Is EVERY Market Rigged?
European Union Launches Investigation Into Manipulation of Oil Prices Since 2002
by Washingtons Blog (May 19 2013)
CNN reports {1}:
The European Commission raided the offices of Shell, BP and Norway’s Statoil this week {2} as part of an investigation into suspected attempts to manipulate global oil prices spanning more than a decade.
None of the companies have been accused of wrongdoing, but the controversy has brought back memories of the Libor rate-rigging scandal that rocked the financial world last year.
…
A review ordered by the British government last year in the wake of the Libor revelations cited “clear” parallels between the work of the oil-price-reporting agencies and Libor.
“They are both widely used benchmarks that are compiled by private organizations and that are subject to minimal regulation and oversight by regulatory authorities”, the review, led by former financial regulator Martin Wheatley {3}, said in August . “To that extent they are also likely to be vulnerable to similar issues with regards to the motivation and opportunity for manipulation and distortion”.
…
In a report issued in October, the International Organization of Securities Commissions – an association of regulators – said the ability “to selectively report data on a voluntary basis creates an opportunity for manipulating the commodity market data” submitted to Platts and its competitors.
Responding to questions from IOSCO last year, French oil giant Total said the price-reporting agencies, or PRAs, sometimes “do not assure an accurate representation of the market and consequently deform the real price levels paid at every level of the price chain, including by the consumer”. But Total called Platts and its competitors “generally … conscientious and professional”.
…
“Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming final consumers”, the European Commission said {4} this week.
USA Today notes {5}:
The Commission … said, however, that its probe covers a wide range of oil products – crude oil, biofuels, and refined oil products, which include gasoline, heating oil, petrochemicals and others.
…
The EU said it has concerns that some companies may have tried to manipulate the pricing process by colluding to report distorted prices and by preventing other companies from submitting their own prices.
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Unlike oil futures, which set prices for contracts, the data used in the MOC process is based on the physical sale and purchase of actual shipments of oil and oil products.
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According to Statoil, the EU investigation stretches back to 2002, which is when Platts launched its MOC price system in Europe. The suspicion is that some companies may have provided inaccurate information to Platts to affect the oil products’ pricing, presumably for financial gain.
Fox points out {6}:
At issue is whether there was collusion to distort prices of crude, refined oil products and ethanol traded during Platts’ market-on-close (MOC) system – a daily half-hour “window” in which it sets prices.
But the European Commission also is examining whether companies were prevented from taking part in the price assessment process.
The Guardian writes {7}:
The commission said {8} the alleged price collusion, which may have been going on since 2002, could have had a “huge impact” on the price of petrol at the pumps “potentially harming final consumers”.
Lord Oakeshott, former Liberal Democrat Treasury spokesman, said the alleged rigging of oil prices was “as serious as rigging Libor” – which led to banks being fined hundreds of millions of pounds. {9}
He demanded to know why the UK authorities had not taken action earlier and said he would ask questions of the British regulator in Parliament. “Why have we had to wait for Brussels to find out if British oil giants are ripping off British consumers?” he said. “The price of energy ripples right through our economy and really matters to every business and families”.
…
Shadow energy and climate change secretary Caroline Flint said: “These are very concerning reports, which if true, suggest shocking behaviour in the oil market that should be dealt with strongly.
“When the allegations of price fixing in the gas market were made, Labour warned that opaque over-the-counter deals and relying on price reporting agencies left the market vulnerable to abuse.
“These latest allegations of price fixing in the oil market raise very similar questions. Consumers need to know that the prices they pay for their energy or petrol are fair, transparent and not being manipulated by traders”.
Shadow financial secretary to the Treasury Chris Leslie said: “If oil price fixing has taken place it would be a shocking scandal for our financial markets”.
The Telegraph reports {10}:
“97 per cent of all we eat, drink, wear or build has spent some time in a diesel lorry”, said a spokesman for FairFuel UK, the lobbyists. “If it is proved, they have been gambling with the very oxygen of our economy”
….
Platts – to determine the benchmark price – examines just trades in the final thirty minutes of the trading day. A group of half a dozen analysts gather round a trading screen and decide on the final price. As with much that goes on in the City, it is a surprisingly old-fashioned method, reliant on gentlemanly conduct. Critics say it leaves the market open to abuse, and the price can suddenly spike or fall in the final minutes of the day.
The New York Times notes {11} of agencies like Platt and Argus Media:
Their influence is extensive. Total, the French oil giant, estimated last year that 75 to eighty percent of crude oil and refined product transactions were linked to the prices published by such agencies.
The Observer writes {12} that manipulation of the oil markets has long been an open secret:
Robert Campbell, a former price reporter at another PRA, Argus – he is now a staffer at Thomson Reuters, which also competes with Platts and others on providing energy news and data – said this a few days ago in a little-noticed commentary: “The vulnerability of physical crude price assessments to manipulation is an open secret within the oil industry. The surprise is that it took regulators so long to open a formal probe.”
Reuters points out {13} that the probe may be expanding to the US:
In Washington, the chairman of the Senate energy committee asked the Justice Department to investigate whether alleged price manipulation has boosted fuel prices for US consumers.
“Efforts to manipulate the European oil indices, if proven, may have already impacted US consumers and businesses, because of the interrelationships among world oil markets and hedging practices”, Senator Ron Wyden (Democrat, Oregon), chairman of the Senate Energy and Natural Resources Committee, wrote in a letter to Attorney General Eric H Holder Jr.
Wyden also asked Justice to investigate whether oil market manipulation was taking place in the United States.
Not only are petroleum products a multi-trillion dollar market on their own, but manipulation of petroleum prices would effect virtually every market in the world.
For example, the Cato Institute notes {14} how many industries use oil:
US industries use petroleum to produce the synthetic fiber used in textile mills making carpeting and fabric from polyester and nylon. US tire plants use petroleum to make synthetic rubber. Other US industries use petroleum to produce plastic, drugs, detergent, deodorant, fertilizer, pesticides, paint, eyeglasses, heart valves, crayons, bubble gum and Vaseline.
The India Times explains that {15}:
The price variation in crude oil impacts the sentiments and hence the volatility in stock markets all over the world. The rise in crude oil prices is not good for the global economy. Price rise in crude oil virtually impacts industries and businesses across the board. Higher crude oil prices mean higher energy prices, which can cause a ripple effect on virtually all business aspects that are dependent on energy (directly or indirectly).
The Federal Reserve Bank of San Francisco points out {16}:
When gasoline prices increase, a larger share of households’ budgets is likely to be spent on it, which leaves less to spend on other goods and services. The same goes for businesses whose goods must be shipped from place to place or that use fuel as a major input (such as the airline industry). Higher oil prices tend to make production more expensive for businesses, just as they make it more expensive for households to do the things they normally do.
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Oil price increases are generally thought to increase inflation and reduce economic growth.
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Oil prices indirectly affect costs such as transportation, manufacturing, and heating. The increase in these costs can in turn affect the prices of a variety of goods and services, as producers may pass production costs on to consumers.
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Oil price increases can also stifle the growth of the economy through their effect on the supply and demand for goods other than oil. Increases in oil prices can depress the supply of other goods because they increase the costs of producing them. In economics terminology, high oil prices can shift up the supply curve for the goods and services for which oil is an input.
High oil prices also can reduce demand for other goods because they reduce wealth, as well as induce uncertainty about the future (Sill 2007 {17}). One way to analyze the effects of higher oil prices is to think about the higher prices as a tax on consumers (Fernald and Trehan 2005 {18}).
The Post Carbon Institute notes (via OilPrice.com {19}) that high oil prices raise food prices as well:
The connection between food and oil is systemic, and the prices of both food and fuel have risen and fallen more or less in tandem in recent years (Figure 1). Modern agriculture uses oil products to fuel farm machinery, to transport other inputs to the farm, and to transport farm output to the ultimate consumer. Oil is often also used as input in agricultural chemicals. Oil price increases therefore put pressure on all these aspects of commercial food systems.
http://www.washingtonsblog.com/wp-content/uploads/2013/05/Food-and-Oil.jpg
Figure 1: Evolution of food and fuel prices, 2000 to 2009
Sources: US Energy Information Administration and FAO.
Economists Nouriel Roubini and Setser {20} note that all recessions after 1973 were associated with oil shocks.
Interest Rates Are Manipulated
Unless you live under a rock, you know about the Libor scandal.
For those just now emerging from a coma, here’s a recap:
* The big banks have conspired for years to rig interest rates … upon which $800 trillion in assets are pegged {21}
* This was the largest insider trading scandal ever {22} … and the largest financial scam in world history {23}
* Local governments got ripped off bigtime {24} by the Libor manipulation
* Libor is still being manipulated {25}
Derivatives Are Manipulated
The big banks have long manipulated derivatives {26} … a $1,200 Trillion Dollar market {27}.
Indeed, many trillions of dollars of derivatives are being manipulated in the exact same same way {28} that interest rates are fixed: through gamed self-reporting {29}.
Gold and Silver Are Manipulated
The Guardian and Telegraph report that gold and silver prices are “fixed” in the same way as interest rates and derivatives – in daily conference calls by the powers-that-be {30}.
Everything Can Be Manipulated through High-Frequency Trading
Traders with high-tech computers can manipulate stocks {31}, bonds, options, currencies and commodities {32}. And see this {33}.
