Portraits of a declining empire: Wall St. edition

Those who make peaceful revolution impossible will make violent revolution inevitable.

- John F. Kennedy

***

Photographs of protesters during the recent occupy Wall Street movement September/October 2011 and in the last photo, a simple suggestion to the folks who created the financial crisis of 2008.  (source: C.S. Monitor)

As in the case of previous protests against the corporate state, the police were brought in to reign in any wider public criticism of the elite.  Police more interested in protecting the criminals who instigated the Great Recession than in supporting the constitutionally sanctioned free-speech of protesters, brought out their truncheons, pepper spray, and paddy wagons, to disrupt protests consisting of no more than a few hundred people.  I briefly discussed the nature of this struggle for democracy and incipient fascism in an earlier post.

The movement, if it can even be called that, is now expanding across America and the world.  News reports indicate that, "More than 100 cities have clocked in under the “Occupy” moniker."  MIT professor and lawyer Nicholas Ashford states the following:

It’s not just a matter of people being “mad as hell and not taking it anymore,” he says. “It’s more crucially the dawning realization that the US economy was always built on quicksand, and that our current dismal state is not the anomaly, but the reality.”

With the global depression unfolding across the northern hemisphere (i.e. Europe, Japan, and North America) the elite -who have suppressed earlier protestation from across the political spectrum- are realizing that they no longer have the ability to hide their incompetence and perfidy.  While the election of Barack Obama was meant to assuage popular discontent in 2008, his mediocre performance and constant willingness to capitulate to the interests of big business (i.e. financial industry versus main street bail-out, health care insurance, protection of the banks and oil companies, and expansion of the Afghan conflict) have alienated much of his liberal base and emboldened the unhinged statists on the right.

Violent and unsettling times await us all as the plutocrats pull up the drawbridge and attempt to prevent the restless masses from engaging in retribution to their greed and criminality.

What she just said...

Occupy Wall Street protestor using something other than a manila colored pizza box to denounce the corrupt state of affairs that is now America's corporate plutocracy.

***

The topics inveighed by the left are vast and given the MSM's collusion in disseminating propaganda and controlling the public narrative on subjects of interest to the corporate state, usually very little coherent messaging makes it into the public consciousness.  However, people across the world, not just in authoritarian countries, are protesting en mass to the reckless and destructive practices of our authoritarian and/or corporate overlords.  Unlike the bullshit machine during the Iraq invasion where the venal and pliant press stenographed the Bush imperium's falsehoods on Iraqi mushroom clouds and fantastical weapons of mass destruction, the fruits of our economic discord are apparent for all to see.  The nations of the world are sliding into a new period of stagnation and decline.  Unemployment, social mobility, declining wages, and reduced prosperity are evident for all to see.  While society crumbles, multinational corporations are sitting on trillions of dollars of liquid capital, financial houses are given nearly unlimited protection by the state for their incompetence, and the wealthiest beneficiaries of the past 30-years of deregulation and financialization of western economies bemoan any increase in their tax rates.

The elite are firmly aware that for them to stay in power demands that the masses are fully unaware of how dire a situation they are in.  Institutional propagandists denounce the protestors as "dangerous" and predicated on mob rule.  Many are asking what the objectives of the movement are about (psst... its about greedy stupid bankers and their congressional whores, motherfucker!).  Daniel Indiviglio at The Atlantic is already calling the protests a waste of time, given that they are unfocused, the financial industry owns congress, and of course the big lie, that America really, really needs behemoth "to big to fail" monstrosities like Bank of America, Citibank, or Goldman Sachs, because as he states, the rest of the economy is just useless unproductive crap. To enforce the objectives of the corporate state, NY city police department was more than happy in assaulting, brutalizing, and arresting innocent civilians who exercised their first amendment rights.  This is nothing new for the NYPD, which has a long record (i.e. the 2004 Republican presidential election convention) of crushing pubic dissidence and violating the civil rights of protestors.

Many people realize the system is fundamentally rigged against them and the composition of the protestors and their supporters reflects this fact:

The crowd—while represented widely in the media as white, liberal college kids—is surprisingly diverse, including raging grannies, street kids, union workers, professors, ex-bankers, longtime activists, human rights lawyers, Native American band members and ex-military. Political views span the spectrum, from anarchist to right-wing libertarian—complicating efforts toward any kind of unifying objective or mantra.

