites the 'Presidential Advance Manual': "If the demonstrators are yelling, rally squads can begin and lead supportive chants to drawn out protestors (USA!, USA!, USA!)."

The choice of police tactics was controversial. Before the Convention had begun, packs of heavily armed police, aided by the Department of Homeland Security and FBI, targetted groups who'd set up protest headquarters in the area. The terrorism moniker has been slapped on these organizations, which shows you how quick authorities are to criminalize dissent. See a Marjorie Cohn article on the effort to preempt demonstrations here.

In Truthout.org, Michael Winship writes:
"...the police seemed especially intent on singling out independent journalists and activists covering the Republican convention for the Internet and other alternative forms of media. Over the weekend, police staged preemptive raids on several buildings where planning sessions for demonstrations were being held, one of them a meeting of various video bloggers, including I-Witness Video, a media group that monitors law enforcement."

During several protests held on the week of the Convention, St. Paul police created cordons with few if any avenues of escape. Demonstrators, with press mixed in, were forced to endure showers of chemical agents.

Media people were targetted, or simply treated the same as the demonstrators. During arrests, independent news producers, photographers, and citizen/journalists were forced to lie down in the streets, with hands tied behind their back. Cameras and equipment were seized. Along with dozens of people simply covering the event, Amy Goodman was arrested.

At least not all people filming the event were targetted, judging from the video available of Goodman's arrest [available only through youtube as of 9/10.] This isn't to say the police there were practicing arbitrary and illegal arrest powers, or practicing the unjustified use of force. Back in 1991, Goodman was actually shot and left for dead by the Indonesia military when she'd been reporting on a protest on the island of Timor and a massacre of unarmed Timorians began. She recounts the nightmare here.

Chris Hedges writes about the police state behavior in Truthdig, "You had to search out Democracy Now!, TheUptake.org, Twin Cities Indymedia, I-Witness, along with a few other independent outlets, to see, hear or read real journalism from St. Paul."

Hedges blames the failure of the media to cover both sides of the war issue (pro- and anti-), the police would be more reticent to act, knowing that millions of viewers would see the repression and react negatively to the use of force. The Vietnam era showed the impact that full and accurate coverage of demonstrations could make. Alongside the first war to be brought through television 'into Americans' living rooms,' huge demonstrations made a large impact when carried by the national networks.

Even with all the 'negative' coverage, support for the Vietnam War was I believe over 50% at the time of its closure. It's worth remembering that Republicans now believe that poor management of the public perception was the reason for our losing that war. By curtailing the press and their freedoms, the idea is that Iraq can be made into a success, or at least a non-failure, which will support continuation of the war until it can presumably be won at some point in the future.

Accompanying Hedges' article is a powerful picture of a flower-wielding woman being sprayed with a chemical agent at point blank range (also available in the photo gallery linked below.) The AP photographer, Matt Rourke, was himself injured in the melee later that day, but not before capturing this photo, and this one.

One of the best videos I've seen comes via indybay, which I found through the constant reports eminating from indymedia's Minneapolis/St. Paul chapter. A group of protestors is met by a mixed police and National Guard detachment which actually pursues the dispersing crowd down Shepard Road as they try to move out of the area.

An extensive gallery of still photos is also available through indybay.org. In a different format, the same pictures are viewable in a scroll-down, chronological sequence of blog entries, arranged on a single page format, here.

Amy Goodman of DemocracyNow explained what happened Thursday: "The march ended with more than 200 demonstrators trapped on the Marion Street bridge with hundreds of police in riot gear blocking either side." link. Also at that link is an interview with DemocracyNow producer Sharif Abdel Kouddous arrested Thursday, who explained the situation, "As soon as we were on the bridge, we realized that we were trapped. Everyone—they had a line of riot cops on one side, a line of riot cops on the other, and the marchers had nowhere to go."

Kouddous explains an exchange he had with a policeman--presumably from the city of St. Paul--during his arrest:
"And he goes, you know, 'Why didn’t you guys just disperse when we tell you to disperse, and this is not going to happen?' I told him, 'You’ve been telling me to disperse since 5:00 p.m. And so, you know, there would be no press for four hours of this march. You know, we can’t—we’re just doing our job. We’re not going to disperse whenever you tell us to. We’re going to continue to do this.'”

I couldn't help but remember my brief discussion with a former D.C. police officer last September, as I made my way towards Washington to cover the demonstration there. He'd been very, very specific about warning me to disperse when told by the police to disperse. The St. Paul situation shows what can easily occur if people don't disperse, but I also think it's vital that people get to see another side--a point of view that the corporate media seems to ritually avoid, one that is unedited, straight from the heart, contrasting with the slick image presented of a party unified inside the Convention hall. Without these Ron Kovic moments, there will be insufficient disruption to the state of normalcy in the political sphere, and the status quo--a continuation of the war--will continue.

Goodman explains her own arrest on Monday in her article "Why we were falsely arrested."

As a personal note, I don't know where we'd be without this great reporting. I don't think a free press should be subject to arrest simply for covering an event like this. I admit with not a little pride that I'm a citizen/journalist who has taken to blogging largely because the mainstream media doesn't provide accurate reporting and objective in-depth analysis, so when I see people performing journalistic duties, I naturally tend to sympathize with them. I also don't see how the police using arbitrary powers of arrest is an effective bludgeon to bash in all coverage that might be detrimental to their handling of the situation. While some in the mainstream media might cower at the thought of arrest, we citizen journalists are a tougher breed, I would hope, and less easily intimidated. If not, well then I guess the public will have to rely exclusively on the mainstream media for their news, which I guess is what those who lack the Internet must do anyway.

