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capitalism’s dirty little secret: Debt

Just why is there so much debt in the Anglo-Saxon world? Bankers and regulators know well that it is in nobody’s long-term interests to have allowed borrowing to escalate to a position where the US now owes far more, as a multiple of the economy, than at the start of the Great Depression.

The answer is capitalism’s dirty little secret: excessive lending was the only way to maintain the living standards of the vast bulk of the population at a time when wealth was being concentrated in the hands of an elite.

The amount by which the elite has benefited is startling, and illustrates the problem with lightly regulated free markets: the rich get much richer while the rest do not get richer at all. According to Société Générale economists, the inflation-adjusted income of the highest-paid fifth of US earners has risen by 60 per cent since 1970, while it has fallen by more than 10 per cent for the rest. As was recently pointed out in the New York Review of Books, the Walton family, of Wal-Mart fame, is wealthier than the bottom third of the US population put together – about 100m people. These are staggering statistics, confirmed by measures such as the US and UK’s ever-rising Gini coefficients, which estimate income disparity. Another way of putting this is that the share of profits in gross domestic product is at a 100-year high, or was until very recently.

Put simply, the benefits of economic growth have gone into the pockets of plutocrats rather than the bulk of the population. So why has there been no revolution? Because there was a solution: debt. If you couldn’t earn it, you could borrow it. Cheap financing was made widely available. Financial innovations such as the asset-backed securities market aided this process, as did government-sponsored agencies such as Fannie Mae and Freddie Mac. Regulators welcomed it all while perhaps taking insufficient account of the moral hazard problem it posed: that ever-increasing leverage meant the authorities had to keep interest rates low, otherwise the debt burden would cripple consumption. This prompted more leverage, which exacerbated the problem.

more from Ben Funnell in the Financial Times

Health Care: Dispelling Some Myths

Many in the United States fear that people would abuse a free health care system, causing overcrowding and a compromised level of care. Others claim that a single payer system would limit the freedoms of both doctor and patient. These claims, propagated by the corporate media in the United States, are a hollow attempt to keep those in the US from organizing to demand single payer health care.

The right to health care is guaranteed in the Venezuelan Constitution, which was written and ratified by the people in 1999. Through implementing a state-funded social program called Barrio Adentro, or inside the barrio, free comprehensive health care is available to all Venezuelans. Beginning in June 2003 through a trade pact with Cuba, Venezuela began to bring Cuban doctors, medical technology, and medications into rural and urban communities free of charge in exchange for low-cost oil. The 1.5 million dollar per year program expanded to provide a broad network of small neighborhood clinics, larger regional clinics, and hospitals which aim to serve the entire Venezuelan population. (1) Chavez has referred to this new health care system as the “democratization of health care” stating that “health care has become a fundamental social right and the state will assume the principal role in the construction of a participatory system for national public health.” (2) In Venezuela, not only is health care a right; it is recognized as essential for true participatory democracy.

[snip]

During my time in Venezuela, I developed a cough that went on for three weeks and progressively worsened. Finally, after I had become incredibly congested and developed a fever, I decided to attend a Barrio Adentro clinic. The closest one available was a Barrio Adentro II Centro de Diagonostico Integral (CDI) and I headed in without my medical records or calling to make an appointment. Immediately, I was ushered into a small room where Carmen, a friendly Cuban doctor, began questioning me about my symptoms. She listened to my lungs and walked me over to another examination room where, again without waiting, I had x-rays taken. Afterwards, the technician walked me to a chair and apologized profusely that I had to wait for the x-rays to be developed, promising that it would take no more than five minutes. Sure enough, five minutes later he returned with both x-rays developed. Carmen studied the x-rays and informed me that I had pneumonia, showing me the telltale shadows. She sent me away with my x-rays, three medications to treat my pneumonia, congestion, and fever, and made me promise to come back if my conditioned failed to improve or worsened within three days.

I walked out of the clinic with a diagnosis and treatment within twenty-five minutes of entering, without paying a dime. There was no wait, no paperwork, and no questions about my ability to pay, my nationality, or whether, as a foreigner, I was entitled to free comprehensive health care. There was no monetary value connected with my physical well-being; the care I received was not contingent upon my ability to pay. I was treated with dignity, respect, and compassion, my illness was cured and I was able to continue with my journey in Venezuela.

read the rest of Rady Ananda's informative piece at Coalition of the Obvious

Recovery? That's a Good One.