Manipulating Numerous Markets In Myriad Ways
The big banks and other giants manipulate numerous markets in myriad ways {34}, for example:
* Engaging in mafia-style big-rigging fraud against local governments. See {35}, {36} and {37}
* Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details {38}, {39}, {40}, {41}, {42}, {43}, {44}, {45}, {46}, {47}, and {48}
* Charging “storage fees” to store gold bullion … without even buying or storing any gold {49}. And raiding allocated gold accounts {50}
* Committing massive and pervasive fraud both when they initiated mortgage loans and when they foreclosed on them {51} and {52}
* Pledging the same mortgage multiple times to different buyers. See {53}, {54}, {55}, {56} and {57}. This would be like selling your car, and collecting money from ten different buyers for the same car
* Cheating homeowners {58} by gaming laws meant to protect people from unfair foreclosure
* Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See {59}, {60}, {61}, {62} and {63}
* Engaging in unlawful “frontrunning” {64} to manipulate markets. See {65}, {66}, {67}, {68}, {69} and {70}
* Engaging in unlawful “Wash Trades” to manipulate asset prices. See {71}, {72} and {73}
* Otherwise {74} manipulating markets. And see {75}
* Participating in various Ponzi schemes. See {76}, {77} and {78}
* Charging veterans unlawful mortgage fees {79}
* Cooking their books {80} and {81}
* Bribing {82} and bullying {83} ratings agencies to inflate ratings on their risky investments
Links:
{1} http://money.cnn.com/2013/05/17/news/economy/oil-price-libor/index.html
{2} http://money.cnn.com/2013/05/14/news/oil-prices-rigging/index.html?iid=EL
{3} http://money.cnn.com/2012/09/27/investing/libor-wheatley/index.html?iid=EL
{4} http://europa.eu/rapid/press-release_MEMO-13-435_en.htm
{5} http://www.usatoday.com/story/money/business/2013/05/16/oil-price-fixing-scandal/2166857/
{7} http://www.guardian.co.uk/business/2013/may/14/bp-shell-oil-price-rigging
{8} http://europa.eu/rapid/press-release_MEMO-13-435_en.htm
{9} http://www.guardian.co.uk/business/2013/feb/06/rbs-fined-libor-rigging-scandal
{12} http://www.guardian.co.uk/business/2013/may/19/everyone-knew-oil-market-brussels
{14} http://www.cato.org/publications/commentary/oil-prices-cause-effect
{16} http://www.frbsf.org/education/activities/drecon/2007/0711.html
{17} http://www.philadelphiafed.org/files/br/2007/br_q1-2007-3_oil-shocks.pdf
{18} http://www.frbsf.org/publications/economics/letter/2005/el2005-31.html
{19} http://oilprice.com/Energy/Oil-Prices/How-Oil-Prices-Affect-The-Price-Of-Food.html
{20} http://people.stern.nyu.edu/nroubini/papers/OilShockRoubiniSetser.pdf
{22} http://www.washingtonsblog.com/2012/07/libor-the-largest-insider-trading-scandal-ever.html
{23} http://www.washingtonsblog.com/2012/07/the-biggest-banking-scam-in-world-history.html
{24} http://www.washingtonsblog.com/2012/07/the-big-losers-in-the-libor-rate-manipulation.html
{25} http://www.bbc.co.uk/news/business-21523989
{29} http://www.businessweek.com/articles/2013-04-18/meet-isdafix-the-libor-scandals-sequel
{32} http://www.washingtonsblog.com/2012/07/libor-is-not-the-only-manipulated-economic-indicator.html
{34} http://www.washingtonsblog.com/2012/07/big-banks-are-criminal-enterprises.html
{35} http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620
{38} http://www.huffingtonpost.com/2011/12/28/bny-mellon-case_n_1172575.html
{39} http://www.nydailynews.com/money/2009/02/21/2009-02-21_bank_of_new_york_mellon_scored_3b_bailou.html
{42} http://articles.businessinsider.com/2011-10-07/wall_street/30253397_1_trial-dates-bny-mellon-bank
{43} http://online.wsj.com/article/SB10001424052748703652104576122220220538048.html
{45} http://www.cjr.org/the_audit/wsj_on_harry_markopolos_whistl.php
{47} http://www.bloomberg.com/news/2011-05-12/sec-probes-state-street-foreign-exchange-pricing.html
{48} http://www.nytimes.com/2009/10/21/business/21street.html
{49} http://uk.reuters.com/article/2007/06/12/morganstanley-suit-idUKN1228014520070612
{50} http://www.washingtonsblog.com/2012/07/beware-allocated-gold-may-not-really-be-there.html
{53} http://www.washingtonsblog.com/2010/10/professors-black-and-wray-confirm-that.html
{58} http://www.reuters.com/article/2012/03/08/bank-of-america-whistleblower-idUSL2E8E804820120308
{62} http://www.sec.gov/news/press/2010/2010-123.htm
{64} http://en.wikipedia.org/wiki/Front_running
{66} http://www.zerohedge.com/article/whoa-glitch-hft
{68} http://www.zerohedge.com/taxonomy_vtn/term/8356
{69} http://www.washingtonsblog.com/2009/07/what-is-high-frequency-trading-and-how.html
{70} http://www.globalresearch.ca/index.php?context=va&aid=18809
{71} http://news.yahoo.com/jpmorgan-fined-wash-trades-oil-gasoline-151048338–sector.html
{74} http://dealbook.nytimes.com/2012/07/03/jpmorgan-role-in-power-market-comes-under-scrutiny/
{76} http://dealbook.nytimes.com/2011/02/15/in-prison-madoff-says-banks-had-to-know-of-fraud/
{77} http://online.wsj.com/article/BT-CO-20120417-716851.html
{78} http://www.miamiherald.com/2012/02/28/2665114/55-victims-of-ponzi-schemer-rothstein.html
{82} http://www.washingtonsblog.com/2009/09/credit-rating-agencies-took-bribes-for-higher-ratings.html
http://www.washingtonsblog.com/2013/05/is-every-market-rigged.html
The New Abnormal
Comment on Current Events by the Author of The Long Emergency (2005)
by James Howard Kunstler
Clusterfuck Nation (May 20 2013)
The collective state of mind in the USA these days may be even more peculiar than what went on in Germany in the early 1930s, when the Nazis were freely elected to lead the country and reconstructed the battered national psyche into a superman cult that soon beat a path to mass death and ruin. America has its own way of going crazy. We don’t goose-step to tragedy; we coalesce into an insane clown posse and stumble into it by pratfall – juggaloes dancing backwards off the cliff edge.
We’ve been softened up and made extra-stupid on a sixty-year-long diet of TV and kreme-filled donuts. Instead of a “master race”, our political fantasies revolve around a master wish – to get something for nothing. Want to feel good about yourself? Smoke some crank. Want to become economically secure? Buy a Powerball ticket or drive to the local casino. Want political esteem? Plug a flag pin into your lapel. Want status? Borrow free money from the Federal Reserve at zero interest and arbitrage it into massive earnings for your primary dealer bank. All these behaviors are the consequence of a culture that elevated advertising to such a high social good, it ended up drowning in its own manufactured bullshit.
http://kunstler.com/blog/Atlantic%20cover.png
A subset of our master wish has been on vivid display in recent months, namely the idea that God has blessed the USA with a limitless supply of new oil that will allow us to keep driving to WalMart forever. This propaganda from an oil industry desperate for capital investment has been swallowed whole by people in authority who ought to know better, just as that same class of people in Germany of 1934 should have known better about what they were bargaining for in economic well-being with the Nazi agenda. In our case, the propaganda drumbeat is being led by formerly respectable news organizations. The New York Times, National Public Radio, Bloomberg News, Forbes, and The Atlantic Magazine are media giants that have lately spread the “good news” that America will soon be (1) “energy independent”, (2) the world’s leading oil exporter (greater than Saudi Arabia is now!), and the “go-to nation” for cheap manufacturing.
All of these claims are false, by the way. The American way-of-life was designed to run on $20-a-barrel oil, not $90-a-barrel oil, and “new technology” has not changed that. The unfortunate and, to some extent, mendacious memes about the wonders of “new technology” have only snookered the public into a false sense of security about a future that will disappoint them badly and probably provoke an extreme political reaction as the reality of our predicament sweeps through daily life.
Most of the current “endless oil” fantasy revolves around shale oil. Just to get a visual idea of what this amounts to, consider this map. It depicts the two major shale oil production regions of the USA: the Bakken in North Dakota and the Eagle Ford “play” in Texas. Bakken production is confined almost entirely to four counties in North Dakota (Williams, Mountrail, McKenzie, Dunn). The Eagle Ford region touches perhaps ten Texas counties. Now, realize that the oil fields all over the rest of the USA (including Alaska) are in decline. Here’s where the “bonanza” of new oil all comes from:
http://kunstler.com/blog/assets_c/2013/05/Shale-thumb-420×237-82.jpg
The oil coming out of these places is high cost and low flow-rate oil. This is exactly the opposite of what US oil production used to be (low cost and high flow-rate) when we were busy building all the freeways, strip malls, housing subdivisions, suburban office parks and all of the other stranded assets that now make up the infrastructure of daily life in this country. Those were the days when you could pound a single pipe vertically 1000 feet down (not much deeper than many home water wells) into the temperate wheatfields of Oklahoma (drive to work in shirtsleeve weather!) and after that modest investment in drilling you could kick back and depend on a great flow rate (5,000 barrels-a-day, not unusual) of sweet light petroleum for years.
