Companies pull hard in pricing tug-of-war

By Alexander Smith – Fri Jan 28, 2011

LONDON (Reuters) – Fretful central bankers and hard-pressed consumers hoping companies will swallow rising input costs look set to be disappointed as evidence grows that prices will increase in coming months.

From a superjumbo jet plane to the ubiquitous Big Mac, manufacturers around the globe are plotting price rises to offset higher costs and claw back ground lost in the recession.

Take McDonald's Corp, the world's biggest restaurant chain, which this week said it would charge more for some menus to help offset expected rises in the 10 commodities that make up around 75 percent of the cost of preparing its food.

Any price rises come against the backdrop of a mixed global inflation outlook. According to the University of Michigan consumer survey, the one-year expectation is for inflation of 3.3 percent. That's the highest level registered by the survey since the third quarter of 2008.

McDonald's reckons its costs are forecast to rise 2 to 2.5 percent in the United States and 3.5 to 4.5 percent in Europe, but hasn't yet put a figure on how much it will raise prices by.

Meanwhile, European planemaker Airbus said earlier this month it was lifting its list prices by an average 4.4 percent and the cost of a A380 superjumbo by an extra 4 percent.

That may not cause so much pain to a growing airline in India, where inflation is around 8 percent and the rupee has appreciated against the euro and dollar. But such increases will hurt a European airline struggling with higher fuel costs and limited ability to raise its own ticket prices.

Some prices have already been marked up in response to rising commodity prices and will be factored into the inflation figures which are giving central banks such a headache.

McDonald's, for instance, raised prices in China last year to offset a spike in commodity costs and in Britain this year to cover a value-added tax hike.

Companies pushing through increases are pointing a finger at raw material costs. A rise in rubber prices drove Italy's Pirelli to announce last week higher tire prices in all European, Middle East, African and Asia-Pacific markets.

The March price rises are 3 percent for car and SUV tires and 7 percent for both heavy and light industrial tires.

Swiss chocolate group Lindt is raising its prices by about 1 percent next month and is not discounting a further rise as problems in Ivory Coast drive the price of cocoa higher.

"Naturally we cannot completely rule out a price increase on our products if the cost of cocoa beans rises significantly," a Lindt representative said this week.

Other sectors look set to follow suit. Goldman Sachs said in a recent research note that U.S. retailers could also begin raising prices as early as next month, and sector analysts expect to see an effect on gross margins by the second half of 2011.

LESS IS MORE

Manufacturing companies have other means of dealing with higher costs for raw materials from grains, cotton, rubber, cocoa and metals to energy. Many responded to the 2009 downturn by turning the screws on their suppliers, forcing them to take the pain.

That looks likely to continue as the likes of McDonald's use size and reach to exert their relative pricing power.

Food retailers and restaurants can also resort to shrinking portion sizes. That way they can hold headline prices by giving customers less, but for the same price as before.

But squeezing suppliers and other tricks will never be enough.

Barclays Capital argues raising prices is one of the ways that European corporates should be able to continue improving their profit margins this year. They will also depend on strong developing market growth, high asset turnover thanks to restructuring, greater productivity and restrained labor costs.
It's not all one-way traffic on pricing. Not all companies are in position to force through rises. Some of Europe's budget clothing retailers are likely to take a hit to profit margins rather than hike prices and risk seeing thrifty customers head for the exits.

For chains like Sweden's Hennes & Mauritz and Britain's Primark, which have gained market share from more expensive rivals during the economic downturn, that is likely to mean short-term pain.

TIME BOMB

In the luxury sector, consumers seem able and willing to pay whatever it takes to sport the latest styles. Asian appetite is strong and players are rushing new stores to meet demand.

Companies such as Swiss watchmaker Swatch Group are not shy about passing on the extra costs of gold, other precious metals and jewels.

Swatch, which also owns higher-end brands such as Breguet, Blancpain and Omega, says it will increase prices and improve its manufacturing processes to combat a strong Swiss franc and higher gold prices.
The same goes for jewelers and watchmakers Cartier, Montblanc and Audemars Piguet which have also signaled they are preparing for price increases this year.

"We will certainly adapt prices for certain brands. We have to do it," Swatch CEO Nick Hayek said, adding it was easier to raise prices for watches at the top end.

Enough is enough, says IMF as spending spree revives US economy

(Doesn't anyone else sort of feel like we're missing out? The US economy has bounced back from the Great Recession, yet the only ones reaping any benefits are the corporations and their executives, not their employees, not the 25 million unemployed Americans, not the states, not the cities, not even the federal government. But those corporations are sitting on trillions of dollars due mostly to financial bailouts, and we the people continue to suffer. That's some ol' bullshit, man...--jef)

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Obama warned that America's borrowing is getting out of hand – while Cameron and Osborne praised for deficit reduction plan

By Sean O’Grady, Economics Editor
Saturday, 29 January 2011

Driven by an unprecedented mix of tax cuts, public spending increases, low interest rates and the direct injection of money, the American economy expanded by 0.8 per cent in the last three months of 2010, an annualised rate of 3.2 per cent. But America has been given a stern warning by the International Monetary Fund to rein in its borrowings.

The IMF also offered general support to the British Government's plans to cut spending and borrowing. Speaking at the World Economic Forum in Davos, the Prime Minister David Cameron reiterated the Coalition's determination: "It's going to be tough – but we must see it through.

"The scale of the task is immense, so we need to be bold in order to build this economy of the future. The British people know these things. They understand there are no shortcuts to a better future."

The Chancellor, George Osborne, added that the nation faced a "particularly acute" challenge and a slow recovery: "Recoveries from this kind of debt-fuelled boom and bust tend to be slower and more protracted than those from other kinds of recession."

The Shadow Chancellor, Ed Balls, has called on ministers to rethink their "reckless" plans.

Unlike in the UK – where a shock contraction of 0.5 per cent in the fourth quarter was reported earlier this week – America is enjoying accelerated growth, up from an annualised rate of 2.6 per cent in the third quarter.

Speaking in Davos, the US Treasury Secretary, Tim Geithner, said: "There's much more confidence now that we've got a sustainable expansion." However, he cautioned; "It's not a boom. It's not an expansion that's going to offer a rapid decline in unemployment."

However, doubts persist about whether the current pace of US expansion is sustainable, and her $10trillion national debt. As in the UK, America's fiscal deficit this year will run at about 10 per cent of national income.

Launching the Fund's latest Fiscal Monitor, designed to help police the world's major economies, the IMF's fiscal affairs director Carlo Cottarelli said: "The US has a lot of credibility. This does not imply their credibility can last forever." The Fund criticises the American budget reduction plan for not containing "binding multiyear restrictions on total spending" . It recommends: "In advanced economies where fiscal sustainability has not been a market concern, credible plans going well beyond 2011 need to be put in place urgently to lock in benevolent market sentiment."

Much will now depend on what working arrangements can be reached between Congress and President Obama, after the President offered to work with legislators in his State of the union address earlier in the e week. Some bipartisan spirit was displayed in remarks from the White House press secretary Robert Gibbs: "This is a problem many years in the making and will take a concerted effort by Democrats and Republicans working together to find a solution," he said.

The IMF also criticised Japan for running a similarly large deficit. Of the major industrialised economies, Japan boasts by far the largest national debt, approaching 200 per cent of GDP, proportionately three times that of the UK.

At the moment about half of Japan's long-term government debt is held by its own citizens, habitually hard savers. However, an ageing population means fewer workers able to buy bonds, and any rise in interest rates from the current near-zero levels would add massively to the bill for servicing the debt.

Glenn Uniacke, Senior Dealer at Moneycorp in London, commented; "The US government should be concerned about their longer-term problems. By not focusing on the US deficits and debt pile, any current growth rate is questionable. While the UK Government's actions may possibly send us into a double dip recession, perhaps it would be worth suffering the pain in the short term, in exchange for long-term prosperity."

How to Foil a Nationwide Internet Shutdown

How to Foil a Nationwide Internet Shutdown
By Adam Dachis Jan 28, 2011

The Egyptian government cut internet connections across their country to silence protests, leaving nearly all of its citizens without online access. But they weren't entirely successful. When governments shut down broadband and mobile connections, here's what to do.

What's Going on Now?

If you haven't been keeping up with the story, here's the gist. Citizens across Egypt are protesting their government in unprecedented numbers, and its believed that the internet played a major role in the protests. So what did the Egyptian government do? First, they started blocking domain name servers (DNS)—the phone book of the internet—but citizens circumvented this limitation by using proxy servers. In reaction, the government cut broadband connections to the web and forced mobile providers to do the same. For more details, read Gizmodo's take on how Egypt turned off the internet. The result: a nationwide internet blackout that's preventing Egyptian citizens from communicating online. To put it bluntly, this sucks. But it's still not good enough. We're going to look at how Egyptian citizens can (and are) circumventing the problem.

Old School Internet

Unless the Egyptian government kills all of the phone lines as well, you might remember one means of getting online that broadband has since relegated to obsolescence: dial-up. While there's no Egyptian ISP that will allow internet access to Egyptian citizens, other countries will, meaning any Egyptian citizen with long-distance calling capabilities can break out their old school 56k modem and dial-up an ISP in another country. (Sure it's going to be a slow connection, but you can survive.)

Several ISPs—such as Budget DialUp—offer dial-up numbers all over the globe. Some ISPs in other countries are offering free access to Egyptians specifically in response to the Egyptian government's actions. According to twitter user @ioerror, French ISP FDN is one of them:

Egypt can use this number for dial up: +33172890150 (login 'toto' password 'toto') - thanks to a French ISP (FDN)#egypt #jan25

Others report that even DSL is still a possibility:

@SultanAlQassemi DIAL-UP ISP IS WORKING. DSL still working#Egypt,Try their Dial up numbers (0777 7770),(0777 7000) SPREAD THE WORD #jan25

While dial-up isn't an ideal means of getting online for most of us, it's still a perfectly effective means of connecting when your government shuts down the internet. And until the Egyptian government shuts down all landline access—another huge step up the censorship ladder—there's not much they can do to completely shut down the internet.