Chris Hedges, Pulitzer prize winning journalist and author, had this to say about the occupation:

The real people who are scared are the power elite. Of course, they’re trying to make you scared and us scared. But I can tell you, having been a reporter for the New York Times, that on the inside they’re very, very frightened. They do not want movements like this to grow, and they understand on some level — whether it’s subconscious or, in other cases, even overt — that the criminal class in this country has seized power.

I am not optimistic that any particular resistance to the corporate state can succeed in changing the current trends.   If history is a guide, it is more likely that the people will turn on those protesting and disclosing the rampant corruption, rather than on their own imbecile leaders.  As long as people remain confused, uneducated, and ignorant to the current situation, the crypto-fascists, corporate fraud-mongers, and militarists driving policy will remain in the driver's seat.

Andrew Sullivan on McGinness' Palin book

Andrew Sullivan, who for the past three years has been denouncing the sustained lies and bizarre cult of Caribou Barbie has a few key words about Sarah Palin in regards to Joe McGinness' new book on her titled "The Rogue".

it remains, in my view, deeply relevant to this country's institutions that we fully investigate and understand how a delusional, unstable, ignorant, vicious unknown came to be selected by a tiny group of people with no serious vetting to be potentially one heart beat away from the presidency of the US. The magnitude of that error should make anyone who cares about this democracy worry. Palin is different - less qualified than anyone in history, shielded from press scrutiny, able to get away with constant lies and absurd stories because of a cowed press, terrified of being called "liberal."

- The Daily Dish, "Unattributed Crap"

Stiglitz on stimulating the US economy

Joseph Stiglitz, professor of economics at Columbia University, former Senior Vice President and Chief Economist of the World Bank, and recipient of the 2001 Nobel Memorial Award in Economic Sciences, offers some sound advice to the American political system in how to stimulate the US economy.

He points out the obvious:

First, we must dispose two myths. One is that reducing the deficit will restore the economy. You don’t create jobs and growth by firing workers and cutting spending. The reason that firms with access to capital are not investing and hiring is that there is insufficient demand for their products. Weakening demand — what austerity means — only discourages investment and hiring.

He asks, "How do we  get America back to work now?"

The best way is to use this opportunity — with remarkably low long-term interest rates — to make long-term investments that America so badly needs in infrastructure, technology and education.

We should focus on investments that both yield high returns and are labor intensive. These complement private investments — they increase private returns and so simultaneously encourage the private sector.

Helping states pay for education would also quickly save thousands of jobs. It makes no sense for a rich country, which recognizes education’s importance, to be laying off teachers — especially when global competition is so fierce. Countries with a better educated labor force will do better. Moreover, education and job training are essential if we are to restructure our economy for the 21st century.

The advantage of having underinvested in the public sector for so long is that we have many high-return opportunities. The increased output in the short run and increased growth in the long run can generate more than enough tax revenues to pay the low interest on the debt. The result is that our debt will decrease, our GDP will increase and the debt to GDP ratio will improve.

He also considers the possibility of raising taxes and using that income to invest in the country to stimulate the economy.

Increasing taxes at the top, for example, and lowering taxes at the bottom will lead to more consumption spending. Increasing taxes on corporations that don’t invest in America and lowering them on those that do would encourage more investment. The multiplier — the amount GDP increases per dollar spent — for spending on foreign wars, for example, is far lower than education, so shifting money here stimulates the economy.

There are things we can do beyond the budget. The government should have some influence over the banks, particularly given the enormous debt they owe us for their rescue. Carrots and sticks can encourage more lending to small- and medium-sized businesses and to restructure more mortgages. It is inexcusable that we have done so little to help homeowners, and as long as the foreclosures continue apace, the real estate market will continue to be weak.

The banks’ anti-competitive credit card practices also essentially impose a tax on every transaction — but it is a tax with revenues that go to fill the banks’ coffers, not for any public purpose — including lowering the national debt. Stronger enforcement of antitrust laws against the banks would also be a boon to many small businesses.