Horizontal drilling (often more than 10,000 feet down + many “laterals” an additional 10,000 feet horizontally) and then fracturing “tight” rock for shale oil is not only a way larger capital expense (lots of steel!) but the flow rates per well (82 barrels-a-day average) are laughable compared to the halcyon days of conventional oil – little better than “stripper” wells. Consider also that shale oil well flow-rates decline greater than sixty percent in the first year (rapidly thereafter, too) and you can see easily that there will be no “kicking back” to run the pump-jacks like cash registers, as in the old days. In fact, the rapid depletion only prompts more frantic drilling and re-drilling to keep the production at its current rate – the “Red Queen Syndrome” (“I’m running as fast as I can to stay where I am”), which means fantastic capital expenditure to keep drilling and fracking more wells (even more steel!). Consider also, that the small “sweet spots” in the shale oil regions were the ones drilled first (in earnest after 2003), for the simple reason that they were the most promising. This was the “low hanging fruit” – easy to pick. Outside these sweet spots the oil may be too meager or difficult or costly to bother drilling for.
This is a picture of a boomlet that may run a few more years – if the banking system doesn’t implode and the massive stream of capital doesn’t quit flowing to the shale counties. The excitement will all be over before 2020, but I suspect that troubles in finance and banking will put the schnitz on the shale gas mania long before that date. What will happen when the American public discovers that they were lied to about yet another important matter? The discovery will coincide with very severe changes in daily life that won’t be avoidable. Everyone will be affected. Many will be impoverished and suffer real hardship. That’s when the public goes apeshit and starts tearing down the house.
Apart from the issue of sheer economic suffering and all the damage that will ensue, consider that it will be generations before anyone believes the “authorities” again – though, like the oil age itself, the era of giant national media will probably prove to be a one-shot deal, too. Future generations – if they are lucky – may read the news on one-page circulating broadsides, printed laboriously in hand-set type by letterpress. Or maybe they’ll be reduced to just parsing out rumors.
*****
Note: This blog (and JHK website as a whole) will be getting a design upgrade in the next couple of weeks. In the meantime, for technical reasons the comments department is temporarily suspended.
For a complete list of books by James Howard Kunstler and purchase links, click
http://www.kunstler.com/books.php .
You Are a Guinea Pig
How Americans became exposed to biohazards in the greatest uncontrolled experiment ever launched
by Gerald Markowitz and David Rosner
Le Monde diplomatique (April 29 2013)
A hidden epidemic is poisoning America. The toxins are in the air we breathe and the water we drink, in the walls of our homes and the furniture within them. We can’t escape it in our cars. It’s in cities and suburbs. It afflicts rich and poor, young and old. And there’s a reason why you’ve never read about it in the newspaper or seen a report on the nightly news: it has no name – and no antidote.
The culprit behind this silent killer is lead. And vinyl. And formaldehyde. And asbestos. And Bisphenol A. And polychlorinated biphenyls (PCBs). And thousands more innovations brought to us by the industries that once promised “better living through chemistry”, but instead produced a toxic stew that has made every American a guinea pig and has turned the United States into one grand unnatural experiment.
Today, we are all unwitting subjects in the largest set of drug trials ever. Without our knowledge or consent, we are testing thousands of suspected toxic chemicals and compounds, as well as new substances whose safety is largely unproven and whose effects on human beings are all but unknown. The Centers for Disease Control (CDC) itself has begun monitoring our bodies for 151 potentially dangerous chemicals, detailing the variety of pollutants we store in our bones, muscle, blood, and fat. None of the companies introducing these new chemicals has even bothered to tell us we’re part of their experiment. None of them has asked us to sign consent forms or explained that they have little idea what the long-term side effects of the chemicals they’ve put in our environment – and so our bodies – could be. Nor do they have any clue as to what the synergistic effects of combining so many novel chemicals inside a human body in unknown quantities might produce.
How industrial toxins entered the american home
The story of how Americans became unwitting test subjects began more than a century ago. The key figure was Alice Hamilton, the “mother” of American occupational medicine, who began documenting the way workers in lead paint pigment factories, battery plants, and lead mines were suffering terrible palsies, tremors, convulsions, and deaths after being exposed to lead dust that floated in the air, coating their workbenches and clothes.
Soon thereafter, children exposed to lead paint and lead dust in their homes were also identified as victims of this deadly neurotoxin. Many went into convulsions and comas after crawling on floors where lead dust from paint had settled, or from touching lead-painted toys, or teething on lead-painted cribs, windowsills, furniture, and woodwork.
Instead of leveling with the public, the lead industry through its trade group, the Lead Industries Association, began a six-decade-long campaign to cover-up its product’s dire effects. It challenged doctors who reported lead-poisoned children to health departments, distracted the public through advertisements that claimed lead was “safe” to use, and fought regulation of the industry by local government, all in the service of profiting from putting a poison in paint, gasoline, plumbing fixtures, and even toys, baseballs, and fishing gear.
As Joe Camel would be for tobacco, so the little Dutch Boy of the National Lead Company became an iconic marketing tool for Dutch Boy Lead Paint, priming Americans to invite a dangerous product into their children’s playrooms, nurseries, and lives. The company also launched a huge advertising campaign that linked lead to health, rather than danger. It even produced coloring books for children, encouraging them to paint their rooms and furniture using lead-based paint.
Only after thousands of children were poisoned and, in the 1960s, activist groups like the Young Lords and the Black Panthers began to use lead poisoning as a symbol of racial and class oppression did public health professionals and the federal government begin to rein in companies like the Sherwin-Williams paint company and the Ethyl Corporation, which produced tetraethyl lead, the lead-additive in gasoline. In 1971, Congress passed the Lead Paint Poisoning Prevention Act that limited lead in paint used for public housing. In 1978, the Consumer Products Safety Commission finally banned lead in all paints sold for consumer use. During the 1980s, the Environmental Protection Agency issued rules that led to the elimination of leaded gasoline by 1995 (though it still remains in aviation fuel).
The CDC estimates that in at least four million households in the US today children are still exposed to dangerous amounts of lead from old paint that produces dust every time a nail is driven into a wall to hang a picture, a new electric socket is installed, or a family renovates its kitchen. It estimates that more than 500,000 children ages one to five have “elevated” levels of lead in their blood. (No level is considered safe for children.) Studies have linked lost IQ points, attention deficit disorders, behavioral problems, dyslexia, and even possibly high incarceration rates to tiny amounts of lead in children’s bodies.
Unfortunately, when it came to the creation of America’s chemical soup, the lead industry was hardly alone. Asbestos is another classic example of an industrial toxin that found its way into people’s homes and bodies. For decades, insulation workers, brake mechanics, construction workers, and a host of others in hundreds of trades fell victim to the disabling and deadly lung diseases of asbestosis or to lung cancer and the fatal cancer called mesothelioma when they breathed in dust produced during the installation of boilers, the insulation of pipes, the fixing of cars that used asbestos brake linings, or the spraying of asbestos on girders. Once again, the industry knew its product’s dangers early and worked assiduously to cover them up.
Despite growing medical knowledge about its effects (and increasing industry attempts to downplay or suppress that knowledge), asbestos was soon introduced to the American home and incorporated into products ranging from insulation for boilers and piping in basements to floor tiles and joint compounds. It was used to make sheetrock walls, roof shingles, ironing boards, oven gloves, and hot plates. Soon an occupational hazard was transformed into a threat to all consumers.
Today, however, these devastating industrial-turned-domestic toxins, which destroyed the health and sometimes took the lives of hundreds of thousands, seem almost quaint when compared to the brew of potential or actual toxins we’re regularly ingesting in the air we breathe, the water we drink, and the food we eat.
Of special concern are a variety of chlorinated hydrocarbons, including DDT and other pesticides that were once spread freely nationwide, and despite being banned decades ago, have accumulated in the bones, brains, and fatty tissue of virtually all of us. Their close chemical carcinogenic cousins, polychlorinated biphenyls (PCBs), were found in innumerable household and consumer products – like carbonless copy paper, adhesives, paints, and electrical equipment – from the 1950s through the 1970s. We’re still paying the price for that industrial binge today, as these odorless, tasteless compounds have become permanent pollutants in the natural environment and, as a result, in all of us.
The largest uncontrolled experiment in history
While old houses with lead paint and asbestos shingles pose risks, potentially more frightening chemicals are lurking in new construction going on in the latest mini-housing boom across America. Our homes are now increasingly made out of lightweight fibers and reinforced synthetic materials whose effects on human health have never been adequately studied individually, let alone in the combinations we’re all subjected to today.
Formaldehyde, a colorless chemical used in mortuaries as a preservative, can also be found as a fungicide, germicide, and disinfectant in, for example, plywood, particle board, hardwood paneling, and the “medium density fiberboard” commonly used for the fronts of drawers and cabinets or the tops of furniture. As the material ages, it evaporates into the home as a known cancer-producing vapor, which slowly accumulates in our bodies. The National Cancer Institute at the National Institutes of Health suggests that homeowners “purchasing pressed-wood products, including building material, cabinetry, and furniture … should ask about the formaldehyde content of these products”.
