Oil – Democracy’s Black Straightjacket

Link to map: http://www.bedigest.com/Images/map2.jpg

The collective name for the nations that produce oil in the Middle East and North Africa is MENA. On the map above you can see that MENA includes the following nations: Algeria, Libya, Egypt, Saudi Arabia, Iraq, Iran, Kuwait, Bahrain, Qatar, The United Arab Emirates (UAE), Oman and Yemen. What happens in these nations in coming years will be crucial for the world’s future. Ten of the twelve MENA nations are among the world’s twenty largest oil exporters. The exceptions are Bahrain and Egypt, but Egypt has a central position in the oil trade since large volumes of oil pass through the Suez Canal and it also controls an oil pipeline that runs parallel to the canal. Every day, large volumes of oil are freighted or pumped to the Mediterranean Sea and the EU. The ten largest oil exporters are, in rank order, Saudi Arabia, Iran, UAE, Kuwait, Iraq, Algeria, Libya, Qatar, Oman and Yemen. None of these nations are democracies as we understand the term.

The twenty largest importers of oil are the USA, China, Japan, Germany, South Korea, France, India, Italy, Spain, The Netherlands, Taiwan, Singapore, Belgium, Thailand, South Africa, Poland, Greece, Pakistan and Australia. Besides China and Thailand, the world’s largest democracies are among the importers. The remaining ten largest oil exporting nations are Russia, Nigeria, Venezuela, Norway, Mexico, Angola, Kazakhstan, Canada, Syria and Vietnam. Democracies exists among these nations but in many of this group the political system is not what we would regard as a democratic.

Goran Persson, Sweden’s prime minister from 1996 to 2006, coined the expression, “Those who are in debt are not free”. At that time he was talking about the nation’s debt levels but the expression can be applied more widely to also include oil. When unrest and calls for democracy began in Tunisia we saw the world’s democracies fairly quickly support those calls. They could do it because Tunisia is not a key nation in terms of oil exports of oil. As the calls for democracy spread farther in the Middle East to include Egypt it became progressively more difficult for the democracies to back the calls. The nation with the greatest difficulty was democracy’s most vocal proponent, the USA, that had supported the dictator Hosni Mubarak for thirty years. President Obama had even chosen Egypt as the nation in which to give his celebrated speech on America’s relationship with the Islamic world. The world and the democracy movement in Egypt waited for support from the USA but the White House was quite silent. The EU and Sweden’s foreign minister were not much better. They were restrained by oil’s black straightjacket.

Now the focus is on Libya and Muammar Abu Minyar al-Gaddafi. In a speech by his son it was made clear that they are willing to use oil in their struggle to retain power. If the world refuses oil from Libya it will prove extremely costly for the USA and the EU as the price of oil skyrockets.

But Saudi Arabia, a nation where women are not allowed to drive cars and can be stoned to death for adultery, has a treaty with the USA that guarantees military support to the ruling family, the “House of Saud” if there is unrest. If Saudi Arabia shuts off its oil production then more than twenty percent of the oil currently available on the world export market to import will disappear. No price, no matter how high, will be able to bring forth the necessary oil. The world will grind to a halt. The world’s democracies are bound tightly by oil’s black straightjacket.


American Zionism against the Egyptian Pro-Democracy Movement

by James Petras

dissidentvoice.org (February 21 2011)

One of the least analyzed aspects of the Egyptian pro-democracy movement and US policy toward it, is the role of the influential Zionist power configuration (ZPC) including the leading umbrella organization – the Conference of Presidents of Major American Jewish Organizations (CPMAJO) – Congressional Middle East committee members, officials occupying strategic positions in the Obama Administration’s Middle East bureaus, as well as prominent editors, publicists and journalists who play a major role in the prestigious newspapers and popular weekly magazines.  This essay is based on a survey of every issue of the Daily Alert (propaganda bulletin of the CPMAJO), the New York Times and the Washington Post between January 25 and February 17 of this year. {1}

From the very beginning of the Egyptian pro-democracy movement, the ZPC, called into question the legitimacy of the anti-dictatorial demands by focusing on the “Islamic threat”.  In particular, the ultra-Zionist Washington Post, the Wall Street Journal and the Daily Alert harped on the “threat” of an “Islamic takeover” by the Muslim Brotherhood even as the overwhelming number of non-Zionist experts and reporters in Egypt demonstrated that the vast majority of protesters were not members of any Islamic political movement, but largely advocates of a secular democratic republic.

