CounterPunch Diary
By ALEXANDER COCKBURN
It’s the worst of times. America is plunging back into Depression. Only one out of every two Americans of working age has a job. Forty years ago that would have been okay. Dad went to the factory. Mom stayed at home to mind the kids. These days, just to keep the show on the road, mom and pop both work and the kids get daycare.
Start looking for work now and on average it will take till next April for you to find something. Across the last two months, more than a million Americans simply gave up seeking employment, even as benefits are running out. Ironically, if you quit looking for work you count as officially "discouraged", and don't figure in the official unemployment stats, which is the only reason that number hasn't shot up to record highs.
Somewhere near 10 million Americans without work aren't getting any kind of check. One in every five children is living below the poverty line, sometimes by as much as 50 per cent – classed as "extreme poverty". Across America, in state after state the till is empty. Barack Obama's home state of Illinois is effectively bankrupt. So is California. Forty-six of the 50 states are buried under huge deficits.
The stimulus has failed. The housing market is in free fall. A couple of months ago market analysts predicted there would be five million more foreclosures between now and 2011 and it looks like they're on target. Forty per cent of delinquent homeowners have already loaded up the SUV, thrown the plastic chairs in the swimming pool and tossed the house keys back at the bank. Only 30 per cent of foreclosures have been re-listed for sale. The banks have been keeping them back to avoid flooding the market.
For tens of millions of Americans the house is as central and crucial a financial asset as a pig was for an Irish peasant family in the 19th century. The pig, as the old Irish saying goes, was "the man beside the fire". It had the place of honor. The pig died, the family starved. Knock 20 per cent off the aggregate value of housing in America today and that means sunset years of penny pinching and, of course, yet one more knife in the belly for the overall economy.
And yet... if not the best of times, you can hardly say that America is broke. It's not. As Carl Ginsburg remarked on this site last week, "America is awash in cash. This is a very, very rich country with piles and piles of cash. Private US accounts today contain approximately $10 trillion in cash and liquid assets.
"On the corporate side, non-financial US corporations are holding more than $1.8 trillion, constituting a 26 per cent increase as of March from one year earlier - the largest increase on record going back to 1952."
The problem is that the banks don't want to put money out, because they think ordinary Americans are too broke to pay it back. Ordinary Americans agree. They've carried America forward through the past decade on the backs of their credit cards and they can't totter another step. They're out of juice.
In the measured argot of the IMF, "Financial crises typically follow periods of rapid expansion in lending and strong increases in asset prices. Recoveries from these recessions are often held back by weak private demand and credit reflecting, in part, households' attempts to increase saving rates to restore balance sheets. Globally synchronized recessions are longer and deeper than others."
(Political footnote to the foregoing: the recession of 1980 finished off President Jimmy Carter: the recession of 1992 did for George Bush Sr and put Bill Clinton into the White House.)
Of course America is wildly rich. How else could it find room in its heart for the legal tax write-offs that allow Americans to deduct contributions to Israelis establishing illegal settlements on the West Bank? How could it pay the $2 million in direct and indirect bribes to the Taliban a week - or is it a day? - in Afghanistan to allow its supply convoys down roads so that the counter-insurgency against the Taliban can continue, if not prosper?
Counter-insurgency means drones that kill civilians and do the Taliban no end of good. But drones mean jobs in jobless America. As Laura Flanders pointed on the F Word on Grit TV the Wisconsin National Guard is planning to build a new $8 million base for unmanned drones. Whiteman Air Force Base in Missouri is to be a drone base control. In South Dakota, Rapid City's nearby Ellsworth Force Base also recently won a drone contract.
In none of these places was there much of anything but joy at the news. "There was great news for Ellsworth Force Base and for the Rapid City community," declared the local Black Hills Fox Channel. Missouri Congressman Ike Skelton said he'd worked for a year to win the Predator. The Rapid City Journal editorial page was ecstatic: "Ellsworth and its many supporters have done Rapid City and South Dakota proud."
It's the best of times for Republicans who have scant sympathy for out-of-work people anyway and who have every political incentive to ensure that by mid-term election day, November 2, they'll be able to hang America's latest "worst of times" around the necks of Obama and the Democrats.
Dean Baker, who co-directs the Center for Economic and Policy Research in Washington DC, explained here on CounterPunch the Republicans' heartless, disgusting math in his article, “The Party of Unemployment” : "State and local governments have cut their workforce by an average of 65,000 a month over the last three months [as they have to do, because they are legally bound to balance their budgets]. Without substantial aid from the federal government this pace is likely to accelerate. The Republican agenda in blocking aid to the states may add another 300,000 people to the unemployment roles by early November.
“The Republicans' blockage of extended unemployment benefits promises similar dividends. Unemployment benefits are not just about providing income support to those who are out of work, they also provide a boost to the economy, which is why the Republicans have been especially keen to cut them off.”
It's the worst of times. People are down. I meet young people every day who say they've simply given up watching the news. It's all too depressing.
The Washington Post ran a story on July 6 by Kimberly Kindy that established that "in the 77 days since oil from the ruptured Deepwater Horizon began to gush into the Gulf of Mexico, BP has skimmed or burned about 60 per cent of the amount it promised regulators it could remove in a single day."
As of Monday July 5, with about two million barrels released into the gulf, the skimming operations that were touted as key to preventing environmental disaster have averaged less than 900 barrels a day.
As William Empson wrote in his poem "Missing Dates":
Slowly the poison the whole blood stream fills…
The waste remains, the waste remains and kills.
Who can feel it's anything other than the worst of times when the Gulf of Mexico is set to die before our eyes.
Saturday, July 10, 2010
Wealthy Are Cashing in Huge, While Workers' Salaries Keep Shrinking
Times are tough for workers in the U.S. where a recession has a stranglehold on much of the economy, but life is perfectly rosy for those at the top.
By Adrianne Appel, IPS News
July 10, 2010
Times are tough for workers in the U.S. where a recession has a stranglehold on much of the economy, but life is perfectly rosy for those at the top.
The riches of the wealthiest North Americans grew by double digits in 2009, primarily from interest their money earned when it was invested in the stock market and elsewhere, according to a report by the Boston Consulting Group.
Millionaires in the U.S. and Canada saw their wealth increase 15 percent in 2009, to a total of 4.6 trillion dollars, the report found.
Worldwide, 11 million - or less than 1 percent of all households - were millionaires in 2009. They owned about 38 percent of the world's wealth or 111 trillion dollars, up from about 36 percent in 2008, according to Boston Consulting Group.
About 4.7 million millionaires live in the U.S., four percent of the population and more than anywhere else in the world. Japan, China, Britain and Germany followed the U.S. in the number of millionaires.
Their fortune is a stark contrast to the lives of more than 15 million people in the U.S. who are unemployed and searching for work, and the eight million more who are just getting by with a part-time job, according to the U.S. Bureau of Labor Statistics. More than two million more people were working prior to the recession but have now dropped out of the labour force.
Apart from the newly unemployed, about 39 million people in the U.S. are chronically poor and do not have enough food to eat, according to the U.S. Census and U.S. Department of Agriculture.
"The nation's jobs crisis is so catastrophic that, unless Congress acts on the scale of the New Deal, millions of Americans will experience extremely long periods of unemployment for many years ahead," Lawrence Mishel, president of the Economic Policy Institute, told a panel of the Committee on Ways and Means recently.
Not so for millionaires and the uber-rich.
The uber-rich, those with more than 30 million dollars, are on the rebound. They spent more money in 2009 on fancy cars, yachts and jets compared to 2008, according to a study by Merrill Lynch-Capgemini. They bought fine art, expensive jewelry, gems and antiques, items that are likely to increase in value over time, so they can sell them later and make more money.
The recession isn't hitting those at the top as it has workers. In fact, many wealthy people benefited from the stock market's ups and downs, said Mike Lapham, director of the Responsible Wealth Project at United for a Fair Economy, an NGO in Boston.
"Folks at the top have a cushion, a disposable income to fall back on. Maybe their portfolios took a hit but they didn't lose their jobs and their homes. If they had losses, they can deduct them from their taxes," Lapham told IPS.
"Some people bet successfully on the financial system going under," he said. "The stock market went from 10,000 to 6,000 and back to 11,000. That's a big jump for people with significant portfolios."
"The people at bottom who've lost work, it'll be years before they get back to where they were before the crash," Lapham said.
The U.S. average national unemployment rate is 9.7 percent. Only those who are actively looking for work are included in this statistic. Among Black Americans, the rate is 15.5 percent and Latinos, 12.4 percent, according to the Bureau of Labor Statistics.
The Congressional Budget Office predicts that unemployment will remain almost unchanged in 2011, about 9.5 percent.
Many families have been surviving on small, weekly unemployment checks provided for 26 weeks by their state government, and an additional 73 weeks by the federal government. The first group of unemployed to run through both benefits hit that point Jul. 1, and today about a million people are receiving no assistance at all. About nine million more are still receiving unemployment payments.
Congress is considering extending federal assistance for another 20 weeks. The House approved the legislation, but the Senate did not. Congress left town for its holiday break until mid-July without passing the legislation.
In the Senate the issue fell almost precisely along party lines, with all but one Democrat for extending the benefit, and all but two Republicans against it, saying the 34- billion-dollar cost was not worth adding to the federal deficit.
Without the vote of Democratic Senator Ben Nelson, of Nebraska, the bill was one vote short of the 60 needed for passage.
"I think we're going to see a new wave of heartache here in Rhode Island," with the end of the federal assistance, Kate Brewster, executive director of the Poverty Institute, a Rhode Island NGO, told IPS.
The small, northeastern U.S. state, a former manufacturing centre whose jobs moved offshore, has struggled with higher unemployment and low-wage jobs for years. Most recently, it was hard hit by the foreclosure crisis and the downturn in the construction industry.
The ongoing unemployment and low jobs creation nationwide is helping to fuel the millions of foreclosures sweeping across the nation, according to a report by the Harvard University Joint Center for Housing Studies.
The nation's anemic jobs creation, high foreclosures and weak consumer spending has convinced Mishel and many economists that the U.S. is in for an extended downturn. Just 83,000 jobs were created in June, instead of the 150,000 needed for robust employment, according to the U.S. Labor Department.
"The United States is undergoing the worst economic downturn in 70 years, and the damage and suffering it is causing will last many years beyond the official end of the recession," Mishel said.
Rhode Island's future is uncertain.
"We've consistently had one of the highest rates of unemployment in the country," Brewster said. Today, in the midst of the recession, more people are showing up at soup kitchens for free meals and dialing in to a toll-free, crisis phone service for families in dire circumstances, she said.
"They've had an enormous influx of calls in the past 18 to 21 months," she said. Fewer services are available to help them.
"Within last five years the state cut back work support programmes like child care assistance and funded health insurance," Brewster said. "The cruel irony is that when families really need help, less is available."
By Adrianne Appel, IPS News
July 10, 2010
The riches of the wealthiest North Americans grew by double digits in 2009, primarily from interest their money earned when it was invested in the stock market and elsewhere, according to a report by the Boston Consulting Group.
Millionaires in the U.S. and Canada saw their wealth increase 15 percent in 2009, to a total of 4.6 trillion dollars, the report found.
Worldwide, 11 million - or less than 1 percent of all households - were millionaires in 2009. They owned about 38 percent of the world's wealth or 111 trillion dollars, up from about 36 percent in 2008, according to Boston Consulting Group.
About 4.7 million millionaires live in the U.S., four percent of the population and more than anywhere else in the world. Japan, China, Britain and Germany followed the U.S. in the number of millionaires.
Their fortune is a stark contrast to the lives of more than 15 million people in the U.S. who are unemployed and searching for work, and the eight million more who are just getting by with a part-time job, according to the U.S. Bureau of Labor Statistics. More than two million more people were working prior to the recession but have now dropped out of the labour force.
Apart from the newly unemployed, about 39 million people in the U.S. are chronically poor and do not have enough food to eat, according to the U.S. Census and U.S. Department of Agriculture.
"The nation's jobs crisis is so catastrophic that, unless Congress acts on the scale of the New Deal, millions of Americans will experience extremely long periods of unemployment for many years ahead," Lawrence Mishel, president of the Economic Policy Institute, told a panel of the Committee on Ways and Means recently.
Not so for millionaires and the uber-rich.
The uber-rich, those with more than 30 million dollars, are on the rebound. They spent more money in 2009 on fancy cars, yachts and jets compared to 2008, according to a study by Merrill Lynch-Capgemini. They bought fine art, expensive jewelry, gems and antiques, items that are likely to increase in value over time, so they can sell them later and make more money.
The recession isn't hitting those at the top as it has workers. In fact, many wealthy people benefited from the stock market's ups and downs, said Mike Lapham, director of the Responsible Wealth Project at United for a Fair Economy, an NGO in Boston.
"Folks at the top have a cushion, a disposable income to fall back on. Maybe their portfolios took a hit but they didn't lose their jobs and their homes. If they had losses, they can deduct them from their taxes," Lapham told IPS.
"Some people bet successfully on the financial system going under," he said. "The stock market went from 10,000 to 6,000 and back to 11,000. That's a big jump for people with significant portfolios."
"The people at bottom who've lost work, it'll be years before they get back to where they were before the crash," Lapham said.
The U.S. average national unemployment rate is 9.7 percent. Only those who are actively looking for work are included in this statistic. Among Black Americans, the rate is 15.5 percent and Latinos, 12.4 percent, according to the Bureau of Labor Statistics.
The Congressional Budget Office predicts that unemployment will remain almost unchanged in 2011, about 9.5 percent.
Many families have been surviving on small, weekly unemployment checks provided for 26 weeks by their state government, and an additional 73 weeks by the federal government. The first group of unemployed to run through both benefits hit that point Jul. 1, and today about a million people are receiving no assistance at all. About nine million more are still receiving unemployment payments.
Congress is considering extending federal assistance for another 20 weeks. The House approved the legislation, but the Senate did not. Congress left town for its holiday break until mid-July without passing the legislation.
In the Senate the issue fell almost precisely along party lines, with all but one Democrat for extending the benefit, and all but two Republicans against it, saying the 34- billion-dollar cost was not worth adding to the federal deficit.
Without the vote of Democratic Senator Ben Nelson, of Nebraska, the bill was one vote short of the 60 needed for passage.
"I think we're going to see a new wave of heartache here in Rhode Island," with the end of the federal assistance, Kate Brewster, executive director of the Poverty Institute, a Rhode Island NGO, told IPS.
The small, northeastern U.S. state, a former manufacturing centre whose jobs moved offshore, has struggled with higher unemployment and low-wage jobs for years. Most recently, it was hard hit by the foreclosure crisis and the downturn in the construction industry.
The ongoing unemployment and low jobs creation nationwide is helping to fuel the millions of foreclosures sweeping across the nation, according to a report by the Harvard University Joint Center for Housing Studies.
The nation's anemic jobs creation, high foreclosures and weak consumer spending has convinced Mishel and many economists that the U.S. is in for an extended downturn. Just 83,000 jobs were created in June, instead of the 150,000 needed for robust employment, according to the U.S. Labor Department.
"The United States is undergoing the worst economic downturn in 70 years, and the damage and suffering it is causing will last many years beyond the official end of the recession," Mishel said.
Rhode Island's future is uncertain.
"We've consistently had one of the highest rates of unemployment in the country," Brewster said. Today, in the midst of the recession, more people are showing up at soup kitchens for free meals and dialing in to a toll-free, crisis phone service for families in dire circumstances, she said.
"They've had an enormous influx of calls in the past 18 to 21 months," she said. Fewer services are available to help them.
"Within last five years the state cut back work support programmes like child care assistance and funded health insurance," Brewster said. "The cruel irony is that when families really need help, less is available."
How Easy It Is For Peaceful People to Violate the Patriot Act and Face 15 Years in Jail
Give some advice to Hamas or al Qaeda about how they can peacefully achieve their objectives -- and the Supreme Court might call it material aid.
By Joshua Holland, AlterNet
Posted on July 10, 2010, Printed on July 10, 2010
Last month, the Supreme Court exposed Americans to jail sentences of up to 15 years just for giving advice to groups the U.S. government considers untouchable. In Holder v. Humanitarian Law Project, the court ruled that the USA Patriot Act's expanded definition of “material support” for “foreign terrorist organizations” passes Constitutional muster. The broad wording of the statute not only makes it a crime to support violent activities, but also prohibits Americans from offering "services" or "training, expert advice or assistance" to any entity designated as a terrorist group.
Providing weapons, materials or know-how that might help terrorists commit violent acts has long been a crime, but it was only with the rushed passage of the Patriot Act just weeks following the 9/11 attacks that “expert advice or assistance” was added to the definition of “material support.”
The Constitution offers Americans the freedom of speech and association. There are only a few exceptions -- you don’t have a right to associate with people conducting a criminal act, and your freedom of speech doesn’t extend to "fighting words," inciting a riot or other forms of speech that might lead to violence.
In criminalizing non-violent speech, the ruling is anathema to our system of constitutional government. In this article I’ll demonstrate just how easy it is to violate the Patriot Act by giving some peaceful advice to a few of the 45 groups the State Department has designated as foreign terrorist organizations.
To Hezbollah: Domestic politics aside, the legitimacy of your organization rests on its ability to provide social services and its participation in Lebanese politics, not from your paramilitary wing’s clashes with the Israeli Defense Forces. Lay down your arms and consolidate your political strength.
To the Revolutionary Armed Forces of Colombia (FARC): Consider re-establishing the Guerrilla Coordinating Board you joined in order to negotiate with the Colombian government. Re-establish prisoner exchanges with Bogotá as a confidence builder, and stop the policy of assassinating indigenous peoples who oppose your agenda.