What’s inside your new walls might be even more dangerous. While the flame retardants commonly used in sofas, chairs, carpets, love seats, curtains, baby products, and even TVs, sounded like a good idea when widely introduced in the 1970s, they turn out to pose hidden dangers that we’re only now beginning to grasp. Researchers have, for instance, linked one of the most common flame retardants, polybrominated diphenyl ethers, to a wide variety of potentially undesirable health effects including thyroid disruption, memory and learning problems, delayed mental and physical development, lower IQ, and the early onset of puberty.
Other flame retardants like Tris (1,3-dichloro-2-propyl) phosphate have been linked to cancer. As the CDC has documented in an ongoing study of the accumulation of hazardous materials in our bodies, flame retardants can now be found in the blood of “nearly all” of us.
Nor are these particular chemicals anomalies. Lurking in the cabinet under the kitchen sink, for instance, are window cleaners and spot removers that contain known or suspected cancer-causing agents. The same can be said of cosmetics in your makeup case or of your plastic water bottle or microwavable food containers. Most recently, Bisphenol A (BPA), the synthetic chemical used in a variety of plastic consumer products, including some baby bottles, epoxy cements, the lining of tuna fish cans, and even credit card receipts, has been singled out as another everyday toxin increasingly found inside all of us.
Recent studies indicate that its effects are as varied as they are distressing. As Sarah Vogel of the Environmental Defense Fund has written, “New research on very-low-dose exposure to BPA suggests an association with adverse health effects, including breast and prostate cancer, obesity, neurobehavioral problems, and reproductive abnormalities”.
Teflon, or perfluorooctanoic acid, the heat-resistant, non-stick coating that has been sold to us as indispensable for pots and pans, is yet another in the list of substances that may be poisoning us, almost unnoticed. In addition to allowing fried eggs to slide right onto our plates, Teflon is in all of us, according to the Science Advisory Board of the Environmental Protection Agency, and “likely to be carcinogenic in humans”.
These synthetic materials are just a few of the thousands now firmly embedded in our lives and our bodies. Most have been deployed in our world and put in our air, water, homes, and fields without being studied at all for potential health risks, nor has much attention been given to how they interact in the environments in which we live, let alone our bodies. The groups that produce these miracle substances – like the petrochemical, plastics, and rubber industries, including major companies like Exxon, Dow, and Monsanto – argue that, until we can definitively prove the chemical products slowly leaching into our bodies are dangerous, we have no “right”, and they have no obligation, to remove them from our homes and workplaces. The idea that they should prove their products safe before exposing the entire population to them seems to be a foreign concept.
In the 1920s, the oil industry made the same argument about lead as an additive in gasoline, even though it was already known that it was a dangerous toxin for workers. Spokesman for companies like General Motors insisted that it was a “gift of God”, irreplaceable and essential for industrial progress and modern living, just as the lead industry argued for decades that lead was “essential” to produce good paint that would protect our homes.
Like the oil, lead, and tobacco industries of the twentieth century, the chemical industry, through the American Chemistry Council and public relations firms like Hill & Knowlton, is fighting tooth and nail to stop regulation and inhibit legislation that would force it to test chemicals before putting them in the environment. In the meantime, Americans remain the human guinea pigs in advanced trials of hundreds if not thousands of commonly used, largely untested chemicals. There can be no doubt that this is the largest uncontrolled experiment in history.
To begin to bring it under control would undoubtedly involve major grassroots efforts to push back against the offending corporations, courageous politicians, billions of dollars, and top-flight researchers. But before any serious steps are likely to be taken, before we even name this epidemic, we need to wake up to its existence.
A toxic dump used to be a superfund site or a nuclear waste disposal site. Increasingly, however, we – each and every one of us – are toxic dumps and for us there’s no superfund around, no disposal plan in sight. In the meantime, we’re walking, talking biohazards and we don’t even know it.
This article was first published in Tom Dispatch, 29 April 2013.
_____
David Rosner and Gerald Markowitz are co-authors and co-editors of seven books and 85 articles on a variety of industrial and occupational hazards, including Deceit and Denial: The Deadly Politics of Industrial Pollution (2003) and, most recently, Lead Wars: The Politics of Science and the Fate of America’s Children (2013). Rosner is a professor of history at Columbia University and co-director of the Center for the History of Public Health at Columbia’s Mailman School of Public Health. Markowitz is a professor of history at John Jay College and the Graduate Center, City University of New York.
More by Gerald Markowitz and David Rosner
Dear American Consumers
Please don’t start eating healthfully
Sincerely, the Food Industry
by Patrick Mustain
Scientific American (May 19 2013)
Dear Consumers: A disturbing trend has come to our attention. You, the people, are thinking more about health, and you’re starting to do something about it. This cannot continue.
Sure, there’s always been talk of health in America. We often encourage it. The thing is, we only want you to think about and talk about health in a certain way – equating health with how you look, instead of outcomes like quality of life and reduced disease risk. Your superficial understanding of health has a great influence over your purchasing decisions, and we’re ready for it, whether you choose to go low-calorie, low-fat, gluten-free or inevitably give up and accept the fact that you can’t resist our Little Debbie snacks, potato chips and ice cream novelties.
Whatever the current health trend, we respond by developing and marketing new products. We can also show you how great some of our current products are and always have been. For example, when things were not looking so good for fat, our friends at Welch’s were able to point out that their chewy fruit snacks were a fat free option. Low fat! Healthy! Then the tide turned against carbohydrates. Our friends in meat and dairy were happy to show that their steaks, meats and cheeses were low-carb choices. Low carbs! Healthy!
But we’re getting uneasy.
In 2009, Congress commissioned the Inter-agency Working Group (IWG) to develop standards for advertising foods to children. The IWG included the Federal Trade Commission (FTC), the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA) and the United States Department of Agriculture (USDA).
Congress identified these organizations as having “expertise and experience in child nutrition, child health, psychology, education, marketing and other fields relevant to food and beverage marketing and child nutrition standards”.
We were dismayed when the IWG released its report in 2011. The guidelines said that foods advertised to children must provide “a meaningful contribution to a healthful diet”. For example, any food marketed to children must “contain at least fifty percent by weight one or more of the following: fruit; vegetable; whole grain; fat-free or low-fat milk or yogurt; fish; extra lean meat or poultry; eggs; nuts and seeds; or beans”.
This report was potentially devastating. These organizations, experts in nutrition, were officially outlining what constituted “a meaningful contribution to a healthful diet”. Thankfully, we have a ton of money and were able to use it to get the IWG to withdraw the guidelines.
In a public comment posted on the FTC website, our friends at General Mills pointed out that under the IWG guidelines, the most commonly consumed foods in the US would be considered unhealthy. Specifically, according to General Mills, “of the 100 most commonly consumed foods and beverages in America, 88 would fail the IWG’s proposed standards”. So you see? If you people start eating the way the nutrition experts at the CDC and USDA recommend that you eat, that would delegitimize almost ninety percent of the products we produce! Do you realize how much money that would cost us?
According to the General Mills letter, if everyone in the US started eating healthfully, it would cost us $503 billion per year! That might affect our ability to pay CEOs like General Mills’ Ken Powell annual compensations of more than $12 million.
But revamping the food environment will also cost you money. The General Mills letter stated “a shift by the average American to the IWG diet would conservatively increase the individual’s annual food spending by $1,632″. Sure, we’ve heard talk about costs to the individual that arise from being obese. One 2010 paper from the George Washington University School of Public Health and Health Services estimated that the annual costs to an individual for being obese can be upwards of $8,000. We like to think of this as a small price to pay for consumer freedom.
Of course, we don’t necessarily want you to be unhealthy. It’s just that it’s so much more profitable to provide foods that happen to be unhealthy. We’ve been able to industrialize the food system so that we can produce massive amounts of the cheapest ingredients available, in the cheapest, most efficient way possible.
On top of that, we understand human biology. Humans evolved in situations in which food was scarce. This led to an evolutionary adaptation that causes you to crave salty, sugary and fatty foods. Consuming foods with these characteristics actually lights up the same pleasure centers in the brain as cocaine. Who wouldn’t play upon that biological craving to increase profits? If one company didn’t, their competitors would, so we all kind of have to do it.
We are also able to provide you with perceived value. Because it doesn’t cost us that much more to make a soda, say, 42 ounces instead of 22, we can almost double the size of a beverage and only charge you twenty percent more. How could you resist a deal like that? You can’t. Trust us, we know.
So you see, dear consumer, everything is fine. We’ve got a good thing going here. There’s no need for you to start worrying about the industrial food system. If you do start thinking about your weight, check out our line of Healthy Choice frozen meals. If that doesn’t work, our friends over in the pharmaceutical industry, the health and fitness industry and the healthcare industry will be happy to help you to continue to fulfill your role as an American Consumer.
_____
Patrick Mustain earned an MPH from The University of Minnesota School of Public Health and an MA from the University of North Carolina School of Journalism & Mass Communication. He is a veteran of the US Navy, a freelance videographer and multimedia producer, and a skeptical fitness professional. Patrick is interested in how commercialization shapes the way people think about and pursue health, especially in the fitness, nutrition and weight-loss realms. His other interests include food advertising and policy, obesity prevention, health promotion, the effects of media consumption on health, consumer advocacy, outdoor recreation and fitness, parks, environmental determinants of health behavior, music, biking, climbing, snowboarding and he really, really loves food. You can find more of his work at his website, patrickmustain.com. Follow on Twitter @patrickmustain.