Once their initial propaganda ploy failed, the ZPC developed several new propaganda lines:  the most prominent of which was a sustained defense of the Mubarak dictatorship as a bulwark of Israel’s ‘security’ and guardian of the so-called “Peace Accord” of 1979.  In other words, the ZPC pressured the US administration, via Congressional hearings, the press and AIPAC to support Mubarak as a key guarantor and collaborator of Israel’s supremacy in the Middle East; although it meant that the Obama regime would have to openly oppose the million-member Egyptian freedom movement.  Israeli journalists, officials and their US Zionist counterparts willingly admitted that although the Mubarak regime was a bloody, corrupt tyranny, he should be supported because a democratic government in Cairo might end Egypt’s decades-old collaboration with the brutal Israeli colonization of Palestine.

Once it became clear that uncritical support for Mubarak was no longer a viable position and the Obama Administration was appealing to the democratic movement to “dialogue” and negotiate with the dictator, the ZPC demanded caution in backing a “dialogue” and assurance that the dialogue did not lead to any abrupt changes in the Mubarak-Israeli treaty.  The ZPC and its scribes in the Washington Post presented Mubarak’s hand picked “Vice President” Omar Suleiman, a notorious torturer and long-term collaborator of Israel’s Mossad, as the legitimate interlocutor for the dialogue – even as he was unanimously rejected by the entire pro-democracy movement.

As the demonstrators grew in number and engulfed the major public squares throughout the country and extended beyond the first week, Israel and the ZPC promoted a possible alternative solution, which would keep Mubarak in power, during a nine month ‘transition’ period.  Caught off guard by the rapid growth of Egypt’s pro-democracy movement, Israel’s willing accomplices in the US administration and media conceded that an end to the dictatorship would be a good thing … if it was managed appropriately; namely, if it excluded or minimized the role of the Muslim Brotherhood and maximized the role of the pro-Israel military high command and intelligence services as overseers of the “transition”.  The ZPC contemptuously rejected Egypt’s independent pro-democracy movement and its leaders and sought to undermine the Egyptian people’s movement by inflating the role of the “best organized” Islamic Brotherhood and warned of a future Islamist “seizure of power”.

The leading Zionist official in the Obama Administration and AIPAC point man, Deputy Secretary of State James Steinberg, traveled to Israel to assure the Netanyahu/Lieberman regime that the US was in contact with the Egyptian military high command and sectors of the civilian opposition (ElBaradei) and that Washington’s support of the democracy movement was conditioned by their assurance that the Israeli-Egyptian Treaty would remain unchanged.

When Mubarak was finally forced to resign, handing power to a military junta, the ZPC congratulated the coup-makers, supported its demobilization of the movement and more important, celebrated the Egyptian generals’ endorsement of the “Peace Agreement of 1979”.  Now the Israeli propaganda machine began to harshly criticize Mubarak and portrayed the military coup as a positive step toward an “orderly and peaceful transition”.  By ‘orderly’ the Zionist think tankers meant a ‘regime change’ that did nothing to change the blockade of Gaza, the regular shipment of fuel to Israel, or the hotline of collaboration between Tel Aviv and Cairo.

Israeli and American Zionists rejected early elections and promoted a prolonged process in which the Egyptian military, the US Administration and the ZPC could handpick members of the ‘transitional constitutional and electoral commissions’ committed to continuing Mubarak’s policy of unconditional submission to Israel. By “peaceful” the pro-Israel diplomats in the Obama Administration meant clearing the streets of the masses of pro-democracy activists and demonstrators so that decisions could be controlled by the small circle of Mubarak military and civilian holdovers behind closed doors.  By “transition”, the circles of Zionists propagandists, US/Israeli policy makers and Egyptian generals meant that nothing would change but the face of Mubarak.

While Israel and the bulk of Zionist scribes and propagandists in the US opposed or questioned the pro-democracy movements against pro-Israeli rulers in the Middle East, they embraced and publicized the social movements opposing the Iranian regime.  In every print and electronic outlet, the pro-Israel journalists emphasized the repressive, brutal nature of the Iranian regime, called for regime change and raised the specter of a military confrontation if Iranian warships traversed the Suez Canal, Iran’s right by international maritime law.  Israeli security, the threat of ‘radical Islam’ and Iran were cited to place narrow limits on all discussions and debates over US policy regarding the enormous and growing mass of pro-democracy movements throughout the Arab world.