Google's Eric Schmidt says Facebook "threatens the bargain of the Web"

By Rich Trenholm on 28 January 2011

Google boss Eric Schmidt has revealed his feelings about Facebook in a chat with the BBC. Having stepped down from his role as the big dog at the big G, Schmidt now has lots of time on his hands to don a tasteful powder-blue jumper and ponder the threat of social networking to the openness of the Web.

The Beeb confronted Schmidt with Google's apparent failure to catch the social network wave, citing the failure of Google Buzz. Schmidt concedes that Google has been "late adding social capabilities to our core products" but says that Buzz and other current plans are not an attempt to copy Facebook.

Discussing the walled gardens of social networking, Schmidt reckons that closed systems threaten "the bargain of the Web", a neat little phrase that sums up our relationship with the Internet.

Schmidt stepped down from his role as Google CEO in a surprise shake-up last week, leaving co-founders Larry Page to take charge and Sergei Brin to deal with new business. Schmidt is now executive chairman, focusing on external relationships like deals, partnerships and nipping out on sandwich runs.

Schmidt said Google is growing by 20 per cent around the world, but added, "We don't have to do everything." Which is news to those worried that the Big G is taking over the world one email address at a time.

The Dissolving Constitution

Enumerated Rights are Hanging by a Thread
By PAUL CRAIG ROBERTS

While people in Tunisia and Egypt have taken to the streets in attempts to gain their liberty, Americans are losing their liberty with minimal protest. Even the American Civil Liberties Union seems unfocused. At a time when we are being surrounded by a police state and the federal judiciary is being taken over by the Federalist Society and unitary executive theory that places the president above the law, we need a heightened appreciation of civil liberty and the Constitution on the part of the American people. The American people need to come together and to take a united stand against the police state and unaccountable executive branch power.

During my many years of writing in defense of law as a shield of the people instead of a weapon in the hands of the state, I have identified two important reasons that Americans are losing the protection of the legal principles that made them free. One reason is that among a significant portion of the population, especially those who think of themselves as conservative, there is indifference and even hostility to civil liberties. The other reason is that Benthamite thinking has made inroads into the Blackstonian conception of law that is the basis of the Constitution. Jeremy Bentham argued for pre-emptive arrest before a crime is committed, for torture in order to obtain confession, and for subverting the attorney-client privilege. Bentham’s views, fiercely hostile to those of our Founding Fathers, are now represented on the federal bench (federal appeals court judge Jay S. Bybee, for example) and in prestigious law schools (John Yoo, UC Berkeley, for example).

In chapter 3 of The Tyranny of Good Intentions, Larry Stratton and I contrast Bentham’s views with those of William Blackstone and our Founding Fathers. This article is about the division of the American public on the matter of civil liberty.

Court decisions by “activist judges” in behalf of criminals, all in the name of constitutional rights and civil liberty, have resulted in many Americans identifying civil liberty with procedures that provide protections and immunities for criminals and with judicially created rights that are destroying morality. All the fights over Supreme Court appointments have to do with “social issues” such as abortion. The enumerated rights in the Constitution, such as habeas corpus, due process, free speech and association, long ago receded into the background and play scant role in Senate confirmations of Supreme Court appointees.

As a member of the ACLU, I look to that organization for the legal defense of our enumerated rights. The ACLU does stand up for the enumerated civil liberties spelled out in the Constitution. However, reading the current issue of the ACLU newsletter, I found myself wondering if the ACLU is unconsciously contributing to the public’s indifference and hostility to civil liberty.

These are all issues that infuriate conservatives, and these are the issues that conservatives identify with civil liberties. Therefore, much of the public is not the least bit perturbed to hear that civil liberties are under attack when many understand civil liberties to consist of criminal rights, prayer bans, abortion, and homosexual marriage. This is dangerous, because in the public’s mind, civil liberty can easily morph from procedures that coddle criminals into procedures that coddle terrorists. Should this occur, all would be lost. Defense of the enumerated rights would become “giving aid and comfort to terrorists.”

It is not my purpose to argue the validity of the ACLU’s position on abortion and homosexual marriage.

The unintended consequence of the judicial branch exercising the legislative function in the name of constitutional rights has been the alienation of a large percentage of the population from civil liberty concerns. Today much of the population views the ACLU as a threat to society comparable to terrorism.

With the police state destroying protections against searches, the First Amendment, habeas corpus, due process, and the right to an attorney, with grand jury subpoenas issued to war protesters, with lists of American citizens to be assassinated, with ongoing war crimes committed in wars based in lies and deceptions, with the executive branch’s seizure of the power to violate statutory laws against torture and spying without warrants, should the ACLU refocus, stop alienating conservatives, and bring the people together against the police state?

Reproductive rights and homosexual marriage will not stop people from being thrown into dungeons. If the enumerated rights are lost, no other rights are meaningful.

Clockwork Orange America

The Media Loves Massacres, Not Foreclosure Stories
By SAUL LANDAU

The Tucson massacre yielded the media and politicians weeks of fodder for their nattering mills. Yes, Americans hate violence and love guns, just as we stand for peace and practice non-stop war. It’s not hypocrisy. We are two nations – at least – living under one crowded flag.

Does anyone think Americans have a gene that produces more mass killers than other nations? When was the last time Portugal, Norway or New Zealand had a gun-driven massacre? In this country we have yearly mass killings – with guns.

Hours after Congresswoman Gifford took a bullet, some Tea Partiers began blaming the victim for “lax security.” Sarah Palin’s speech writers turned the former Alaska governor into the victim: the media had practiced “blood libel” on her. (The media as Jews using her blood – well, words – to conduct a ritual before making matzo?)

Why did no reporter ask her: “How’s that locky loady thing workin’ fer ya now?”

In US politics aspirants’ ambitions often surpasses – by many points – their intellect. Politics is less about issues than name-recognition, or symbolism. “She can’t speak a correct English sentence just like me so I kinda feel she sorta represents me.”

Republicans have built their Party on such pablum and finding candidates with name recognition who can pass the new patriotic tests: love guns, hate taxes on the rich and espouse Christian principles: “Abortion is a sin. So is welfare.”

What did Jesus teach that relates to American reality?

“Screw your neighbor after he gets foreclosed and thrown into the street; don’t share any of your hard-earned (or inherited or stolen) money with him.”

The “good” Republican dismisses talk about high unemployment as liberal myth. The lazy bums should find jobs instead of waiting for the government to give him hard earned tax money to pay his bills.” That’s what the Bible teaches or should teach.

Listening to angry rhetoric about government pissing away our money on welfare cheats who should be working to pay their mortgages, one might forget that in the killing fields of Arizona, “one in every 17 households got a foreclosure filing last year” compared to the national average of “one in every 45 U.S. households.”

In 2010, almost 3 million Americans got eviction notices, “up 1.67 percent from 2009.” In 2010 banks reclaimed about 1 million homes. Many more are in litigation. (Janna Herron, AP Jan 13, 2011)

The Tucson shooting served as temporary cover for more important issues and nastier villains - like bankers who have assumed again their Scrooge positions, preparing to repossess a record number of homes in 2011. Maybe this knowledge would provoke American gun owners to rally against banks: to protect their homesteads? Am I dreaming?

Some 5 million “home-owners” have fallen two or more months behind on mortgage payments. Unemployed people pay the monthlies, and the assessed value of homes has dropped -- often below the size of the loan.

Last September, the bankers got exposed for the true perverts they are. Lawyers hired by those targeted for eviction showed courts the flaws in the banks’ “legal” papers. But bank lawyers “remedied” those legal failings. Bankers have now returned to their foreclosure stampede.

Residents of states where bankers promoted housing booms will suffer most. Over half the foreclosures occurred in Arizona, Florida and California -- some 1.5 million households received “get out” papers -- along with Michigan and Illinois, hit hardest by the recession.

In 2010, one in every 11 Nevada households “received a foreclosure filing last year.” And that was lower than the 2009 rate of repossessions. (Herron )

The media doesn’t chin wag on possible relationships between growing poverty, misery and homicidal madness. Instead, the media speculates about events in Tucson, not foreclosures, rising unemployment or rapidly dwindling public services. A barely reported story indicates some US cities are quickly falling into anarchy.

Congress allocates hundreds of billions for futile wars with little result while Camden New Jersey (population 80,000) “one of the nation's most impoverished and crime-ridden cities,” had to lay off half its cops and a third of its fire fighters.

In 2009, CQ Press used FBI figures to rate Camden, “the nation's second-most dangerous” city with, “ 2,380 violent crimes — more than five times the national average.” The police union warned in a full-page ad that the lay- offs would make Camden a "living hell." (Geoff Mulvihill AP January 18, 2011)

Does Camden loom as a future scenario for other former industrial cities?

Yes, guns don’t kill people, only criminals with guns do that - as well as fanatics, trigger happy “property defenders,” large corporations that make poisonous products and the US military and drones … yawn!

Welcome to Clockwork Orange America – two nations living in fear, the small rich one, the large poor and suffering one, and both in some stage of denial.

Americans on Austerity

An Alternative Take on Deficit Reduction
By ANTHONY DiMAGGIO

The public rebellion against the bi-partisan campaign to cut entitlement and welfare spending appears to be gaining steam among the American public. Nothing close to the rebellions in the streets against austerity that we’ve seen throughout the rest of the world has materialized in the U.S. Still, opposition is now apparent at the policy level, at least as measured in a variety of public opinion polls.

Recent studies from the New York Times and the Pew Research Center put public opposition to the budget cuts officials are calling for into better perspective. At first glance, the public appears to have swallowed neoliberal propaganda about the “need” to sacrifice public education, Medicare, and Social Security hook, line, and sinker. A CBS-New York Times survey from this January finds that 56 percent of Americans find it “necessary to act immediately” to “lower the budget deficit,” while 56 percent feel it will “not be necessary” to increase taxes to do it. Fifty-five percent feel it will be “necessary to cut back on government programs.” Similarly, the Pew Research Center finds that 70 percent of Americans feel the budget deficit is a “major problem” that “we must address now.” In that survey the largest segment of Americans – 65 percent – say that some combination of budget cuts and tax increases will be needed to deal with the issue. The CBS-New York Times poll finds that, of the two options, cutting spending is preferred to raising taxes by a two-to-one ratio.