To the Real Irish Republican Army (IRA): Given the history and reality on the ground, it’s virtually impossible to achieve independence and unification of Ireland by force. Disband your military organization and join the 10-year-old peace process. And engage with the government in Northern Ireland, which has attained political legitimacy along the way.
The Supreme Court has ruled that if I leave it at that -- expressing my own views without being in contact with any group designated as a terrorist organization -- I’m fine. But if I send this column to an official of Hezbollah or FARC -- if I communicate with them directly -- I’ll be committing a serious crime.
When the “material support” statute was first enacted in the 1990s, a person didn’t need to know that a group they supported was listed as a terrorist organization in order to run afoul of the law. But after a district court agreed to hear a challenge to the provision, Congress modified the law so that people who, for example, unwittingly sent a few bucks to a charity that turned out to be associated with terrorism would be in the clear. However, in places like Gaza, where Hamas controls a lot of ground, it’s virtually impossible to deliver humanitarian relief without talking to members of a “terrorist” organization.
Since 2001, Islamic charities have struggled to deal with the uncertainty caused by the material support provision. According to the Bill of Rights Defense Committee, “Muslims fulfilling their obligation to contribute to [charity]…risk inadvertently supporting a current or future [Foreign Terrorist Organization]. In 2004, in order to avoid this, Muslim leaders asked the DOJ for a list of acceptable charities. The DOJ responded that their request was ‘impossible to fulfill’ and that it was ‘not in a position to put out lists of any kind, particularly of any organizations that are good or bad.’" Several people have already been jailed in the United States for their charitable activities in the Islamic world.
Holder v. Humanitarian Law Project
The court handed down its decision in a case brought by the Humanitarian Law Project, an NGO that sought to advise the Kurdistan Worker’s Party (PKK) -- which the U.S. considers a terrorist organization -- on filing human rights complaints with the United Nations and conducting peace negotiations with the Turkish government. In its 6-3 decision, the supremes ruled that the statute didn’t trample the organization’s members’ rights to free speech and free assembly as long as they had no direct contact with the PKK. Ironically, in theory that means members of the Humanitarian Law Project can publicly urge the PKK to carry out deadly acts of terrorism without running afoul of the law, but they can’t work with the group in an effort to stop the violence.
The decision casts the court’s rightward balance in sharp relief. Just months ago, the same court ruled in the Citizens United case that the government doesn’t have a sufficiently compelling interest in limiting political campaign dollars to infringe on the free speech rights of corporations -- “artificial persons.” But the court, dismissing the admonition that those who would give up essential liberties for some temporary security deserve neither, was quick to accept the Justice Department’s claim that fighting terrorism trumps the rights of the Humanitarian Law Project. Writing for the majority, Chief Justice John Roberts cited the Federalist Papers, which held that "security against foreign danger" is an "avowed and essential object" of the U.S. government.
Opening the Door for (More) Political Prosecutions
Arguably, the most fundamental flaw in the statute is that there is no apolitical and universally accepted definition of “terrorism.” The United Nations has wrangled with the issue for years, and the major obstacle is simple to understand: everyone wants to define it as political violence in furtherance of a goal with which they disagree.
By criminalizing even a tenuous association with groups the U.S. government lists as terrorist organizations, the statute opens the door to prosecuting people for taking unpopular sides in remote conflicts.
Sometimes, however, history proves those people were on the “right” side. Perhaps the most obvious example is the African National Congress (ANC), which the United States designated as a terrorist organization during the 1980s. If the Patriot Act had been in effect at the time, any U.S. citizen who communicated with the ANC while organizing opposition to South Africa’s racist system would have been eligible for a lengthy prison term. Now, it's the ruling party in today’s post-apartheid South Africa.
The ANC isn’t the only example. In the early 1990s, Robert Gelbard, Bill Clinton's special envoy to the Balkans, described the Kosovo Liberation Army as, "without any questions, a terrorist group." As journalist Michael Moran noted, by the end of the decade, “the United States had embraced the KLA's cause,” and, “after the war, the KLA was transformed into the Kosovo Protection Corps, which now works alongside NATO forces patrolling the province.”
An American may have sided with the Serbs or with the KLA, but if the Patriot Act had been in effect, engaging the latter would have constituted a serious crime. Other groups once designated as terrorist organizations that have either laid down their arms or joined the political process include the Irish Republican Army and the Palestine Liberation Organization.
At the same time, some organizations that commit terrible crimes against civilians never make the list because their goals dovetail with our own. Sometimes we even support them. During the 1980s, the Nicaraguan contras were known to torture, rape and kill innocent civilians sympathetic to the Sandinistas, but Ronald Reagan praised the group as heroic “freedom fighters.” In Iran, the Mujahedin-e Kalq (MEK) is universally condemned as a terrorist organization, and the United States government has listed it as one. But that didn’t stop former Colorado Rep. Tom Tancredo from saying, “We should be aiding them, instead of restricting their activities. We can use the MEK; they are in fact warriors. Where we need to use that kind of force, we can use them."
It’s worth noting that Islamic groups lead the list of designated terrorist organizations, followed by communists and nationalists. Groups like the Gush Emunim Underground -- a radical Israeli settler group that was responsible for a series of attacks against Palestinian civilians -- don’t make the cut. It’s a clear signal that the State Department’s list is highly politicized.
Making matters worse is the fact that some organizations that have committed acts of terrorism also have legitimate political arms with which humanitarian aid organizations must communicate in order to do their work. In Lebanon, Hezbollah is both a paramilitary group and a major player in the country’s political scene. It provides social services -- operating schools and hospitals -- but is designated a terrorist organization by the United States. As a result, American aid workers won’t be able to operate in much of Lebanon without risking criminal prosecution.
Criminalizing Peacemaking
As journalist Courtney Martin noted, “the definition of material support includes everything from providing aid to distributing literature to political advocacy,” adding that it’s “a step in the wrong direction for the post-September 11 world.”
The law essentially criminalizes promoting dialogue in conflict zones and undermines efforts to provide nonviolent solutions to previously violent groups, equating such actions with trafficking weapons. In a world that demands precise, strategic interventions to prevent and curb terrorism, this law is like a blunt object. We're not promoting peace; we're advocating the equivalent of the silent treatment.
In the 1980s, a concept known as “multi-track diplomacy” emerged. Traditional negotiations between states -- known as “track one” diplomacy -- had had limited success, in part because states couldn’t always negotiate with non-state actors like rebel groups. Experts in conflict resolution began to see how non-state actors -- professional conflict negotiators, institutions like the UN, international businesses, religious organizations and other members of civil society -- could play a great role in bringing long-standing, seemingly intractable conflicts to an end. “Track two” diplomacy (some academics further divide track two into various other tracks) was crucial in bringing peace to Northern Ireland. In Mozambique, a bloody 17-year civil war ended when the Order of Sant' Egidio, an Italian NGO, mediated peace talks between the various parties to the conflict.
The group, which believes that “war is the mother of all poverty,” continues its peacemaking efforts in the Congo and the Balkans. An American NGO that tried to emulate its success would be violating the Patriot Act, exposing its members to harsh criminal penalties.
Writing for the majority, Chief Justice Roberts claimed that direct contact of any kind with Americans “also importantly helps lend legitimacy to foreign terrorist groups -- legitimacy that makes it easier for those groups to persist, to recruit members, and to raise funds -- all of which facilitate more terrorist attacks."
It’s an ironic statement in a ruling that prohibits Americans from acting as peacemakers or aiding people in crisis. There’s broad agreement that winning the “war on terror” requires isolating extremists, and winning the hearts and minds of the populations of the countries in which they operate. The rest of the world will continue to see complex conflicts as just that -- complex. In its decision, the court codified a dangerous tendency to see them in black and white, one that has prevailed in the U.S. since the attacks of 9/11.
The rest of the world will continue to see multi-track diplomacy as an example of best practices for resolving deeply entrenched conflicts. It will continue to see humanitarian relief and the engagement of civil society as crucially important to winning the battle of ideas and marginalizing violent actors.
But with the threat of a criminal rap, there won’t be many Americans involved in those efforts. In its fear-based logic, the court sought to isolate violent extremists, but its decision will only end up isolating the United States.
By Joshua Holland, AlterNet
Posted on July 10, 2010, Printed on July 10, 2010
Last month, the Supreme Court exposed Americans to jail sentences of up to 15 years just for giving advice to groups the U.S. government considers untouchable. In Holder v. Humanitarian Law Project, the court ruled that the USA Patriot Act's expanded definition of “material support” for “foreign terrorist organizations” passes Constitutional muster. The broad wording of the statute not only makes it a crime to support violent activities, but also prohibits Americans from offering "services" or "training, expert advice or assistance" to any entity designated as a terrorist group.
Providing weapons, materials or know-how that might help terrorists commit violent acts has long been a crime, but it was only with the rushed passage of the Patriot Act just weeks following the 9/11 attacks that “expert advice or assistance” was added to the definition of “material support.”
The Constitution offers Americans the freedom of speech and association. There are only a few exceptions -- you don’t have a right to associate with people conducting a criminal act, and your freedom of speech doesn’t extend to "fighting words," inciting a riot or other forms of speech that might lead to violence.
In criminalizing non-violent speech, the ruling is anathema to our system of constitutional government. In this article I’ll demonstrate just how easy it is to violate the Patriot Act by giving some peaceful advice to a few of the 45 groups the State Department has designated as foreign terrorist organizations.
To Hezbollah: Domestic politics aside, the legitimacy of your organization rests on its ability to provide social services and its participation in Lebanese politics, not from your paramilitary wing’s clashes with the Israeli Defense Forces. Lay down your arms and consolidate your political strength.
To the Revolutionary Armed Forces of Colombia (FARC): Consider re-establishing the Guerrilla Coordinating Board you joined in order to negotiate with the Colombian government. Re-establish prisoner exchanges with Bogotá as a confidence builder, and stop the policy of assassinating indigenous peoples who oppose your agenda.
To the Real Irish Republican Army (IRA): Given the history and reality on the ground, it’s virtually impossible to achieve independence and unification of Ireland by force. Disband your military organization and join the 10-year-old peace process. And engage with the government in Northern Ireland, which has attained political legitimacy along the way.
The Supreme Court has ruled that if I leave it at that -- expressing my own views without being in contact with any group designated as a terrorist organization -- I’m fine. But if I send this column to an official of Hezbollah or FARC -- if I communicate with them directly -- I’ll be committing a serious crime.
When the “material support” statute was first enacted in the 1990s, a person didn’t need to know that a group they supported was listed as a terrorist organization in order to run afoul of the law. But after a district court agreed to hear a challenge to the provision, Congress modified the law so that people who, for example, unwittingly sent a few bucks to a charity that turned out to be associated with terrorism would be in the clear. However, in places like Gaza, where Hamas controls a lot of ground, it’s virtually impossible to deliver humanitarian relief without talking to members of a “terrorist” organization.
Since 2001, Islamic charities have struggled to deal with the uncertainty caused by the material support provision. According to the Bill of Rights Defense Committee, “Muslims fulfilling their obligation to contribute to [charity]…risk inadvertently supporting a current or future [Foreign Terrorist Organization]. In 2004, in order to avoid this, Muslim leaders asked the DOJ for a list of acceptable charities. The DOJ responded that their request was ‘impossible to fulfill’ and that it was ‘not in a position to put out lists of any kind, particularly of any organizations that are good or bad.’" Several people have already been jailed in the United States for their charitable activities in the Islamic world.
Holder v. Humanitarian Law Project
The court handed down its decision in a case brought by the Humanitarian Law Project, an NGO that sought to advise the Kurdistan Worker’s Party (PKK) -- which the U.S. considers a terrorist organization -- on filing human rights complaints with the United Nations and conducting peace negotiations with the Turkish government. In its 6-3 decision, the supremes ruled that the statute didn’t trample the organization’s members’ rights to free speech and free assembly as long as they had no direct contact with the PKK. Ironically, in theory that means members of the Humanitarian Law Project can publicly urge the PKK to carry out deadly acts of terrorism without running afoul of the law, but they can’t work with the group in an effort to stop the violence.
The decision casts the court’s rightward balance in sharp relief. Just months ago, the same court ruled in the Citizens United case that the government doesn’t have a sufficiently compelling interest in limiting political campaign dollars to infringe on the free speech rights of corporations -- “artificial persons.” But the court, dismissing the admonition that those who would give up essential liberties for some temporary security deserve neither, was quick to accept the Justice Department’s claim that fighting terrorism trumps the rights of the Humanitarian Law Project. Writing for the majority, Chief Justice John Roberts cited the Federalist Papers, which held that "security against foreign danger" is an "avowed and essential object" of the U.S. government.
Opening the Door for (More) Political Prosecutions
Arguably, the most fundamental flaw in the statute is that there is no apolitical and universally accepted definition of “terrorism.” The United Nations has wrangled with the issue for years, and the major obstacle is simple to understand: everyone wants to define it as political violence in furtherance of a goal with which they disagree.
By criminalizing even a tenuous association with groups the U.S. government lists as terrorist organizations, the statute opens the door to prosecuting people for taking unpopular sides in remote conflicts.
Sometimes, however, history proves those people were on the “right” side. Perhaps the most obvious example is the African National Congress (ANC), which the United States designated as a terrorist organization during the 1980s. If the Patriot Act had been in effect at the time, any U.S. citizen who communicated with the ANC while organizing opposition to South Africa’s racist system would have been eligible for a lengthy prison term. Now, it's the ruling party in today’s post-apartheid South Africa.
The ANC isn’t the only example. In the early 1990s, Robert Gelbard, Bill Clinton's special envoy to the Balkans, described the Kosovo Liberation Army as, "without any questions, a terrorist group." As journalist Michael Moran noted, by the end of the decade, “the United States had embraced the KLA's cause,” and, “after the war, the KLA was transformed into the Kosovo Protection Corps, which now works alongside NATO forces patrolling the province.”
An American may have sided with the Serbs or with the KLA, but if the Patriot Act had been in effect, engaging the latter would have constituted a serious crime. Other groups once designated as terrorist organizations that have either laid down their arms or joined the political process include the Irish Republican Army and the Palestine Liberation Organization.
At the same time, some organizations that commit terrible crimes against civilians never make the list because their goals dovetail with our own. Sometimes we even support them. During the 1980s, the Nicaraguan contras were known to torture, rape and kill innocent civilians sympathetic to the Sandinistas, but Ronald Reagan praised the group as heroic “freedom fighters.” In Iran, the Mujahedin-e Kalq (MEK) is universally condemned as a terrorist organization, and the United States government has listed it as one. But that didn’t stop former Colorado Rep. Tom Tancredo from saying, “We should be aiding them, instead of restricting their activities. We can use the MEK; they are in fact warriors. Where we need to use that kind of force, we can use them."
It’s worth noting that Islamic groups lead the list of designated terrorist organizations, followed by communists and nationalists. Groups like the Gush Emunim Underground -- a radical Israeli settler group that was responsible for a series of attacks against Palestinian civilians -- don’t make the cut. It’s a clear signal that the State Department’s list is highly politicized.
Making matters worse is the fact that some organizations that have committed acts of terrorism also have legitimate political arms with which humanitarian aid organizations must communicate in order to do their work. In Lebanon, Hezbollah is both a paramilitary group and a major player in the country’s political scene. It provides social services -- operating schools and hospitals -- but is designated a terrorist organization by the United States. As a result, American aid workers won’t be able to operate in much of Lebanon without risking criminal prosecution.
Criminalizing Peacemaking
As journalist Courtney Martin noted, “the definition of material support includes everything from providing aid to distributing literature to political advocacy,” adding that it’s “a step in the wrong direction for the post-September 11 world.”
The law essentially criminalizes promoting dialogue in conflict zones and undermines efforts to provide nonviolent solutions to previously violent groups, equating such actions with trafficking weapons. In a world that demands precise, strategic interventions to prevent and curb terrorism, this law is like a blunt object. We're not promoting peace; we're advocating the equivalent of the silent treatment.
In the 1980s, a concept known as “multi-track diplomacy” emerged. Traditional negotiations between states -- known as “track one” diplomacy -- had had limited success, in part because states couldn’t always negotiate with non-state actors like rebel groups. Experts in conflict resolution began to see how non-state actors -- professional conflict negotiators, institutions like the UN, international businesses, religious organizations and other members of civil society -- could play a great role in bringing long-standing, seemingly intractable conflicts to an end. “Track two” diplomacy (some academics further divide track two into various other tracks) was crucial in bringing peace to Northern Ireland. In Mozambique, a bloody 17-year civil war ended when the Order of Sant' Egidio, an Italian NGO, mediated peace talks between the various parties to the conflict.
The group, which believes that “war is the mother of all poverty,” continues its peacemaking efforts in the Congo and the Balkans. An American NGO that tried to emulate its success would be violating the Patriot Act, exposing its members to harsh criminal penalties.
Writing for the majority, Chief Justice Roberts claimed that direct contact of any kind with Americans “also importantly helps lend legitimacy to foreign terrorist groups -- legitimacy that makes it easier for those groups to persist, to recruit members, and to raise funds -- all of which facilitate more terrorist attacks."
It’s an ironic statement in a ruling that prohibits Americans from acting as peacemakers or aiding people in crisis. There’s broad agreement that winning the “war on terror” requires isolating extremists, and winning the hearts and minds of the populations of the countries in which they operate. The rest of the world will continue to see complex conflicts as just that -- complex. In its decision, the court codified a dangerous tendency to see them in black and white, one that has prevailed in the U.S. since the attacks of 9/11.
The rest of the world will continue to see multi-track diplomacy as an example of best practices for resolving deeply entrenched conflicts. It will continue to see humanitarian relief and the engagement of civil society as crucially important to winning the battle of ideas and marginalizing violent actors.