Happy-face media reporting of economic news is providing the usual upbeat spin on Friday’s debt-deflation statistics. The Commerce Department’s National Income and Product Accounts (NIPA) for May show that U.S. “savings” are now absorbing 6.9 percent of income.

I put the word “savings” in quotation marks because this 6.9 per cent is not what most people think of as savings. It is not money in the bank to draw out in rainy-day emergencies like losing one’s job, as thousands are every day. The statistic means that 6.9 per cent of national income is being earmarked to pay down debt – the highest savings rate in 15 years, up from actually negative rates (living on borrowed credit) just a few years ago. The only way in which these savings are “money in the bank” is that they are being paid by consumers to their banks and credit card companies.

Income paid to reduce debt is not available for spending on goods and services. It therefore shrinks the economy, aggravating the depression. So why is the jump in “saving” good news?

It certainly is a good idea for consumers to get out of debt. But the media are treating this diversion of income as if it were a sign of confidence that the recession may be ending and that Obama’s “stimulus” plan is working. The Wall Street Journal has reported that Social Security recipients of one-time government payments “seem unwilling to spend right away,” while The New York Times wrotethat“many people were putting that money away instead of spending it.” It is as if people can afford to save more.

The reality is that most consumers have little real choice but to pay. Unable to borrow more as banks cut back credit lines, their “choice” is either to pay their mortgage and credit card bill each month, or lose their homes and see their credit ratings slashed, pushing up penalty interest rates near 20 per cent To avoid this fate, families are shifting to cheaper and less nutritious food, eating out less or at fast food restaurants, and cutting back on vacation spending. So it seems contradictory to applaud these “savings” (that is, debt-repayment) statistics as an indication that the economy may emerge from depression in the next few months. While unemployment approaches the 10 per cent rate and new layoffs are being announced every week, isn’t the Obama administration taking a big risk in telling voters that its stimulus plan is working? What will people think this winter when markets continue to shrink? How thick is Obama’s Teflon?

more from Michael Hudson at Counterpunch

many more classics at Pulp International

Does Obama Have What It Takes?

For the first time, I'm actually quite afraid at having Barack Obama occupying the office of President of the United States. I hate to say it, but McCain was right - Obama doesn't have the experience needed for the job under the present circumstances.

At some not too distant point, this man is going to have to stand alone, break away from the chains of all his controllers and sycophants, agonize as he has never done before, and make a decision which will have incalculable consequences.

It really won't matter whether the decision will be about direct intervention in Iran or calling North Korea's bluff or calling out the Army and FEMA mercenaries to squash riots in Los Angeles, Gary, Des Moines, or wherever. If he really wants his job, he'll have to make the decision himself and order that it be carried out.

Watching the President's performance so far, I have no faith that he is ready for that ...

Under Bush, and now under Obama, the presidency is really not the President. It is, in fact, a group of very powerful people, most of whom have been in and around the corridors, lobbies, and back rooms of Washington and its tentacles for a very long time. Whereas The Dubbleduh-Chainey Gang was run by operatives from the Nixon, Reagan, and Bush I regimes, Obama's syndicate, of which he is only the mouthpiece, is crawling with denizens of the Carter and Clinton administrations with grand geopolitical agendas, Cold War mindsets, and incredible, conflicting egos.

It is very difficult for "progressives" to see that, in some ways, The Gang was extremely successful in accomplishing its goals. The primary reasons for that were one-mindedness and lock-step discipline. If you didn't walk like the other ducks, you ditched the pond or were driven out. There was no discussion. The goals were clear. You were with 'em or agin 'em, no matter who you were. And essentially, there was one guy in charge (although it obviously wasn't George).

Obama has a distinct disadvantage here. He has gathered into the Executive branch a motley crew of old hands who have enormous experience, but who are certainly not of one mind. And Obama is not in the center, he's on the periphery.

Such a group would work fantastically well if it had a strong, well-seasoned, very knowledgeable leader; one who could say, "OK, guys, thanks for the input. Now get the hell out of my office. I'll let you know in two hours what we're going to do." Barack Obama is not that man.

More from Glenn Greenwald:

One of the rarest commodities in the establishment media is someone who was a vehement critic of George Bush and who now, applying their principles consistently, has become a regular critic of Barack Obama -- i.e., someone who criticizes Obama from what is perceived as "the Left" rather than for being a Terrorist-Loving Socialist Muslim. It just got a lot rarer, as The Washington Post -- at least according to Politico's Patrick Gavin -- just fired WashingtonPost.com columnist, long-time Bush critic and Obama watchdog (i.e., a real journalist) Dan Froomkin.