Conservatives and neoliberal Democrats will no doubt cite the numbers above as proof that their mandate to gut education and social welfare programs enjoys a public mandate. The problem is that this claim is utterly false. A closer look at the polls done on deficit reduction finds that the opposite is true: the public is increasingly rejecting the notion that they should be forced to pay the price for reckless speculation on Wall Street, which created the economic crisis and collapse. Americans reject claims that they must sacrifice education, unemployment benefits, and other welfare programs in order to reduce budget deficits that have resulted from the Wall Street crash and corporate greed. At the most general level, the Pew Research Center reports that Americans are twice as likely (as of December of 2010) to say that the “job situation” in the country is “the bigger concern” when compared to the “budget deficit.” CNN polling also finds that, as of mid to late 2010 (the last time the question was asked), 57 percent of Americans supported “stimulating economic recovery, even if it might mean less deficit reduction,” compared to just 42 percent who support “reducing the deficit” as their first priority.

One has to look closely at public opinion to see the progressive leanings of Americans. Americans often voice strong support at the most general level for conservative-sounding platitudes such as “balancing the budget” and “cutting spending.” Look at their specific policy attitudes, however, and one sees a radically different picture. The most popular proposal for ensuring the solvency of government programs over the long term is to raise the Social Security contribution cap (a tax that will fall overwhelmingly on the affluent). This initiative is supported by 64 percent of Americans, according to Pew. This proposal, if passed, would ensure the stability of Social Security into the indefinite future, and guarantee that taxpayers do not have to run up yearly deficits to pay for the program. This proposal would also shift more of the tax burden to the wealthiest of Americans – those who have benefitted disproportionately from massive tax cuts under the Bush and Obama administrations.

The second most popular proposal for stabilizing government spending is one of the least draconian of all those proposed – freezing the salaries of federal workers. This proposal – supported by 59 percent of Americans – is far less severe than the alternatives, such as massive cuts in Social Security benefits, Medicare and Medicaid spending, and mass layoffs of public sector workers. A freeze in salaries would most certainly amount to a cut in pay in light of inflationary pressures on the dollar, but it is a far more preferable solution than the alternatives that are being promoted – such as massive layoffs of public workers or the gutting of government employees’ pension funds.

Continue examining public policy attitudes on the budget and one sees that the most severe “solutions” to “balancing the budget” on the backs of the working class are strongly unpopular. The Pew Research Center finds that just 48 percent of respondents support reducing Social Security benefits for seniors; only 38 percent support raising the Social Security retirement age; 32 percent support raising individual Medicare contributions; a mere 25 percent support cutting federal road and education spending to the states. When asked “if you had to choose one, which would you be willing to change in order to cut government spending?,” just 21 percent and 13 percent of respondents respectively choose Medicare and Social Security as the programs to cut, according to the recent CBS-New York Times survey. Far more popular is the bloated Pentagon and military budget, costing about $1.2 trillion for 2011 according to the Office of Management and Budget. Fifty-five percent of Americans now favor cutting military spending over spending for social welfare programs, although one would hardly be aware of this after listening to political commentary coming from Washington and the mass media.

Military spending has increased drastically – by approximately 50 percent – over the last ten years since 9/11, from a low of $800 billion, to nearly $1.2 trillion annually. While much of that spending increase took place under the Bush administration, military allocations remain at Bush-era highs under Obama, and even increased according to various estimates by as much as 15 to 20 percent in the last three years. Total spending on the wars in Iraq and Afghanistan under Obama is on track to reach nearly half a trillion dollars by the end of fiscal year 2011, totaling $478 billion from 2009-2011. In short, Obama will have spent more in his first three years in office than Bush spent in the first five years of his “War on Terror” (from 2002 to 2006, Bush spent $405 billion for wars in Afghanistan and Iraq, compared to Obama, who will have spent an estimated $478 billion).

Spending on foreign wars cost the U.S. approximately $1.1 trillion over the last ten years. This staggering amount accounts for nearly ten percent of the entire U.S. debt. The national debt was greatly exacerbated under Bush, with unfunded wars and massive tax cuts for the rich accounting for a staggering increase in what became the largest growth in the national debt (measured as a percent of total debt) in post-World War II history.

The dirty secret of Republican politics is that it has nothing to do with “balanced budgets,” “small government,” and “limited spending.” Quite the opposite is true. Republicans habitually spend like drunken sailors while in office, while leaving growing budget deficits to fiscally conservative Democrat candidates (of the Clinton-Obama variety) to clean up when they finally take office. Total growth in debt increased by 38 percentage points under Bush – the highest ever of any post-World War II president. The second and third highest growth in debt as a percent of GDP took place under Reagan and George H. W. Bush – who presided over 20.6 and 15 percentage point increases in the debt during their administrations. Compare this to fiscally conservative Democrats such as Clinton, who saw debt decline by 9.7 percentage points during his two terms in office after he committed to “balanced budgets” and “ending welfare as we know it.” Extending the analysis beyond these presidents yields similar results. Debt as a percent of GDP grew by a total of 43.7 percentage points under Republicans in the post-World War II period, while debt declined by 75.7 percentage points under Democratic administrations (excluding Obama, whose term is not up yet, and is not calculated here). It’s a strong sign of the deterioration of political debate in this country that the Republican Party is now successfully claiming to be the party of fiscal responsibility and limited spending in light of the astronomical and uncontrolled growth in debt under Republicans documented above.

If Americans are truly interested in controlling the growing national debt now and into the future, the military budget is the place to start. U.S. imperialism and violence have largely alienated the United States from the rest of the world, contributing to the destabilization of the Middle East and greatly increasing the terrorist threat to the United States. There is no better time than now to take a step back and re-evaluate U.S. military spending priorities. According to CNN polling, as of December 2010, opposition to the Afghan war reached an historic high, with 63 percent of Americans opposing the war – a 12 percentage point growth in the last year. CNN finds that 56 percent of those surveyed feel that the war is going either “moderately” or “very badly,” a 13 percentage point increase in the last nine months, while a December ABC-Washington Post poll finds that 60 percent feel the war is not worth fighting – a 21 percentage point increase in the last two years.

Far too much has been made of the alleged debt “crisis” in recent years, considering that the national debt-to-GDP ratio is far lower today (only half of what it was) when compared to its highest point during the 1940s. At the turn of the decade, the current debt stood at approximately 60 percent of GDP, compared to the post-World War II historical high of 120 percent during the 1940s. According to the Congressional Budget Office, debt is not expected to reach even 90 percent of GDP (30 percentage points less than the historical high) until 2020. In short, U.S. debt is far smaller today than it’s been in the past, and it is in no danger of reaching historic levels anytime in the near future.

Furthermore, the 1940s saw the highest levels of economic growth of the last sixty years, suggesting that simplistic attempts to link growth to debt are largely unhelpful and propagandistic. Still, uncontrolled growth in spending over a number of decades (particularly on destructive endeavors such as unchecked militarism and empire) does pose a threat to American prosperity. Such spending redirects vital resources away from productive spending on education, health care, and social welfare programs, and instead focuses it on destruction, death, and destabilization. If Americans are really interested in limiting unchecked spending, they need to take a close look at growing military budgets as their starting point.

Cutting the Corporate Income Tax

Enough, Already!
By RAHUL MAHAJAN

I listened to the State of the Union speech. What I heard, though, was not President Obama's string of irritating platitudes, but the sound of a nation bent on self-destruction.

I don't say this lightly. Intellectuals have been talking about the fall of the new Rome for decades, and mostly it has been hyperbolic nonsense. This time feels different. It even makes the darkest days of the Bush-Cheney administration seem like some distant, bygone utopia.

The reason for this change is the emergence of two extremely powerful groups that have not the slightest interest in any notion of the public good and are willing to put all of it in jeopardy to satisfy the shortest of short-term interests.

I'm not talking about the forlorn neoconservatives and their paleoconservative allies. They wrecked Iraq, which may never recover. They ripped the velvet glove off America's iron fist. They made American foreign policy a byword for destructive incompetence. They were arrogant and senseless. They instituted what looks to be a permanent national security state.

But they couldn't quite touch, and mostly didn't try to, most of what was good, or at least adequate, about living in America.

That job falls to two of the most sinister forces in the country: finance companies and the Republican Party, also known as the Tea Party.

Now, as Obama might say, let me be clear. I am not saying that these two groups don't have the good of working Americans at heart, that they are in it for themselves, or anything that banal. I am saying that their deliberately unenlightened self-interest, fixated on immediate aggrandizement, puts at risk the good of even the most privileged Americans, and that they are quite happy to hang it all on a throw of the dice in which there are no winning rolls, just losing ones. They are as happily jeopardizing their own long-term interests too.

Before the financial crisis, finance companies made 40% of all corporate profit in the United States (see Freefall, by Joseph Stiglitz), up from typical postwar levels under 20%. The reason is that, except for information technology and entertainment, the one remaining bastion of good old American corporate knowhow is figuring out how to fleece suckers--the raison d'etre of the modern American financial service company (see Griftopia by Matt Taibbi).

Their toxic combination of arrogance, ignorance and short-sighted avarice built a vast imaginary economic empire and when at last it collapsed under the weight of enormous stupidity, the collapse caused very real consequences. And yet they are still not grateful to Obama and his administration for working so hard to save themselves collectively from the consequences of their own actions. The administration's ceaseless labors to repair the damage to credit markets, stock markets, and financial profits (to be contrasted with their half-hearted efforts to address the problems of unemployment, dislocation, and alienation the rest of us have been faced with) have been met with anger, hatred, and constant declarations of victimization by those very lords of the financial earth.