Europe's inverted socialism

And most Northern Europeans also seem to believe that the bailouts have gone to lazy Southern Europeans. In fact, their purpose has been to shore up the fragile Northern European financial systems. German banks are among the weakest in Europe; some of them (especially the state-owned landesbanks) are effectively bankrupt. If they were forced to mark down their Southern European debt, they might well collapse in a heap, and the European financial system could grind to a halt. Just as in the United States, the real impact of the European bailout has been to shore up the continent’s banks – not to help the continent’s debtors. The recent downgrading of two of France’s most important banks, due to their holdings of Greek debt, reminds us of how exposed Northern Europe’s financial systems remain. And rumors of a recent IMF report that European banks are over $270 billion short of the capital they need to confront their current problems served to drive the point home.

- Jeffry Frieden, "Europe's Lehman moment"

Europe's financial problems have escalated to the point where a world-wide contagion has become again possible.  Economists and international leaders are sounding alarms that have rarely been spoken in unison, since the inception of the 2008 financial crisis.  Christine Lagarde, the managing director of the International Monetary Fund, said "We have entered into a dangerous phase of the crisis." Her words come at a point where the Greek debt crisis appears to be reaching its climax.  Moody's Investors Service downgraded two of France's top banks, Societe Generale and Credit Agricole, stating that it had concerns about the two banks funding and liquidity profiles, due to their exposure to Greek debt.  A recent analysis indicates that 43 large European banks hold debt in the PIIGS equivalent to 65% of the book value of those institutions. Gretchen Morgenson of the NY Times explains the current situation:

Some of these [European] banks are growing desperate for dollars. Fearing the worst, investors are pulling back, refusing to roll over the banks’ commercial paper, those short-term i.o.u.’s that are the lifeblood of commerce. Others are refusing to renew certificates of deposit. European banks need this money, in dollars, to extend loans to American companies and to pay their own debts.  

As a result several central banks have mounted a coordinated effort to inject US dollars into the financial system to stimulate market confidence.  The Guardian newspaper elaborates:

The Bank of England joined the US Federal Reserve, the European Central Bank, the Swiss National Bank and the Bank of Japan on Thursday to announce that they would flood money markets with dollars over the coming months.

Gus Faucher, director of macroeconomics at Moody's Analytics, states "The big question is: is this enough in the short term to get us to a longer term solution? There is a potential for a really huge financial crisis in Europe. Things are bad now, but they could get a lot worse."

Many observers are looking at the current European situation and seeing similarities between Lehman Brothers demise and the 2008 crisis.

Adding to the peril is that these banks are funded primarily by short-term investors, like buyers of commercial paper, rather than by depositors, as is more often the case with American banks. This was the same problem faced by Bear Stearns and Lehman Brothers, which collapsed after short-term lenders fled in panic.

Economist Barry Eichengreen says that, "The euro’s survival and, indeed, that of the European Union hang in the balance."  He says long term proposals on restructuring Europe's sovereign debts are not of immediate concern, rather the continent needs to act decisively in stabilizing its banks.  The European Financial Stabilty Facility (EFSF) and even the IMF should be used to re-capitalize Europe's weak banks.  The second move should be to give Greece sufficient room to maneuver by asking its creditors to relax its fiscal targets.  Third, governments need to end this futile dalliance with austerity and proceed with stimulus projects that would create real growth.  He states, "Without growth, tax revenues will remain stagnant, and the capacity to service debts will continue to erode. Social stability, similarly, depends on it."

Economist Paul Krugman at the beginning of this week had some serious words for European governments.  He states, "We’re not talking about a crisis that will unfold over a year or two; this thing could come apart in a matter of days. And if it does, the whole world will suffer"  Likewise, he is telling Europe to use the ECB to continue buying up Spanish and Italian debt to contain the risk of default. The moral argument for inaction or worst punishing Europe's peripheral nations and the Mediterranean nations of Spain and Italy, will drive the continent -if not the world- into another economic abyss.