But with the threat of a criminal rap, there won’t be many Americans involved in those efforts. In its fear-based logic, the court sought to isolate violent extremists, but its decision will only end up isolating the United States.
Pfizer: The Drug Giant That Makes Bank from Drugs That Can Kill You
To say that Pfizer has been accused of wrongdoing is like saying BP had an oil spill.
By Martha Rosenberg, AlterNet
July 10, 2010
The drug company Pfizer is best known for Lipitor, a drug that brings cholesterol down and Viagra, a drug that brings other things up.
But the "world's largest research-based pharmaceutical company" which sits between Goldman Sachs and Marathon Oil on the Fortune 500, is also closely associated with a seemingly never-ending series of scandals.
To say Pfizer's been accused of wrongdoing is like saying BP had an oil spill. Other drug companies have a portfolio of products, Pfizer has a portfolio of scandals including, but not limited to, Chantix, Lipitor, Viagra, Geodon, Trovan, Bextra, Celebrex, Lyrica, Zoloft, Halcion and drugs for osteoarthritis, Parkinson's disease, kidney transplants and leukemia.
During one week in June Pfizer 1) agreed to pull its 10-year-old leukemia drug Mylotarg from the market because it caused more, not less patient deaths 2) Suspended pediatric trials of Geodon two months after the FDA said children were being overdosed 3) Suspended trials of tanezumab, an osteoarthritis pain drug, because patients got worse not better, some needing joint replacements (pattern, anyone?) 4) Was investigated by the House for off-label marketing of kidney transplant drug Rapamune and targeting African-Americans 5) Saw a researcher who helped established its Bextra, Celebrex and Lyrica as effective pain meds, Scott S Reuben, MD, trotted off to prison for research fraud 6) was sued by Blue Cross Blue Shield to recoup money it overpaid for Bextra and other drugs 7) received a letter from Sen. Charles Grassley (R-Iowa) requesting its whistleblower policy and 8) had its appeal to end lawsuits by Nigerian families who accuse it of illegal trials of the antibiotic Trovan in which 11 children died, rejected by the Supreme Court. And how was your week?
Nor does Pfizer back down when faced with legal troubles.
Even as it was under the probation of a 5-year Corporate Integrity Agreement (CIA) with Health and Human Services for withholding $20 million in Lipitor rebates owed to Medicaid in 2002, it off-label marketed its seizure drug Neurontin and entered into another CIA in 2004.
Worse, it bought Warner-Lambert in 2000, which made Neurontin, knowing the drug's marketing practices were under criminal investigation. (And knowing its Rezulin had been withdrawn.)
And even as it entered into its 2004 CIA for Neurontin, it was off-label marketing the seizure drug Lyrica, called Son of Neurontin, and three other meds, and had to enter into a third CIA, last year's $2.3 billion Bextra settlement which was the largest health care fraud settlement in US history.
The same day the settlement news broke, Pfizer announced it bought the drug giant Wyeth despite its thicket of Fen-Phen heart valve suits and Prempro cancer suits.
And there was more "bring 'em on" chutzpah.
After Vioxx and Pfizer's Bextra were withdrawn from the market for cardiovascular risks, Pfizer sought FDA approval for its Celebrex, the last legal COX-2 inhibitor, also suspected of cardiovascular risks, for use in children as young as two.
And in June, days before Pfizer suspended development of the osteoarthritis drug tanezumab for worsening joints, it touted the drug as "well-tolerated."
As a company, Pfizer, based in New York City with research headquarters in Groton, CT, looks better from the outside than the inside. Its Pac-Man like acquisition of drug companies, Warner-Lambert, Pharmacia (Searle, Upjohn), SUGEN, Vicuron, Rinat and Wyeth (also creating the world's biggest animal drug company) has created a silo structure in which the company's 90,000 employees in 90 countries feel unconnected to a corporate heartbeat. Loyalty is rare as employees in absorbed companies bought for their products alone fear getting pfired and 14,000 scientists bemoan that the company's biggies like Lipitor, Celebrex, Neurontin, Zithromax, Zyrtec and now Wyeth's Prempro weren't created inhouse.
Despite flying doctors to Caribbean resorts to attend drug pitches (by other paid doctors) and bestowing four figure honorariums on them, and Enron moments like a Bextra sales extravaganza with acrobats, dancers and gigantic "fist" logo, Pfizer's Midtown Manhattan offices consist of unimpressive cubes.
After becoming the world's biggest drug company in 2000, Henry A. McKinnell, former Pfizer CEO and a Bushmate (replaced by less conservative Jeffrey B. Kindler) vowed to make Pfizer the "the world's most valued company to patients, to customers, to business partners, to colleagues, and to communities where we work and live." But thanks to the parade of damaging safety and ethics scandals, Esprit de corps is lacking except in some sales units.
"Pfizer is a black hole," Peter Rost, MD, author of The Whistleblower: Confessions of a Healthcare Hitman and probably Pfizer's most famous former employee told AlterNet. "It is nothing but a maze of cobbled together drug companies that aggressively markets drugs it didn't create in a military-like command structure."
Still, Pfizer's vast product line, its $50 billion a year revenues -- exceeding some states' entire budgets -- and reputation for having the best trained sales reps make it the team to beat for competing salesmen and examples of Pfizer envy dot Cafepharma, the drug industry chatroom considered pharma's washroom wall.
"Glad they did it," wrote a poster about last year's Department of Justice (DOJ) Bextra settlement. "Pfizer is only sticking it to the American person when they perpitrate a fruad (sic) of this magnitude. The rest of you who sat by and said nothing are no better than a bunch of crooks. My father always said, 'you lie, you cheat, you steal; you can't do one without doing them all'. You must be so proud...I would take that name badge off when I walk into an office if I were you."
"If you think that Pfizer is the only drug company that has dealt with off-label promotion issues you are sadley (sic) mistaken," perpitrated the next poster.
"You are so right. All the other companies are doing it, so we did too. Waaah, waaah, waaaaah! (stomping my foot). It's not fair! It made us so much money! Patients don't matter, money does," wrote the next poster. Characterizations about wives and mothers followed.
Patients also resent Pfizer and have sued over Chantix, Lipitor, Celebrex, Bextra, Neurontin, Lyrica, Viagra, Zoloft and other drugs. Pfizer downplayed Lipitor's "serious and irreversible side effects" says Mark Jay Krum, an attorney representing plaintiffs in a class-action suit, and "is willing to promote the drug at any cost." Say that.
Even the DOJ calls Pfizer incorrigible. "...illegal conduct was pervasive throughout the company and stemmed from messages created at high levels within the national marketing team," it wrote in the Bextra sentencing memo. "Employees, including district managers, explained that they did not question their supervisors about the illegal conduct that they were being instructed to carry out, because to do so would be considered a 'CLM' or 'Career Limiting Move.'"
Still the FDA needs to take some blame for waving iffy Pfizer drugs through, especially under the 1992 Prescription Drug User Fee Act (PDUFA) in which drug companies "buy" accelerated approvals.
Why did the FDA allow Pfizer to make money for ten years on the leukemia drug Mylotarg, which was given an accelerated approval, and allow people to take it as guinea pigs for ten years while "confirmatory" studies establishing its safety and efficacy were still outstanding? Patients who took Mylotarg while on chemotherapy had more deaths than those just on chemotherapy in a clear example of the lethal metrics of rushed through drugs.
Why was Pfizer's pain drug tanezumab, an injected monoclonal antibody made from bio-engineered immune cells, even considered for knee pain except for the profits in such Frakendrugs?
Why was Pfizer allowed to continue clinical trials on children, or anyone, after the FDA found Geodon overdoses in April -- and why is Geodon, rejected once by the FDA and promoted by Richard Borison MD who is in Hancock State Prison for research fraud -- hello -- on the market? Obama appointees Commissioner Margaret Hamburg, MD and principal deputy commissioner Joshua Sharfstein, MD come from public health backgrounds but it will be hard to turn the FDA ship around.
And speaking of dangerous drugs, what's up with Pfizer's anti-smoking drug Chantix?
In 2007, Texas musician Carter Albrecht, who played with Sorta and Edie Brickell & New Bohemians, became a poster boy for Chantix' unpredictable mental effects when he was fatally shot trying to kick in a neighbor's door. In 2008, with 988 adverse effects reported including seizures, heart trouble and suicides, the FDA banned airline pilots and air traffic controllers from taking it. Thanks for that. Last year it gave Chantix a black box warning to "highlight the risk of serious mental health events including changes in behavior, depressed mood, hostility, and suicidal thoughts when taking these drugs."
Most pharma watchers agree that financial penalties, including last year's $2.3 billion Bextra settlement, won't upend Pfizer whose one year budget for R & D alone is in the billions. Yet the DOJ repeatedly lets Pfizer pawn off guilty pleas to the False Claims Act (which include a ban on Medicare, Medicaid and VA eligibility) on its shell companies and keep doing business with the government. Why?
"Pfizer is the largest drug company in the world and if you include its generics unit it makes literally hundreds of different drugs. Getting tough would mean no Lipitor, no Viagra, no Bacitracin, no Cipro, no Zithromax, no Sutent, et cetera," says Jim Edwards, a pharmaceutical reporter on Bnet and former managing editor of Adweek. "The government is not really in a position to be cutting itself off from all that medicine."
"So many Medicaid, Medicare and VA drugs come from Pfizer, the government would never convict them," agrees Peter Rost. "It would stop the drug flow."
And then there's lobby power.
Just as former Louisiana Republican representative Billy Tauzin left the House Committee on Energy and Commerce which oversees the drug industry and resurfaced as head of PhRMA, Pfizer recently hired Gregory Simon who served on Obama's transition team and as chief domestic policy advisor to Vice President Gore to head its "global policy effort." Its senior corporate counsel until 2008, Arnold Friede, had an FDA background and Pfizer's former senior vice president for worldwide public affairs, Richard Bagger, has re-emerged as New Jersey Governor Christopher Christie's chief of staff. Hey, you guys look familiar!
Even the Bextra settlement arouses cynicism since $102 million of it went to a doctor and five former Pfizer reps who served as whistleblowers on the case, one getting $51 million.
Isn't making big money off pharma how the trouble started?
By Martha Rosenberg, AlterNet
July 10, 2010
The drug company Pfizer is best known for Lipitor, a drug that brings cholesterol down and Viagra, a drug that brings other things up.
But the "world's largest research-based pharmaceutical company" which sits between Goldman Sachs and Marathon Oil on the Fortune 500, is also closely associated with a seemingly never-ending series of scandals.
To say Pfizer's been accused of wrongdoing is like saying BP had an oil spill. Other drug companies have a portfolio of products, Pfizer has a portfolio of scandals including, but not limited to, Chantix, Lipitor, Viagra, Geodon, Trovan, Bextra, Celebrex, Lyrica, Zoloft, Halcion and drugs for osteoarthritis, Parkinson's disease, kidney transplants and leukemia.
During one week in June Pfizer 1) agreed to pull its 10-year-old leukemia drug Mylotarg from the market because it caused more, not less patient deaths 2) Suspended pediatric trials of Geodon two months after the FDA said children were being overdosed 3) Suspended trials of tanezumab, an osteoarthritis pain drug, because patients got worse not better, some needing joint replacements (pattern, anyone?) 4) Was investigated by the House for off-label marketing of kidney transplant drug Rapamune and targeting African-Americans 5) Saw a researcher who helped established its Bextra, Celebrex and Lyrica as effective pain meds, Scott S Reuben, MD, trotted off to prison for research fraud 6) was sued by Blue Cross Blue Shield to recoup money it overpaid for Bextra and other drugs 7) received a letter from Sen. Charles Grassley (R-Iowa) requesting its whistleblower policy and 8) had its appeal to end lawsuits by Nigerian families who accuse it of illegal trials of the antibiotic Trovan in which 11 children died, rejected by the Supreme Court. And how was your week?
Nor does Pfizer back down when faced with legal troubles.
Even as it was under the probation of a 5-year Corporate Integrity Agreement (CIA) with Health and Human Services for withholding $20 million in Lipitor rebates owed to Medicaid in 2002, it off-label marketed its seizure drug Neurontin and entered into another CIA in 2004.
Worse, it bought Warner-Lambert in 2000, which made Neurontin, knowing the drug's marketing practices were under criminal investigation. (And knowing its Rezulin had been withdrawn.)
And even as it entered into its 2004 CIA for Neurontin, it was off-label marketing the seizure drug Lyrica, called Son of Neurontin, and three other meds, and had to enter into a third CIA, last year's $2.3 billion Bextra settlement which was the largest health care fraud settlement in US history.
The same day the settlement news broke, Pfizer announced it bought the drug giant Wyeth despite its thicket of Fen-Phen heart valve suits and Prempro cancer suits.
And there was more "bring 'em on" chutzpah.
After Vioxx and Pfizer's Bextra were withdrawn from the market for cardiovascular risks, Pfizer sought FDA approval for its Celebrex, the last legal COX-2 inhibitor, also suspected of cardiovascular risks, for use in children as young as two.
And in June, days before Pfizer suspended development of the osteoarthritis drug tanezumab for worsening joints, it touted the drug as "well-tolerated."
As a company, Pfizer, based in New York City with research headquarters in Groton, CT, looks better from the outside than the inside. Its Pac-Man like acquisition of drug companies, Warner-Lambert, Pharmacia (Searle, Upjohn), SUGEN, Vicuron, Rinat and Wyeth (also creating the world's biggest animal drug company) has created a silo structure in which the company's 90,000 employees in 90 countries feel unconnected to a corporate heartbeat. Loyalty is rare as employees in absorbed companies bought for their products alone fear getting pfired and 14,000 scientists bemoan that the company's biggies like Lipitor, Celebrex, Neurontin, Zithromax, Zyrtec and now Wyeth's Prempro weren't created inhouse.
Despite flying doctors to Caribbean resorts to attend drug pitches (by other paid doctors) and bestowing four figure honorariums on them, and Enron moments like a Bextra sales extravaganza with acrobats, dancers and gigantic "fist" logo, Pfizer's Midtown Manhattan offices consist of unimpressive cubes.
After becoming the world's biggest drug company in 2000, Henry A. McKinnell, former Pfizer CEO and a Bushmate (replaced by less conservative Jeffrey B. Kindler) vowed to make Pfizer the "the world's most valued company to patients, to customers, to business partners, to colleagues, and to communities where we work and live." But thanks to the parade of damaging safety and ethics scandals, Esprit de corps is lacking except in some sales units.
"Pfizer is a black hole," Peter Rost, MD, author of The Whistleblower: Confessions of a Healthcare Hitman and probably Pfizer's most famous former employee told AlterNet. "It is nothing but a maze of cobbled together drug companies that aggressively markets drugs it didn't create in a military-like command structure."
Still, Pfizer's vast product line, its $50 billion a year revenues -- exceeding some states' entire budgets -- and reputation for having the best trained sales reps make it the team to beat for competing salesmen and examples of Pfizer envy dot Cafepharma, the drug industry chatroom considered pharma's washroom wall.
"Glad they did it," wrote a poster about last year's Department of Justice (DOJ) Bextra settlement. "Pfizer is only sticking it to the American person when they perpitrate a fruad (sic) of this magnitude. The rest of you who sat by and said nothing are no better than a bunch of crooks. My father always said, 'you lie, you cheat, you steal; you can't do one without doing them all'. You must be so proud...I would take that name badge off when I walk into an office if I were you."
"If you think that Pfizer is the only drug company that has dealt with off-label promotion issues you are sadley (sic) mistaken," perpitrated the next poster.
"You are so right. All the other companies are doing it, so we did too. Waaah, waaah, waaaaah! (stomping my foot). It's not fair! It made us so much money! Patients don't matter, money does," wrote the next poster. Characterizations about wives and mothers followed.
Patients also resent Pfizer and have sued over Chantix, Lipitor, Celebrex, Bextra, Neurontin, Lyrica, Viagra, Zoloft and other drugs. Pfizer downplayed Lipitor's "serious and irreversible side effects" says Mark Jay Krum, an attorney representing plaintiffs in a class-action suit, and "is willing to promote the drug at any cost." Say that.
Even the DOJ calls Pfizer incorrigible. "...illegal conduct was pervasive throughout the company and stemmed from messages created at high levels within the national marketing team," it wrote in the Bextra sentencing memo. "Employees, including district managers, explained that they did not question their supervisors about the illegal conduct that they were being instructed to carry out, because to do so would be considered a 'CLM' or 'Career Limiting Move.'"
Still the FDA needs to take some blame for waving iffy Pfizer drugs through, especially under the 1992 Prescription Drug User Fee Act (PDUFA) in which drug companies "buy" accelerated approvals.
Why did the FDA allow Pfizer to make money for ten years on the leukemia drug Mylotarg, which was given an accelerated approval, and allow people to take it as guinea pigs for ten years while "confirmatory" studies establishing its safety and efficacy were still outstanding? Patients who took Mylotarg while on chemotherapy had more deaths than those just on chemotherapy in a clear example of the lethal metrics of rushed through drugs.
Why was Pfizer's pain drug tanezumab, an injected monoclonal antibody made from bio-engineered immune cells, even considered for knee pain except for the profits in such Frakendrugs?
Why was Pfizer allowed to continue clinical trials on children, or anyone, after the FDA found Geodon overdoses in April -- and why is Geodon, rejected once by the FDA and promoted by Richard Borison MD who is in Hancock State Prison for research fraud -- hello -- on the market? Obama appointees Commissioner Margaret Hamburg, MD and principal deputy commissioner Joshua Sharfstein, MD come from public health backgrounds but it will be hard to turn the FDA ship around.
And speaking of dangerous drugs, what's up with Pfizer's anti-smoking drug Chantix?