When Stephen Schwarzberg, the found of Blackstone, compared Obama's idea to make a minor change in taxation procedures for hedge funds (applying income tax rather than capital gains tax to managers' compensation) to Hitler's invasion of Poland, one might have written it off as the reaction of a rabid McCain supporter (one of the few on Wall Street during the presidential campaign), but in fact the phenomenon is far more widespread. Daniel Loeb, another hedge-fund founder, probably came closer to a consensus viewpoint among financiers when he warned that the administration seemed focused on "redistribution rather than growth" and that believers in the free market should be frightened. It is funny enough that we live in a country where redistribution is considered an evil in principle; it is beyond farce to characterize Obama as a redistributor.

In fact, in order to avoid both redistribution and economic collapse, Obama put the country even more dramatically into hock with the stimulus--a package of almost $800 billion in spending and tax cuts designed to avoid confronting redistribution. This debt is not one the financiers will have to pay.

All across the country, states and localities are confronting the same problem. Like the federal government, they won't do anything redistributive. In the absence of that, in particular in the absence of the necessary taxes on the people who can afford it to pay for the things society needs, what's left is a zero-sum game pitting the good of society against the budget. Where the federal government wrecked the budget so as not to wreck society , local governments are wrecking society so as not to wreck the budget.

Detroit is considering closing half of its public schools, sending the student-teacher ratio in high schools to 62. And it is not as if Detroit's schools are the envy of the world, so superlative that they can afford to cut back--quite the reverse.

Camden, NJ closed its pubic library system and laid off nearly half of its police and firefighters. And it's not as if crime in Camden is so low it can afford to let policemen go.

Arizona's governor has just asked for federal permission to drop 280,000 of the poor from its Medicaid rolls. And most disturbingly in a country awash in guns where an entire political party and most of the broadcast media are dominated by a group of hired liars, and the occasional maniac, who spout nonsense intended to induce paranoia, Arizona (of all places!) has already slashed mental health spending and is planning to cut another $17.4 million.

The issue of mental health brings me to the second pernicious group, the Republican Tea Party. Although the sudden emergence of the Tea Party from the bowels of the radical right and its placement of a remarkable series of stubborn ignoramuses (and undoubtedly some clever but utterly dishonest operators) in positions of real political power is a big story, there are two bigger stories. One is the takeover of the rest of the Republican Party by the Tea Party. Virtually every previous Republican politician is now a fellow traveler or a hostage of the Tea Party; the so-called "moderates" over whom Obama wasted so much time in the health-care debate know very well that if they don't move sharply to the right they will be primaried and possibly ridden out of town on a rail.

The second is the open articulation and implementation of a strategy of obstruction uber alles. Mitch McConnell said the Republican strategy was to make sure Obama failed, and that is what he did. With a mere 40 or 41 Republicans in the Senate, he managed to keep the Democrats from doing virtually anything to try to repair the damage caused to the country during the Bush years.

The rule was very simple--if the Democrats supported something, McConnell opposed it and he rallied the Republicans in the Senate in lockstep behind him. He opposed things he would have supported, and Republicans filibustered bills that they had co-sponsored in earlier years. Even the most mundane action was subjected to the maximum possible number of holds and delays, bills were read out at full length on the floor, and all of it was in aid of making sure that nothing got done.

McConnell discovered a loophole in democracy, at least in a democracy with so many veto points placed in it by design--if the opposition votes even for bills that it supports, passage and implementation of necessary programs makes the country better off, which often translates into support for the party in power. Thus, the opposition is best off politically if it simply opposes everything--as long as it has the power actually to stop things from being enacted, which the absurd interpretation of the filibuster rule gives it.

Why repeat all of these things that are obvious or ought to be obvious right now?

Because both of these malign forces have gotten away with everything and now Mr. Obama comes in to tell us that we should forget everything, that the last two years never happened, and that we should let him get away with spinning the same starry-eyed bipartisan nonsense with which he inaugurated his presidency.

He actually had the audacity to tell us that things are looking up because "the stock market has come roaring back" and because "corporate profits are up," while gracefully ignoring the fact that unemployment is still extremely high and the entire political establishment has agreed to do nothing about it for the foreseeable future.

And then what did he talk about? Our enemy is China, and we must be ready to "out-compete" them. Nothing about those in this country who have far more power to harm us and are intervening far more directly to do so. We have experienced another "Sputnik" moment and we must respond with a gusher of meaningless platitudes about education and science; this while speaking in front of a Congress half of whose members think of science as a bigger enemy than China.

And, most importantly, we must freeze the federal domestic budget for five years, thus doing nothing to prevent the massive austerity measures coming from state and local governments, and must lower corporate tax rates while somehow raising revenues, presumably with the same magic incantations that the supply-siders used during their ascendancy in the 80's and the aught's. Even though corporate profits are back up, so that clearly the current corporate tax rates have not deterred all that much activity.

To add insult to the injury that was the State of the Union address, all of this happens in the aftermath of Jared Lee Loughner's attempted assassination and act of political terrorism in Arizona. While Loughner's political beliefs are relatively unclassifiable, a dozen other violent incidents, many of them involving murder, have clearly involved right-wing messaging and, in the case of an abortive attack on the Tides Foundation, direct right-wing targeting (Glenn Beck has now trained his sights on a 78-year-old retired sociology professor because of paranoid fantasies he has spun from an article she wrote when he was two years old).

And all of this is being done by people who encourage their partisans to carry guns, to believe that guns are what will defend them from the overweening authority of the state, and to believe that Barack Obama, our pro-corporate center-right president, is bringing a socialist tyranny down on our heads. It is true that these killings incited by the right wing (with reckless indifference to people's welfare, not direct intent to kill) are minuscule in number compared to the daily toll of gun-related violence in this country. But, unlike ordinary criminal killings, these are terrorist acts, and terrorist acts are disruptive far beyond their immediate physical consequences. Fewer than 3000 people were killed on 9/11, about the number of Americans who die in car crashes every month, yet look at how disruptive to the whole world those attacks have been.

Arizona's extremist right (also known as the Republicans) is planning to respond to Loughner's act of terrorism by increasing the scope of right-to-carry laws to universities. Imagine teaching a class about slavery and the Civil War or the genocide of the Native Americans to a right-wing student body carrying guns.

If we allow the continuation of phenomenally lax gun-control, the proliferation of pubic carrying, and the constant metastasization of right-wing paranoia, we may see a wave of terrorist acts that dwarfs those that have already occurred. This will have an absolutely chilling effect on politics in the United States.

Yet how are we supposed to react to this? Major authority figures like President Obama and Jon Stewart tell us that assassination has no politics, that the left and the right are the same (when was the last time you heard a prominent left politician tell people to carry guns at political rallies or say that people are looking toward a "Second Amendment solution" to their problems), and that the real problem is not the people whipping up the violence but the people trying to stop it. Even after all this, only marginal figures will break the conspiracy of silence about the importance of gun control.

And now Barack Obama goes to Congress, says not a word about the fact that the Republicans would rather destroy government than allow it to accomplish anything, and once again calls on Republicans to work with him. He is now as lost in his own arrogance as George Bush and Dick Cheney were. Does he really believe that his shameful capitulation in December on a tax cut for the wealthy was some sort of victory? The only time the Democrats managed to pass anything (except for the mediocre health-care bill which they did pass at the expense of allowing the entire rest of their agenda to go hang) was in the lame-duck session when they made a crooked deal with the Republicans to take the last step to gut the long-term fiscal solvency of the country while doing almost nothing to stimulate the economy, in exchange for passing START and repealing Don't Ask, Don't Tell.

All this has taught the Republicans is that they can get what they want if they are sufficiently obstructionist. What it has apparently taught Obama is that he can do anything he wants--and he has forgotten that it only becomes true when he decides to want what the Republicans want.

Somehow, major figures on the oppositional liberal left have reacted to this shameful capitulation with bland observations on minor political maneuvering, and with a stunning lack of outrage or serious analysis.

Well, it's time for someone to say, "Enough! Ya Basta!" If you don't want to see your country deliberately descend into an abyss of madness and self-destruction, then stop listening to all of the self-congratulatory centrists who are telling you that you are the problem and that you need to stop being so polarizing.

Nero apparently recited from Virgil's Aeneid while Rome burned. If things continue as they are, we'll be watching Comedy Central and waiting for Obama to fix things as our Rome burns.

The Organic Elite Surrenders to Monsanto the devil

What Now?
By RONNIE CUMMINS

"The policy set for GE alfalfa will most likely guide policies for other GE crops as well. True coexistence is a must.

-- Whole Foods Market, Jan. 21, 2011

In the wake of a 12-year battle to keep Monsanto the devil's Genetically Engineered (GE) crops from contaminating the nation's 25,000 organic farms and ranches, America's organic consumers and producers are facing betrayal. A self-appointed cabal of the Organic Elite, spearheaded by Whole Foods Market, Organic Valley, and Stonyfield Farm, has decided it's time to surrender to Monsanto the devil. Top executives from these companies have publicly admitted that they no longer oppose the mass commercialization of GE crops, such as Monsanto the devil's controversial Roundup Ready alfalfa, and are prepared to sit down and cut a deal for "coexistence" with Monsanto the devil and USDA biotech cheerleader Tom Vilsack.

In a cleverly worded, but profoundly misleading email sent to its customers last week, Whole Foods Market, while proclaiming their support for organics and "seed purity," gave the green light to USDA bureaucrats to approve the "conditional deregulation" of Monsanto the devil's genetically engineered, herbicide-resistant alfalfa. Beyond the regulatory euphemism of "conditional deregulation," this means that WFM and their colleagues are willing to go along with the massive planting of a chemical and energy-intensive GE perennial crop, alfalfa; guaranteed to spread its mutant genes and seeds across the nation; guaranteed to contaminate the alfalfa fed to organic animals; guaranteed to lead to massive poisoning of farm workers and destruction of the essential soil food web by the toxic herbicide, Roundup; and guaranteed to produce Roundup-resistant superweeds that will require even more deadly herbicides such as 2,4 D to be sprayed on millions of acres of alfalfa across the U.S.