The same prominent US Zionist scribes who, at first, defended US support for the dictatorial Mubarak regime and then supported the military takeover in Cairo, have now become born-again backers of anti-regime democrats in Iran.  This is not inconsistent:  the issue for US Zionists is how might pro-democracy movements affect Israel’s colonial policies in Palestine and Israel’s expanding power in the Middle East.  In other words, the ZPC in Congress and the White House are not concerned about promoting democracy through American foreign policy, but only about harnessing US diplomacy and military leverage to serve Israel.

What is striking about Obama’s twist and turns in policy toward the mass popular struggles in Egypt is how closely it repeats and implements the policy positions of the US Zionist power configuration clearly presented in the ’52 organizations’ propaganda organ, the Daily Alert.

Note {1} The Financial Times (January 26 2011 to February 17 2011}


James Petras, a former Professor of Sociology at Binghamton University, New York, owns a fifty-year membership in the class struggle, is an adviser to the landless and jobless in Brazil and Argentina, and is co-author of Globalization Unmasked (Zed Books, 2001). Petras’ most recent book is Zionism, Militarism and the Decline of US Power (Clarity Press, 2008). He can be reached at: jpetras@binghamton.edu. Read other articles by James at http://dissidentvoice.org/author/JamesPetras/, or visit James’s website: http://petras.lahaine.org/


Money Pollution

The US Chamber of Commerce Darkens the Skies

by Bill McKibben

view.mail.macmillan.com (February 23 2011)

In Beijing, they celebrate when they have a “blue sky day”, when, that is, the haze clears long enough so that you can actually see the sun.  Many days, you can’t even make out the next block.

Washington, by contrast, looks pretty clean: white marble monuments, broad, tree-lined avenues, the beautiful, green spread of the Mall. But its inhabitants – at least those who vote in Congress – can’t see any more clearly than the smoke-shrouded residents of Beijing.

Their view, however, is obscured by a different kind of smog.  Call it money pollution.  The torrents of cash now pouring unchecked into our political system cloud judgment and obscure science. Money pollution matters as much as or more than the other kind of dirt.  That money is the single biggest reason that, as the planet swelters through the warmest years in the history of civilization, we have yet to take any real action as a nation on global warming.

And if you had to pick a single “power plant” whose stack was spewing out the most smoke? No question about it, that would be the US Chamber of Commerce, whose headquarters are conveniently located directly across the street from the White House.  On its webpage, the chamber brags that it’s the biggest lobby in Washington, “consistently leading the pack in lobbying expenditures”.

The group spent as much as $33 million trying to influence the midterm 2010 elections, and has announced that it will beat that in 2012.  That, of course, is its right, especially now that the Supreme Court, in its Citizens United ruling, opened the floodgates for corporate speech (as in “money talks”).

But the chamber does what it does with a twist.  It claims to represent “three million businesses of all sizes, sectors, and regions”. The organization, that is, seems to speak for a country full of barbers and florists, car dealers, restaurant owners, and insurance salesmen, not to mention the small entrepreneurs who make up local and state chambers of commerce across the country.

At least when it comes to energy and climate, though, that claim is, politely put, a fib.  The Chamber of Commerce doesn’t have to say where it gets its money, but last year a group called US ChamberWatch used one of the last disclosure laws still in existence to uncover a single pertinent fact. They went to the headquarters of the chamber and asked to see its IRS 990 form. It showed that 55% of its funding came from just sixteen companies, each of which gave more than a million dollars. It doesn’t have to say which companies, but by their deeds shall you know them.

The chamber has long opposed environmental standards.  In the 1980s, it fought a ban on the dumping of hazardous waste.  In the 1990s, it fought smog and soot standards.  On climate change, though, it’s gone pretty near berserk.

In 2009, for instance, one of its officials even demanded a “twenty-first century Scopes monkey trial” for global warming: “It would be the science of climate change on trial”, the chamber’s senior vice-president for environment, technology, and regulatory affairs explained.

That didn’t go over so well.  Several high-profile companies quit the chamber. Apple Computer, the very exemplar of the universe of cutting-edge technology, explained: “We would prefer that the chamber take a more progressive stance on this critical issue and play a constructive role in addressing the climate crisis”.