In 2007, Texas musician Carter Albrecht, who played with Sorta and Edie Brickell & New Bohemians, became a poster boy for Chantix' unpredictable mental effects when he was fatally shot trying to kick in a neighbor's door. In 2008, with 988 adverse effects reported including seizures, heart trouble and suicides, the FDA banned airline pilots and air traffic controllers from taking it. Thanks for that. Last year it gave Chantix a black box warning to "highlight the risk of serious mental health events including changes in behavior, depressed mood, hostility, and suicidal thoughts when taking these drugs."
Most pharma watchers agree that financial penalties, including last year's $2.3 billion Bextra settlement, won't upend Pfizer whose one year budget for R & D alone is in the billions. Yet the DOJ repeatedly lets Pfizer pawn off guilty pleas to the False Claims Act (which include a ban on Medicare, Medicaid and VA eligibility) on its shell companies and keep doing business with the government. Why?
"Pfizer is the largest drug company in the world and if you include its generics unit it makes literally hundreds of different drugs. Getting tough would mean no Lipitor, no Viagra, no Bacitracin, no Cipro, no Zithromax, no Sutent, et cetera," says Jim Edwards, a pharmaceutical reporter on Bnet and former managing editor of Adweek. "The government is not really in a position to be cutting itself off from all that medicine."
"So many Medicaid, Medicare and VA drugs come from Pfizer, the government would never convict them," agrees Peter Rost. "It would stop the drug flow."
And then there's lobby power.
Just as former Louisiana Republican representative Billy Tauzin left the House Committee on Energy and Commerce which oversees the drug industry and resurfaced as head of PhRMA, Pfizer recently hired Gregory Simon who served on Obama's transition team and as chief domestic policy advisor to Vice President Gore to head its "global policy effort." Its senior corporate counsel until 2008, Arnold Friede, had an FDA background and Pfizer's former senior vice president for worldwide public affairs, Richard Bagger, has re-emerged as New Jersey Governor Christopher Christie's chief of staff. Hey, you guys look familiar!
Even the Bextra settlement arouses cynicism since $102 million of it went to a doctor and five former Pfizer reps who served as whistleblowers on the case, one getting $51 million.
Isn't making big money off pharma how the trouble started?
BP Data Show 20% of Gulf Spill Responders Exposed to Chemical
New BP Data Show 20% of Gulf Spill Responders Exposed to Chemical That Sickened Valdez Workers
In an under-the-radar release of new test results for its Gulf of Mexico oil spill workers, BP PLC is reporting potentially hazardous exposures to a now-discontinued dispersant chemical -- a substance blamed for contributing to chronic health problems after the Exxon Valdez cleanup -- among more than 20 percent of offshore responders.
BP's new summary of chemical testing, posted to its website this week after a nearly monthlong absence of new data, also makes notable revisions to the company's public characterization of the health risks facing Gulf workers. The oil giant now describes the government as a partner in developing the program for monitoring cleanup crews.
In a June 9 report on worker test results, BP confidently asserted that the health hazards of exposure to both dispersant chemicals and the components of leaking crude "are very low." In its latest summary, BP replaced those three words with an assurance that health risks "have been carefully considered in the selection of the various methods employed in addressing its spill."
The new BP summary, including results up to June 29, show a broad majority of workers testing below exposure limits set by the Occupational Safety and Health Administration (OSHA) and the National Institute for Occupational Safety and Health (NIOSH).
But the Valdez-linked chemical 2-butoxyethanol was detected at levels up to 10 parts per million (ppm) in more than 20 percent of offshore responders and 15 percent of those near shore. The NIOSH standard for 2-butoxyethanol, which lacks the force of law but is considered more health-protective than the higher OSHA limit, is 5 ppm.
Some public-health advocates pointed out that BP references the NIOSH ceiling of each chemical it tested for except 2-butoxyethanol, an ingredient in the Corexit 9527 dispersant that BP phased out after spraying it in the Gulf during the early days of the spill. "They're playing with these numbers," said Mark Catlin, a veteran industrial hygienist who has studied the worker-health fallout from the 1989 Valdez spill.
Natural Resources Defense Council Senior Scientist Gina Solomon described BP's continued offshore 2-butoxyethanol detection during the month of June as "worrisome."
"It suggests to me that there is still, clearly, a serious air-quality concern. ... [Gulf] air quality, if anything, seems to be deteriorating," Solomon said.
Hunter College toxicology professor Frank Mirer said it would be "implausible" that the ongoing detection of 2-butoxyethanol among workers could be attributable to only BP's early use of Corexit 9527.
On June 9, BP's testing summary stated: "BP has, for the very start, worked hard to ensure that the people involved in all the activities associated with the incident are protected." That sentence also appeared in this week's report, with "BP" replaced by "the Unified Area Command," the government's joint oil spill response effort.
More questions than answers
BP's latest report on worker exposures adds test results for three components of crude oil not mentioned in previous monitoring summaries: toluene, xylene and ethylbenzene. Solomon praised the company for releasing more of its data amid pressure for increased transparency from members of Congress (E&E Daily, June 15).
"I was very happy to see they have presented results for many more chemicals than they were previously," she said.
However, the company's continued use of bar graphs that encompass ranges of exposures -- without including where and under what conditions the Gulf tests are performed -- left several occupational safety experts with more questions than answers.
New York Committee for Occupational Safety and Health industrial hygienist David Newman, who served on a U.S. EPA expert panel that evaluated lingering public health risks after the Sept. 11 attacks, cautioned against focusing on worker testing data without considering broader details of particular on-the-job chemical exposures.
"We had a humongous amount of data after 9/11," Newman said. "Most if not all of the data were reassuring. And yet harm was done."
Catlin echoed Newman's warning. "There are certainly some folks saying, 'Look at all this data, everything looks good,'" he said, "but we saw that same thing on the Exxon Valdez. ... The summary data BP provides is too sketchy to be able to give a clean bill of health."
Greenwire is published by Environment & Energy Publishing. Read More »
Friday, July 9, 2010
Elena Kagan and the 1st Amendment
Reasons for Concern
By JULIE HILDEN
During last week's Supreme Court confirmation hearings, U.S. Solicitor General and nominee Elena Kagan made a number of comments relating to the First Amendment -- which were then compiled by the First Amendment Center. In this column, I'll consider what we can glean from Kagan's views in this area.
Kagan on Cameras at the Supreme Court
Laudably, Kagan strongly endorsed the idea of having cameras in the Supreme Court. But this is only the tip of the iceberg of the cameras-in-court issue -- and it is the easy case.
Having cameras in trial-court courtrooms poses some risks -- for instance, the risk of inadvertently revealing jurors' identities. In contrast, having cameras in appellate courtrooms, including in the Supreme Court, has virtually no downside at all. Viewers will only see what visitors already see. And Americans who can never make the trip to Washington, D.C. -- whether due to modest means, hometown commitments, disability, illness, or other reasons -- will still get to have the precious experience of attending a Supreme Court oral argument.
It is precisely because this issue is a no-brainer that Kagan could effuse that "It would be a great thing for the Court, and it would be a great thing for the American people." None of her other answers on First Amendment topics was quite as unequivocal.
Kagan on Campaign-Finance Restrictions
Kagan's comments on campaign-finance restrictions and the First Amendment were purposely unrevealing. As FindLaw columnist Vikram Amar explained, Kagan earlier wrote a law-review essay that encouraged the aggressive, substantive questioning of Supreme Court nominees. Yet Kagan, as nominee, still gave non-answer answers on the topic of campaign-finance legislation and, in particular, on the topic of the Court's recent decision striking downparts of the federal campaign-finance law.
Kagan had argued, as Solicitor General, in favor of the Court's upholding the law, and she noted that she had felt that, as an advocate, she was given "a strong case to make." She also commented that the case was "settled law." But these are empty banalities. It's extremely rare that a case makes its way to the Court without both sides having something important and potentially persuasive to say; the Supreme Court chooses its cases, and rarely do the Justices opt for one that is going to be a walkover. And by definition, every decision the Court makes is "settled law" -- until it is not, because the Justices say it is not. The Court's very job, after all, is to settle the law.
On the campaign-finance topic, Kagan also refused to "take off the advocate's hat and put on the judge's hat." That stance is troubling, though, for Kagan has never been a judge, and surely we deserve some insight into what kind of judge she will be. That is the kind of insight that a history of prior judging -- such as existed, for instance, in the case of now-Justice Sonia Sotomayor -- typically provides. Lacking any such history, Kagan should have at least been willing to "put on the judge's hat" for her Senate questioning.
To be fair to Kagan, every Supreme Court nominee since the disastrously candid Bork hearings has given empty answers and offered banal comments that were lacking in insight. But as Vikram Amar has argued, one could at least have hoped that Kagan -- whose own essay reveals that she clearly sees the wrongness in this practice, and whose lack of judicial experience provides a special reason for candor -- might break the pattern.
Kagan on the Law of Libel
Kagan's comments on libel law were, in my view, a bit disturbing. Kagan gave a nod to the First Amendment implications of libel law, but she also heavily emphasized the other side of the equation -- stating that " we should also appreciate that people who did nothing to ask for trouble … can be greatly harmed when something goes around the Internet, and everybody believes something false about a person. … That's a real harm, and the legal system should not pretend that it's not."
Granted, Kagan's questioner had asked her if she favored "balance" in this area of law -- and it's hard to argue against "balance. And granted, people can indeed be harmed by Internet falsities. But Kagan's response, itself, would have been much more balanced had she also acknowledged the ways in which the Internet allows those who are not celebrities or public figures to debunk false allegations.
From a libel perspective, the Internet is a double-edged sword -- providing both the opportunity to libel widely, and the opportunity to respond widely. Indeed, as I noted in a recent column drawing on a New York Observer article, some ascribe the recent, stark drop in libel suits against media entities to the Internet's ability to give everyone an effective podium. For the libel victim, it helps, especially, that Google and other search engines tend to unearth both the libel and the reply.
Kagan's response was also unnecessarily hyperbolic. Even the strongest First Amendment advocates don't claim that harm to reputation isn't "a real harm," and key Supreme Court precedents like New York Times Co. v. Sullivan certainly don't imply anything of the kind. What they do imply is that honoring the First Amendment may, in some cases, be more important than addressing this very genuine harm. Thus, in her answer, Kagan simply created a straw man -- a legal system that falsely pretends that libels don't do "real harm" to reputation -- and knocked it down. But that isn't the legal system that we have -- not remotely.
In reality, Supreme Court precedent is quite clear that the choice between protecting reputation and protecting speech is brutal, a choice between averting two very real harms. But it also recognizes that free speech alone enjoys the protection of a constitutional amendment.
In sum, it's worrisome that when asked about libel, Kagan dwelt on reputation, not free speech. Let's hope that it was the question regarding "balance," and not Kagan's own inclinations, that led to this skewed emphasis. If Kagan does indeed value reputation over free speech, that view could ramify into other areas of law -- for instance, leading her to over-value privacy.
Kagan Versus Franken on Antitrust and the First Amendment
Like Kagan's comments on libel law, her exchange with Senator Al Franken on antitrust and the First Amendment suggested that Kagan may not see what is now happening in the media world as truly revolutionary -- revolutionary enough to possibly call for legal changes to mirror changing practical realities. However, I think that many, many people would disagree with her on that point.
In questioning Kagan, Franken insisted that the First Amendment should play a role in issues such as media consolidation and Net neutrality -- such that the Court's review of antitrust issues could also trigger the First Amendment. But Kagan -- in one of the very few definitive answers she gave relating to free speech -- categorically resisted any First-Amendment-law role here, though she did see a place for "First Amendment values."
In her answer, Kagan also indicated an inclination to defer to those "who know a lot more about antitrust policy than I do."
Unfortunately, these two stances, put together, make it sound like Justice Kagan will be more or less a rubber-stamp for government antitrust policy. We need more searching review from the Justices in an era of rapid technological and media-industry change. The Justices may still end up agreeing with regulators the lion's share of the time, but they need, now more than ever, to at least start off with a close look at the basis for policy.
Finally, to see issues like the ones Franken has raised as being strictly antitrust issues is, I believe, a seriously blinkered way of seeing what is a truly new media landscape. The heavy-handed fairness doctrine -- which I strongly oppose -- once gave government intervention in free-speech markets a bad name. But that is only one kind of tool -- a kind of forced speech. Other tools -- such as playing-field-leveling strategies -- may be much more attractive from a First Amendment perspective.
In sum, it seems very possible that, in the Internet Age, the government may want to intervene to address media-market problems that are not just antitrust problems, but, in practice, First Amendment problems too. Let's hope that Justice Kagan, when she is confirmed -- as it seems she will be -- keeps a more open mind about these issues than she has displayed as a nominee.
Julie Hilden practiced First Amendment law at the D.C. law firm of Williams & Connolly from 1996-99. She is the author of a memoir, The Bad Daughter and a novel Three. She can be reached through her website.
By JULIE HILDEN
During last week's Supreme Court confirmation hearings, U.S. Solicitor General and nominee Elena Kagan made a number of comments relating to the First Amendment -- which were then compiled by the First Amendment Center. In this column, I'll consider what we can glean from Kagan's views in this area.
Kagan on Cameras at the Supreme Court
Laudably, Kagan strongly endorsed the idea of having cameras in the Supreme Court. But this is only the tip of the iceberg of the cameras-in-court issue -- and it is the easy case.
Having cameras in trial-court courtrooms poses some risks -- for instance, the risk of inadvertently revealing jurors' identities. In contrast, having cameras in appellate courtrooms, including in the Supreme Court, has virtually no downside at all. Viewers will only see what visitors already see. And Americans who can never make the trip to Washington, D.C. -- whether due to modest means, hometown commitments, disability, illness, or other reasons -- will still get to have the precious experience of attending a Supreme Court oral argument.
It is precisely because this issue is a no-brainer that Kagan could effuse that "It would be a great thing for the Court, and it would be a great thing for the American people." None of her other answers on First Amendment topics was quite as unequivocal.
Kagan on Campaign-Finance Restrictions
Kagan's comments on campaign-finance restrictions and the First Amendment were purposely unrevealing. As FindLaw columnist Vikram Amar explained, Kagan earlier wrote a law-review essay that encouraged the aggressive, substantive questioning of Supreme Court nominees. Yet Kagan, as nominee, still gave non-answer answers on the topic of campaign-finance legislation and, in particular, on the topic of the Court's recent decision striking downparts of the federal campaign-finance law.
Kagan had argued, as Solicitor General, in favor of the Court's upholding the law, and she noted that she had felt that, as an advocate, she was given "a strong case to make." She also commented that the case was "settled law." But these are empty banalities. It's extremely rare that a case makes its way to the Court without both sides having something important and potentially persuasive to say; the Supreme Court chooses its cases, and rarely do the Justices opt for one that is going to be a walkover. And by definition, every decision the Court makes is "settled law" -- until it is not, because the Justices say it is not. The Court's very job, after all, is to settle the law.
On the campaign-finance topic, Kagan also refused to "take off the advocate's hat and put on the judge's hat." That stance is troubling, though, for Kagan has never been a judge, and surely we deserve some insight into what kind of judge she will be. That is the kind of insight that a history of prior judging -- such as existed, for instance, in the case of now-Justice Sonia Sotomayor -- typically provides. Lacking any such history, Kagan should have at least been willing to "put on the judge's hat" for her Senate questioning.
To be fair to Kagan, every Supreme Court nominee since the disastrously candid Bork hearings has given empty answers and offered banal comments that were lacking in insight. But as Vikram Amar has argued, one could at least have hoped that Kagan -- whose own essay reveals that she clearly sees the wrongness in this practice, and whose lack of judicial experience provides a special reason for candor -- might break the pattern.
Kagan on the Law of Libel
Kagan's comments on libel law were, in my view, a bit disturbing. Kagan gave a nod to the First Amendment implications of libel law, but she also heavily emphasized the other side of the equation -- stating that " we should also appreciate that people who did nothing to ask for trouble … can be greatly harmed when something goes around the Internet, and everybody believes something false about a person. … That's a real harm, and the legal system should not pretend that it's not."
Granted, Kagan's questioner had asked her if she favored "balance" in this area of law -- and it's hard to argue against "balance. And granted, people can indeed be harmed by Internet falsities. But Kagan's response, itself, would have been much more balanced had she also acknowledged the ways in which the Internet allows those who are not celebrities or public figures to debunk false allegations.
From a libel perspective, the Internet is a double-edged sword -- providing both the opportunity to libel widely, and the opportunity to respond widely. Indeed, as I noted in a recent column drawing on a New York Observer article, some ascribe the recent, stark drop in libel suits against media entities to the Internet's ability to give everyone an effective podium. For the libel victim, it helps, especially, that Google and other search engines tend to unearth both the libel and the reply.
Kagan's response was also unnecessarily hyperbolic. Even the strongest First Amendment advocates don't claim that harm to reputation isn't "a real harm," and key Supreme Court precedents like New York Times Co. v. Sullivan certainly don't imply anything of the kind. What they do imply is that honoring the First Amendment may, in some cases, be more important than addressing this very genuine harm. Thus, in her answer, Kagan simply created a straw man -- a legal system that falsely pretends that libels don't do "real harm" to reputation -- and knocked it down. But that isn't the legal system that we have -- not remotely.
In reality, Supreme Court precedent is quite clear that the choice between protecting reputation and protecting speech is brutal, a choice between averting two very real harms. But it also recognizes that free speech alone enjoys the protection of a constitutional amendment.
In sum, it's worrisome that when asked about libel, Kagan dwelt on reputation, not free speech. Let's hope that it was the question regarding "balance," and not Kagan's own inclinations, that led to this skewed emphasis. If Kagan does indeed value reputation over free speech, that view could ramify into other areas of law -- for instance, leading her to over-value privacy.