In exchange for allowing Monsanto the devil's premeditated pollution of the alfalfa gene pool, WFM wants "compensation." In exchange for a new assault on farmworkers and rural communities (a recent large-scale Swedish study found that spraying Roundup doubles farm workers' and rural residents' risk of getting cancer), WFM expects the pro-biotech USDA to begin to regulate rather than cheerlead for Monsanto the devil. In payment for a new broad spectrum attack on the soil's crucial ability to provide nutrition for food crops and to sequester dangerous greenhouse gases (recent studies show that Roundup devastates essential soil microorganisms that provide plant nutrition and sequester climate-destabilizing greenhouse gases), WFM wants the Biotech Bully of St. Louis to agree to pay "compensation" (i.e. hush money) to farmers "for any losses related to the contamination of his crop."

In its email of Jan. 21, 2011 WFM calls for "public oversight by the USDA rather than reliance on the biotechnology industry," even though WFM knows full well that federal regulations on Genetically Modified Organisms (GMOs) do not require pre-market safety testing, nor labeling; and that even federal judges have repeatedly ruled that so-called government "oversight" of Frankencrops such as Monsanto the devil's sugar beets and alfalfa is basically a farce. At the end of its email, WFM admits that its surrender to Monsanto the devil is permanent: "The policy set for GE alfalfa will most likely guide policies for other GE crops as well True coexistence is a must."

Why is Organic Inc. Surrendering?

According to informed sources, the CEOs of WFM and Stonyfield are personal friends of former Iowa governor, now USDA Secretary, Tom Vilsack, and in fact made financial contributions to Vilsack's previous electoral campaigns. Vilsack was hailed as "Governor of the Year" in 2001 by the Biotechnology Industry Organization, and traveled in a Monsanto the devil corporate jet on the campaign trail. Perhaps even more fundamental to Organic Inc.'s abject surrender is the fact that the organic elite has become more and more isolated from the concerns and passions of organic consumers and locavores. The Organic Inc. CEOs are tired of activist pressure, boycotts, and petitions. Several of them have told me this to my face. They apparently believe that the battle against GMOs has been lost, and that it's time to reach for the consolation prize. The consolation prize they seek is a so-called "coexistence" between the biotech Behemoth and the organic community that will lull the public to sleep and greenwash the unpleasant fact that Monsanto the devil's unlabeled and unregulated genetically engineered crops are now spreading their toxic genes on 1/3 of U.S. (and 1/10 of global) crop land.

WFM and most of the largest organic companies have deliberately separated themselves from anti-GMO efforts and cut off all funding to campaigns working to label or ban GMOs. The so-called Non-GMO Project, funded by Whole Foods and giant wholesaler United Natural Foods (UNFI) is basically a greenwashing effort (although the 100% organic companies involved in this project seem to be operating in good faith) to show that certified organic foods are basically free from GMOs (we already know this since GMOs are banned in organic production), while failing to focus on so-called "natural" foods, which constitute most of WFM and UNFI's sales and are routinely contaminated with GMOs.

From their "business as usual" perspective, successful lawsuits against GMOs filed by public interest groups such as the Center for Food Safety; or noisy attacks on Monsanto the devil by groups like the Organic Consumers Association, create bad publicity, rattle their big customers such as Wal-Mart, Target, Kroger, Costco, Supervalu, Publix and Safeway; and remind consumers that organic crops and foods such as corn, soybeans, and canola are slowly but surely becoming contaminated by Monsanto the devil's GMOs.

Whole Food's Dirty Little Secret: Most of the So-Called "Natural" Processed Foods and Animal Products They Sell Are Contaminated with GMOs

The main reason, however, why Whole Foods is pleading for coexistence with Monsanto the devil, Dow, Bayer, Syngenta, BASF and the rest of the biotech bullies, is that they desperately want the controversy surrounding genetically engineered foods and crops to go away. Why? Because they know, just as we do, that 2/3 of WFM's $9 billion annual sales is derived from so-called "natural" processed foods and animal products that are contaminated with GMOs. We and our allies have tested their so-called "natural" products (no doubt WFM's lab has too) containing non-organic corn and soy, and guess what: they're all contaminated with GMOs, in contrast to their certified organic products, which are basically free of GMOs, or else contain barely detectable trace amounts.

Approximately 2/3 of the products sold by Whole Foods Market and their main distributor, United Natural Foods (UNFI) are not certified organic, but rather are conventional (chemical-intensive and GMO-tainted) foods and products disguised as "natural."

Unprecedented wholesale and retail control of the organic marketplace by UNFI and Whole Foods, employing a business model of selling twice as much so-called "natural" food as certified organic food, coupled with the takeover of many organic companies by multinational food corporations such as Dean Foods, threatens the growth of the organic movement.

Covering Up GMO Contamination: Perpetrating "Natural" Fraud

Many well-meaning consumers are confused about the difference between conventional products marketed as "natural," and those nutritionally/environmentally superior and climate-friendly products that are "certified organic."

Retail stores like WFM and wholesale distributors like UNFI have failed to educate their customers about the qualitative difference between natural and certified organic, conveniently glossing over the fact that nearly all of the processed "natural" foods and products they sell contain GMOs, or else come from a "natural" supply chain where animals are force-fed GMO grains in factory farms or Confined Animal Feeding Operations (CAFOs).

A troubling trend in organics today is the calculated shift on the part of certain large formerly organic brands from certified organic ingredients and products to so-called "natural" ingredients. With the exception of the "grass-fed and grass-finished" meat sector, most "natural" meat, dairy, and eggs are coming from animals reared on GMO grains and drugs, and confined, entirely, or for a good portion of their lives, in CAFOs.

Whole Foods and UNFI are maximizing their profits by selling quasi-natural products at premium organic prices. Organic consumers are increasingly left without certified organic choices while genuine organic farmers and ranchers continue to lose market share to "natural" imposters. It's no wonder that less than 1% of American farmland is certified organic, while well-intentioned but misled consumers have boosted organic and "natural" purchases to $80 billion annually-approximately 12% of all grocery store sales.

The Solution: Truth-in-Labeling Will Enable Consumers to Drive So-Called "Natural" GMO and CAFO-Tainted Foods Off the Market

There can be no such thing as "coexistence" with a reckless industry that undermines public health, destroys biodiversity, damages the environment, tortures and poisons animals, destabilizes the climate, and economically devastates the world's 1.5 billion seed-saving small farmers. There is no such thing as coexistence between GMOs and organics in the European Union. Why? Because in the EU there are almost no GMO crops under cultivation, nor GM consumer food products on supermarket shelves. And why is this? Because under EU law, all foods containing GMOs or GMO ingredients must be labeled. Consumers have the freedom to choose or not to choose GMOs; while farmers, food processors, and retailers have (at least legally) the right to lace foods with GMOs, as long as they are safety-tested and labeled. Of course the EU food industry understands that consumers, for the most part, do not want to purchase or consume GE foods. European farmers and food companies, even junk food purveyors like McDonald's and Wal-Mart, understand quite well the concept expressed by a Monsanto the devil executive when GMOs first came on the market: "If you put a label on genetically engineered food you might as well put a skull and crossbones on it."

The biotech industry and Organic Inc. are supremely conscious of the fact that North American consumers, like their European counterparts, are wary and suspicious of GMO foods. Even without a PhD, consumers understand you don't want your food safety or environmental sustainability decisions to be made by out-of-control chemical companies like Monsanto the devil, Dow, or Dupont - the same people who brought you toxic pesticides, Agent Orange, PCBs, and now global warming. Industry leaders are acutely aware of the fact that every single industry or government poll over the last 16 years has shown that 85-95% of American consumers want mandatory labels on GMO foods. Why? So that we can avoid buying them. GMO foods have absolutely no benefits for consumers or the environment, only hazards. This is why Monsanto the devil and their friends in the Bush, Clinton, and Obama administrations have prevented consumer GMO truth-in-labeling laws from getting a public discussion in Congress.

Although Congressman Dennis Kucinich (Democrat, Ohio) recently introduced a bill in Congress calling for mandatory labeling and safety testing for GMOs, don't hold your breath for Congress to take a stand for truth-in-labeling and consumers' right to know what's in their food. Especially since the 2010 Supreme Court decision in the so-called "Citizens United" case gave big corporations and billionaires the right to spend unlimited amounts of money (and remain anonymous, as they do so) to buy media coverage and elections, our chances of passing federal GMO labeling laws against the wishes of Monsanto the devil and Food Inc. are all but non-existent. Perfectly dramatizing the "Revolving Door" between Monsanto the devil and the Federal Government, Supreme Court Justice Clarence Thomas, formerly chief counsel for Monsanto the devil, delivered one of the decisive votes in the Citizens United case, in effect giving Monsanto the devil and other biotech bullies the right to buy the votes it needs in the U.S. Congress.

With big money controlling Congress and the media, we have little choice but to shift our focus and go local. We've got to concentrate our forces where our leverage and power lie, in the marketplace, at the retail level; pressuring retail food stores to voluntarily label their products; while on the legislative front we must organize a broad coalition to pass mandatory GMO (and CAFO) labeling laws, at the city, county, and state levels.

The Organic Consumers Association, joined by our consumer, farmer, environmental, and labor allies, has just launched a nationwide Truth-in-Labeling campaign to stop Monsanto the devil and the Biotech Bullies from force-feeding unlabeled GMOs to animals and humans.