The views expressed are those of the author and are not necessarily those of Scientific American.
Scientific American is a trademark of Scientific American, Inc. Used with permission.
(c) 2013 Scientific American, a Division of Nature America, Inc. All Rights Reserved.
The Confiscation of Bank Savings to “Save the Banks”
The Diabolical Bank “Bail-In” Proposal
by Professor Michel Chossudovsky
Global Research (April 02 2013)
Is the Cyprus Bank “Bail-in” a “dress rehearsal” for things to come?
Is a “Savings Heist” in the European Union and North America envisaged which could result in the outright confiscation of bank deposits?
In Cyprus, the entire payments system has been disrupted leading to the demise of the real economy.
Pensions and wages are no longer paid. Purchasing power has collapsed.
The population is impoverished.
Small and medium sized enterprises are spearheaded into bankruptcy.
Cyprus is a country with a population of one million.
What would happen if similar “hair cut” procedures were to be applied in the US or the European Union?
According to the Washington based Institute of International Finance (IIF) which represents the consensus of the global financial establishment, “the Cyprus approach of hitting depositors and creditors when banks fail, would likely become a model for dealing with collapses elsewhere in Europe”. (Economic Times, March 27 2013).
It should be understood that prior to the Cyprus onslaught, the confiscation of bank deposits had been contemplated in several countries. Moreover, the powerful financial actors who triggered the bank crisis in Cyprus, are also the architects of the socially devastating austerity measures imposed in the European Union and North America.
Does Cyprus constitute a “model” or scenario?
Are there “lessons to be learned” by these powerful financial actors, to be applied elsewhere, at some later stage, in the Eurozone’s banking landscape?
According to the Institute of International Finance (IIF), “hitting depositors” could become the “new normal” of this diabolical project, serving the interests of the global financial conglomerates.
This new normal is endorsed by the IMF and the European Central Bank. According to the IIF which constitutes the banking elites mouthpiece,
Investors would be well advised to see the outcome of Cyprus … as a reflection of how future stresses will be handled”. (Economic Times, March 27 2013)
“Financial Cleansing”. Bail-ins in the US and Britain
What is at stake is a process of “financial cleansing” whereby the “too big to fail banks” in Europe and North America (for example Citi, JPMorgan Chase, Goldman Sachs, et al ) displace and destroy lesser financial institutions, with a view to eventually taking over the entire “banking landscape”.
The underlying tendency at the national and global levels is towards the centralization and concentration of bank power, while leading to the dramatic slump of the real economy.
Bail-ins have been envisaged in numerous countries. In New Zealand a “haircut plan” was envisaged as early as 1997 coinciding with Asian financial crisis.
There are provisions in both the UK and the US pertaining to the confiscation of bank deposits. In a joint document of the Federal Deposit Insurance Corporation (FDIC) and the Bank of England, entitled Resolving Globally Active, Systemically Important, Financial Institutions, explicit procedures were put forth whereby “the original creditors of the failed company”, meaning the depositors of a failed bank, would be converted into “equity”. (See Ellen Brown, It Can Happen Here: The Bank Confiscation Scheme for US and UK Depositors, Global Research, March 2013)
What this means is that the money confiscated from bank accounts would be used to meet the failed bank’s financial obligations. In return, the holders of the confiscated bank deposits would become stockholders in a failed financial institution on the verge of bankruptcy.
Bank savings would be transformed overnight into an illusive concept of capital ownership. The confiscation of savings would be adopted under the disguise of a bogus “compensation” in terms of equity.
What is envisaged is the application of a selective process of confiscation of bank deposits, with a view to collecting debt while also triggering the demise of “weaker” financial institutions. In the US, the procedure would bypass the provisions of the Federal Deposit Insurance Corporation (FDIC) which insures deposit holders against bank failures:
No exception is indicated for “insured deposits” in the US, meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks. The directive is called a “resolution process”, defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer …” The only mention of “insured deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to say is inadequate, implying that it needs to be modified or overridden. (Ibid)
Because depositors are provided with a bogus compensation, they are not eligible to the FDIC deposit insurance.
Canada’s Deposit Confiscation Proposal
The most candid statement of confiscation of bank deposits as a means to “saving the banks” is formulated in a recently released document of the Canadian government entitled “Jobs, Growth and Long Term Prosperity: Economic Action Plan 2013″.
The latter was submitted to the House of Commons by Canada’s Minister of Finance Jim Flaherty on March 21 as part of a so-called “pre-budget” proposal.
A short section of the 400 [page] report entitled “Risk Management Framework for Domestic Systemically Important Banks” identifies bail-in procedure for Canada’s chartered banks. The word confiscation is not mentioned. Financial jargon serves to obfuscate the real intent which essentially consists in stealing people’s savings.
Under the Canadian “Risk Management” project:
The Government proposes to implement a ‘bail-in’ regime for systemically important banks.
This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital”.
This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada.
What this signifies is that if one or more banks (or credit unions) were obliged to “systemically deplete their capital” to meet the demands of their creditors, the banks would be recapitalized through “the conversion of certain bank liabilities into regulatory capital”.
The “certain bank liabilities” pertains (in technical jargon) to the money they owe their customers, namely to their depositors, whose bank accounts would be confiscated in exchange for shares (equity) in a “failing” banking institution.
“This will reduce risks for taxpayers” is a nonsensical statement. What this really means is that the government will not provide funding to compensate depositors who are victims of a failed banking institution, nor will it come to rescue of the failed institution.
Instead the depositors will be obliged to give up their savings. The money confiscated will then be used by the bank to meet their liabilities contracted with major financial creditor institutions. In other words, this entire scheme is “a safety net” for too big to fail banks, a mechanism which enables them as creditors to overshadow lesser banking institutions including credit unions, while precipitating either their collapse or their takeover.
Canada’s Financial Landscape
The Risk Management Bail-in initiative is of crucial significance for Canadians across the land: once it is adopted by the House of Commons as part of the budget package, the Bail-in procedures could be applied.
The Conservative government has a parliamentary majority. There is a good likelihood that the Economic Action Plan 2013 which includes the Bail-in procedure will be adopted.
While Canada’s Risk Management Framework intimates that Canada’s banks “are at risk”, particularly those which have accumulated large debts (as a result of derivative losses), a generalised across the board application of the “Bail-in” is not contemplated.
The likely scenario in the foreseeable future is that Canada’s “big five” banks, Royal Bank of Canada, TD Canada Trust, Scotiabank, Bank of Montreal and CIBC (all of which have powerful affiliates operating in the US financial landscape) will consolidate their position at the expense of lesser (provincial level) banks and financial institutions.
The Government document intimates that the Bail-in could be used selectively “in the unlikely event that one [bank] becomes non-viable”. What this suggests is that at least one or more of Canada’s “lesser banks” could be the object of a bail-in. Such a procedure would inevitably lead to a greater concentration of bank capital in Canada, to the benefit of the larger financial conglomerates.
Displacement of Provincial Level Credit Unions and Cooperative Banks
There is an important network of over 300 provincial level credit unions and cooperative banks including the powerful Desjardins network in Quebec, the Vancouver City Savings Credit Union (Vancity) and the Coastal Capital Savings in British Columbia, Servus in Alberta, Meridian in Ontario, the caisses populaires in Ontario (affiliated to Desjardins), among many others, which could be the target of selective “Bail-in” operations.
In this context, what is likely to occur is a significant weakening of provincial level cooperative financial institutions, which have a governance relationship to their members (including representative councils) and which, in the present context, offer an alternative to the Big Five chartered banks. According to recent data, there are more than 300 credit unions and caisses populaires in Canada which are members of the “Credit Union Central of Canada”.
New Normal: International Standards Governing the Confiscation of Bank Deposits
Canada’s Economic Action Plan 2013 acknowledges that the proposed Bail-in framework “will be consistent with reforms in other countries and key international standards”. Namely, the proposed pattern of confiscating bank deposits as described in the Canadian government document is consistent with the model contemplated in the US and the European Union. This model is currently a “talking point” (behind closed doors) at various international venues regrouping central bank governors and finance ministers.
The regulatory agency involved in these multilateral consultations is the Financial Stability Board (FSB) based in Basel, Switzerland and hosted by the Bank for International Settlements (BIS). The FSB happens to be chaired by the governor of the Bank of Canada, Mark Carney, who was recently appointed by the British government to head the Bank of England starting in June 2013.
Mark Carney, as Governor of the Bank of Canada, was instrumental in shaping the provisions of the Bail-in for Canada’s chartered banks. Before his career in central banking, he was a senior executive at Goldman Sachs, which has played a behind the scenes role in the implementation of the bank bailouts and austerity measures in the EU.
The FSB’s mandate would be to coordinate the bail-in procedures, in liaison with the “national financial authorities” and “international standard setting bodies” which include the IMF and the BIS. It should come as no surprise: the deposit confiscation procedures in the UK, the US and Canada examined above are remarkably similar.
Bank “Bail-ins” vs Bank “Bail-outs”
The bailouts are “rescue packages” whereby the government allocates a significant portion of State revenues in favor of failed financial institutions. The money is channeled from the coffers of the State to the banking conglomerates.