Other businesses complained that they hadn’t been consulted.  Some, like Nike, quit the organization’s board. “We just weren’t clear in how decisions on climate and energy were being made”, said a Nike spokesman.

One thing was for sure: they weren’t being made by three million small businesses – because many local chambers of commerce started quitting the chamber as well. From Florida and South Carolina to Missouri and Kansas, from Colorado and Pennsylvania to New Hampshire and Washington, dozens of local chambers have announced that the US Chamber doesn’t speak for them on these issues. In Largo, Florida, for instance, the head of the local chamber explained that the US Chamber was composed, “for the most part, of political action committees and business lobbyists. They hold little resemblance to the local chambers of commerce that have been the cornerstone of their communities for generations.”

Faced with that kind of incipient rebellion, the chamber backtracked just a little, issuing a statement saying that they didn’t really want a global warming version of a monkey trial after all, and that climate change was an “important issue”. (The same statement went on to call for transforming the United States into the “Saudi Arabia of clean coal”.)

The happy talk in public, however, has done nothing to change the agenda the chamber pushes so powerfully in private.  The same year as that statement, for instance, the organization petitioned the Environmental Protection Agency to take no action on global warming on the grounds that “populations can acclimatize to warmer climates via a range of range of behavioral, physiological, and technological adaptations”.

Now, read that again.   No suggestion here that sixteen dinosaur companies adapt their business model to a reality that now includes melting ice caps, desertification and massive flooding, ever fiercer storms and acidifying oceans.  Instead, they would prefer that every human being (and every other species) be so kind as to adapt their behavior and physiology to the needs of this tiny coterie of massive contributors. Forever.

What’s become clear is that the US Chamber of Commerce, an organization formed in 1912, more than a century after the first local chamber came into being, is anything but a benign umbrella for American small businesses. Quite the opposite: it’s a hard-edged ideological shop. It was Glenn Beck, after all, who said of the chamber that “they are us”, and urged his viewers to send them money. (Beck personally contributed $10,000 of the $32 million he earned in 2009.) The chamber’s chief lobbyist even called in to offer his personal thanks. It shouldn’t have come as a great surprise: Beck’s Fox News parent, Rupert Murdoch’s News Corporation, had given its own million-dollar donation to the chamber.

Thanks to the Supreme Court and its Citizens United decision, there’s no way to keep the chamber and others from running their shadowy election-time campaigns.  As long as monster companies are pumping money into their coffers, it’s “free speech” all the way and they’ll simply keep on with their dodgy operations.

Still, the rest of us can stand up and be counted.  We can tell the Congressional representatives taking their money that they don’t speak for us. We can urge more big companies to act like Apple and Microsoft, which publicly denounced the chamber.  (It’s good to hear Levi Strauss, General Electric, and Best Buy making similar noises.)  We need to hear from more dissenting chambers of commerce.  It cheered me to find that the CEO of the Greater New York Chamber said , “They don’t represent me”, or to discover that just a few weeks ago the Seattle chamber cut its ties.

But it’s even more important to hear from small businesspeople, the very contingent the US Chamber of Commerce draws on for its credibility. Across America in the coming months, volunteers from the climate change organization I helped to found, 350.org, will be fanning out to canvass local businesses – all those bakeries and beauty salons, colleges and chiropractors, pharmacies and fitness centers that belong to local chambers of commerce.

The volunteers will be asking for signatures on a statement announcing that “the US Chamber doesn’t speak for me”, and offering businesspeople the chance to post videos expressing just how differently they do think when it comes to global warming, energy, and the environment. It’s a chance to emphasize that American business should be about nimbleness, creativity, and adaptation – that it’s prepared to cope with changing circumstances, instead of using political cash to ensure that yesterday’s technologies remain on artificial life support.

It’s easy to guess how the US Chamber of Commerce will respond to this campaign. Last week, a series of leaks showed that their law firm had been carrying out extended negotiations with at least one “security firm” to collect intelligence on the chamber’s adversaries, including the group that uncovered the tax data showing where their money came from. Once the leak was made public, the chamber’s law firm cut off the negotiations, but not before they received “samples” of the kind of intelligence they presumably wanted – pictures of their opponents’ children, for instance, or the news that one foe attended a “Jewish church” near Washington.

For the record: I don’t like the chamber’s deceptions. I belong to the Methodist church in my hometown. Keep away from my daughter.