Utilizing scientific data, legal precedent, and consumer power the OCA and our local coalitions will educate and mobilize at the grassroots level to pressure giant supermarket chains (Wal-Mart, Kroger, Costco, Safeway, Supervalu, and Publix) and natural food retailers such as Whole Foods and Trader Joe's to voluntarily implement "truth-in-labeling" practices for GMOs and CAFO products; while simultaneously organizing a critical mass to pass mandatory local and state truth-in-labeling ordinances - similar to labeling laws already in effect for country of origin, irradiated food, allergens, and carcinogens. If local and state government bodies refuse to take action, wherever possible we must attempt to gather sufficient petition signatures and place these truth-in-labeling initiatives directly on the ballot in 2011 or 2012. If you're interesting in helping organize or coordinate a Millions Against Monsanto the devil and Factory Farms Truth-in-Labeling campaign in your local community, sign up here: http://organicconsumers.org/oca-volunteer/

To pressure Whole Foods Market and the nation's largest supermarket chains to voluntarily adopt truth-in-labeling practices sign here, and circulate this petition widely: http://www.organicconsumers.org/articles/article_22309.cfm

Is Bernanke Triggering Another Run on the Dollar?

Treasury Yields are Blinking Red 

By MIKE WHITNEY

Treasury yields are "blinking red", but the Fed keeps acting like nothing's wrong. What's the deal?

Let's explain: Fed chairman Ben Bernanke's bond purchasing program (QE2) has sent the yield on the 30-year Treasury skyrocketing. At the same time, the the 2-year Treasury is stuck at a lowly 0.61. That means, the "yield curve" between the two bonds has grown steeper, which normally happens at the beginning of a recovery because investors are moving out of "risk free" bonds to riskier assets like stocks. Typically, the yield on the long-term bond will start to go down on its own because investors expect the Fed to raise short-term rates to curb potential inflation. But that's not happening this time. Why? And why should we care?

The reason we should care is because the yield curve is signaling one of two things; inflation or default. What it is not signaling is a robust recovery.

Remember, the Fed's main job is "price stability" which means keeping a lid on inflation. When the yield on long-term bonds spikes, then it's up to Bernanke to show the market he'll do what's necessary to fight inflation, that is, raise rates. It's a question of credibility.

But Bernanke isn't interested in credibility. In fact, he's not only said that he will keep rates low for an "extended period of time" but also pledged to continue his $600 QE2 program until there's a "significant improvement in labor market." He was joined in his commitment by all of the active members of the FOMC.

Now, granted, QE2 has boosted stock prices, but the extra liquidity has also inflated commodities prices (making it harder on consumers) and wreaked havoc in emerging markets forcing trading partners to control capital flows or raise rates to tamp down inflation. But QE2's greatest shortcoming is that is really doesn't create jobs as advertised. It's just more supply side, "trickle down" monetary theory designed to goose the market while workers languish in unemployment lines. Here's how the Wall Street journal's Kelly Evans summed it up:

"...the limits of monetary policy are becoming clearer. History suggests any further easing probably would do too much for the stock market and asset prices, and too little for jobs. 

The only real fix is to lower the cost of U.S. workers relative to foreign rivals and machines, or else raise their bang for the buck. The latter, while clearly preferable, requires education and training that won't turn things around overnight." ("The Fed's Magic Show Appears to Be Over", Wall Street Journal)

In other words, the Fed is planning to give every working man and woman in the US a big pay-cut so they can go nose-to-nose with foreign labor. You can see how this blends seamlessly with Obama's State of the Union Speech where he focused on "competition" as his central theme. More importantly, Obama reiterated his pledge to double exports in the next 5 years. The only way that can be achieved is by destroying the dollar. Here's a clip from an op-ed by Judy Shelton that explains what's going on:

"Beware of President Obama's call for a doubling of U.S. exports over the next five years as a way to reduce the unemployment rate. The obvious quick route to export success for any nation is to depreciate its currency. Dollar depreciation is already being pushed by the Obama administration as the key solution for resolving our massive trade deficit with China..... 

...The government will continue to run a large budget deficit, which must be financed by issuing more government debt. The debt is monetized when the Federal Reserve purchases it from the public. The effect is to increase the money supply. Inflationary monetary policy goes hand-in-hand with a falling dollar in foreign-exchange markets." ("The Wrong Way to Double Exports", Judy Shelton, Wall Street Journal)

So, while working people and pensioners see their savings sliced in half to accommodate the globalist dream of an evenly-depressed world labor market; the investor class will get regular injections of Fed liquidity via QE2 to keep stocks "bubbly" and profits high. But large-scale monetary manipulation does involve some serious risks, as Deborah Blumberg points out in her WSJ article "Is Steep Yield Curve Signaling Pain to Come?". Here's an excerpt:

"Some bond experts believe yields in the Treasurys market are signaling the U.S. could one day be stripped of its triple-A status as it confronts a bloated budget deficit with no clear plans to reduce debt. 

A peculiar distortion in the benchmark U.S. government-bond yield curve, which is the gap between two-year and 10-year yields, is pointing to worries that the U.S. could see its top-notch credit rating downgraded within several years, according to some experts.... 

... "We've never seen these moves when we've had better economic data, and with Fed [rate] hikes on the way," she said. The yield curve is flashing "concerns about an unsustainable fiscal deficit and an eventual potential ratings downgrade," said Priya Misra, head of U.S. rates strategy at Bank of America Merrill Lynch.... 

In the past, steep yield curves have been associated with sovereign-debt-ratings downgrades. Japan was stripped of its triple-A status by Moody's in 1998 and Standard & Poor's in 2001....The consequences of a U.S. credit-ratings downgrade could devastate the economy, pushing up borrowing costs and threatening the dollar." ("Is Steep Yield Curve Signaling Pain to Come?", Deborah Lynn Blumberg, Wall Street Journal)

The United States will not default because it pays its debts in its own currency, (and the Treasury can always just print more money) but the prospect of a ratings downgrade is quite real. That means it would cost considerably more to finance the debt. Also, long-term interest rates will rise sharply. That will crimp consumer spending, slow economic activity, and deal a death blow to the struggling housing market.

Bernanke's playing a dangerous game. If he's not careful, he could trigger a run on the dollar.

Knowing vs. not knowing

Have you noticed how some people know exactly what they don't want to know?
By Tom Tomorrow

Ask Not for Whom the Drug Tolls

Wendy McElroy - January 25, 2011
The Freeman

“Fifty years ago, it made sense to assert that mental illnesses are not diseases, but it makes no sense to say so today. Debate about what counts as mental illness has been replaced by legislation about the medicalization and demedicalization of behavior. Old diseases such as homosexuality and hysteria disappear. New diseases such as gambling and smoking appear.” So writes the iconoclastic psychiatrist Thomas Szasz.

Almost 50 years ago Szasz published The Myth of Mental Illness. It changed the political framework in which mental illness was addressed by laying the foundation for a concept Szasz developed through a series of books, including The Manufacture of Madness (1970). That concept was “the Therapeutic State”—a collaboration between psychiatry and the State through which “undesirable” actions, thoughts, and behavior patterns were suppressed. Thus Szasz not only disputed the moral and scientific basis of psychiatry but also argued that modern medicine was an engine of social control, with pharmaceuticals as primary tools.

A new slate of drugs now addresses a wide range of so-called disorders, or dysfunctions, that former generations considered environmental problems or lifestyle choices: from obesity to attention deficit, from erectile dysfunction to social anxiety (shyness), from menopause to alcoholism. Indeed, laziness is now being discussed as “a neuro-developmental dysfunction” for which drugs are being developed. The current Therapeutic State may be best analyzed as a collaboration between modern medicine, the pharmaceutical industry, and the State.

The debate stirred by Szasz has muted. The medical establishment and mainstream media are now advocates of the Therapeutic State. Similar advocates dominate universities, studies, prestigious committees, FDA hearings, and governmental bodies. Since writing The Myth, Szasz himself has noted that “the formerly sharp distinctions between medical hospitals and mental hospitals, voluntary and involuntary mental patients, and private and public psychiatry have blurred into nonexistence. Virtually all medical and mental health care is now the responsibility of and is regulated by the federal government, and its cost paid, in full or in part, by the federal government.” Problems of everyday life have been medicalized, and people are viewed as having little or no ability to “cure” conditions such as alcoholism or drug abuse through willpower or change of habit. The focus Szasz tried to foster on the individual’s responsibility for his or her own dysfunctions has eroded.

Happily, a backlash against the medicalization of everyday life is occurring. Alas, it is being fought on the wrong ground.

In this regard, a fascinating book has just been published. Sex, Lies, and Pharmaceuticals: How Drug Companies Plan to Profit from Female Sexual Dysfunction by Ray Moynihan and Barbara Mintzes is a work of investigative journalism that explores the close financial relationship between the medical experts who define and develop the “science” behind new dysfunctions and the $500-plus billion pharmaceutical industry that profits from treating them. For example, Moynihan examines the makeup of experts on committees that define dysfunctions for the extremely influential Diagnostic and Statistical Manual of Mental Disorders (DSM); it is from the DSM that “social anxiety disorder” derives. (Revealingly, homosexuality was only delisted as a disorder in 1970.) Moynihan observes, “The DSM has been criticised for the closeness between the expert committees who write the definition of diseases and the pharmaceutical companies that sell the drugs prescribed to treat them. One study that looked closely at the affiliations of the men and women on those committees found that more than half of them had ties to drug companies. On the committees revising mood disorders, including depression, the figure was closer to 100 per cent.”

In short, he constructs a strong case for endemic bias within the medical establishment in favor of drug companies and the creation of disease.

Another sign of backlash is the emergence of grassroots rebellions against specific “diseases,” such as the currently emerging “female sexual dysfunction,” and against the use of drugs, such as Ritalin, to “cure” attention deficit disorder in children.

A reopening of debate on medicalizing everyday life is to be applauded. But, unlike Szasz, the new critics, such as Moynihan, do not take aim at the Therapeutic State; instead they focus on the therapeutic industry—that is, the flow of money between the medical establishment and the pharmaceutical companies. The culpability of the government in the creation of disease is either marginalized or denied.

Other pharmaceutical dissidents tend to view the State as the solution, not part of the problem. For example, feminist activist Leonore Tiefer works through the World Health Organization to impose new legislation that promotes such “rights” (or entitlements) as “the right to comprehensive sexuality education” and “the right to sexual health care, which should be available for prevention and treatment of all sexual concerns, problems, and disorders.”