In the US in 2008 and 2009, a total of $1.45 trillion was channeled to Wall Street financial institutions as part of the Bush and Obama rescue packages.
These bailouts were considered as a de facto government expenditure category. They required the implementation of austerity measures. Together with massive hikes in military expenditure, the bailouts were financed through drastic cuts in social programs including Medicare, Medicaid and Social Security.
In contrast to the Bailout, which is funded from the public purse, the “Bail-in” requires the (in-house) confiscation of bank deposits. The bail-ins are implemented without the use of public funds. The regulatory mechanism is established by the central bank.
At the outset of Obama’s first term in January 2009, a bank bailout of the order of $750 billion was announced by Obama, which was added on to the 700 billion dollar bailout money allocated by the outgoing Bush administration under the Troubled Assets Relief Program (TARP).
The total of both programs was a staggering 1.45 trillion dollars to be financed by the US Treasury. (It should be understood that the actual amount of cash financial “aid” to the banks was significantly larger than $1.45 trillion. In addition to this amount defence allocations to fund Obama’s war economy (Fiscal 2010) was a staggering $739 billion. Namely the bank bailouts plus defence combined ($2189 billion) eat up almost the totality of the federal revenues which in Fiscal 2010 amounted to $2381 billion.
Concluding remarks
What is occurring is that the bank bailouts are no longer functional. At the outset of Obama’s second term, the coffers of the state are empty. The austerity measures have reached a deadlock.
The bank bail-ins are now being contemplated instead of the “bank bailouts”.
The lower and middle income groups which are invariably indebted will not be the main target. The appropriation of bank deposits would essentially target the upper middle and upper income groups which have significant bank deposits. The second target will be the bank accounts of small and medium sized firms.
This transition is part of the evolution of the global economic crisis and the impasse underlying the application of the austerity measures.
The purpose of the global financial actors is to wipe out competitors, consolidate and centralize bank power and exert an overriding control over the real economy, the institutions of government and the military.
Even if the bail-ins were to be regulated and applied selectively to a limited number of failing financial institutions, credit unions, et cetera, the announcement of a program of confiscation of deposits could potentially lead to a generalized “run on the banks”. In this context, no banking institution would be regarded as safe.
The application of Bail-in procedures involving deposit confiscation (even when applied locally or selectively) would create financial havoc. It would interrupt the payments process. Wages would no longer be paid. Purchasing power would collapse. Money for investment in plant and equipment would no longer be forthcoming. Small and medium sized businesses would be precipitated into bankruptcy.
The application of a Bail-In in the EU or North America would initiate a new phase of the global financial crisis, a deepening of the economic depression, a greater centralization of banking and finance, increased concentration of corporate power in the real economy to the detriment of regional and local level enterprises.
In turn, an entire global banking network characterized by electronic transactions (which govern deposits, withdrawals, et cetera) – not to mention money transactions on the stock and commodity markets – could potentially be the object of significant disruptions of a systemic nature.
The social consequences would be devastating. The real economy would plummet as a result of the collapse in the payments system.
The potential disruptions in the functioning of an integrated global monetary system could result in a a renewed global economic meltdown as well as a drop off in international commodity trade.
It is important that people across the land, in the European Union and North America, nationally and internationally, forcefully act against the diabolical ploys of their governments – acting on behalf of dominant financial interests – to implement a selective process of bank deposit confiscation.
*****
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Patriotic Yardsticks for Unpatriotic Giant Corporations
by Ralph Nader
The Nader Page (May 16 2013)
Why are big, global US corporations so unpatriotic? After all, they were created in the USA, rose to immense profit because of the toil of American workers, are bailed out by American taxpayers whenever they’re in trouble, and are safeguarded abroad by the US military.
Yet these corporate goliaths work their tax lawyers overtime to escape US taxes. Many pay less than you do in federal income taxes. Imagine corporations, like General Electric, have not paid federal income taxes on US profits for years.
Mega corporations have abandoned US workers by entrenching “pull-down” trade agreements that make it easier than ever to ship jobs and whole industries to fascist and communist regimes abroad which keep their workers near serfdom. Remember, the US has run large trade deficits for the past thirty years as a result of anti-American trade deals pushed by these global companies. These goliaths are pressing for the Trans-Pacific Partnership, a trade agreement that will further pull down our economy. (See http://www.citizen.org.)
Corporate CEOs are raiding and draining traditional pension plans for millions of workers who are left without their expected and earned pension payments on retirement. For more information see Ellen E Schultz’s book Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers (2011).
They are freezing the federal minimum wage, for low income service jobs that they cannot export, at $7.25 per hour, leaving thirty million workers today making less than workers made in 1968, inflation adjusted. Having wages that go backwards into the future means workers cannot afford the basic necessities of life for themselves and their children.
Giant companies hire legions of lobbyists to weaken or abolish consumer, worker and environmental safety and health laws, to stop our country from joining all other Western Nations with full Medicare for all. Corporate campaign cash increasingly flows to indentured politicians, who in turn do the bidding of the corporate paymasters at your expense.
We’ve yet to find a CEO of a US global corporation who will even go through the motions at their annual shareholders meeting standing up and, in the name of the company, pledging “allegiance to the United States … with liberty and justice for all”. When asked, as was General Motors, the CEO refused.
Charge companies with unpatriotic behavior and you’ll tap a nerve or two. The munitions companies, like Lockheed Martin and Boeing, put ads on television and radio asserting how their modern weapons back up our troops who are sent to expand the Empire. Of course, defense contractors never mention their huge profits, cost over-runs and their staffing the higher echelons of the Pentagon with their own appointees. Nor do these arms merchants ever raise a patriotic objection to the criminal wars of aggression conducted by Bush/Cheney against the defenseless people of Iraq, whose tottering dictator, formerly a US ally, was not a threat to America.
Other companies are trying softer promotions of their claimed care for America. Have you seen the lengthy ad campaign by Chevron that starts with some bold demand by a pictured ordinary person? One such ad begins “Oil companies SHOULD support the communities they’re a PART OF” (Chevron’s emphasis) and, invariably, Chevron answers “we agree”, and lists their charities here and abroad. Evaluating corporation philanthropy is for another time; suffice it to say that not one giant corporation exceeds one percent of their pre-tax profits, when the law allows them to give up to five percent, deductible.
Do you think that all of the above only comes from consumer/worker advocates? Then read a new, paperback book by Robert A G Monks, titled Citizens Disunited: The Corporate Capture of the American Dream (2013).
Monks, a former corporate lawyer, corporate CEO, founder of companies, bank chairman, and investor-advocate extraordinaire, writes memorably about corporate excesses.
He quotes an Apple executive who told The New York Times:
We sell iPhones in over a hundred countries. We don’t have an obligation to solve America’s problems.
Monks responds:
This is what greed looks like in the global epoch of corporatism: plunder the Treasury, to be sure, but then deny all sense of responsibility to your country of domicile, outsource all obligations, and, like maggots, set to work destroying the host from inside by exporting its jobs and depleting its revenue sources.
He then cites Clyde Prestowitz, founder of the Economic Strategy Institute, who wrote that, as a top US government trade negotiator, he went to great lengths to open up the Japanese market for Apple in the early nineteen eighties, adding:
We did all we could and in doing so came to learn that virtually everything Apple had for sale, from the memory chips to the cute pointer mouse, had had its origins in some program wholly or partially supported by US government money.
Monks sums up:
Henry Ford’s great success was built in part on his decision to pay his workers a high enough wage so that they could afford the products they were producing. No more. The shrinking middle class, the widening gap between the rich and the poor – these are some of those American ‘problems’ that American-born-and-bred corporations like Apple really have no time for.
For more galvanized specifics, please read and absorb this book!
Other high, former corporate officials are speaking out. Former general counsel of USAir, Lawrence Stentzel, called on reluctant federal prosecutors to hold corporate wrongdoers’ feet to the fire and force them to admit to their wrongdoing. He also demanded that the Justice Department create a user friendly database of corporate wrong doing. http://www.corporatecrimereporter.com/news/200/stentzelspeaksout03132013/
Big US corporations have long demanded a legal system where they are defined as “people”, so as to get all of our constitutional rights while they expand their privileged powers and immunities. Well, why don’t we measure them by the many patriotic standards that we apply to ourselves, the real American people.
Getting these giant firms on the defensive is the first step for the resurgence of the people so that corporations become our servants and do not remain our masters.
http://nader.org/2013/05/16/patriotic-yardsticks-for-unpatriotic-giant-corporations/
Hypocrites in the Air
Should climate change academics lead by example?
by Kevin Anderson
http://kevinanderson.info/blog (April 12 2013)
(The arguments outlined in this commentary apply equally to any politician, civil servant, journalist, NGO or business leader calling for stringent mitigation)
From the World Bank and PricewaterhouseCoopers through to Stern and the International Energy Agency, analyses increasingly demonstrate how, without urgent and radical reductions in emissions, global temperatures are set to rise by four degrees Celsius or higher – with, as the IEA emphasise, “devastating” repercussions for the planet.
But whose responsibility is it to initiate such radical mitigation?