Kagan Versus Franken on Antitrust and the First Amendment
Like Kagan's comments on libel law, her exchange with Senator Al Franken on antitrust and the First Amendment suggested that Kagan may not see what is now happening in the media world as truly revolutionary -- revolutionary enough to possibly call for legal changes to mirror changing practical realities. However, I think that many, many people would disagree with her on that point.
In questioning Kagan, Franken insisted that the First Amendment should play a role in issues such as media consolidation and Net neutrality -- such that the Court's review of antitrust issues could also trigger the First Amendment. But Kagan -- in one of the very few definitive answers she gave relating to free speech -- categorically resisted any First-Amendment-law role here, though she did see a place for "First Amendment values."
In her answer, Kagan also indicated an inclination to defer to those "who know a lot more about antitrust policy than I do."
Unfortunately, these two stances, put together, make it sound like Justice Kagan will be more or less a rubber-stamp for government antitrust policy. We need more searching review from the Justices in an era of rapid technological and media-industry change. The Justices may still end up agreeing with regulators the lion's share of the time, but they need, now more than ever, to at least start off with a close look at the basis for policy.
Finally, to see issues like the ones Franken has raised as being strictly antitrust issues is, I believe, a seriously blinkered way of seeing what is a truly new media landscape. The heavy-handed fairness doctrine -- which I strongly oppose -- once gave government intervention in free-speech markets a bad name. But that is only one kind of tool -- a kind of forced speech. Other tools -- such as playing-field-leveling strategies -- may be much more attractive from a First Amendment perspective.
In sum, it seems very possible that, in the Internet Age, the government may want to intervene to address media-market problems that are not just antitrust problems, but, in practice, First Amendment problems too. Let's hope that Justice Kagan, when she is confirmed -- as it seems she will be -- keeps a more open mind about these issues than she has displayed as a nominee.
Julie Hilden practiced First Amendment law at the D.C. law firm of Williams & Connolly from 1996-99. She is the author of a memoir, The Bad Daughter and a novel Three. She can be reached through her website.
The Worst Supreme Court Decision of the Term
Echoes of Lawfare
By JOANNE MARINER
What was the worst ruling of the Supreme Court term that just ended? Citizens United v. Federal Election Commission, the corporate campaign spending decision that President Obama criticized in January, could make a strong claim to that title, but defenders of the First Amendment would point to the Court's ruling two weeks ago in Holder v. Humanitarian Law Project.
The Humanitarian Law Project case involved peace and human rights activists who sought an injunction that would allow them to advise and train militant groups to use lawful means to achieve political ends. Specifically, the plaintiffs wanted to train Kurdish nationalists in Turkey on how to use international law to resolve disputes peacefully, and how to petition 'representative bodies such as the United Nations" for relief. They also wanted to engage in political advocacy on behalf of the Kurds in Turkey and the Tamil Tigers in Sri Lanka.
Both of the groups with which the plaintiffs sought to communicate had been deemed 'foreign terrorist organizations" under US law. Because of this designation, the plaintiffs' proposed speech was arguably barred by a federal law that criminalizes the provision of 'material support" to terrorist organizations, including support in the form of training, expert advice, personnel, and services.
The Court acknowledged that the case involved content-based restrictions on speech, normally an area in which the First Amendment requires the judiciary to enforce stringent protections against government overreaching. Yet in a 6-3 decision, the Court's conservative majority, joined by departing Justice John Paul Stevens, rejected the plaintiffs' claims. The Court found that the government's compelling interest in preventing terrorism outweighed the plaintiffs' free speech rights.
Indeed, it reached this conclusion without even asking the government to provide empirical evidence to show that the goal of preventing terrorism would actually be served by the speech restrictions at issue.
Heavy Sentences for Negotiating Peace
Human Rights Watch, together with the Carter Center, the International Crisis Group, and several other peace, human rights, and humanitarian aid groups, filed an amicus brief in support of the plaintiffs in Humanitarian Law Project. Noting that the challenged statute imposes sentences of up to 15 years in prison for the crime of providing advice and training to a designated 'foreign terrorist organization," the groups explained how their own activities might potentially expose them to such penalties.
The groups were unanimous in their condemnation of terrorism and terrorist methods. But as they told the Court, 'peace-making, conflict resolution, human rights advocacy, and the provision of aid to needy civilians sometimes requires direct engagement with groups and individuals that resort to or support violence," including those that have been designated as terrorist.
The Carter Center, for example, said that in the course of trying to address bloody conflicts in places like Uganda, Nepal and Gaza, its representatives might meet with members of armed factions to seek to mediate peaceful solutions. Human Rights Watch offered concrete examples of meeting with designated terrorist groups like the FARC, the ELN, and the LTTE (also known as the Tamil Tigers), in order to confront them with evidence of human rights violations and advise them of their obligation to respect international law.
The human rights and humanitarian aid groups explained their logical understanding of the First Amendment's reach. 'If a U.S. human rights organization issues a report that documents the LTTE's use of child soldiers, condemns the practice, lists a set of concrete recommendations it believes the LTTE should adopt to cease the abuse, and provides specific advice as to how the LTTE should implement the recommendations in practice, there is surely no doubt that this activity is fully protected by the First Amendment," their brief argued. 'The mere fact that it is communicated to the LTTE (an entity engaged in some illegal conduct) rather than The New York Times editorial board cannot remove this kind of peaceful speech and advocacy from constitutional protection."
Echoes of Lawfare
The Court's opinion in Humanitarian Law Project backed away from decades of First Amendment caselaw, including landmark rulings from the Cold War era. It deferred to the government's argument that national security interests justified restrictions on plaintiffs' speech, even though the claim lacked empirical support, stating that where national security is concerned, conclusions can 'be based on informed judgment rather than concrete evidence."
In speculating about how designated terrorist groups might gain dangerous benefit from skills imparted by the plaintiffs, the Court's tone was especially harsh. Echoing right-wing critics of 'lawfare," the Court mused that a terrorist group that was familiar with the international legal system might use this expertise "to threaten, manipulate, and disrupt." Its portrayal of international law as a tool in the hands of terrorists was reminiscent of hardline ideologues from the Bush Administration.
But unfortunately, although the Bush Administration litigated the Humanitarian Law Project case up through the courts, the final Supreme Court judgment belongs to President Obama. It was appropriate, in fact, that the decision in Humanitarian Law Project was issued just before the beginning of confirmation hearings for Obama's latest Supreme Court nominee, Elena Kagan. Kagan, during her time as Solicitor General, argued the government's appeal of the case before the Supreme Court; her aggressive advocacy is reflected in the opinion.
By JOANNE MARINER
What was the worst ruling of the Supreme Court term that just ended? Citizens United v. Federal Election Commission, the corporate campaign spending decision that President Obama criticized in January, could make a strong claim to that title, but defenders of the First Amendment would point to the Court's ruling two weeks ago in Holder v. Humanitarian Law Project.
The Humanitarian Law Project case involved peace and human rights activists who sought an injunction that would allow them to advise and train militant groups to use lawful means to achieve political ends. Specifically, the plaintiffs wanted to train Kurdish nationalists in Turkey on how to use international law to resolve disputes peacefully, and how to petition 'representative bodies such as the United Nations" for relief. They also wanted to engage in political advocacy on behalf of the Kurds in Turkey and the Tamil Tigers in Sri Lanka.
Both of the groups with which the plaintiffs sought to communicate had been deemed 'foreign terrorist organizations" under US law. Because of this designation, the plaintiffs' proposed speech was arguably barred by a federal law that criminalizes the provision of 'material support" to terrorist organizations, including support in the form of training, expert advice, personnel, and services.
The Court acknowledged that the case involved content-based restrictions on speech, normally an area in which the First Amendment requires the judiciary to enforce stringent protections against government overreaching. Yet in a 6-3 decision, the Court's conservative majority, joined by departing Justice John Paul Stevens, rejected the plaintiffs' claims. The Court found that the government's compelling interest in preventing terrorism outweighed the plaintiffs' free speech rights.
Indeed, it reached this conclusion without even asking the government to provide empirical evidence to show that the goal of preventing terrorism would actually be served by the speech restrictions at issue.
Heavy Sentences for Negotiating Peace
Human Rights Watch, together with the Carter Center, the International Crisis Group, and several other peace, human rights, and humanitarian aid groups, filed an amicus brief in support of the plaintiffs in Humanitarian Law Project. Noting that the challenged statute imposes sentences of up to 15 years in prison for the crime of providing advice and training to a designated 'foreign terrorist organization," the groups explained how their own activities might potentially expose them to such penalties.
The groups were unanimous in their condemnation of terrorism and terrorist methods. But as they told the Court, 'peace-making, conflict resolution, human rights advocacy, and the provision of aid to needy civilians sometimes requires direct engagement with groups and individuals that resort to or support violence," including those that have been designated as terrorist.
The Carter Center, for example, said that in the course of trying to address bloody conflicts in places like Uganda, Nepal and Gaza, its representatives might meet with members of armed factions to seek to mediate peaceful solutions. Human Rights Watch offered concrete examples of meeting with designated terrorist groups like the FARC, the ELN, and the LTTE (also known as the Tamil Tigers), in order to confront them with evidence of human rights violations and advise them of their obligation to respect international law.
The human rights and humanitarian aid groups explained their logical understanding of the First Amendment's reach. 'If a U.S. human rights organization issues a report that documents the LTTE's use of child soldiers, condemns the practice, lists a set of concrete recommendations it believes the LTTE should adopt to cease the abuse, and provides specific advice as to how the LTTE should implement the recommendations in practice, there is surely no doubt that this activity is fully protected by the First Amendment," their brief argued. 'The mere fact that it is communicated to the LTTE (an entity engaged in some illegal conduct) rather than The New York Times editorial board cannot remove this kind of peaceful speech and advocacy from constitutional protection."
Echoes of Lawfare
The Court's opinion in Humanitarian Law Project backed away from decades of First Amendment caselaw, including landmark rulings from the Cold War era. It deferred to the government's argument that national security interests justified restrictions on plaintiffs' speech, even though the claim lacked empirical support, stating that where national security is concerned, conclusions can 'be based on informed judgment rather than concrete evidence."
In speculating about how designated terrorist groups might gain dangerous benefit from skills imparted by the plaintiffs, the Court's tone was especially harsh. Echoing right-wing critics of 'lawfare," the Court mused that a terrorist group that was familiar with the international legal system might use this expertise "to threaten, manipulate, and disrupt." Its portrayal of international law as a tool in the hands of terrorists was reminiscent of hardline ideologues from the Bush Administration.
But unfortunately, although the Bush Administration litigated the Humanitarian Law Project case up through the courts, the final Supreme Court judgment belongs to President Obama. It was appropriate, in fact, that the decision in Humanitarian Law Project was issued just before the beginning of confirmation hearings for Obama's latest Supreme Court nominee, Elena Kagan. Kagan, during her time as Solicitor General, argued the government's appeal of the case before the Supreme Court; her aggressive advocacy is reflected in the opinion.
Waltzing at the Doomsday Ball
Capitalism is Dead, But We Still Dance With the Corpse
By JOE BAGEANT
Ajijic, Jalisco, Mexico.
As an Anglo European white guy from a very long line of white guys, I want to thank all the brown, black, yellow and red people for a marvelous three-century joy ride. During the past 300 years of the industrial age, as Europeans, and later as Americans, we have managed to consume infinitely more than we ever produced, thanks to colonialism, crooked deals with despotic potentates and good old gunboats and grapeshot. Yes, we have lived, and still live, extravagant lifestyles far above the rest of you. And so, my sincere thanks to all of you folks around the world working in sweatshops, or living on two bucks a day, even though you sit on vast oil deposits. And to those outside my window here in Mexico this morning, the two guys pruning the retired gringo's hedges with what look like pocket knives, I say, keep up the good work. It's the world's cheap labor guys like you -- the black, brown and yellow folks who take it up the shorts -- who make capitalism look like it actually works. So keep on humping. Remember: We've got predator drones.
After twelve generations of lavish living at the expense of the rest of the world, it is understandable that citizens of the so-called developed countries have come to consider it quite normal. In fact, Americans expect it to become plusher in the future, increasingly chocked with techno gadgetry, whiz bang processed foodstuffs, automobiles, entertainments, inordinately large living spaces -- forever.
We've had plenty of encouragement, especially in recent times. Before our hyper monetized economy metastasized, things such as housing values went through the sky, and the cost of basics, food etc. went through the basement floor, compared to the rest of the world. The game got so cheap and fast that relative fundamental value went right out the window and hasn't been seen since. For example, it would be very difficult to make Americans understand that a loaf of bread or a dozen eggs have more inherent value than an iPhone. Yet, at ground zero of human species economics, where the only currency is the calorie, that is still true.
Such is the triumph of the money economy that nothing can be valued by any other measure, despite that nobody knows what money is worth at all these days. This is due in part to the international finance jerk-off, in which the world's governments print truckloads of worthless money, so they can loan it out. The idea here is that incoming repayment in some other, more valuable, currency will cover their own bad paper. In turn, the debtor nations print their own bogus money to repay the loans. So you have institutions loaning money they do not have to institutions unable to repay the loans. All this is based on the bullshit theory that tangible wealth is being created by the world's financial institutions, through interest on the debt. Money making money.
As my friend, physicist and political activist George Salzman writes,
"Everyone in these 'professional' institutions dealing in money lives a fundamentally dishonest life. Never mind 'regulating' interest rates," he says. "We must do away with interest, with the very idea of 'money making money'. We must recognize that what is termed 'Western Civilization' is in fact an anti-civilization, a global social structure of death and destruction. However, the charade of ever-increasing debt can be kept up only as long as the public remains ignorant. Once ecological limits have been reached the capitalist political game is up."
You can see why I love this guy.
Boomers and Doomers and XXL bloomers
Capitalism wouldn't be around today, at least not in its current pathogenic form, if it had not caught a couple of lucky breaks. The first of course, was the expansion of bloodsucking colonialism to give it transfusions of unearned wealth, enabling "investors" to profit by artificial means (death, oppression and slavery). But the biggest break was being driven to stratospheric heights by inordinate quantities of available hydrocarbon energy. Inordinate, but never the less finite. Consequently, the 100-year-long oil suckdown that put industrial countries in the tall cotton, now threatens to take back from subsequent beneficiary generation everything it gave. The Hummers, the golf courses, the big box stores, cruising at 35,000 feet over the Atlantic -- everything.
You'd never know that, to look around at Americans or Canadians, who have not the slightest qualms about living in that 3,500 square foot vinyl sided fuck box, if they can manage to make the mortgage nut, or unashamedly buying a quadruple X large Raiders Jersey because, hey, a guy's gotta eat, right? Why don't I deserve a nice ride, a swimming pool and a flat screen? I worked for it (sure you did buddy, your $12,000 Visa/MasterCard tab is proof of that).
The doomers and the peak oilers gag, and they call it American denial.
Personally, I think it is somewhat unfair to say that most Americans and Canadians are in denial. They simply don't have a fucking clue about what is really happening to them and their world. Everything they have been taught about working, money and "quality of life" constitutes the planet's greatest problem -- overshoot. Understanding this trashes our most basic assumptions, and requires a complete reversal in contemporary thought and practice about how we live in the world. When was the last time you saw any individual, much less an entire nation, do that?
Compounding our ignorance and naiveté are the officials and experts, politicians, media elites, and especially economists, who interpret the world for us and govern the course of things. The go-to guys. They don't know either. But they've got the lingo down.
Somehow or other, it all has to do with the economy, which none of us understands, despite round the clock media jabbering on the subject.
Somehow it has to do with this great big spring on Wall Street called "the market" that's gotta be kept wound up, and interest rates at something called The Fed, which have got to be kept smunched down. The industry of crystal gazing and hairball rubbing surrounding these entities is called economics.
In heaven, there are no jobs
The following may be old news to some who studied economics in college. However, I did not. And, for me at least, this gets at the heart of our dilemma (if dilemma is the right word for economic, environmental and species collapse). Here goes:
The human economy is made up of three parts: nature, work and money. But since nobody would pay people like Allen Greenspan or Milton Friedman millions of dollars if they talked just like the rest of us, economists and academics refer to these three parts as the primary, secondary and tertiary economies.
Of these, nature -- the world's ecosystems and natural capital -- is by far the most important. It comprises about three quarters of the total value of economic activity (Richard Costanza et al. 1997). To western world economists, nature -- when it is even give nature a thought -- is considered to be limitless.
The second part, work, is the labor required to produce goods and services from natural resources. Work creates real value through efficient use of both human and natural resource energy. A potato is just a potato until people sweating over belt lines and giant fryers turn it into Tater Tots.
The third economy, the tertiary economy, is the production and exchange of money. This includes anything that can be exchanged for money, whether it is gold, or mortgages bundled as securities, or derivatives. In short, any paperwork device that can be rigged up in such a fashion that money will stick to it. Feel free to take a wild-assed guess which of the three economies causes the most grief in this world.
To an economist, work -- the stuff that eats up at least a third of our earthly lives, is merely a "factor" called labor. Work is considered an unfortunate cost in creating added value. Added value, along with nature's resources, is the basis for all real world profits. Without labor, the money economy could not gin up on-paper wealth in its virtual economy. Somewhere, somebody's gotta do some real-world work, before bankers and investment brokers can go into their offices and pretend to work at "creating and managing wealth."
Paying the workers in society to produce real wealth costs money. Capitalists hate any sort of cost. It represents money that has somehow escaped their coffers. So when any behemoth corporation hands out thousands of pink slips on a Friday, Wall Street cheers and "the market" goes up. No ordinary mortal has ever seen "the market." But traders on the floor of 11 Wall Street, people who've deemed themselves more than mortal by virtue of their $110 Vanitas silk undershorts, assure us the market does exist. No tours of the New York Stock exchange are permitted, so we have to take their word for it.