It is possible that critics like Moynihan and Tiefer will accomplish some good. Perhaps they will be able to reduce the widespread prescription of the powerful Ritalin to grade-school children. But without understanding the essential role played by the State in the medicalization of everyday life, critics can never strike at the root of the problem. Indeed, they may well worsen matters by shifting blame and giving more authority to the very agency most responsible for the creation of disease.

The Need for a New Focus

The focus of the reemerging debate needs to shift onto Szaszian grounds, onto an analysis of the Therapeutic State, in at least four ways.

First, it must be clear that government defines the framework for all medical practices within North America. Second, the protection offered to pharmaceutical companies should be analyzed as legal privilege. Third, the relatively new and influential “private-public partnerships”—a marriage between the corporate sector and government institutions—should be examined and exposed. And, fourth, the role government plays in “marketing” drugs through institutions like the public school system and social services must be examined.

Government framework. There is no genuine competition allowed in the practice of medicine or the administration of drugs. Both of these vital functions of society are monopolies that the government assigns to those who meet State requirements and abide by State rules. Thus the American Medical Association (AMA) is able to exert monopoly control of medical care, such as hospitalization, and has a long history of persecuting competitors such as midwives.

But licensing is only the most obvious way in which the State and AMA define medical care. There are many other labyrinthine ways in which the medical establishment partners with authority. In reporting on the AMA’s support of Obamacare, for example, the Wall Street Journal explained last year, “The organization wants to protect a monopoly that the federal government has created for it—a medical coding system administered by the AMA that every health-care professional and hospital must use if they wish to get paid for the services they provide. This monopoly generates income of $70 million to $100 million annually for the AMA. That makes the AMA less an association looking out for doctors and more a special-interest group beholden to Congress and the White House.”

FDA Approved

Legal privilege. All prescription drugs must be approved by the FDA; but, again, the monopoly privilege of being the sole legal drug dealers in society is only the most obvious one granted the pharmaceutical industry and hardly captures the extent of partnership. Moynihan chronicles a less obvious privilege in writing about “one of the biggest healthcare frauds in U.S. history. Pfizer was accused of illegally promoting an anti-arthritis drug for unapproved uses and, so, creating a health risk to users. Pfizer admitted to limited guilt and paid a criminal fine of $1.2 Billion and civil penalties of $1B.” Despite the hefty financial hit, not one executive was held personally responsible; no retribution was sought. The sentencing judge, federal District Court Judge Douglas Woodlock (Massachusetts) commented in his concluding remarks, “This is a case in which no human being, apparently, is going to be held responsible for substantial criminal activity by a corporation.” He notes that Pfizer absorbed the financial hit as a “cost of doing business” and still returned record profits.


Private-public partnerships (PPP). A PPP is a collaboration between government and the private sector in which a venture is funded (in part or in full) by tax dollars and operated through the private sector, or else the private sector raises capital under contract with the government to provide services. Although PPPs are most often associated with infrastructure projects, such as the repair of roads or building of bridges, this sort of ersatz capitalism is rampant within medical research and drug promotion. According to a 2001 study, “hundreds of millions of dollars” have been invested in the United States to promote partnerships around health issues, creating “thousands of alliances, coalitions, consortia and other health partnerships.” That trend has only increased in the ensuing years. Tax-funded research is commonly funneled through nominally private organizations or researchers. Conferences, studies, reports, and such are conducted at taxpayer expense. Arguably, such funding constitutes the greatest barrier to alternative, independent research.

Uncle Sam the Pusherman

Government peddling of pharmaceuticals. It is not merely that private for-profit organizations have used tax dollars to climb aboard the public health bandwagon. The government uses its agencies to create a market base. Just one example is the role of the public schools as a “pusher” of Ritalin—a form of speed more potent than cocaine—to millions of school-age children. Overwhelmingly, it is prescribed to boys who are “unruly” in class. A 2001 report stated, “If Huckleberry Finn and Tom Sawyer were in a school in Massachusetts today, they’d be drugged with Ritalin, according to many psychiatrists and other experts.” As a recent September Huffington Post headline asked, “Do 2.5 Million Children Really Need Ritalin?” Dr. Sanford Newmark continued, “What is going on here? Have millions of our children become so hyperactive and unable to focus that they are incapable of succeeding at school or dealing with the demands of normal life? Or are we creating an illness where there is none, calling normal variations in temperament and personality a ‘disease’ that requires the intervention of long term, and extremely profitable, pharmaceutical medication?”

Monopoly, legal privileges, the rise of PPPs, the use of tax dollars to create disease and eliminate competition, the peddling of pharmaceuticals through government agencies—these issues must be prominent in any productive discussion of the medicalization of everyday life. If the discussion focuses on corporate greed, then the Therapeutic State will have merely entered a new phase.

The Not-So-Neutral Net

The FCC’s new rules on Net Neutrality open the Internet to corporate discrimination. But it’s not too late to preserve Internet freedom.
Tuesday, January 25, 2011 by YES! Magazine
by Jenn Ettinger

The Internet was created as an “open” or “neutral” platform, and net neutrality is the principle that ensures that Internet providers can’t interfere with a user’s ability to access any content on the Web, whether it’s a community blog, a YouTube video, or a major news site. It’s essentially the First Amendment of the Internet.

In late December, the Federal Communications Commission enacted new rules on net neutrality—rules that are supposed to protect Internet users from discrimination and to prevent Internet providers like AT&T, Comcast, and Verizon from acting as gatekeepers on the Web.

But the FCC missed the mark, and its rules not only fail to protect Internet users, but bolster the big phone and cable companies’ ability to carve up the Internet among themselves. As Net Neutrality champion Senator Al Franken said, the rules are “simply inadequate to protect consumers or preserve the free and open Internet.”

During the presidential campaign, Barack Obama came out strongly in favor of net neutrality, saying he would “take a back seat to no one” on the issue. But in the end, Obama's FCC chairman, Julius Genachowski, failed to deliver on the president’s promise, instead issuing ambiguous rules riddled with loopholes that corporate lobbyists will easily undermine.

Over the past several years, the phone and cable companies have flooded Washington with millions of dollars and hundreds of lobbyists to buy support in Congress and put pressure on the FCC. Public interest groups and a few lawmakers have tried to fight back, and more than two million people have urged the FCC to adopt strong net neutrality rules, but Chairman Genachowski ultimately caved to industry demands and turned a deaf ear to the public.

What Went Wrong: Real vs. Fake Net Neutrality

At its core, real net neutrality is a clear rule of non-discrimination that governs all Internet providers. It means that your provider can’t slow down your service in order to speed up someone else’s. It means that your provider can’t exploit legal loopholes to slow down your access to Netflix while speeding up Hulu because it happens to own Hulu. It means that there’s one Internet, whether you access it from your home computer or your mobile phone.

But the rules that the FCC passed in December are vague and weak. The limited protections that were placed on wired connections, the kind you access through your home computer, leave the door open for the phone and cable companies to develop fast and slow lanes on the Web and to favor their own content or applications.

Worse, the rules also explicitly allow wireless carriers—mobile phone companies like AT&T and Verizon—to block applications for any reason and to degrade and de-prioritize websites you access using your cell phone or a device like an iPad. That means these companies could block something like the music service Pandora, while offering unlimited access to its own preferred applications, like VCast.

We’re already seeing what a world without real Net Neutrality will look like. Just weeks after the FCC’s vote, MetroPCS, the nation’s fifth-largest wireless carrier, announced new plans that would block popular applications like Skype and Netflix while favoring YouTube. This is particularly egregious because MetroPCS serves a lower-income audience that is increasingly moving toward the mobile Web as their only way to get online.

Some companies are already marketing “deep packet inspection” technology that would allow carriers to nickel-and-dime you by charging you every time you visit Facebook or try to stream a Vimeo video. If MetroPCS gets away with its scheme—which appears to violate even the FCC’s weak rules—you can bet that AT&T and Verizon will waste no time in unveiling their own plans, which would mean higher bills and fewer choices on the mobile Web.

Lastly, the FCC’s short-sighted action failed to contend with a series of drastic deregulatory decisions made during the Bush administration that severely hamstrung the FCC’s ability to oversee the phone and cable companies. By failing to restore the agency’s authority over broadband, the FCC risks seeing even these rules tossed out in court.

The FCC rules were designed to appease the phone and cable companies—but even that didn’t work. Verizon has already filed suit against the agency, showing that these gatekeepers will settle for nothing less than total deregulation and a toothless FCC.

Undoing the Damage

The FCC’s new rules are certainly a setback in the quest to protect the Web as an open platform and an integral piece of our communications infrastructure and our democracy. In the absence of clear FCC authority and oversight of the Internet and a strong Net Neutrality framework that protects your right to go wherever you want, whenever you want online, AT&T, Comcast, and Verizon are free to interfere with your Internet experience.

The FCC still has the opportunity to put in place a solid framework that would put the public interest above the profit motive of the phone and cable companies that it is supposed to regulate. And the FCC should take immediate steps to close the loopholes it created, to strengthen its rules, and to include wireless protections. The fight is far from over. We can work to change the rules, demand better oversight and consumer protections and make sure that the big companies can’t pad their bottom lines on the backs of their customers.

Will the Banksters Walk Away from Their Crimes?

Although the financial crisis that swept the world may have started on Wall Street, it has brought down governments and shredded economic security worldwide.
By Danny Schechter, AlterNet
Posted on January 26, 2011

All over Europe and in much of the rest of the world, a new fictional hero has engaged the fascination of millions of readers. His name is Mikael Blomkvist, and he’s the protagonist of the late Stieg Larsson’s Millennium trilogy.

These thrillers, set against the background of high financial crimes and misdemeanors, have become global best-sellers, doubtless in part owing to their gripping plots, elaborate mysteries and engaging characters. But their success is also indisputably a by-product of the macroeconomic chicaneries of our era and the human catastrophes they have wrought.