What makes this firing so bizarre and worthy of inquiry is that, as Gavin notes, Froomkin was easily one of the most linked-to and cited Post columnists. At a time when newspapers are relying more and more on online traffic, the Post just fired the person who, in 2007, wrote 3 out of the top 10 most-trafficked columns. In publishing that data, Media Bistro used this headline: "The Post's Most Popular Opinions (Read: Froomkin)." Isn't that an odd person to choose to get rid of?

Following the bottomless path of self-pity of the standard right-wing male -- as epitomized by Pete Hoekstra's comparison of House Republicans to Iranian protesters and yet another column by Pat Buchanan decrying the systematic victimization of the white male in America -- Charles Krauthammer last night said that Obama critics on Fox News are "a lot like [Hugo Chavez'] Caracas where all the media, except one, are state run." But right-wing polemicists like Krauthammer are all over the media.

In addition to his Rupert Murdoch perch at Fox, Krauthammer remains as a regular columnist at the Post, alongside fellow right-wing Obama haters such as Bill Kristol, George Will, Jim Hoagland, Michael Gerson and Robert Kagan -- as well as a whole bevy of typical, banal establishment spokespeople who are highly supportive of whatever the permanent Washington establishment favors (David Ignatius, Fred Hiatt, Ruth Marcus, David Broder, Richard Cohen, Howie Kurtz, etc. etc.). And that's to say nothing of the regular Op-Ed appearances by typical Krauthammer-mimicking neoconservative voices such as John Bolton, Joe Lieberman, and Douglas Feith -- and the Post Editorial Page itself. "Caracas" indeed.

Notably, Froomkin just recently had a somewhat acrimonious exchange with the oh-so-oppressed Krauthammer over torture, after Froomkin criticized Krauthammer's explicit endorsement of torture and Krauthammer responded by calling Froomkin's criticisms "stupid." And now -- weeks later -- Froomkin is fired by the Post while the persecuted Krauthammer, comparing himself to endangered journalists in Venezuela, remains at the Post, along with countless others there who think and write just like he does: i.e., standard neoconservative pablum. Froomkin was previously criticized for being "highly opinionated and liberal" by Post ombudsman Deborah Howell (even as she refused to criticize blatant right-wing journalists).

All of this underscores a critical and oft-overlooked point: what one finds virtually nowhere in the establishment press are those who criticize Obama not in order to advance their tawdry right-wing agenda but because the principles that led them to criticize Bush compel similar criticism of Obama. Rachel Maddow is one of the few prominent media figures who will interview and criticize Democratic politicians "from the Left" (and it's hardly a coincidence that it was MSNBC's decision to give Maddow her own show -- rather than the endless array of right-wing talk show hosts plaguing television for years -- which prompted a tidal wave of "concern" over whether cable news was becoming "too partisan"). In general, however, those who opine from the Maddow/Froomkin perspective are a very endangered species, and it just became more endangered as the Post fires one if its most popular, talented, principled and substantive columnists.

Greenwald's columns can be read at Salon.com

further insight from Jane Hamsher

What a Surprise! Not.

WASHINGTON — Defense Department officials are debating whether to ignore an earlier promise and squelch the release of an investigation into a U.S. airstrike last month, out of fear that its findings would further enrage the Afghan public, Pentagon officials told McClatchy Monday.

The military promised to release the report shortly after the May 4 air attack, which killed dozens of Afghans, and the Pentagon reiterated that last week. U.S. officials also said they'd release a video that military officials said shows Taliban fighters attacking Afghan and U.S. forces and then running into a building. Shortly afterward, a U.S. aircraft dropped a bomb that destroyed the building.

However, a senior defense official told McClatchy Monday: "The decision (about what to release) is now in limbo."

Pentagon leaders are divided about whether releasing the report would reflect a renewed push for openness and transparency about civilian casualties or whether it would only fan Afghan outrage and become a Taliban recruiting tool just as Army Lt. Gen. Stanley McChrystal takes command of U.S. forces in Afghanistan.

Two U.S. military officials told McClatchy that the video shows that no one checked to see whether any women or children were in the building before it was bombed. The report acknowledges that mistakes were made and that U.S. forces didn't always follow proper procedures, but it does little to reassure Afghans that the U.S. has done enough to avoid repeating those mistakes.

read on in McClatchy

Fisk on Iran

It was Iran's day of destiny and day of courage. A million of its people marched from Engelob Square to Azadi Square – from the Square of Revolution to the Square of Freedom – beneath the eyes of Tehran's brutal riot police. The crowds were singing and shouting and laughing and abusing their "President" as "dust".