With my colleagues at 350.org, I’ll do what I can to help undermine the chamber’s claim to represent American business.  I don’t know if we can win this fight against money pollution, but we’re going to do what we can to clear the air.


Bill McKibben is Schumann Distinguished Scholar at Middlebury College, co-founder of 350.org, and a TomDispatch regular. His most recent book is Eaarth: Making a Life on a Tough New Planet (2010).

Copyright 2011 Bill McKibben

This email was sent by: Macmillan
175 Fifth Avenue New York, New York 10010 USA


Nations May Expand Food Stockpiles …

… and Subsidies, Traders Say

by Thomas Kutty Abraham

bloomberg.com/news (February 21 2011)

Governments worldwide will increase their role in global food markets and may boost stockpiles and subsidies or impose trade curbs to head off the protests that have rippled through the Middle East, commodity traders said.

“Greater political intervention in food matters is only to be expected”, Alan Winney, chairman of Emerald Group Australia Pty Ltd, said in an interview at a sugar-industry conference in Dubai. “Governments will be careful to take preemptive measures to prevent increases in food prices”, said Winney.

Countries across Africa to Asia are increasing imports or releasing supply from state reserves to cool inflation as rising demand and adverse weather cuts harvests and pushes food prices to a record. A revolt in Libya widened at the weekend, with leader Muammar Qaddafi’s son warning that a civil war would risk the country’s oil wealth and invite a return of colonial powers.

“Food inflation is there to stay this year as cereals, soft commodities are all affected by supply contraction”, said Vijay Iyengar, managing director of Agrocorp International Pte, who’s traded agricultural commodities since 1986. “Governments will have to subsidize” staples, including sugar, Iyengar said.

The higher costs of wheat, sugar and dairy products sent the United Nations’ World Food Price Index to an all-time high last month. The jump has contributed to democratic revolts in Tunisia and Egypt, as well as other Arab nations. Saif al-Islam Qaddafi said in a televised address Libya is “not Tunisia and Egypt” after thousands demonstrated in the city of Benghazi.

Wheat’s Rally

Wheat climbed to $9.1675 a bushel on the Chicago Board of Trade on February 14, the highest price since August 2008, and has surged 66 percent the past year. That compares with an 88 percent gain for corn and a 43 percent jump in soybeans. Sugar prices have doubled since the end of May. There is no US grain trade today due to a public holiday.

Finance ministers from the Group-of-Twenty nations signaled their concern at the weekend that surging commodity costs are driving global inflationary pressures. Price developments pose challenges “for both consumers and producers”, the G-20 nations said in their statement after a meeting in Paris.

Global wheat harvests may trail demand for a second year, spurring “widespread” hoarding and further price advances, Abdolreza Abbassian, a senior economist at the Food & Agriculture Organization, said February 9. Global corn output will need to rise six percent and wheat three percent to four percent in the 2011-2012 crop season to rebuild global reserves, he has said.

“Wheat may have done its job as far as prices are concerned, while corn may still gain on feed demand”, said Winney. “Farmers can respond to higher grain prices but not to crops like sugar”.

Corn Stockpiles

Global corn stockpiles are forecast by the US Department of Agriculture to drop at the end of this season to a four-year low, while reserves of wheat will slump ten percent from a year earlier as harvests lag behind demand. Soybean inventories will drop to a two-year low, the agency said.

Sugar stockpiles will stay low for the next year and the shortage, which drove prices to the highest level since 1980 earlier this month, may last for the first half of this year, broker and researcher Jonathan Kingsman said at the conference.

Some sugar refiners, which depend on imports, have partly wound down operations, Cyrus Raja, general manager at Al Khaleej Sugar Company, the world’s biggest, said at the conference. High food prices prompted India, the second-biggest sugar producer, to put on hold shipments of 500,000 tons after announcing the plan in December, adding to the deficit.

Accelerating food prices sparked riots from Haiti to Egypt in 2008 as economic growth in Asia and the diversion of crops for making ethanol threatened food security for some of the world’s most vulnerable people.

“Three years ago the finger was pointed out at biofuels for the food shortage”, said Patricia Luis-Manso, biofuels manager at Kingsman SA, said at the Dubai conference. “It’s clear to more people that there’s no single factor contributing to food-price increases”.