The reality is Greece's debt problems have been growing and not diminishing over the past two years.  The country is not in any position today or in any foreseeable future to repay the totality of its debt.  Under the current regime imposed on the country, Simon Johnson a former IMF chief economist concludes that "The tax revenue needed to service [the Greek] debt would burden businesses and households for decades – enterprising and productive people will move their fortunes and their futures elsewhere in the euro area or to the United States." Throwing billions of dollars at the nation, only to prop up banks in the northern economies of Europe and hoping that the situation will be resolved at a later date, has now been shown to be an unfeasible and irresponsible position.  Europe needs to first stabilize its banking sector immediately and then proceed in an orderly default of Greece's debt. An unorderly default will plunge the entire Eurozone into chaos.  Spain and Italy will face unprecedented pressure, whereas the remaining nations of Portugal, Ireland, and Greece may well face economic collapse.

Texas sized Climate Change!

Reports from NOAA's National Climatic Data Center (NCDC) in Asheville, N.C. indicate that the heat waves encountered in the USA during the months of June, July, and August, represent the second warmest summer.

The press release indicates the following:

• Excessive heat in six states -- Arizona, Colorado, New Mexico, Texas, Oklahoma, and Louisiana -- resulted in their warmest August on record. This year ranked in the top ten warmest August for five other states: Florida (3rd), Georgia (4th), Utah (5th), Wyoming (8th), and South Carolina (9th).The Southwest and South also had their warmest August on record.
• Only nine of the lower 48 states experienced August temperatures near average, and no state had August average temperatures below average.
• An analysis of Texas statewide tree-ring records dating back to 1550 indicates that the summer 2011 drought in Texas is matched by only one summer (1789), indicating that the summer 2011 drought appears to be unusual even in the context of the multi-century tree-ring record.
• Texas had its driest summer on record, with a statewide average of 2.44 inches of rain. This is 5.29 inches below the long-term average, and 1.04 inches less than the previous driest summer in 1956. New Mexico had its second driest summer and Oklahoma its third driest summer. New Jersey and California had their wettest summers on record with 22.50 inches and 1.93 inches, respectively.
• Based on NOAA's Residential Energy Demand Temperature Index, the contiguous U.S. temperature-related energy demand was 22.3 percent above average during summer. This is the largest such value during the index's period of record, which dates to 1895.

Recession Watch: one dip, two dips,... we all fall down

The trend lines are undeniable; the US economy is heading into another recession.  Debate between economic analysts entail whether what is occurring is an entirely new recession, a double-dip recession, or the continuation of even larger economic contraction that began initially with the 2008 financial crisis (which some would argue is an extension of the 2001 recession) and has properties that are unlike previous recessions.  Each of these arguments have some validity in explaining the current situation, but all conclude that this new decline, while not likely to be as severe as the 2008 crisis, will last longer in duration and given the current political weaknesses of the major industrial nations, be more difficult to mitigate.

Leaving aside the debt crisis and economic malaise that is occurring in Europe for the moment or the possible hard landing that has been predicted about China and the entailing risks these situations pose to the global economy, America's economic position is clearly weak.

First, the jobs position is dismal.  Last month, zero jobs were added and only a fraction of the jobs necessary to compensate for population growth alone have been achieved in the previous four months.  The NY Times summarizes:

Over the last 50 years, every time that job growth has been as meager as it has been over the last four months, the economy has been headed toward recession, in a recession or in the immediate aftermath of one.

The collapse of job creation is not about businesses fearing regulatory uncertainty, creeping hyper-inflation, or the need for further tax-cuts to stimulate big businesses already bloated corporate coffers, but rather it is due to insufficient aggregate demand.  People without jobs, people forced to take inferior paying jobs, people concerned that they may lose their jobs, people forced to subsidize their spouse, adult children, parents, and/or relatives, and people loaded with debt, aren't engaged in making major purchases, because they can't afford to.  Consider the following:

But the latest indicators suggest that even if the economy does not continue to worsen, it appears to be too weak to add enough jobs each month — roughly 125,000 — even to keep pace with population growth. Anything less, and the share of the population that is employed will continue to fall.