Mirhossein Mousavi was among them, riding atop a car amid the exhaust smoke and heat, unsmiling, stunned, unaware that so epic a demonstration could blossom amid the hopelessness of Iran's post-election bloodshed. He may have officially lost last Friday's election, but yesterday was his electoral victory parade through the streets of his capital. It ended, inevitably, in gunfire and blood.

Not since the 1979 Iranian Revolution have massed protesters gathered in such numbers, or with such overwhelming popularity, through the boulevards of this torrid, despairing city. They jostled and pushed and crowded through narrow lanes to reach the main highway and then found riot police in steel helmets and batons lined on each side. The people ignored them all. And the cops, horribly outnumbered by these tens of thousands, smiled sheepishly and – to our astonishment – nodded their heads towards the men and women demanding freedom. Who would have believed the government had banned this march?

The protesters' bravery was all the more staggering because many had already learned of the savage killing of five Iranians on the campus of Tehran University, done to death – according to students – by pistol-firing Basiji militiamen. When I reached the gates of the college yesterday morning, many students were weeping behind the iron fence of the campus, shouting "massacre" and throwing a black cloth across the mesh. That was when the riot police returned and charged into the university grounds once more.

At times, Mousavi's victory march threatened to crush us amid walls of chanting men and women. They fell into the storm drains and stumbled over broken trees and tried to keep pace with his vehicle, vast streamers of green linen strung out in front of their political leader's car. They sang in unison, over and over, the same words: "Tanks, guns, Basiji, you have no effect now." As the government's helicopters roared overhead, these thousands looked upwards and bayed above the clatter of rotor blades: "Where is my vote?" Clichés come easily during such titanic days, but this was truly a historic moment.

Would it change the arrogance of power which Mahmoud Ahmadinejad demonstrated so rashly just a day earlier, when he loftily invited the opposition – there were reported to be huge crowds protesting on the streets of other Iranian cities yesterday – to be his "friends", while talking ominously of the "red light" through which Mousavi had driven. Ahmadinejad claimed a 66 per cent victory at the polls, giving Mousavi scarcely 33 per cent. No wonder the crowds yesterday were also singing – and I mean actually singing in chorus – "They have stolen our vote and now they are using it against us."

more from Fisk in The Independent (U.K.)

Reflections

WHEN I WROTE "Soccer in Sun and Shadow," I wanted fans of reading to lose their fear of soccer and fans of soccer to lose their fear of books. I never imagined anything more.

But a former member of the Mexican congress, Victor Quintana, told me the book saved his life. In the middle of 1997, he was kidnapped by contract killers, hired to punish him for exposing some nasty business.

They had him trussed up, face in the dirt, and were kicking him to death, when, just before finishing him off with a bullet, they started arguing about soccer. Victor, more dead than alive, put in his two cents. And he started telling stories from my book, trading minutes of life for every tale out of those pages. Time and stories came and went, and at last the murderers left him, beaten and broken, but alive.

"You're okay," they told him, and they took their bullets elsewhere.

***

A few years ago, at a school in Salta in the north of Argentina, I was reading stories to 8- and 9-year-olds.

Afterward, the teacher asked the children to write to me, commenting on what I had read.

One of the letters counseled: "Keep at it, you'll improve."

***

At one of my storytelling sessions, in the Spanish town of Ourense, a man in the back row kept staring at me, an unblinking, impassible mask. When the reading ended, he approached slowly, fixing me with his gaze as if he wanted to kill me. Fortunately, he didn't. Instead, he said, "It must be so hard to write so simply."

And after that remark, the highest praise I have ever received, he turned on his heel and left.

more from South American author Eduardo Galeano in the Washington Post

via FYTO which, if you don't mind its colorful name, is well-worth exploring as it features many fine images of the ocean

Genetically Modified Foods

The following is excerpted from an interview of scientist Arpad Pusztai, conducted by Ken Roseboro.

Why is genetic engineering a risky technology?

Gene insertion is a major problem. You cannot direct where the splicing of the genetic construct will happen. It is well known that when you insert a genetic construct into the DNA network of a plant, you create changes in that network. As a result, you will get changes in the functionality of the plant's own genes. They may become more active or silent. The effects will be unpredictable and uncontrollable. It can sometimes cause irreparable damage to the genome. This is insertional mutagenesis.