To contact the reporter on this story: Thomas Kutty Abraham in Dubai at tabraham4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net



Ron Paul joins the Collapse Party

by Dmitry Orlov

Club Orlov (February 18 2011)

US Congressman Ron Paul is sounding like quite the shoo-in for a leadership position within the Collapse Party, which I proposed over three years ago (and which is fast becoming a great success: without fielding a single candidate in any election, it is well on its way to successfully implementing the entire collapse agenda).

Lately, Ron has been heard saying things like this:

[The US] government is in the process of failing, and they can’t deliver on the goods, just as the Soviets couldn’t deliver the goods and maintain their own power … We will have those same problems domestically. We face serious economic problems as this dollar crisis evolves … We don’t need to just change political parties. We need to change our philosophy about what this country is all about.

So, Ron, what is the Soviet Union all about these days, other than staying dead?


The Collapse Party Platform

by Dmitry Orlov

Club Orlov (March 31 2008)

My forthcoming book, Reinventing Collapse, has just gone to print, and it is time to publish some excerpts. This being an election year in the US, I thought it fitting to circulate my little wish list of items that the US government could try to accomplish if it suddenly decided to make itself useful.

If the entire country were to embrace the notion that collapse is inevitable and that it must prepare for it, a new political party might be formed: the Collapse Party. If this party were to succeed in upending the two-party monopoly and forming a majority government, this government would then want to implement a crash program to dismantle institutions that have no future, create new ones that are designed to survive collapse and save whatever can be saved. If, further, this crash program somehow succeeded, in spite of constitutional limitations on government action, and in spite of the inevitable lack of financial resources for such an ambitious undertaking, and in spite of the insurmountable bureaucratic complexity, then I for one would be really surprised!

Barring such surprises, sometimes it is possible for small groups of capable and motivated individuals to succeed where governments fear to tread. And so here are some things that I would like to see taken care of, in preparation for collapse.

I am particularly concerned about all the radioactive and toxic installations, stockpiles and dumps. Future generations are unlikely to be able to control them, especially if global warming puts them underwater. There is enough of this muck sitting around to kill off most of us. There are abandoned mine sites at which, soon after the bulldozers and the excavators stop running, toxic tailings and the contents of settling ponds will flow into and poison the waters of major rivers, making their flood plains and estuaries uninhabitable for many centuries. Many nuclear power plants have been built near coastlines, for access to ocean water for cooling. These will be at risk of inundation due to extreme weather events and rising sea levels caused by global warming. At many nuclear power stations, spent fuel rods are stored in a pool right at the reactor site, because the search for a more permanent storage place has been mired in politics. There are surely better places to store them than next to population centers and bodies of water. Nuclear reservations – sites that have been permanently contaminated in the process of manufacturing nuclear weapons – should be marked with sufficiently large, durable and frightening obelisks to warn off travelers long after all memory of their builders has faded away.

I am also worried about soldiers getting stranded overseas – abandoning its soldiers is among the most shameful things a country can do. Not only is it an indelible stain on the country’s honor, it is an effective way to create a large underclass of desperate armed men who do not answer to any authority, creating a society where the price of a contract killing is only slightly higher than the price of the ammunition. The United States maintains over a thousand overseas military bases, most of which serve no purpose other than maintaining a megalomaniac fiction of American military superiority. They are often resupplied by private contractors, whose procurement operations rely on the domestic civilian economy. As long as the economy is intact, they can bring three flavors of ice cream to an air-conditioned tent in the middle of a desert, but once the economy collapses, they will collapse with it, and the military may turn out to lack even the resources to truck in water. Overseas military bases should be dismantled and the troops repatriated.

I would like to see the huge prison population whittled away in a controlled manner, ahead of time, instead of in a chaotic general amnesty. Such an amnesty will have to happen as a matter of course, once the resources that sustain the prison system stop flowing. The scenario to avoid is one in which, in the midst of general chaos, the entire population of prisoners is released en masse and, with no other resources available to them, they start plying their various criminal trades. Paroling the non-violent, shortening sentences, decriminalizing drugs, and providing room and board to former inmates, are all reasonable steps to take to prevent a crime wave of staggering proportions once the criminal justice system finally shuts down.