In any case, in the money economy, eliminating costs, even if those costs happen to be feeding human beings, citizens of the empire, is sublime. That is why economists in the tertiary economy can declare a "jobless recovery" with a straight face. By their lights, the perfect recovery would necessarily be 100% jobless. Human costs of generating profit would be entirely eliminated.
Say what you will about the tertiary "money economy," but one thing is certain. It's virulent. Right now finance makes up 42% of GDP, and is rising. Traditionally that figure has been around 9%. Fifty eight percent of the economy is "services." When it comes to the service economy, most people think of fried chicken buckets and "customer service," call centers harassing debtors or selling credit cards. However, much of the so-called service economy consists of "services" sub-corporations and entities owned and operated by monopolies in communications, electronic access and energy. They are designed for the sole purpose of robbing the people incrementally. Borrow a microscope and read the back side your cable and electric bill. Billing you is a "service" for which you pay. So is the guy who cuts off your lights if you don't.
And manufacturing? Ten percent. Mostly big ticket items such as salad shooters, as near as I can tell.
What nature?
Still though, the foundation of the world, including our entire economic structure, is nature. This is clear to anyone who has ever, planted a garden, hiked in the woods, gone fishing or been gnawed on by chiggers. In vis est exordium quod terminus.
Yet, not one in a thousand economists takes nature into account. Nature has no place in contemporary economics, or the economic policy of today's industrial nations. Again, like the general American public, these economists are not in denial. They simply don't know it's there. Historically, nature has never been considered even momentarily because economists, like the public, never figured they would run out of it. With the Gulf oil "spill" at full throttle, the terrible destruction of nature is becoming obvious. But no economist who values his or her career wants to start figuring the cost of ecocide into pricing analysis. For god sake man, it's a cost!
With industrial society chewing the ass out of Mama Nature for three centuries, something had to give, and it has. Capitalists, however, remain unimpressed by global warming, or melting polar ice caps, or Southwestern desert armadillos showing up in Canada, or hurricanes getting bigger and more numerous every year. They are impressed by the potential dough in the so-called green economy. In fact, last night I watched an economist on CNN say that if the government had let the free market take care of the BP gulf catastrophe, it would not be the clusterfuck it is now. Now THAT might qualify as denial. In the mean time, anthropogenic ecocide and resource depletion, coupled with the pressures of six billion mouths and asses across the globe, have started to produce -- surprise surprise, Sheriff Taylor! -- very real effects on world economies. (How could they not?) So far though, in the simplistic see-spot-run American mind, it's all about dead pelicans and oiled up hotel beaches.
Monkey with the paper
When the U.S., and then the world's money economy started to crumble, the first thing capitalist economists could think of to do was to monkey with the paper. That's all they knew how to do. It was unthinkable that the tertiary virtual economy, that great backroom fraud of debt manipulation and fiat money, might have finally reached the limits of the material earth to support. That the money economy's gaming of workers and Mother Nature might itself might be the problem never occurred to the world's economic movers and shakers. It still hasn't. (Except for Chavez, Morales, Castro and Lula). Jobs disappeared, homes went to foreclosure, and personal debt was at staggering all time highs. America's working folks were taking it square in the face. Not that economists or financial kingpins cared much one way or the other. In the capitalist financial world, everything is an opportunity. Cancer? Build cancer hospital chains. Pollution? Sell pollution credits. The country gone bankrupt?
"Nothing to do," cried the mad hatters of finance, "but print more money, and give gobs of cash to the banks! Yes, yes, yes! Borrow astronomical amounts of the stuff and bribe every fat cat financial corporation up and down The Street!" All of which came down to creating more debt for the common people to work off. They seem willing enough to do it too -- if only they had jobs.
Along with the EU, Japan and the rest of the industrial world, the US continues to flood the market with cheap credit. That would be hunky dory, if was actually wealth for anybody but a banker. The real problems are debt and fraud, and tripling the debt in order to cover up the fraud. And pretending there no natural costs of our actions, that we do not have to rob the natural world to crank up the money world through debt.
No matter what economists tell us abut getting the credit industry moving again, papering over debt with more debt will not pollinate our food crops when the last honeybee is dead. I suggest that we put the economists out there in the fields, hand-pollinating crops like they do in China. They seem to know all about the subject, and have placed a monetary value of $12 billion on the pollination accomplished by bees in the US. Can you imagine the fucking arrogance? All bees do is make our fruit and vegetable supply possible. Anyway, if we cannot use the economists for pollinators (odds are they are too damned whacked to do that job), we could also stuff them down the blowhole of the Deepwater Horizon spill. For the first time in history, economists would be visibly useful.
Speaking of China: Since there is no way to pick up the turd of American capitalism by the clean end, much less polish it, American economists have pointed east, and set up a yow-yow about China as "the emerging giant." The "next global industrial superpower." Many Chinese are willing to ride their bicycles 10 miles to work through poisonous yellow-green air, and others in the "emerging middle class" are willing to wade into debt up to their nipples; this is offered as evidence of the viability of industrial capitalism. All it proves is that governments and economists never learn. In the quest of getting something for nothing, China follows the previous fools right into the industrial smog and off the cliff.
Sumthin' fer nuthin'
The main feature of capitalism is the seductive assertion that you can get something for nothing in this world. That you can manufacture wealth through money manipulation, and that it is OK to steal and hold captive the people's medium of exchange, then charge them out the ass for access. That you can do so with a clear conscience. Which you can, if you are the kind of sleazy prick who has inherited or stolen enough wealth to get into the game.
Even so, to keep a rigged game going, you must keep the suckers believing they can, and eventually will, benefit from the game. Also, that it is the only game in town. Legitimizing public theft means indoctrinating the public with all sorts of market mystique and hocus-pocus. They must be convinced there is is such a thing as an "investment" for the average schmuck drawing a paycheck (and there is, sort of, between the crashes and the bubbles). It requires a unified economic rationale for government and industry policies, and it is the economist's job to pump out this rationale. Historically, they have seldom hesitated to get down on their knees and do so.
It ain't robbery, it's a business cycle
Capitalism is about one thing: aggregating the surplus productive value of the public for private interests. As we have said, it is about creating state sanctioned "investments" for the workers who produce the real wealth. Things like home "ownership" and mortgages, or stock investments and funds to absorb their retirement savings. That crushing 30-year mortgage with two refis is an investment. So is that 401K melting like a snow cone the beach.
As the people's wealth accumulates, it is steadily siphoned off by government and elite private forces. From time to time, it is openly plundered for their benefit by way of various bubbles, depressions or recessions and other forms of theft passed off as unavoidable acts of nature/god. These periodic raids and draw downs of the people's wealth are attributed to "business cycles." Past periodic raids and thefts are heralded as being proof of the rationale. "See folks, it comes and goes, so it's a cycle!" Economic raids and busts become "market adjustments." Public blackmail and plundering through bailouts become a "necessary rescue packages." Giveaways to corporations under the guise of public works and creating employment become "stimulus." The chief responsibility of economists is to name things in accordance with government and corporate interests. The function of the public is to acquire debt and maintain "consumer confidence." When the public staggers to its feet again and manages to carry more debt, buy more poker chips on credit to play again, it's called a recovery. They are back in the game.
Dealer, hit me with two more cards, I feel lucky.
Does it hurt yet?
To anyone who is paying attention, things look doomed. Fortunately for American capitalism, nobody is paying attention. They never have. Even given the unemployment numbers, foreclosures and bankruptcies, most Americans are still not feeling enough pain yet to demand change. Not that they will. Demand change, I mean. We haven't the slightest idea of any other options, outside those provided by the corporate managed state. So in a chorus well-schooled by the media the public demands "reform," of the present system, the systemic pathogenic system based on exploitation of the many by the few, the one presently eating our society from the inside out. How do you reform that?
We are clueless, and the state sees to it that we stay that way. Take the price of gas, about which Americans are obsessive. In one way or another, petroleum is the subject of much news coverage, nearly as much as pissing matches between egomaniacs in Hollywood or o Capitol Hill. So one might think that by now Americans would have a realistic grasp of the petroleum business and things like oil and gasoline prices.
Hah, think again! This is America, this is Strawberry Fields, where nothing is real and the skies are not cloudy all day. We're stewed in a consumer hallucination called the American Dream and riding a digital virtual money economy nobody can even prove exists.
Is there an economy out there or not?
If we decide to believe the money economy still exists, and that debt is indeed wealth, then we damned sure know where to go looking for the wealth. Globally, forty percent of it is in the paws of the wealthiest one percent. Nearly all of that one percent are connected to the largest and richest corporations. Just before the economy blew out, these elites held slightly less than $80 trillion. After the blowout/bailout, their combined investment wealth was estimated at a little over $83 trillion. To give some idea, this is four years of the gross output of all the human beings on earth. It is only logical that these elites say the only way to revive the economy, which to them consists entirely of the money economy, out is to continue to borrow money from them.
However, the unasked question still hangs in the air: Does the money economy even exist anymore? Is it still there? (was it ever?) Or are we all blindly going through the motions because:
If there is no economy left, what the hell are we all participating in? A mirage? The zombie ball? The short answer is: Because the economy is a belief system, you are participating in whatever you believe you are. Personally, I believe we are participating in a modern extension of the feudal system, with bankers as the new feudal barons and credit demographics as their turf. But then, I drink and take drugs. Whatever it is, the money economy is the only game in town until the collapse, after which chickens and firewood may become the national currency. The Masai use cattle don't they?
At the same time, even dumb people are starting to feel an undefined fear in their bones. When I was back in the States last month, an old high school chum, a sluggard who seldom has forward thought beyond the next beer and Lotto scratch ticket, confides in me:
However, the most adept economists and other court sorcerers are going along as if nothing too unusual is happening -- calling it a recession, or more recently a double-dip recession (don't you love these turd-balls, making it sound as harmless as an ice cream cone -- gimme a double dip please!) or even a depression. But no matter what it is, they smugly assure us, there is nothing happening that the world has never seen before. Including the insider scams that ignited the catastrophe. It's just a matter of size. Extent.
OK, it's a matter of scale. Like the Gulf oil spill. We've seen spills before, just not this big. But over the next couple of years as the poison crud circulates the world's oceans, the Deep Horizon spill will prove to be a global game changer, whether economists and court wizards acknowledge it or don't. Anything of global scale, whether it is in finance, energy, foreign aid, world health or war contracting, is accompanied by unimaginable complexity. That makes it perfect cover for criminal activity. Particularly finance, where you are always close to the money.
Jim Kunstler, never at a loss to describe a ludicrous situation, sums up the paper economy's engineering of our collapse nicely:
Defenders of capitalism who say it can and must be saved must also admit that there is not enough money left to work with, to invest. There is only debt. Oh, yeah, we forgot; debt is wealth to a banker. Well then, all we gotta do is collect $190 per head from people in Sudan and Haiti and the rest of the planet.
Naw, that's too hard. Elite capital's best bet is a good old fashioned money raid on the serfs; create another bubble that will buy enough time before it pops to make the already rich a few billion richer. To that end, the G-8 is blowing one last bounder out there in the hyperspace where the economy s alleged to be surviving. Naturally, they are doing it in order to "save the world economy." The tough part is figuring out what to base the next bubble on.
May I suggest Soylent Green?
Under God, with fees and compound interest for all
From the outset, capitalism was always about the theft of the people's sustenance. It was bound to lead to the ultimate theft -- the final looting of the source of their sustenance -- nature. Now that capitalism has eaten its own seed corn, the show is just about over, with the nastiest scenes yet to play out around water, carbon energy (or anything that expends energy), soil and oxygen. For the near future however, it will continue to play out around money.
As the economy slowly implodes, money will become more volatile stuff than it already is. The value and availability of money is sure to fluctuate wildly. Most people don't have the luxury of escaping the money economy, so they will be held hostage and milked hard again by the same people who just drained them in the bailouts. As usual, the government will be right there to see that everybody plays by the rules. Those who have always benefited by capitalism's rules will benefit more. That cadre of "money professionals" which holds captive the nation's money supply, and runs things according to the rules of money, can never lose money. It writes the rules. And rewrites them when it suits the money elite's interests. Capitalism, the Christian god, democracy, the Constitution.
It's all one ball of wax, one set of rules in the American national psyche. Thus, the money masters behind the curtain will write The New Rules, the new tablets of supreme law, and call them Reform. There will be rejoicing that "the will of the people" has once again moved upon the land, and that the democracy's scripture has once again been delivered by the unseen hand of God.
By JOE BAGEANT
Ajijic, Jalisco, Mexico.
As an Anglo European white guy from a very long line of white guys, I want to thank all the brown, black, yellow and red people for a marvelous three-century joy ride. During the past 300 years of the industrial age, as Europeans, and later as Americans, we have managed to consume infinitely more than we ever produced, thanks to colonialism, crooked deals with despotic potentates and good old gunboats and grapeshot. Yes, we have lived, and still live, extravagant lifestyles far above the rest of you. And so, my sincere thanks to all of you folks around the world working in sweatshops, or living on two bucks a day, even though you sit on vast oil deposits. And to those outside my window here in Mexico this morning, the two guys pruning the retired gringo's hedges with what look like pocket knives, I say, keep up the good work. It's the world's cheap labor guys like you -- the black, brown and yellow folks who take it up the shorts -- who make capitalism look like it actually works. So keep on humping. Remember: We've got predator drones.
After twelve generations of lavish living at the expense of the rest of the world, it is understandable that citizens of the so-called developed countries have come to consider it quite normal. In fact, Americans expect it to become plusher in the future, increasingly chocked with techno gadgetry, whiz bang processed foodstuffs, automobiles, entertainments, inordinately large living spaces -- forever.
We've had plenty of encouragement, especially in recent times. Before our hyper monetized economy metastasized, things such as housing values went through the sky, and the cost of basics, food etc. went through the basement floor, compared to the rest of the world. The game got so cheap and fast that relative fundamental value went right out the window and hasn't been seen since. For example, it would be very difficult to make Americans understand that a loaf of bread or a dozen eggs have more inherent value than an iPhone. Yet, at ground zero of human species economics, where the only currency is the calorie, that is still true.
Such is the triumph of the money economy that nothing can be valued by any other measure, despite that nobody knows what money is worth at all these days. This is due in part to the international finance jerk-off, in which the world's governments print truckloads of worthless money, so they can loan it out. The idea here is that incoming repayment in some other, more valuable, currency will cover their own bad paper. In turn, the debtor nations print their own bogus money to repay the loans. So you have institutions loaning money they do not have to institutions unable to repay the loans. All this is based on the bullshit theory that tangible wealth is being created by the world's financial institutions, through interest on the debt. Money making money.
As my friend, physicist and political activist George Salzman writes,
"Everyone in these 'professional' institutions dealing in money lives a fundamentally dishonest life. Never mind 'regulating' interest rates," he says. "We must do away with interest, with the very idea of 'money making money'. We must recognize that what is termed 'Western Civilization' is in fact an anti-civilization, a global social structure of death and destruction. However, the charade of ever-increasing debt can be kept up only as long as the public remains ignorant. Once ecological limits have been reached the capitalist political game is up."
You can see why I love this guy.
Boomers and Doomers and XXL bloomers
Capitalism wouldn't be around today, at least not in its current pathogenic form, if it had not caught a couple of lucky breaks. The first of course, was the expansion of bloodsucking colonialism to give it transfusions of unearned wealth, enabling "investors" to profit by artificial means (death, oppression and slavery). But the biggest break was being driven to stratospheric heights by inordinate quantities of available hydrocarbon energy. Inordinate, but never the less finite. Consequently, the 100-year-long oil suckdown that put industrial countries in the tall cotton, now threatens to take back from subsequent beneficiary generation everything it gave. The Hummers, the golf courses, the big box stores, cruising at 35,000 feet over the Atlantic -- everything.
You'd never know that, to look around at Americans or Canadians, who have not the slightest qualms about living in that 3,500 square foot vinyl sided fuck box, if they can manage to make the mortgage nut, or unashamedly buying a quadruple X large Raiders Jersey because, hey, a guy's gotta eat, right? Why don't I deserve a nice ride, a swimming pool and a flat screen? I worked for it (sure you did buddy, your $12,000 Visa/MasterCard tab is proof of that).
The doomers and the peak oilers gag, and they call it American denial.
Personally, I think it is somewhat unfair to say that most Americans and Canadians are in denial. They simply don't have a fucking clue about what is really happening to them and their world. Everything they have been taught about working, money and "quality of life" constitutes the planet's greatest problem -- overshoot. Understanding this trashes our most basic assumptions, and requires a complete reversal in contemporary thought and practice about how we live in the world. When was the last time you saw any individual, much less an entire nation, do that?
Compounding our ignorance and naiveté are the officials and experts, politicians, media elites, and especially economists, who interpret the world for us and govern the course of things. The go-to guys. They don't know either. But they've got the lingo down.
Somehow or other, it all has to do with the economy, which none of us understands, despite round the clock media jabbering on the subject.
Somehow it has to do with this great big spring on Wall Street called "the market" that's gotta be kept wound up, and interest rates at something called The Fed, which have got to be kept smunched down. The industry of crystal gazing and hairball rubbing surrounding these entities is called economics.
In heaven, there are no jobs
The following may be old news to some who studied economics in college. However, I did not. And, for me at least, this gets at the heart of our dilemma (if dilemma is the right word for economic, environmental and species collapse). Here goes:
The human economy is made up of three parts: nature, work and money. But since nobody would pay people like Allen Greenspan or Milton Friedman millions of dollars if they talked just like the rest of us, economists and academics refer to these three parts as the primary, secondary and tertiary economies.