The stimulus program offered by Mr. Obama was insufficient to meet the full demands of the  financial crash of 2008.  This blog has been saying for the past three years (here, here, and here) that the weak recovery was an illusion.  Joseph Stiglitz said back in 2009 that, "We need a larger and better designed stimulus."  Paul Krugman has been waging a public policy crusade to convince the public that a second more robust stimulus is needed.  President Obama, instead of listening to these and similar minded economists, decided to split the difference and offer everyone a little of what they wanted: a little bit of tax cuts and some stimulus over a couple years.  The problem was that while averting a more severe recession, it failed to create enough power to re-inflate the economy to pre-recessionary levels.  Now that the stimulus dollars have been used, the economy is drifting back into negative territory and with a recalcitrant Republican dominated House of Representatives, there is virtually no chance that anything of substance being passed.

Other indicators such as GDP, consumer confidence, consumer consumption, factory employment diffusion index, and housing are all trending downwards.  Volatility in the market place, with abundant talk of debt crises across the western hemisphere, has investors and business worried.  Last month Asian banks cut credit lines to French banks.  Central banks across Europe, Japan, and America have made the unexpected move to offer dollars to European banks to ensure liquidity.

What had been in 2008 a financial crisis has migrated into a sovereign debt crisis.  Nouriel Roubini expands:

We are running out of policy bullets. The policymakers don't have monetary bullets; they don't have fiscal bullets; they cannot even backstop their own financial system. That's why it's more scary than a year ago, two years ago, or three years ago -- when we had all these policy bullets. Now we are running out of them.

***

Ken Rogoff, Harvard professor and former chief economist at the IMF, has said, "the real problem is that the global economy is badly overleveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation."  As a result, Rogoff points out that many policy makers have badly misunderstood the overall problems associated with this second great contraction, as he puts it.  He offers the suggestion that, "If governments that retain strong credit ratings are to spend scarce resources effectively, the most effective approach is to catalyze debt workouts and reductions."

Solutions to both individual and national debt problems should be addressed as follows:

For example, governments could facilitate the write-down of mortgages in exchange for a share of any future home-price appreciation. An analogous approach can be done for countries.  For example, rich countries’ voters in Europe could perhaps be persuaded to engage in a much larger bailout for Greece (one that is actually big enough to work), in exchange for higher payments in ten to fifteen years if Greek growth outperforms.

Another approach offered by Rogoff to reduce the painful deleveraging process and years of unnecessary slow growth, would be for central banks to pursue a policy of moderate inflation of 4-6% for several years.

At this stage, none of the policies suggested by Stiglitz, Krugman, Roubini, or Rogoff appear on the table in either Washington DC or the capitals of Europe.  Instead of sustained and ambitious solutions, we are left with blathering idiots telling us of austerity programs that will magically generate confidence, while keeping away the terrible bond vigilantes.  The incompetence and stupidity of our leaders is nearly blinding.

Quote of the day: Tom Ricks on Fox News

I think Fox may be the most destructive force in American society nowadays, basically pouring poison into the stream of our political discourse.

- Tom Ricks, "Fox News Scoop!"

As this blog has been discussing for years, the function of the media is not to inform, but to deform reality for the benefit of the ruling class.  In this context, the nature of the news is by definition propaganda and its value, just as Pravda was during the years of the Soviet Union, is to leave the audience with a specific perspective that benefits the powerful.  In the USSR it was the communist party; in the USA it is the broad swath of business interests, including the military-industrial-surveillance complex, big-pharma, big-agri, the financial industry, the energy/chemicals sector, and Health care/insurance industry.  Fox News serves the interests of these people and is, as Ricks points out, a source of outright fraud that contaminates civil discourse with purposefully designed falsehoods and innuendo that plays into the biases and bigotry of their audience.

I found it interesting when Dick Cheney was vice-president, that he wanted the television in his hotel suites preset to Fox news.  Did that mean that he wanted to know what the minions were watching and thus assess the adequacy of his disinformation machine personally?  Or did it mean that Cheney was uninterested in hearing other perspectives of news, other than the one he and his cohorts had created?  Fox News represents the convoluted intersection of corporatism and government sponsored deceit.  This disinformation channel, because it wasn't interested in news but in pushing perspective, became a juggernaut in the decade of the zeroes. The conventional framework of left and right politics has broken down.  As a result, no longer is the prevalent conflict between liberals and conservatives.  Instead, the struggle for America has become a battle between an inverted form of totalitarianism, defined by corporatism, and the free flow of information espoused by those interested in democracy.