*****
My partner and I recently arrived in Sicily for a couple of weeks’ camping and rock climbing – not exactly sun-kissed limestone (fifteen degrees Celsius and damp), but still a little warmer than the Arctic blasts battering the UK at the moment.
As we try to avoid flying we’ve travelled here by train: Manchester to London and then onto Paris, overnight Paris to Rome, a day strolling between the Pantheon and the Colosseum, before another overnight train to Palermo in the North West corner of Sicily.
The journey took longer than flying, but we get a day each way to explore Rome and overnight travel to and from Sicily, so in terms of price and time it isn’t that different to flying. But when it comes to emissions I stand by the arguments I made following my train trip to Shanghai in 2011 (for work on that occasion). At a system level, trains have an order of magnitude lower emissions than the metal bird alternative – the saving is that significant.
If my arguments are valid, surely those of us intimately engaged in climate change should, at the very least, curtail our use of the most carbon-profligate activity (per hour) humankind has thus far developed.
For those interested, the arguments I previously posted on the Tyndall Centre website are repeated below. In addition, I’ve included a few thoughts in response to the comeback often made – “those of us with children can’t afford the longer journey times as we have overriding parental commitments”.
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Slow and low – the way to go: A systems view of travel emissions
When planning the journey from Broadbottom (UK), to Shanghai, and also since my return, I have been asked frequently about the associated emissions:
* “I thought trains weren’t much better than planes, what’s the difference?”
* “Was it worth the effort for whatever you saved?”
On the face of it, these and many similar queries are completely reasonable questions to ask. But, in my view, they miss the point, and without trying to be overly provocative (that’s for later), I don’t think they are so reasonable – particularly from the array of informed experts who asked them. So why do I think the questions are unreasonable – and what would I suggest as an alternative framing for assessing emissions from travel?
Analysis
The following blog-style analysis is a mix of provocation, parody and some different ways of thinking about emissions from our travel. I’ve tried to make a coherent case on the basis of argument, but some of the language may not be what you would typically find in an academic paper. Nonetheless, I stand by the well-intentioned thrust of the case and if anyone has any substantive disagreements I’d be pleased to hear them. It is intended to hold a mirror up to the climate change community – and as with all mirrors, it can make for grim viewing. I know: it’s a fit 36-year-old who looks in the mirror – but a less fit grey-haired and 49-year-old bloke who stares back at me!
My concerns about the questions I’ve been asked fall into three broad and related categories. They were asked by folk who work intimately on climate change as a system. But not one person asked a systems-level question, ‘How are you going to compare the plane and train emissions?’ - or - ‘Have you thought about rebound, where time saved via faster travel is spent on additional carbon-emitting activities?’
Instead, all of the questions relegated climate change to a purely technical, quantitative or efficiency issue – none of which address what we need to do to reduce total emissions.
The opportunity costs, rebound effect, carbon intensity of time, technical and financial lock-in/lock-out, early adoption, role models, diffusion and so on, are all concepts the climate change community are familiar with. Asking emissions questions without direct or indirect recourse to any of these is, in my view, neither responsible nor reasonable.
Unreasonable reasonableness – another Rumsfeldian paradox
The first argument for my concluding the reasonable questions aren’t so reasonable relates to it being academics working on climate change (amongst others) who asked them.
For the last decade the language of climate change used in proposals for funding, research council calls, brochures, government documents and so on, has been awash with terms such as ‘whole systems’, ‘systems thinking’, ‘interdisciplinary’, and the like. Put us in a room and we’ll espouse eloquently the virtues of such approaches, noting if we’re to tackle big issues like climate change we have to think on a systems level. But as soon as there’s something that can be readily quantified we’re like moths to a flame: here’s something familiar to our 2000 years of reductionism, some knowledge – but without understanding. The virtues of systems thinking that we were waxing lyrical about moments before are quickly forgotten in the mad scrabble to get to the numbers. We know what to do with numbers and, as Lord Kelvin so persuasively put it, ‘When you measure what you are speaking of and express it in numbers, you know that on which you are discoursing, but when you cannot measure it and express it in numbers your knowledge is of a very meagre and unsatisfactory kind’. Well I’m not sure this always holds, and when we do use numbers they have to be meaningful. Isolated numbers tell us little about the system, and worse, they can lead to decisions based only on the bit we can measure. This may be worse than doing nothing or taking random action; at the very least numbers have to be contextual.
So having made the argument that systems thinking requires some systems thinking itself, the following sections outline more precisely defined and technical matters that underpin my concern that the climate change community continues to take overly narrow views of systems-level issues. In 2011, we ought to know better.
System Saving Number One: Relative dimensions in distance, time and emissions
If we accept temperature as an adequate proxy for our various concerns about climate change, then there is broad acceptance we must stay below a two degrees Celsus increase in global temperature. Thus the climate is only really concerned with our cumulative emissions over a relatively short period of time – a period longer than the Broadbottom to Shanghai train journey, but stretching only about as far as 2020 for two degrees Celsus (and for four degrees Celsus sometime around 2030). There is some mathematics behind these dates linked to how high we are already on the emissions curves, the ‘real’ emission growth trend, realistic peaks and the proportion of our carbon budget we’ve squandered already. See Beyond Dangerous Climate Change {1}.
Coming back to the train and its emissions relative to other transport modes: from a systems perspective, it’s a good enough approximation to consider the carbon dioxide per passenger kilometre for planes, trains and automobiles to be similar. Okay, alone in a Ferrari with your foot to the floor will be many times worse than being sardined into one of EasyJet’s relatively new aircraft. Similarly, four people cosying up in a small Fiat Panda will knock the socks off any scheduled airline (that is, have much lower carbon dioxide emissions). But put a couple of academics in a diesel family saloon and any disparity in emissions between the modes over the same distance will be lost in the system noise. The difference, of course, arises from the distance we deem reasonable to travel – and really this is less about the distance and more about the time.
Attending an ‘essential’ conference to save the world from climate change in Venice, Cancun or some other holiday resort, is perfectly do-able by plane. However, the rising emission trends don’t seem to have registered the sterling work we have achieved at such events. Perhaps if we flew to more of them, emissions would really start to come down – we may even spot some flying pigs en route. Instead, junk the plane and get together with a few other UK speakers heading to the same event, cram yourself in a trusty Fiat Panda and set off for Venice. Somewhere around Dartford, what was previously ‘essential’ begins to take on a different hue, and by Dover a whole new meaning has evolved. Essential has become a relative term, dependent on: Can we get there by plane? Are our friends also attending? Is it somewhere nice to visit (or name-drop)? Will we be taxied around? Are we staying in a plush hotel?
This is where the first major saving resides: slow forms of travel fundamentally change our perception of the essential. We consequently travel less (at least in distance), and given that air travel is the most emission-profligate activity per hour (short of Formula 1 and possibly space tourism) the emission-related opportunity costs are knocked into a cocked hat. Of course, as climate change specialists we are exempt from such analysis – our message truly is essential – so we’re the exception that should be able to carry on emitting as before.
Ah, yes, and business folk – we need them to drive the economy. Tourists are yet another really important economic driver (not to mention the great cultural gains from staying in western-style hotels with like-minded folk and observing other cultures pass by the windscreens of our air conditioned taxis). Next there are the pop stars and celebrities – the world would be such a dull place if they weren’t able to prance about at international festivals. The football and tennis players must test their mettle in the international arena – and of course they need their fans to cheer them on.
We can then turn to whole industrial sectors’ that put forward an equally bewildering array of ‘reasons’ why they should be the exceptions and exempt from major emission reductions. This extends to government departments, climate change think tanks and some NGOs – with the remaining less deserving sectors and individuals taking up the slack. It really is a puzzler as to why emissions keep on rising – all the more so since fuel prices have rocketed to levels way in excess of any carbon price economists previously told us would collapse the economy! Still, a few more international conferences and guidance from the carbon-market gurus will have us turn the corner on this one, I’m sure.
Obviously these caricatures are so far from reality that we don’t recognise ourselves in any of them – but nevertheless the message is clear. Travelling slowly forces us to travel much less, to be much more selective in what events we attend, and to endeavour to get more out of those trips we do take. Fewer trips and potentially longer stays: not rocket science – just climate change basics.
System Saving Number Two: Iteration, adaptive capacity and indulgences – how to avoid carbon lock-in
It may be apocryphal, but I have heard from several reputable sources that China is in the process of constructing 150 new international airports. This perhaps sounds implausible, but China’s population is approximately 22 times the UK’s, and the UK has around 25 international airports. Proportionately, China would need 550 international airports to match the per capita equivalent of the UK. Suddenly their construction rate seems less implausible. Either way, flying to Shanghai sends a very clear market signal: expand your airport. And that is exactly what they’re doing right now, so they’re reading our repeated signal loud and clear.
But how is that worse than expanding the rail network? Firstly, there is potential to radically improve the efficiency of train travel – until very recently efficiency has not been a major concern for the industry. This is not the case for aviation. Jet engines and current plane designs have pushed the orthodox design envelope about as far as it can go; so one to two per cent per annum improvement is about as much as can be wrung out of the aviation industry in the short to medium term. In the longer term things may change, but this will not be within the short timeframe associated with climate change. Consequently, flying now locks the future into a high-carbon aviation infrastructure. By contrast, trains have substantial efficiency potential (though this may be compromised with the very high-speed trains) and, more significantly, trains can run on electricity (many already do) and electricity can be low-carbon (some of it already is). Trains can also have regenerative breaking (tricky with aircraft) and overnight trains can be used to flatten demand curves (and cut back on hotel emissions). Planes are currently locked into high-carbon kerosene whilst trains already have several low-carbon options.