Lastly, I think that this farce with debts that will never be repaid has gone on long enough. Collateralized debt will evaporate once the value of the collateral is too low to secure the debt: if the house has no water, cannot be lit, heated or reached by transportation, its value is effectively zero, and so is the value of the mortgage. Non-collateralized debt, such as credit card debt in the post-bankruptcy-reform era, is secured by the threat of force – be it breaking legs or garnering wages – and even such measures bring diminishing returns in a collapsing economy. Wiping the slate clean ahead of time will give society some time to readjust to the new reality. Perhaps most importantly, by canceling debts before they become unrepayable, it may be possible to prevent the current system – one of indentured servitude based on debt – from evolving into a system of permanent servitude based on force: a new American slavery. I remain optimistic that the forces of chaos will prevent such a system from becoming entrenched; nevertheless, it might be prudent to take some measures to make such an outcome even less likely.

— From Reinventing Collapse (2008), pages 110 to 113


Money, “Free Trade” and “the China Problem”

by Thomas H Greco

Beyond Money (February 22 2011)

Professor Antal Fekete is an expert on the real bills doctrine and the gold standard. He is someone whose knowledge and insights I respect. This article, which appears on the SilverSeek.com website, draws important parallels between the opium wars of the 19th century and the current trade imbalance between the west (especially the US) and China. It’s the same game of looting but with somewhat different details.

While I don’t agree that a new gold standard is the solution, I recommend Professor Fekete’s article because it provides the kind of historical perspective that is necessary for understanding what is really going on between China and the west. Rather than a gold standard, I think the world needs and an objective, non-political standard of value based on a defined assortment of basic commodities. That is something I’ve written about in all of my books.   — Thomas H Greco

Silver and Opium

by Professor Antal E Fekete

SilverSeek.com (February 16 2011)

The opium wars do not belong to the glorious episodes of Western history. Rather, they were instances of shameful behavior the West still has not lived down. Mercantilist governments resented the perpetual drain of silver from West to East in payment for Oriental goods (tea, silk, porcelain) that were in high demand in the Occident, facing low demand in the Orient for Occidental goods. From the mid-17th century more than nine billion Troy ounces or 290 thousand metric tons of silver was absorbed by China from European countries in exchange for Chinese goods.

The British introduced opium along with tobacco as an export item to China in order to reduce their trade deficit. Under the disguise of free trade, the British, the Spanish and the French with the tacit approval of the Americans continued sending their contraband to China through legitimate as well as illegitimate trade channels even after the Chinese dynasty put an embargo on opium imports. Because of its strong appeal to the Chinese masses, and because of its highly addictive nature, opium appeared to be the ideal solution to the West’s trade problem. And, indeed, the flow of silver was first stopped, and then reversed. China was forced to pay silver for her addiction to opium smoking that was artificially induced by the pusher: the British.

Thus silver was replaced by opium as the mainstay of Western exports. In 1729 China, recognizing the growing problem of addiction and the debilitating and mind-corrupting nature of the drug, prohibited the sale and smoking of opium; allowing only a small quota of imports for medicinal purposes. The British defied the embargo and ban on opium trade, and encouraged smuggling. As a result, British exports of opium to China grew from an estimated fifteen tons to 75 by 1773. This increased further to 900 tons by 1820; and to 1400 tons annually by 1838 – an almost 100-fold increase in 100 years.

Something had to be done. The Chinese government introduced death penalty for drug trafficking, and put British processing and distributing facilities on Chinese soil under siege. Chinese troops boarded British ships in international waters carrying opium to Chinese ports and destroyed their cargo, in addition to the destruction of opium found on Chinese territory. The British accused the Chinese of destroying British property, and sent a large British-Indian army to China in order to exact punishment.

British military superiority was clearly evident in the armed conflict. British warships wreaked havoc on coastal towns. After taking Canton the British sailed up the Yangtze River. They grabbed the tax barges, inflicting a devastating blow on the Chinese as imperial revenues were impossible to collect. In 1842 China sued for peace that was concluded in Nanking and ratified the following year. In the treaty China was forced to pay an indemnity to Britain, open four port cities where British subjects were given extraterritorial privileges, and cede Hong Kong to Britain. In 1844 the United States and France signed similar treaties with China.

These humiliating treaties were criticized in the House of Commons by William E Gladstone, who later served as Prime Minister. He was wondering “whether there had ever been a war more unjust in its origin, a war more calculated to cover Britain with permanent disgrace”. The Foreign Secretary, Lord Palmerston replied that nobody believed that the Chinese government’s motive was “the promotion of good moral habits”, or that the war was fought to stem China’s balance of trade deficit. The American president John Quincy Adams chimed in during the debate by suggesting that opium was a “mere incident”. According to him “the cause of the war was the arrogant and insupportable pretensions of China that she would hold commercial intercourse with the rest of mankind not upon terms of equal reciprocity, but upon the insulting and degrading forms of the relations between lord and vassal”. These words are echoed, 160 years later, by president Obama’s recent disdainful pronouncements to the effect that China’s exchange-rate policy is unacceptable to the rest of mankind as it pretends that China’s currency is that of the lord, and everybody else’s is that of the vassal.