Larsson understood that financial crimes are far from victimless. They have upended millions of people’s lives, even if most of the victims don’t understand how they’ve been shortchanged and who is responsible.

Although the financial crisis that swept the world may have started on Wall Street, it has brought down governments and shredded economic security worldwide, resulting in the loss of millions of jobs and homes as businesses collapse, foreclosures grow, credit tightens and communities are devastated.

Estimates of the damage run into the trillions.

The Pew Economic Policy Group reports the average U.S. household lost $66,000 in stock holdings and $30,000 in real estate values from June 2008 through March 2009 due to the upheaval in world markets. This brings us close to $100,000 per family.

Against that backdrop, it’s not hard to see the appeal of Larsson’s hero Blomkvist, whose “contempt for his fellow financial journalists” the author encapsulates with stinging clarity:

“A bank director who blows millions on foolhardy speculations should not keep his job. A managing director who plays shell company games should do time…. The job of the financial journalist was to examine the sharks who created interest crises and speculated away the savings of small investors, to scrutinize company boards with the same merciless zeal with which political reporters pursue the tiniest steps out of line of ministers and members of Parliament.”

This is why I identified with Blomkvists’s fictional mission; in some ways it captured my own frustrations in a media world for which “the c-word” — as in financial crime— seems must never be spoken.

The media failed us on the most crucial story of our era.

Our newspapers and TV sources contributed to an economic disaster so cynically engineered even billionaire investor Jim Chanos was prompted to ask, “So where are the perp walks? How long does it take before we see any investigations? It boggles the mind that $150 billion is vaporized…there haven’t been any arrests, any indictments, nor any convictions at any major bank or at any of the government-owned financial institutions Fannie, Freddie and AIG.”

I know how hard it is to alarm the public with mere facts. They don’t have the context within which to interpret complicated stories. In 2006, I released the film In Debt We Trust, exposing illegal subprime scams and warning of the coming meltdown. It was well reviewed, but no mainstream TV outlet would air it.

I was dismissed as an alarmist and a “doom and gloomer.” A mass denial of the dangers ahead seemed to be embedded in the euphoria of the very bubble that was bringing in billions for Wall Street’s financial alchemists, who themselves seemed oblivious to the risks and indifferent to the social impact their practices courted.

The media coverage has made a complex reality deliberately complicated, even incomprehensible. The satirical paper The Onion put the financial press in its place regarding the totally obtuse reporting for which financial journalists were justly infamous even before the biggest scoop since 1929 fell into their laps:

“JPMORGAN CHASE ACQUIRES BEAR STEARNS IN TEDIOUS-TO-READ NEWS ARTICLE.”

The Onion witheringly characterized the coverage as “bogging down the news for anyone who might be remotely interested in grasping what the fuck is going on.”

Yet there were truth-tellers out there who were largely ignored. Investors like Warren Buffett compared the new exotic financial instruments to weapons of mass destruction — financial nuclear bombs.

Even guru of the right Ayn Rand had warned in Atlas Shrugged about greed destroying her beloved free market: “When you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you — when you see corruption being rewarded and honesty becoming a self-sacrifice — you may know that your society is doomed.”

Doomed or not, in the second year of the Age of Obama the hoped-for economic turnaround has yet to occur. Even as the stock market goes up again, benefitting institutional investors with the capabilities to exploit it, unemployment remains high and loan defaults continue to rise.

The best projections forecast a “jobless recovery,” which for millions is no recovery at all. How did we get into this mess?

Put ten economists in a room, and you get 20 explanations. Most of them revolve around business mistakes, poor risk models or even psychological problems like delusion and market madness. Few will concede that Sen. Ted Kaufman, D-Delaware, is right in charging that “fraud and potential criminal conduct were at the heart of the financial crisis.”

Missing has been a hard-nosed look at the crisis as a crime story.

Former bank examiner William Black understands this. Focusing on looting and CEO fraud, he helped send over 1,000 bankers to prison during the S&L crisis in the 1980s. This time there were neither dogged sleuths nor crime-busting newshounds on the beat.

Even Alan Greenspan has finally admitted in his all-too-polite exchange with a government inquiry that has come to resemble a Princeton seminar, “If you don’t have enforcement, and a lot of that stuff was just plain fraud, you’re not coming to grips with the issue.”

Of course, this “maestro” didn’t go into detail on “a lot of that stuff.”

What we are watching is an abstruse debate about banks that are “too big to fail,” not too big to jail.

Very little of the discourse speaks in terms of the victims — the millions of families now without breadwinners or homes. Most of the commentary still looks up at CEOs, not down at the people whom they robbed by design, as folk singer Woody Guthrie put it, not with a six-gun but “with a fountain pen.”

When most of us think of crime, we think of gangsters with guns, not banksters with elaborate schemes designed to transfer your wealth to their accounts.

Graydon Carter, the editor of Vanity Fair — a publication more at home with Groucho Marx than Karl — said of the meltdown:

“[This] may well turn out to be the greatest nonviolent crime against humanity in history…never before have so few done so much to so many.

Yet economists, even progressive ones like James Kwak, deeply mired in the labyrinthian world of financial transactions, still don’t believe it.

The day the SEC filed a complaint against Goldman Sachs, he wrote on BaselineScenario.com, one of the more critical Web sites covering the collapse of this vast swindle:

“One of the things I say now and then that most annoys people is that the financial crisis was not caused by criminal behavior….

“My general line is that I’m sure there was some bad behavior that rose to the level of criminal liability — like lying in disclosure documents — but that it wasn’t necessary for the crisis, and we could have had the crisis without any criminal activity at all.”

The problem with this thinking is that it defines financial crime too narrowly, only in terms of securities laws concerned primarily with protecting investors.

It doesn’t acknowledge that financial institutions spent nearly a billion dollars underwriting efforts to erode government controls and change rules, regulations and even laws to allow them to get away with whatever enhanced their bottom lines, no matter who got hurt.

Their well-documented history of aggressive lobbying and buying up politicians qualifies them as avaricious manipulators, not law-abiding companies. Their legal and moral defenses for this conduct are entirely bogus.

Let’s look at Goldman Sachs. In my film I report that Goldman was accused by Massachusetts authorities of deliberately designing mortgages to fail. They settled the complaint by paying a $60 million fine and wrote it off as a cost of doing business.

The SEC later filed civil fraud charges on similar grounds. This was followed by turbulent hearings on the Hill during which Sen. Carl Levin, D-Michigan, repeatedly cited an internal correspondence reference to “shitty” deals that Goldman Sachs peddled only to bet against them.

The Justice Department, in a separate action, was asked to open a criminal file. Among the allegations: shady accounting schemes. The giant firm has certainly come in for excoriation and ridicule, but none of Goldman’s officers has been convicted of wrongdoing, and they are “lawyered up” to the gills.

Leslie Griffith on Reader Supported News writes: “A modern-day financial monarchy, Goldman acts with the impunity once reserved for kings. Controlling legislators. Electing Presidents. Filling the Executive Branch with well-heeled lackeys, manipulating world markets and betting against the welfare of its own clients…the American people. When their equivalent of ‘tax time’ came, they squeezed the peasants for billions of bail-out bucks.”

In their testimony before Congress, Goldman bankers defended themselves by saying all big banks did what they did. A weak alibi at best, it nonetheless seems to be working for them.

The assignment of criminal liability is hardly underway. As one lawyer said to Bloomberg News, “In order to proceed criminally in a case, you need to have very clear evidence of lying, cheating and stealing.”

In plain English: Don’t get your hopes up.

The government has not declared war on Wall Street even after Wall Street declared war on Main Street. The housing bubble was built on a bedrock of fraud linking shady subprime brokers and appraisers to an industry of financial products that were then resold with misrepresented values thanks to the connivance of unethical ratings agencies.

The selling and reselling of assetless asset-backed securities is a central element of the vast fraud, as is the practice of insuring while simultaneously betting against these investments through companies like AIG.

We are talking about a criminal enterprise involving tens of thousands of people working in the financial services industry. Martin Wolf of The Financial Times explained that three industries worked together almost like a cabal to perpetuate these schemes.

The architects of the FIRE economy (structured around Finance, Insurance and Real Estate), operated in the shadow of bent rules and apathetic regulators. They built a huge infrastructure of collaborators and henchmen called “financial service professionals.”

Writes Wolf:

“In between the ultimate borrowers and the risk-takers were loan-originators, designers and packagers of securitized assets, ratings agencies, sales staff, managers of banks and SIVs [Structured Investment Vehicles] and managers of pension — and other — funds.”

What chance did some poor homeowner or credit card customer have against this savvy and well-funded phalanx of operatives whose one mission was to separate them from their property and money?

Many knew the people they were selling to could not afford to buy their products. They didn’t care. It was all done deceptively and by design. It was deliberate, engineered in public and hidden in plain sight.

At the local level, mortgage companies said they were under pressure from Wall Street to keep selling homes to the poor so the paper could be resold in an atmosphere of trickle-down corruption.

My own investigation led me to produce a new film, Plunder: The Crime of Our Time, out on DVD from Disinfo. (PlunderTheCrimeOfOurTime.com). I also wrote a companion book, The Crime of Our Time (Disinformation Books) with more documentation than you can get into any film of reasonable length.

I was surprised when the Wall Street Journal characterized it as an “anti-Wall Street film [that] isn’t just for Michael Moore fans.” The Hollywood Interview blog called it “fascinating and nailbiting, much like All the President’s Men.”

Movie City News elaborated: "Plunder: The Crime of Our Time describes how Wall Street interests greased the skids for just such a collapse, consciously breaking laws they knew government regulators were unlikely to defend. Michael Moore has trod similar ground, but in a more overtly entertaining style…. It’s a sobering documentary, but one that’s too important to ignore…in Schechter’s case, again.”

This crisis can be explained in a way most people will understand, and when the public “gets it” they will get angry and act. It’s the oldest truism: Where there is a will, there’s a way.