So there you have it. Jump on a plane and you send a suite of very clear market signals. Please buy some more aircraft that will operate for twenty to thirty years and have a design life of forty years. Please build some more airports. Please divert public transport funds so passengers (and shoppers) can travel to the airport on low-carbon trains or trams. Please expand the airport car park for when bags are just too heavy to lug on a tram. Please keep producing the black stuff – without it we will have invested billions in an industry dependent on kerosene; lock-in par excellence. They don’t tell you all this on the back of the ticket – though there may be some oh so useful advice on carbon offsetting. Again, is it any wonder that emissions aren’t coming down when we, the high-emitters, can buy indulgences so easily and cheaply?
System Saving Number Three A: Opportunity costs constrain carbon
Here we turn to the old chestnut, opportunity costs. Basically if I had flown – and assuming the direct emissions per capita were the same between the plane and the Trans-Siberian Express – then what would I have been doing for the time I wasn’t on the train?
Let’s say the plane took two days – one day each way (UK to Shanghai), while the train took a total of twenty days (ten each way), leaving an opportunity cost period of eighteen days. If at home, I certainly would have been taking the train to and from work each day. I’d probably have had around four longer UK trips, typically at around 650 kilometres per return trip. I’d have visited a few rock-climbing venues in my immediate vicinity around the Peak District (say 200 to 300 kilometres in total, probably shared with a couple of others in the car); I’d have watched a few movies, listened to the radio a lot – and all the usual stuff. The total distance travelled would be equivalent to 3000 to 5000 kilometres, that is, very roughly ten to twenty per cent of the Trans-Siberian trip distance. But if I was a regular flyer, in twenty days I may have taken a flight or two, and if I was one of the great and the good this would have been business or first class. Added to this (if we treat offsetting with the disdain it deserves) the opportunity-cost emissions could easily have exceeded those from the full return journey to China by train. And if offsetting had been used, I take the view that the emissions would have been still higher (increased lock-in, reduced incentive for the ‘donor’ to change behaviour and the economic multiplier effect for the ‘recipient’. See: The Inconvenient Truth of Carbon Offsetting {2}. All of this assumes that during my twelve days in China I emitted roughly the same quantity of carbon dioxide per day as if I’d remained at home in the UK. This is probably not too unreasonable, but again if I were one of the great and good, I’d no doubt would have had much higher emissions from further business-class travel to champion my low carbon message in yet more exotic venues.
By including opportunity costs, this slow-travel stuff really starts to notch up the carbon savings for those of us who travel a lot – particularly if it includes international travel.
System Saving number Three B: The slippery slope: thinking low-carbon engenders thinking low-carbon which engenders …
A final point worthy of a brief note: making the transition from fast to slower forms of long-distance travel may engender slower forms of travel elsewhere. Once we’ve made such a transition, it becomes more ‘natural’ to avoid taxis and instead to seek out the public transport, walking or cycling options we espouse for others. Taxis are another market signal for more roads. Jamming our bodies onto the Tube (or Beijing subway), or waiting for the reliable late-night bus from Norwich station to the University of East Anglia, all give much lower carbon signals, especially if supported with the occasional letter, either chastising the London Mayor for not doing more with the Tube and local trains, or complimenting Norwich bus planners – or however we think admonishment and praise should be meted out.
So there you have it: my potted account as to why I think the climate change community needs to put its own house in order before wagging its hypocritical finger at others or espousing low-carbon solutions to ministers that we simply wouldn’t accept for ourselves.
Final thoughts: Can slow travel be justified in a busy university life?
My guess is that a common retort to my ramblings will be, ‘it’s okay for him, I’m too busy to take such a long time off work, it’s just not practical – I’ve got to live in the real world’. But the real world has us flying half way around the world to give banal twenty minute presentations to audiences who know what we’re going to say. Even if our talks are riveting canters through the intellectual surf, are they really so important that we have to be there in person and in an instant, before launching off to dispense our pearls of wisdom to another packed house in another exotic location? Isn’t our situation emblematic of the problems (such as fast and self-important lives for the few, no time for thinking, reflexivity and humility) that we are abjectly failing to shed any light on?
My life is perhaps not as busy as some, but I still clock up a fair few work hours, have meetings to attend, administration to do and research to deliver on. The train was certainly not as simple to organise as a plane – though next time it would be much easier, and I wouldn’t worry so much about getting everything perfect and having back-up plans in place. Long and unusual journeys inevitably take more planning, not least to ensure the time spent travelling can be productive. And in terms of cost, the reimbursement system is just not set yet up to support such journeys, so you’ll likely have to dip into your pocket, as long train journeys typically cost more than taking to the air. Moreover, receipts don’t come with purchases of strange foods from sellers on station platforms and odd bits of accommodation.
So what of the work you can do while travelling? I had planned and expected my many hours of mildly enforced confinement to provide a good working environment. But I wasn’t prepared for what turned out to be the most productive period of my academic career, particularly on the return journey. During the outward trip, I read a range of papers and managed to write another on shipping and climate change. However, after having spent twelve days in China bombarded with fresh experiences, new ways of thinking and new information, the return journey was a wonderful opportunity to begin to make sense of it all, embedding much of it in a paper which a colleague and I had been working on for the past year. This was the first time I had actually put pen to paper with regard to that research.
The train’s ability to remove many of the choices that clutter my daily life gave me the seclusion and concentration I needed to set to work on what has proved a very challenging paper. By the time Moscow arrived, I had completed about 75 per cent of the writing; this would have taken another six months had I flown to Shanghai.
From a productivity perspective, the twenty-day train journey easily trumped the two-day flight. Counter-intuitive perhaps, but I remain convinced that a carefully planned train journey not only delivers lower emissions by an order of magnitude, but facilitates the process of research in a way that universities and daily life simply can’t match. Add to that the ‘slower’ ethos that such journeys engender, and I think there may be early signs of making a meaningful transition to a low-carbon future – or at least a bridging ethos – while we wait for the panacea of low-carbon technologies to become the norm.
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Addendum: Children, families and slow travel …
Amongst the wealth of responses to the original blog, a recurrent theme was “I really can’t see how those of us with young children could spend so much time travelling slowly when we could, by flying, be back home quickly and spend more time with our families”. On a more altruistic note, several colleagues with children suggested that they “should perhaps avoid any longer-distance travel, as the emotional pull to return quickly is inevitably very strong”.
I certainly can empathise with the challenge of balancing work and family pulls on our time. Ultimately, climate change is mostly about families and friends – but surely not only ours in the here and now?
If the science is broadly correct and the emissions trends continue, then we’re heading for enormous changes for many families even in the short term. These families may not be our own – much more likely they’ll be those who have not contributed to the problem, have little income and live in areas geographically more vulnerable to climate change impacts. So the choice is about whose family and friends matter most. We choose to fly back to be with our family as quickly as possible – so as not to be away for more than a few days. But the repercussions (okay, not on a one to one basis perhaps) are for another family in another place to lose their home, suffer food and water shortages, social and community pressures and wider conflicts – to put at risk the very fabric of their families and communities.
Moreover, our reducing time away from our families by using fast and high carbon travel also has longer-term repercussions for our own children. Are we rushing back for the sake of our own families or for ‘our’ individual engagement with our own families? This is a subtle but I think important distinction. Are we concerned about our families only whilst we’re around to enjoy and benefit from them, or are we more altruistically concerned regardless of our own immediate returns? When we’re dead and buried our children will likely still be here dealing with the legacy of our inaction today; do we discount their futures at such a rate as to always favour those family activities that ‘we’ can join in with?
I’m not talking about this solely in an abstract manner; most of my immediate family have gone on to more ethereal activity leaving me with an uncle in Scotland and another in Australia who is getting on in years and not in the best of health. I last saw him in 2004 and have since stuck to the difficult decision not to return to visit him. Okay I may relent one day, but for now I’m unable to reconcile my desire to share family memories with my fine Ozzie uncle and the fact that my visiting him jeopardises others’ abilities to lead good lives with their families.
Life in a changing climate is awash with such thorny issues and tough decisions. To me the guiding principle (supported by the mathematics) is that those of us responsible for the lion’s share of emissions are the same group that need to drive emissions down – and fast.
Technology alone cannot deliver the low carbon promise land in a timely manner. The future is in our hands now, our lifestyles, behaviours, practices and habits. If we are truly concerned about families (others as well as our own – now and in the future), then perhaps the overseas trip is not as ‘essential’ as when we could travel quickly by plane. Alternatively, if we still consider it an important trip, we must assess whether the additional time away from our family as a consequence of slower travel is compensated by the value of our message. The decisions just got tougher. Of course, it could be that we are that shining example of an exception to the rule – enlightened beings preaching real mitigation to our parishioners 32 thousand feet below.
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Is it really surprising that the hoi polloi are indifferent to our pronouncements and politicians pay only lip service to our analyses, when those of us working on climate change exhibit no desire to forego our own high-carbon lifestyles?
Links:
{1} http://rsta.royalsocietypublishing.org/content/369/1934/20.full.pdf+html