The biotechnology industry simply overrides this concern. They say we don't have to worry about it, and if you raise your voice, you are called a Luddite.

Fundamentally the science of genetic engineering is crap. One gene expressing one protein is the basis of genetic engineering, but the Human Genome Project discovered 23,000 genes, and there are 200,000 proteins in every cell. With this discovery, genetic engineering should have disappeared into the dustbin, but the biotechnology industry is so strong. Genetic engineering is a product driven technology. If you have enough money to throw at it, you can do many things. But the industry won't waste money on safety assessment.

What are some of the studies you are aware of showing negative health impacts of GM foods?

In addition to the organ ultrastructural studies showing up significant changes, the most important studies are ones that showed alterations in the immune system. The Australian study (showing that GM peas caused immune damage in mice), the recent Italian study (showing immune disturbances in mice fed GM corn), and the reproduction studies of Irina Ermakova and more recently the Austrian study (showing reduced fertility in mice fed GM corn).

Although the significance of these studies is questioned by the biotech industry and regulatory agencies, in scientific terms the writing is on the wall for the present genetic modification technique.

read the full interview here

9/11 Conspiricy Theory: Can you explain it away?

This is a topic that I have not touched on previously, but one which has piqued my interest to varying degrees during the past several years. As you may know, there are quite a few smart people who have challenged the various official 9/11 stories, but what you may not know is that some of them have built very powerful cases.

It seems to me that the most questionable event and subsequent official explanation was the collapse of WTC 7. That building suffered no strike by airplanes on 9/11, yet it collapsed. The official explanation was that fires were the cause for the collapse, but as many have pointed out, that really does not pass serious scrutiny. No other steel skyscraper has ever been to known to collapse due to fire, as normal fires are insufficiently hot to cause such a collapse. Even the heat levels of burning jet fuel, which was of course present in the two main towers, is arguably insufficient.

Some have also mentioned the possibility of there having been damage done to the building by falling debris. But the problem with that is the manner in which the building fell. In other words, it is difficult to concieve of such a smooth, vertical implosion, if one side of the building had been badly damaged.

But the reason that I bring up WTC 7 now, is that there has been some new evidence published recently to support an alternative theory as to what may have been responsible for the building's collapse. That theory, which is understandably and accurately considered to be a 'conspiricy' theory, is that the building was actually brought down by a form of controlled demolition.

This evidence, painstakingly detailed by Jim Hoffman, suggests (if not proves) that there was residue of "unignited aluminothermic explosives" found in the rubble of WTC 7. Hoffman elaborates in great scientific detail, and then asks a number of trenchant questions which, I believe, warrant answers.

If any of you happen to have a scientific background, I would be very interested in hearing your reaction to Hoffman's article. And irrespective of whether you find serious flaws in it, or find it to be compelling, I'll be happy to publish any serious responses.

Hoffman's analysis can be read here

Here is a broader overview of the questions surrounding the WTC 7 case

Tilt-Shift

Though rarely used until recent years, tilt-shift photography produces very interesting effecst in which the subject in sharp focus, while most everything surrounding it is not (see this article in Wikipedia for much more detail).

Given the remarkable capabilities of current generation digital cameras, it is now possible to create this effect in video as well. Here is a really fine example, using Swiss trains as subjects, created by Andi Leemann and Jeri Peier.

fb1 visuals

The Importance of Tribes

Steven Pressfield has developed a video series in which he makes a very interesting and strong case for why, in large part, the U.S. has been floundering in its war efforts in Afghanistan. Here is his introduction:

This five-part series is about war in Afghanistan, ancient and modern. Each video is five minutes long. I'm not doing this for money. I have no political axe to grind. I'm a Marine and I don't want young Marines and soldiers going into harm's way without the full mental arsenal of history and cultural context.

What's my thesis? That the enemy in Afghanistan today (and in Iraq and Pakistan) is not Islamism or jihadism. It's tribalism.

The tribal mind-set (warrior pride, hostility to all outsiders, perpetual warfare, the obligation of revenge, suppression of women, a code of honor rather than a system of laws, extreme conservatism, unity with the land, patience and capacity for hatred) permeates everything in Afghanistan and its neighboring Islamic republics. For war-making or peace-making, it cannot be ignored.

Think of these videos as a crash course in tribalism.

Pressfield's videos can be viewed here, and are well-worth watching

Minding the Store?

Absolutely mind-boggling.

via Michael Shedlock

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