A large-scale letter-writing campaign was led by FreePress.org in the aftermath of the journalist arrests. Updates on the effort to hold the authorities accountable for their actions are available at thier site, and the website theuptake.org as well, which includes a summary of all the Convention violence.

Surprisingly, the City of St. Paul actually has an agreement with the Republican National Committee to pay for the first $10 million in civil settlements that the city might be forced to pay as the result of successful litigation by those arrested, gassed, or denied their rights. Paul Demko of the Minnesota Independent writes:
"The St. Paul JPA [Joint Powers Agreement] offers participating agencies liability insurance coverage with a $10 million limit. The cost of that insurance is being footed by the RNC’s Minneapolis St. Paul 2008 Host Committee per an agreement it struck with the city. Some police departments, particularly county sheriffs’ agencies across the metro, are worried that $10 million isn’t really enough to cover potential litigation costs associated with an event of the RNC’s magnitude. And if such expenditures did exceed $10 million, cities and counties fear they could end up on the financial hook." (Source)

Recently a jury found New York City liable for their abuse of protester rights at the 2004 Republican National Convention in New York City (that was the infamous case of the illegal holding pens set up in the docks.) If the Republicans have simply marked off $10 million as the price of doing business, they would much rather contend with the financial ramifications of violating the rights of demonstrators than risk facing the true scope of public discontent concerning the Iraq War, which they must truly fear.

Speaking of fear, Zack de la Rocha leads his band Rage Against the Machine in an impromtu, acapella song the band's four members played using a bullhorn on Tuesday near the State Capitol. At the bottom of this Raw Story article on the Convention arrests there was an abbreviated video of the performance credited to above-thefold.com, which had a more complete video half-way down a post there, including some political opinion omitted from the shorter Raw Story post. [Editor's Note: Neither of those links was functioning as of September 10th. RATM's website was directing visitors to the same video at the youtube site.]

Dela Rocha points out that the authorities don't fear him or four musicians from Los Angeles, but rather you, the crowd.

World Socialist Web Site--a scary name but good source of information--offers a good article by Jerry White on the official misconduct occuring alongside the Convention. Also worth reading is this blog entry in GeorgeWashington2.blogspot.com.

Palin Family Values

I guess Palin and her supporters reserve the right to remove Bristol, Palin's 17-year-old daughter, from the public spotlight. Barack Obama has obliged the Republicans, agreeing that Bristol's situation is a private family matter.

Marie Cocco, writing in Truthdig, agrees that pregnancy is completely a family matter, an issue over which no one outside the family should be allowed to exercise their control or opinions. In Cocco's opinion, the privacy that families are entitled to should not be violated by the passage of laws and controls over family planning decisions.

Right-to-lifers believe that having a child is a responsibility of all pregnant females. They would take their view and impose it on all families with unwed pregnant daughters, denying them what the Palins desire--just to be left alone to make their decisions free of outside meddling. Under draconian restrictions on abortion--including a set of rules that make victims of rape and incest get parental approval for abortions--the inner sanctity of the family is violated. Families that decide that their teenage daughters aren't yet ready for parental responsibilities would be forced to carry the girl's fetus to full term.

Cocco brings up the zealotry of the anti-abortion movement and its intrusive nature:
Activists have applauded inquisitors who’ve sought to rummage through the medical files of women who have had abortions, under the guise of investigating whether doctors might be performing them in contravention of certain state restrictions. They have sought to make it harder for women even to obtain birth control pills, forcing them to argue with objecting pharmacists in all the privacy afforded by a drugstore aisle. Just days ago, the Bush administration put forth a new rule that would allow objecting health care workers to refuse to tell rape victims about the availability of emergency contraception or refuse to dispense ordinary birth control pills.

Blocking information is a vital element in controlling behavior. What a young woman does not know, she cannot choose. If Palin and others have their way, she won't even be allowed access to borth control, which turns her body into a vehicle for procreation, an essentially fundamentalist view that Palin shares. Another nasty belief is the idea that vicitms of rape and incest should be forced to carry their fetuses to birth. While mayor of Wasilla, Palin required rape victims to pay for their own rape kits. (Alaska has the nation's highest incidence of rape.)

The young man who presumably impregnated Palin's daughter has apparently agreed to marry her. While Bristol, the daughter of a governor, might be able to get married, most teenage girls who get pregnant aren't so lucky. Was the pregnancy was the reason for the marriage, or was the rise of Palin to the scrutiny of a national audience the reason for the marriage? Either way, Bristol's pregnancy was likely the result of inadequate sex education and the absence/familial rejection of brith control as a method to prevent pregancy.

Joe Conason writes in Truthdig:
"As a politician who insists on lecturing adolescents to abstain without teaching them about contraception, she may never have informed Bristol how to protect herself from an unwanted pregnancy and sexually transmitted disease."
He goes on:
"Surely Sarah and Todd Palin as well as their church gave Bristol a clear message that she should avoid premarital sex. But what we know now is abstinence-only education, whether at school or in the home, fails at least as often as it succeeds. The religious morality of the evangelical right, preaching the return of the sexual mores of decades ago, is no more likely to succeed."

Bristol's personal life is no longer private. She'll be lifted to the nation as a role model of how unmarried teenagers should behave. The marriage after the fact does nothing to glaze over the fact that unmarried teenage girls should not have unprotected sex, and that abstinence-only doesn't work.


Labels: , ,