Of these, nature -- the world's ecosystems and natural capital -- is by far the most important. It comprises about three quarters of the total value of economic activity (Richard Costanza et al. 1997). To western world economists, nature -- when it is even give nature a thought -- is considered to be limitless.
The second part, work, is the labor required to produce goods and services from natural resources. Work creates real value through efficient use of both human and natural resource energy. A potato is just a potato until people sweating over belt lines and giant fryers turn it into Tater Tots.
The third economy, the tertiary economy, is the production and exchange of money. This includes anything that can be exchanged for money, whether it is gold, or mortgages bundled as securities, or derivatives. In short, any paperwork device that can be rigged up in such a fashion that money will stick to it. Feel free to take a wild-assed guess which of the three economies causes the most grief in this world.
To an economist, work -- the stuff that eats up at least a third of our earthly lives, is merely a "factor" called labor. Work is considered an unfortunate cost in creating added value. Added value, along with nature's resources, is the basis for all real world profits. Without labor, the money economy could not gin up on-paper wealth in its virtual economy. Somewhere, somebody's gotta do some real-world work, before bankers and investment brokers can go into their offices and pretend to work at "creating and managing wealth."
Paying the workers in society to produce real wealth costs money. Capitalists hate any sort of cost. It represents money that has somehow escaped their coffers. So when any behemoth corporation hands out thousands of pink slips on a Friday, Wall Street cheers and "the market" goes up. No ordinary mortal has ever seen "the market." But traders on the floor of 11 Wall Street, people who've deemed themselves more than mortal by virtue of their $110 Vanitas silk undershorts, assure us the market does exist. No tours of the New York Stock exchange are permitted, so we have to take their word for it.
In any case, in the money economy, eliminating costs, even if those costs happen to be feeding human beings, citizens of the empire, is sublime. That is why economists in the tertiary economy can declare a "jobless recovery" with a straight face. By their lights, the perfect recovery would necessarily be 100% jobless. Human costs of generating profit would be entirely eliminated.
Say what you will about the tertiary "money economy," but one thing is certain. It's virulent. Right now finance makes up 42% of GDP, and is rising. Traditionally that figure has been around 9%. Fifty eight percent of the economy is "services." When it comes to the service economy, most people think of fried chicken buckets and "customer service," call centers harassing debtors or selling credit cards. However, much of the so-called service economy consists of "services" sub-corporations and entities owned and operated by monopolies in communications, electronic access and energy. They are designed for the sole purpose of robbing the people incrementally. Borrow a microscope and read the back side your cable and electric bill. Billing you is a "service" for which you pay. So is the guy who cuts off your lights if you don't.
And manufacturing? Ten percent. Mostly big ticket items such as salad shooters, as near as I can tell.
What nature?
Still though, the foundation of the world, including our entire economic structure, is nature. This is clear to anyone who has ever, planted a garden, hiked in the woods, gone fishing or been gnawed on by chiggers. In vis est exordium quod terminus.
Yet, not one in a thousand economists takes nature into account. Nature has no place in contemporary economics, or the economic policy of today's industrial nations. Again, like the general American public, these economists are not in denial. They simply don't know it's there. Historically, nature has never been considered even momentarily because economists, like the public, never figured they would run out of it. With the Gulf oil "spill" at full throttle, the terrible destruction of nature is becoming obvious. But no economist who values his or her career wants to start figuring the cost of ecocide into pricing analysis. For god sake man, it's a cost!
With industrial society chewing the ass out of Mama Nature for three centuries, something had to give, and it has. Capitalists, however, remain unimpressed by global warming, or melting polar ice caps, or Southwestern desert armadillos showing up in Canada, or hurricanes getting bigger and more numerous every year. They are impressed by the potential dough in the so-called green economy. In fact, last night I watched an economist on CNN say that if the government had let the free market take care of the BP gulf catastrophe, it would not be the clusterfuck it is now. Now THAT might qualify as denial. In the mean time, anthropogenic ecocide and resource depletion, coupled with the pressures of six billion mouths and asses across the globe, have started to produce -- surprise surprise, Sheriff Taylor! -- very real effects on world economies. (How could they not?) So far though, in the simplistic see-spot-run American mind, it's all about dead pelicans and oiled up hotel beaches.
Monkey with the paper
When the U.S., and then the world's money economy started to crumble, the first thing capitalist economists could think of to do was to monkey with the paper. That's all they knew how to do. It was unthinkable that the tertiary virtual economy, that great backroom fraud of debt manipulation and fiat money, might have finally reached the limits of the material earth to support. That the money economy's gaming of workers and Mother Nature might itself might be the problem never occurred to the world's economic movers and shakers. It still hasn't. (Except for Chavez, Morales, Castro and Lula). Jobs disappeared, homes went to foreclosure, and personal debt was at staggering all time highs. America's working folks were taking it square in the face. Not that economists or financial kingpins cared much one way or the other. In the capitalist financial world, everything is an opportunity. Cancer? Build cancer hospital chains. Pollution? Sell pollution credits. The country gone bankrupt?
"Nothing to do," cried the mad hatters of finance, "but print more money, and give gobs of cash to the banks! Yes, yes, yes! Borrow astronomical amounts of the stuff and bribe every fat cat financial corporation up and down The Street!" All of which came down to creating more debt for the common people to work off. They seem willing enough to do it too -- if only they had jobs.
Along with the EU, Japan and the rest of the industrial world, the US continues to flood the market with cheap credit. That would be hunky dory, if was actually wealth for anybody but a banker. The real problems are debt and fraud, and tripling the debt in order to cover up the fraud. And pretending there no natural costs of our actions, that we do not have to rob the natural world to crank up the money world through debt.
No matter what economists tell us abut getting the credit industry moving again, papering over debt with more debt will not pollinate our food crops when the last honeybee is dead. I suggest that we put the economists out there in the fields, hand-pollinating crops like they do in China. They seem to know all about the subject, and have placed a monetary value of $12 billion on the pollination accomplished by bees in the US. Can you imagine the fucking arrogance? All bees do is make our fruit and vegetable supply possible. Anyway, if we cannot use the economists for pollinators (odds are they are too damned whacked to do that job), we could also stuff them down the blowhole of the Deepwater Horizon spill. For the first time in history, economists would be visibly useful.
Speaking of China: Since there is no way to pick up the turd of American capitalism by the clean end, much less polish it, American economists have pointed east, and set up a yow-yow about China as "the emerging giant." The "next global industrial superpower." Many Chinese are willing to ride their bicycles 10 miles to work through poisonous yellow-green air, and others in the "emerging middle class" are willing to wade into debt up to their nipples; this is offered as evidence of the viability of industrial capitalism. All it proves is that governments and economists never learn. In the quest of getting something for nothing, China follows the previous fools right into the industrial smog and off the cliff.
Sumthin' fer nuthin'
The main feature of capitalism is the seductive assertion that you can get something for nothing in this world. That you can manufacture wealth through money manipulation, and that it is OK to steal and hold captive the people's medium of exchange, then charge them out the ass for access. That you can do so with a clear conscience. Which you can, if you are the kind of sleazy prick who has inherited or stolen enough wealth to get into the game.
Even so, to keep a rigged game going, you must keep the suckers believing they can, and eventually will, benefit from the game. Also, that it is the only game in town. Legitimizing public theft means indoctrinating the public with all sorts of market mystique and hocus-pocus. They must be convinced there is is such a thing as an "investment" for the average schmuck drawing a paycheck (and there is, sort of, between the crashes and the bubbles). It requires a unified economic rationale for government and industry policies, and it is the economist's job to pump out this rationale. Historically, they have seldom hesitated to get down on their knees and do so.
It ain't robbery, it's a business cycle
Capitalism is about one thing: aggregating the surplus productive value of the public for private interests. As we have said, it is about creating state sanctioned "investments" for the workers who produce the real wealth. Things like home "ownership" and mortgages, or stock investments and funds to absorb their retirement savings. That crushing 30-year mortgage with two refis is an investment. So is that 401K melting like a snow cone the beach.
As the people's wealth accumulates, it is steadily siphoned off by government and elite private forces. From time to time, it is openly plundered for their benefit by way of various bubbles, depressions or recessions and other forms of theft passed off as unavoidable acts of nature/god. These periodic raids and draw downs of the people's wealth are attributed to "business cycles." Past periodic raids and thefts are heralded as being proof of the rationale. "See folks, it comes and goes, so it's a cycle!" Economic raids and busts become "market adjustments." Public blackmail and plundering through bailouts become a "necessary rescue packages." Giveaways to corporations under the guise of public works and creating employment become "stimulus." The chief responsibility of economists is to name things in accordance with government and corporate interests. The function of the public is to acquire debt and maintain "consumer confidence." When the public staggers to its feet again and manages to carry more debt, buy more poker chips on credit to play again, it's called a recovery. They are back in the game.
Dealer, hit me with two more cards, I feel lucky.
Does it hurt yet?
To anyone who is paying attention, things look doomed. Fortunately for American capitalism, nobody is paying attention. They never have. Even given the unemployment numbers, foreclosures and bankruptcies, most Americans are still not feeling enough pain yet to demand change. Not that they will. Demand change, I mean. We haven't the slightest idea of any other options, outside those provided by the corporate managed state. So in a chorus well-schooled by the media the public demands "reform," of the present system, the systemic pathogenic system based on exploitation of the many by the few, the one presently eating our society from the inside out. How do you reform that?
We are clueless, and the state sees to it that we stay that way. Take the price of gas, about which Americans are obsessive. In one way or another, petroleum is the subject of much news coverage, nearly as much as pissing matches between egomaniacs in Hollywood or o Capitol Hill. So one might think that by now Americans would have a realistic grasp of the petroleum business and things like oil and gasoline prices.
Hah, think again! This is America, this is Strawberry Fields, where nothing is real and the skies are not cloudy all day. We're stewed in a consumer hallucination called the American Dream and riding a digital virtual money economy nobody can even prove exists.
Is there an economy out there or not?
If we decide to believe the money economy still exists, and that debt is indeed wealth, then we damned sure know where to go looking for the wealth. Globally, forty percent of it is in the paws of the wealthiest one percent. Nearly all of that one percent are connected to the largest and richest corporations. Just before the economy blew out, these elites held slightly less than $80 trillion. After the blowout/bailout, their combined investment wealth was estimated at a little over $83 trillion. To give some idea, this is four years of the gross output of all the human beings on earth. It is only logical that these elites say the only way to revive the economy, which to them consists entirely of the money economy, out is to continue to borrow money from them.
However, the unasked question still hangs in the air: Does the money economy even exist anymore? Is it still there? (was it ever?) Or are we all blindly going through the motions because:
A: we do not understand that, for all practical historical purposes, it's over;
B: we do not know how to do anything else so we keep dancing with the corpse of the hyper-capitalist economy;
C: the right calamity has not come down the pike to knock us loose from the spell of the dance, or
D: we're so friggin brain dead, commodities engorged and internally colonized by capitalist industrialism that nobody cares, and therefore it no longer matters.This is multiple choice, and it counts ten points toward survival, come the collapse.
If there is no economy left, what the hell are we all participating in? A mirage? The zombie ball? The short answer is: Because the economy is a belief system, you are participating in whatever you believe you are. Personally, I believe we are participating in a modern extension of the feudal system, with bankers as the new feudal barons and credit demographics as their turf. But then, I drink and take drugs. Whatever it is, the money economy is the only game in town until the collapse, after which chickens and firewood may become the national currency. The Masai use cattle don't they?
At the same time, even dumb people are starting to feel an undefined fear in their bones. When I was back in the States last month, an old high school chum, a sluggard who seldom has forward thought beyond the next beer and Lotto scratch ticket, confides in me:
"Joey, I can't shake the feeling that something big and awful is going to happen. And by awful I mean awful."
"Happen to what?"
"Money, work, our country. Shit, I dunno."
"Probably all three," I opined. "Plus the environment."
"Cheerful fuck, ain't ya?"
"That's what they pay me for, Bubba."Some in the herd are starting to feel a big chill in the air, the first winds of the approaching storm. Yes, something is happening, and you don't know what it is, dooooo yew, Mistah Jones?
However, the most adept economists and other court sorcerers are going along as if nothing too unusual is happening -- calling it a recession, or more recently a double-dip recession (don't you love these turd-balls, making it sound as harmless as an ice cream cone -- gimme a double dip please!) or even a depression. But no matter what it is, they smugly assure us, there is nothing happening that the world has never seen before. Including the insider scams that ignited the catastrophe. It's just a matter of size. Extent.
OK, it's a matter of scale. Like the Gulf oil spill. We've seen spills before, just not this big. But over the next couple of years as the poison crud circulates the world's oceans, the Deep Horizon spill will prove to be a global game changer, whether economists and court wizards acknowledge it or don't. Anything of global scale, whether it is in finance, energy, foreign aid, world health or war contracting, is accompanied by unimaginable complexity. That makes it perfect cover for criminal activity. Particularly finance, where you are always close to the money.
Jim Kunstler, never at a loss to describe a ludicrous situation, sums up the paper economy's engineering of our collapse nicely:
"Wall Street -- in particular the biggest 'banks' -- packaged up and sold enough swindles to unwind 2500 years of western civilization. You simply cannot imagine the amount of bad financial paper out there right now in every vault and portfolio on the planet … the people fabricating things like synthetic collateralized debt obligations (CDOs) had no idea what the fuck they were doing -- besides deliberately creating documents that nobody would ever understand, that would never be unraveled by teams of law clerks ... and were guaranteed to place in jeopardy every operation of the world economy above the barter level."
Phew!
So, for $5,000 and an all expense paid trip to Rio: What does a good capitalist do after having stolen all there is to steal from the living, then stolen the nation's future wealth from the unborn through debt both public and private?
Tick tock, tick tock. The wheel spins.
Blaaaaaamp!
"Your answer please."
"A good capitalist would "invest" his haul in some other racket, some other scam in the money economy."
"Vanna, a pie in the kisser for this guy, please."The problem with the answer is that economy is now toxed out. Radioactive. Crawling with paper vermin and all manner of vermin, especially toxic derivatives -- about $1.4 quadrillion worth (even as we are still trying to get used to hearing the term trillions), according to the Bank of National Settlements. That is 1,000 trillion, or $190 for every human being on the planet. There is not now, and never will be, enough wealth to cover that puppy -- because there is not enough natural world under the puppy to create it. Not the way capitalism creates wealth.
Defenders of capitalism who say it can and must be saved must also admit that there is not enough money left to work with, to invest. There is only debt. Oh, yeah, we forgot; debt is wealth to a banker. Well then, all we gotta do is collect $190 per head from people in Sudan and Haiti and the rest of the planet.
Naw, that's too hard. Elite capital's best bet is a good old fashioned money raid on the serfs; create another bubble that will buy enough time before it pops to make the already rich a few billion richer. To that end, the G-8 is blowing one last bounder out there in the hyperspace where the economy s alleged to be surviving. Naturally, they are doing it in order to "save the world economy." The tough part is figuring out what to base the next bubble on.
May I suggest Soylent Green?
Under God, with fees and compound interest for all
From the outset, capitalism was always about the theft of the people's sustenance. It was bound to lead to the ultimate theft -- the final looting of the source of their sustenance -- nature. Now that capitalism has eaten its own seed corn, the show is just about over, with the nastiest scenes yet to play out around water, carbon energy (or anything that expends energy), soil and oxygen. For the near future however, it will continue to play out around money.
As the economy slowly implodes, money will become more volatile stuff than it already is. The value and availability of money is sure to fluctuate wildly. Most people don't have the luxury of escaping the money economy, so they will be held hostage and milked hard again by the same people who just drained them in the bailouts. As usual, the government will be right there to see that everybody plays by the rules. Those who have always benefited by capitalism's rules will benefit more. That cadre of "money professionals" which holds captive the nation's money supply, and runs things according to the rules of money, can never lose money. It writes the rules. And rewrites them when it suits the money elite's interests. Capitalism, the Christian god, democracy, the Constitution.
It's all one ball of wax, one set of rules in the American national psyche. Thus, the money masters behind the curtain will write The New Rules, the new tablets of supreme law, and call them Reform. There will be rejoicing that "the will of the people" has once again moved upon the land, and that the democracy's scripture has once again been delivered by the unseen hand of God.
Runaway Recession...to Depression
How Did Happen, How Bad Will It Get?
By CARL FINAMORE
In the not too distant past, bankers, financiers and investors could do no wrong. They were the wizards of Wall Street, ushering in a new era of economic expansion. But by around 2006, it became very clear their magic was just an illusion. The only thing real was millions of homeowners defaulting, millions of pensioners watching their 401Ks evaporate and millions of workers losing their jobs.
Investors and bankers didn’t fare nearly as bad. They seemed to just shut down their old hustle, moved on down the road and reopened for business as if nothing had happened.
Billionaire Warren Buffet’s two rules to investors were in full force and effect and backed up by the U.S. Treasury: “Number one rule is to never lose money and number two rule is to never forget rule number one.”
In fact, big business pretty much made up its own rules during the last three decades. Taxes for corporations and the wealthiest were continually lowered and regulatory obstacles to domestic and offshore investments were eliminated. At the same time, conversely, wages for the majority remained stagnant since 1973.
Not surprisingly, a dramatic shift in wealth occurred during this time. Forbes Magazine lists the 400 wealthiest Americans with a total net worth of $1.27 trillion. Their poorer cousins, the top one percent, control 40% of our wealth if housing alone is excluded.
On the other hand, the majority is being squeezed more and more and purse strings tightened. Simply put, the average consumer has been losing ground in the last thirty years.
Extensions of credit to family households concealed this decline and kept the economy going until debt burdens finally led to the current wave of defaults, especially in the housing market where speculators drove prices to unprecedented levels.
Too much money in the hands of too few fundamentally led to the crisis, according to Jack Rasmus, a former elected union official turned college professor and writer, whose latest book, Epic Recession, Prelude to Global Depression, has just been released by Pluto Press.