There are those who feel that if a person is given sufficient and credible information, they will invariably choose the most rational argument.  The fact that religion, debunked political ideologies, and failed economic models persist amongst the majority of Americans, suggests that this line of thinking is false.  Many people don't want to know the truth.  They want to be lied to and given ridiculous and fictitious narratives that make their lives tolerable.  The majority of the world want to exist under what Nietzsche described as a slave ethic.  A world where they are the constant victims, where forces external to themselves are always punishing them and depriving them of their just deserves.  In the minds of American conservatives, Fox News is their secular conduit to the outside world.  They can justify their ignorance and prejudices through presented falsehoods and manufactured realities, while all the time marching to the beat of their corporate masters.

Posts from the moral center of hell

Over the past few days a number of commentators have expressed awe at the indecency and depravity of the Republican party and its core constituents in applauding the notion that the state has no obligation to ensure the well being of it citizenry in the event of unforeseen medical catastrophe.

During a televised debate between candidates for the Republican Party presidential nominee, CNN host Wolf Blitzer asked Rep. Ron Paul (R-TX), given that he was a practicing medical doctor, as to what obligation does the state have to an individual who chooses not to pay for medical insurance but falls ill. Ron initially evaded the question and gave the standard "right to choose" and "liberty" blather that economic libertarians like to preach. When Blitzer pressed on and asked if the man should be left to die, the crowd erupted in "Yeah!"

This is the party that always calls itself moral and Christian. This the party that goes around the nation demanding an end to abortion. Ron Paul himself has claimed that abortion is nothing less than murder. This is the same party that rammed through congress a bill that would have stripped Terri Schiavo's husband from deciding on her welfare, given her vegetative and unconscious existence, and making her a ward of the state. This is the same party that was shrieking over the evils of Obamacare and the horrors of death panels and socialized medicine, in the run up to the 2010 congressional midterm elections. Yet when faced with the opportunity to show some decency and Christian charity, they reverted to their true character.

Republicans aren't just an amoral political force. They are a dangerous cancer on humanity. Their war-mongering, anti-intellectual, anti-environmental, and hyper-religiosity founded on evangelical bigotry of all persons who do not share their immediate goals, has been shown to be lethal to those of us not living in Dixie.

US Poverty Rate at 15-year high

Rotting from the inside out, is how I'd best describe the current circumstances.

The US census bureau came out this week with some further data that shows that the decade of the zeroes was a bust for most people.  The NY Times summarizes:

With the country in its worst economic crisis since the Great Depression, four million additional Americans found themselves in poverty in 2009, with the total reaching 44 million, or one in seven residents. Millions more were surviving only because of expanded unemployment insurance and other assistance.

Professor Lawrence Katz, an economics professor at Harvard, states in this second article, “This is truly a lost decade... We think of America as a place where every generation is doing better, but we’re looking at a period when the median family is in worse shape than it was in the late 1990s."

Everyone was quite happy when they were making a bit more and the music played on; even if the top 1% were making multiples at the time.  Now the day of reckoning has arrived and people are awakening to the real morning in America.  Less opportunities, less income, more social inequality, a middle class in decline, and a federal government that is completely owned and bought for and by corporate interests.  This is the rancid fruit of thirty years of Reaganomics.

The specific details provided by the article, show that the nation is in decline.

• Last year, about 48 million people ages 18 to 64 did not work even one week out of the year, up from 45 million in 2009, said Trudi Renwick, a Census official. 
• According to the Census figures, the median annual income for a male full-time, year-round worker in 2010 — $47,715 — was virtually unchanged, in 2010 dollars, from its level in 1973, when it was $49,065, said Sheldon Danziger, professor of public policy at the University of Michigan. 
• The period from 2001 to 2007 was the first recovery on record where the level of poverty was deeper, and median income of working-age people was lower, at the end than at the beginning.
• 22 percent of children are in poverty, the highest percentage since 1993. 
• For a single adult in 2009, the poverty line was $10,830 in pretax cash income; for a family of four, $22,050. 

Given that the Great recession will continue for years, perhaps even throughout this current decade, poverty rates will increase, social unrest will occur, and political mayhem may well ensue in the years to come, unless serious and coordinated changes are made.