“A massive amount of liquidity in the hands” of “wealthy individuals, their various investing institutions like hedge funds, private equity firms, private banks” and corporations have created over the last three decades a “global money parade…that sloshes around the global economy in pursuit of the greatest short-term returns, which in recent years have become increasingly speculative in nature.”
Rasmus cites 2006 statistics that reveal both the relative value of global financial assets and their infinite variety such as cash, stocks, bonds, options, certificates of deposit, commercial paper, money funds, foreign currency, precious metals, commodity futures, derivatives, redeemable insurance contracts, accounting receivables and more.
The endless, toxic brew of financial cocktails outstripped the world’s total production of commodities by a factor of three. In the United States, it was worse, the enormously lucrative financial sector accounted for four times the Gross Domestic Product (GDP), a measure of all the goods and services produced in this country.
Numerous investment schemes were concocted to attract this excess glut of global capital that saw more profit in paper transactions than in production of real goods and services. As demand for speculative ventures multiplied, so did the stock market.
The Dow Jones jumped an incredible 8000 points from 1994-2000, the largest leap in its history. All seemed to be going good, too good as it turned out.
Little of real, hard physical value was being produced as the global economy was awash with trillions of dollars in the pockets of the wealthiest among us, all swimming toward the next big speculative venture.
Cracks began to appear during the Asian currency crisis and the Dot.com bust of the last decade, creating what billionaire financier George Soros described as a “longer-term super bubble.” But, thinking they held all the cards, the Federal Reserve Bank threw more chips into the pot by dramatically lowering interest rates.
The Fed often worked this way by making sure the money faucet flowed anytime Wall Street got a little thirsty.
With more money on the table, banks in the first years of this decade actually aggressively pursued home buyers just to keep the casino doors open. More home buyers meant higher home prices meaning even more eager purchasers of mortgage-bundled investments. With new blood in the water, the feeding frenzy by speculators continued.
Thus, warning tremors were ignored as profits continued to flow. Few recognized or wanted to admit that the economy was built on shallow landfill unprepared for the next “Big One” to hit.
However, when consumers could no longer afford the skyrocketing price of a home, the hot item topping the menu of speculators the last few years, the housing market finally collapsed. The resulting sag in home purchases in 2006 was compounded by the growing number of defaults, thus triggering an enormous free fall of the fragile financial structures that depended so heavily on the fantasy that home prices would steadily and endlessly increase.
How did this Happen?
New financial packages were developed in the U.S. housing sector that profited enormously as each mortgage of the original physical asset, a home in this example, was bundled together with assorted other stock portfolios, hedge funds and securities that was passed along a chain of sellers and buyers. Each investor profited from every subsequent exchange even as the paper trail extended far beyond the initial real, material asset of the home.
Speculators of home mortgages both produced and greatly benefited from the surge in housing prices. In fact, higher home prices were essential to maintaining the profitable sale and resale of these bundled mortgage investments to new investors climbing on board.
As is the nature of Wall Street thrill seekers, no one believed the ride would end.
In fact, to keep the wheel of fortune turning, lenders began desperately and aggressively offering no interest home loans to credit-deficient working people who subsequently defaulted when the Federal Reserve Bank began raising their credit line from a floor of one percent to over six percent after 2003.
Hundreds of thousands of defaulting families, often portrayed by Wall Street apologists as causing the deep recession, are really the victims and pawns of these shady pyramid schemes.
The whole scheme depended on housing prices rising and this worked for awhile as speculative demand for housing derivatives increased. But, at some point, the material asset of a home, for example, must actually correspond to a more real set of values.
Rasmus makes the point that supply and demand restraints do not equally apply to speculative ventures. In fact, it is demand that is the driving force there and as demand grew for the sale and resale multiple times of home mortgages to investment firms, for example, so did the price of each subsequent transaction escalate. Profits and fees were added along each step, thus, also driving higher the price of homes.
The price of the real, physical entity of a home, unlike its various speculative paper derivative counterparts, however, is affected by market supply and demand as Rasmus explains. So, when home prices outdistanced the ability of cash-strapped and debt-ridden consumers, a cascade of defaults resulted, adding to the housing glut and leading to dramatic declines in home prices.
The boom finally went bust. But Buffet and the other billionaires are still smiling. They either profited enormously in those years or were bailed out by the Bush and Obama administrations that subsidized several trillion dollars of losses of the 19 largest banks and investment firms in the United States.
But not one dollar was extended by the government to homeowners directly. In effect, nothing has been done to solve the underlying problem which is that working families have become chronic under consumers. The problem is acerbated since being deprived of credit which was the one life line to compensate for lower wages and higher health care costs.
The author does not, therefore, exclude the economy descending even further. The current situation is nothing more than a holding pattern, a stalemate that only temporarily avoids descent into depression. The fragile banking system was beefed up but little has been done to rebuild the deteriorating condition of worker consumers in this country and no recovery is possible without this being addressed.
Depression of Recovery?
Not surprisingly, the former labor organizer offers a political theme in his final chapter recommending solutions. In it, he expresses more confidence in a rejuvenated union movement that champions working class economic and social reforms than he does in the politicians in Washington who have amply demonstrated their class bias favoring banks and investors.
The book contains descriptions of several other epic recessions in our past such as in 1907-1914 and in1929-1931 where little or no government spending on jobs led to what the author calls severe “consumption fragility,” setting the stage for long-term stagnation on the road towards a full blown depression.
These economic catastrophes were only averted by massive government spending leading up to WW1 and WW11.
For Rasmus, turning the economy around today means learning from these experiences by, first, closing the widening gap in wealth between the top and the bottom and by, secondly, investing that surplus directly into productive sectors of the economy.
It starts with substantial tax reform of capital income.
For example, the huge state deficits of California and New York could be wiped out today by applying a one percent tax on the top one percent of their wealthiest residents. Many European countries do this.
With a correct tax program, there would be no national, state or municipal deficits. In fact, there would be a tax surplus resulting from more working people employed and earning a decent living.
It would shift the side-tracked political discussion in this country away from using existing deficits, mostly induced by war spending and bank bailouts, as an excuse to halt government spending on jobs and social programs.
“These are key political points,” Rasmus told me, “that must be raised and discussed more, otherwise folks will think the only alternative is to cut the deficit which means immensely more pain for the working class and, inevitably, a descent into depression”
His other solutions include nationalization of key banking transactions to provide no-interest home loans, the same benefit provided to bailed-out banks and investment firms.
The fraudulent nature of the economic boom of the last decade has been exposed.
The book explains how it happened, how previous recessions and depressions arose and abated, how dramatic structural changes of the economy must go well beyond reinstituting needed banking regulations and how the government should acquire funds through a fairer tax system and then spend these trillions of dollars for social programs and jobs to upright a thoroughly imbalanced economy tilted toward the super rich.
The reader is conveniently provided three distinct book sections which can each be read independently: a discussion of broad economic theory, a description of U.S. economic history and an analysis of the causes and solutions to the current epic recession. The introduction gives an excellent overview of all three of these chapters.
Thus, the author is the exception to George Bernard Shaw’s observation that “if all economists were laid end to end, they would not reach a conclusion.” On the contrary, Professor Rasmus has plenty of opinions, all fact-based, and plenty of conclusions, all well-documented.
But the author does face the obstacle wittily noted by another famous authority, the late liberal American economist John Kenneth Galbraith who once wrote that “economics is a subject…resonant with boredom. On few topics is an American audience so practiced in turning off its ears and minds. And none can say the response is ill advised.”
Students, workers, social activists, and those who simply want to examine more closely the collapsing world economy dramatically affecting us all, would be well advised to plunge ahead. To be sure, this is not a happy face book that can be read leisurely with your Ipod blasting away. This is a scholarly work on a serious subject that deserves to be studied thoughtfully.
This does not mean it is too difficult to understand.
On the contrary, the book shatters the mystique of economics. Human decisions, not Adam Smith’s legendary “invisible hand,” have brought us to the brink of disaster. If you want to understand better the world around us, better understand the current turmoil engulfing us and better understand and even anticipate future events that lie ahead for us, Epic Recession belongs on your bookshelf.
By CARL FINAMORE
In the not too distant past, bankers, financiers and investors could do no wrong. They were the wizards of Wall Street, ushering in a new era of economic expansion. But by around 2006, it became very clear their magic was just an illusion. The only thing real was millions of homeowners defaulting, millions of pensioners watching their 401Ks evaporate and millions of workers losing their jobs.
Investors and bankers didn’t fare nearly as bad. They seemed to just shut down their old hustle, moved on down the road and reopened for business as if nothing had happened.
Billionaire Warren Buffet’s two rules to investors were in full force and effect and backed up by the U.S. Treasury: “Number one rule is to never lose money and number two rule is to never forget rule number one.”
In fact, big business pretty much made up its own rules during the last three decades. Taxes for corporations and the wealthiest were continually lowered and regulatory obstacles to domestic and offshore investments were eliminated. At the same time, conversely, wages for the majority remained stagnant since 1973.
Not surprisingly, a dramatic shift in wealth occurred during this time. Forbes Magazine lists the 400 wealthiest Americans with a total net worth of $1.27 trillion. Their poorer cousins, the top one percent, control 40% of our wealth if housing alone is excluded.
On the other hand, the majority is being squeezed more and more and purse strings tightened. Simply put, the average consumer has been losing ground in the last thirty years.
Extensions of credit to family households concealed this decline and kept the economy going until debt burdens finally led to the current wave of defaults, especially in the housing market where speculators drove prices to unprecedented levels.
Too much money in the hands of too few fundamentally led to the crisis, according to Jack Rasmus, a former elected union official turned college professor and writer, whose latest book, Epic Recession, Prelude to Global Depression, has just been released by Pluto Press.
“A massive amount of liquidity in the hands” of “wealthy individuals, their various investing institutions like hedge funds, private equity firms, private banks” and corporations have created over the last three decades a “global money parade…that sloshes around the global economy in pursuit of the greatest short-term returns, which in recent years have become increasingly speculative in nature.”
Rasmus cites 2006 statistics that reveal both the relative value of global financial assets and their infinite variety such as cash, stocks, bonds, options, certificates of deposit, commercial paper, money funds, foreign currency, precious metals, commodity futures, derivatives, redeemable insurance contracts, accounting receivables and more.
The endless, toxic brew of financial cocktails outstripped the world’s total production of commodities by a factor of three. In the United States, it was worse, the enormously lucrative financial sector accounted for four times the Gross Domestic Product (GDP), a measure of all the goods and services produced in this country.
Numerous investment schemes were concocted to attract this excess glut of global capital that saw more profit in paper transactions than in production of real goods and services. As demand for speculative ventures multiplied, so did the stock market.
The Dow Jones jumped an incredible 8000 points from 1994-2000, the largest leap in its history. All seemed to be going good, too good as it turned out.
Little of real, hard physical value was being produced as the global economy was awash with trillions of dollars in the pockets of the wealthiest among us, all swimming toward the next big speculative venture.
Cracks began to appear during the Asian currency crisis and the Dot.com bust of the last decade, creating what billionaire financier George Soros described as a “longer-term super bubble.” But, thinking they held all the cards, the Federal Reserve Bank threw more chips into the pot by dramatically lowering interest rates.
The Fed often worked this way by making sure the money faucet flowed anytime Wall Street got a little thirsty.
With more money on the table, banks in the first years of this decade actually aggressively pursued home buyers just to keep the casino doors open. More home buyers meant higher home prices meaning even more eager purchasers of mortgage-bundled investments. With new blood in the water, the feeding frenzy by speculators continued.
Thus, warning tremors were ignored as profits continued to flow. Few recognized or wanted to admit that the economy was built on shallow landfill unprepared for the next “Big One” to hit.
However, when consumers could no longer afford the skyrocketing price of a home, the hot item topping the menu of speculators the last few years, the housing market finally collapsed. The resulting sag in home purchases in 2006 was compounded by the growing number of defaults, thus triggering an enormous free fall of the fragile financial structures that depended so heavily on the fantasy that home prices would steadily and endlessly increase.
How did this Happen?
New financial packages were developed in the U.S. housing sector that profited enormously as each mortgage of the original physical asset, a home in this example, was bundled together with assorted other stock portfolios, hedge funds and securities that was passed along a chain of sellers and buyers. Each investor profited from every subsequent exchange even as the paper trail extended far beyond the initial real, material asset of the home.
Speculators of home mortgages both produced and greatly benefited from the surge in housing prices. In fact, higher home prices were essential to maintaining the profitable sale and resale of these bundled mortgage investments to new investors climbing on board.
As is the nature of Wall Street thrill seekers, no one believed the ride would end.
In fact, to keep the wheel of fortune turning, lenders began desperately and aggressively offering no interest home loans to credit-deficient working people who subsequently defaulted when the Federal Reserve Bank began raising their credit line from a floor of one percent to over six percent after 2003.
Hundreds of thousands of defaulting families, often portrayed by Wall Street apologists as causing the deep recession, are really the victims and pawns of these shady pyramid schemes.
The whole scheme depended on housing prices rising and this worked for awhile as speculative demand for housing derivatives increased. But, at some point, the material asset of a home, for example, must actually correspond to a more real set of values.
Rasmus makes the point that supply and demand restraints do not equally apply to speculative ventures. In fact, it is demand that is the driving force there and as demand grew for the sale and resale multiple times of home mortgages to investment firms, for example, so did the price of each subsequent transaction escalate. Profits and fees were added along each step, thus, also driving higher the price of homes.
The price of the real, physical entity of a home, unlike its various speculative paper derivative counterparts, however, is affected by market supply and demand as Rasmus explains. So, when home prices outdistanced the ability of cash-strapped and debt-ridden consumers, a cascade of defaults resulted, adding to the housing glut and leading to dramatic declines in home prices.
The boom finally went bust. But Buffet and the other billionaires are still smiling. They either profited enormously in those years or were bailed out by the Bush and Obama administrations that subsidized several trillion dollars of losses of the 19 largest banks and investment firms in the United States.
But not one dollar was extended by the government to homeowners directly. In effect, nothing has been done to solve the underlying problem which is that working families have become chronic under consumers. The problem is acerbated since being deprived of credit which was the one life line to compensate for lower wages and higher health care costs.
The author does not, therefore, exclude the economy descending even further. The current situation is nothing more than a holding pattern, a stalemate that only temporarily avoids descent into depression. The fragile banking system was beefed up but little has been done to rebuild the deteriorating condition of worker consumers in this country and no recovery is possible without this being addressed.
Depression of Recovery?
Not surprisingly, the former labor organizer offers a political theme in his final chapter recommending solutions. In it, he expresses more confidence in a rejuvenated union movement that champions working class economic and social reforms than he does in the politicians in Washington who have amply demonstrated their class bias favoring banks and investors.
The book contains descriptions of several other epic recessions in our past such as in 1907-1914 and in1929-1931 where little or no government spending on jobs led to what the author calls severe “consumption fragility,” setting the stage for long-term stagnation on the road towards a full blown depression.
These economic catastrophes were only averted by massive government spending leading up to WW1 and WW11.
For Rasmus, turning the economy around today means learning from these experiences by, first, closing the widening gap in wealth between the top and the bottom and by, secondly, investing that surplus directly into productive sectors of the economy.
It starts with substantial tax reform of capital income.
For example, the huge state deficits of California and New York could be wiped out today by applying a one percent tax on the top one percent of their wealthiest residents. Many European countries do this.
With a correct tax program, there would be no national, state or municipal deficits. In fact, there would be a tax surplus resulting from more working people employed and earning a decent living.
It would shift the side-tracked political discussion in this country away from using existing deficits, mostly induced by war spending and bank bailouts, as an excuse to halt government spending on jobs and social programs.
“These are key political points,” Rasmus told me, “that must be raised and discussed more, otherwise folks will think the only alternative is to cut the deficit which means immensely more pain for the working class and, inevitably, a descent into depression”
His other solutions include nationalization of key banking transactions to provide no-interest home loans, the same benefit provided to bailed-out banks and investment firms.
The fraudulent nature of the economic boom of the last decade has been exposed.
The book explains how it happened, how previous recessions and depressions arose and abated, how dramatic structural changes of the economy must go well beyond reinstituting needed banking regulations and how the government should acquire funds through a fairer tax system and then spend these trillions of dollars for social programs and jobs to upright a thoroughly imbalanced economy tilted toward the super rich.
The reader is conveniently provided three distinct book sections which can each be read independently: a discussion of broad economic theory, a description of U.S. economic history and an analysis of the causes and solutions to the current epic recession. The introduction gives an excellent overview of all three of these chapters.
Thus, the author is the exception to George Bernard Shaw’s observation that “if all economists were laid end to end, they would not reach a conclusion.” On the contrary, Professor Rasmus has plenty of opinions, all fact-based, and plenty of conclusions, all well-documented.
But the author does face the obstacle wittily noted by another famous authority, the late liberal American economist John Kenneth Galbraith who once wrote that “economics is a subject…resonant with boredom. On few topics is an American audience so practiced in turning off its ears and minds. And none can say the response is ill advised.”
Students, workers, social activists, and those who simply want to examine more closely the collapsing world economy dramatically affecting us all, would be well advised to plunge ahead. To be sure, this is not a happy face book that can be read leisurely with your Ipod blasting away. This is a scholarly work on a serious subject that deserves to be studied thoughtfully.
This does not mean it is too difficult to understand.
On the contrary, the book shatters the mystique of economics. Human decisions, not Adam Smith’s legendary “invisible hand,” have brought us to the brink of disaster. If you want to understand better the world around us, better understand the current turmoil engulfing us and better understand and even anticipate future events that lie ahead for us, Epic Recession belongs on your bookshelf.
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