The peace of Nanking did not last. The Chinese searched a suspicious ship, and the British answered by putting the port city of Canton under siege in 1856, occupying it in 1857. The French also entered the fray. British troops were approaching Beijing and set on to destroy the Summer Palace. China again was forced to sue for peace. In the peace treaty of Tianjin China yielded to the demand to create ten new port cities, and granted foreigners free passage throughout the country. It also agreed to pay an indemnity of five million ounces of silver: three million to Britain and two million to France.

This deliberate humiliation of China by the Western powers contributed greatly to the loosening and ultimate snapping of the internal coherence of the Qing Dynasty, leading to the Taiping Rebellion (1850-1864), the Boxer Uprising (1899-1901) and, ultimately, to the downfall of the Qing Dynasty in 1912.

The present trade dispute between the US and China is reminiscent of the background to the two Opium Wars. Once more, the issue is the humiliation and plunder of China as a “thank you” for China’s favor of having provided consumer goods for which the West was unable to pay in terms of Western goods suitable for Chinese consumption. The only difference is the absence of opium in the dispute.

Oops, I take it back. The role of opium in the current dispute is played by paper. Paper dollars, to be precise. In 1971 an atrocity was made that I call the Nixon-Friedman conspiracy. To cover up the shame and disgrace of the default of the US on its international gold obligations, Milton Friedman (following an earlier failed attempt of John M Keynes) concocted a spurious and idiotic theory of floating exchange rates. It suggests that falling foreign exchange value of the domestic currency makes it stronger when in actual fact the opposite is true: it is made weaker as the terms of trade of the devaluing country deteriorates and that of its trading partners improves. Nixon was quick to embrace the false theory of Friedman. No public debate of the plan was permitted then, or ever after. Under the new dispensation the irredeemable dollar was to play the role of the ultimate extinguisher of debt, a preposterous idea. The scheme was imposed on the world under duress as part of the “new millennium”, shaking off the “tyranny of gold”, that “barbarous relic”, the last remnant of superstition, the only remaining “anachronism of the Modern Age”. The ploy was played up and celebrated as a great scientific breakthrough, making it possible for man to shape his own destiny rationally, free of superstition, for the first time ever. Yet all it was a cheap trick to elevate the dishonored paper of an insolvent banker (the US) from scum to the holy of holies: international currency. The fact that fiat paper money has a history of 100 percent mortality was neatly side-stepped. Any questioning of the wisdom of experimenting with is in spite of logic and historical evidence was declared foggy-bottom reactionary thinking.

The amazing thing about this episode of the history of human folly was the ease with which it could be pushed down the throat of the rest of the world, including those nations that were directly hurt by it, such as the ones running a trade surplus with the US. Their savings went up in smoke. The explanation for this self-destructing behavior is the addictive, debilitating and mind-corrosive nature of paper money, in direct analogy with that of opium. The high caused by administering the opium pipe to the patient (read: administering Quantitative Easing, QE) had to be repeated when the effect faded by a fresh administration of more opium (read: more Quantitative Easing, QE2).

If the patient resists, like China did in 1840, then a holy opium war must be declared on it in the name of the right of others to free trade. 170 years later a New China once more demurred against the paper-torture treatment it was subjected to by the American debt-mongers and opium pushers.

But beware: if the West starts another Opium War, this time it is not China that will be on the losing side.


Reference: Opium Wars, Wikipedia (June 29 2010).



New Hacking Tools …

… Pose Bigger Threats to Wi-Fi Users

by Kate Murphy

New York Times (February 16 2011)

You may think the only people capable of snooping on your Internet activity are government intelligence agents or possibly a talented teenage hacker holed up in his parents’ basement. But some simple software lets just about anyone sitting next to you at your local coffee shop watch you browse the Web and even assume your identity online.

“Like it or not, we are now living in a cyberpunk novel”, said Darren Kitchen, a systems administrator for an aerospace company in Richmond, California, and the host of Hak5, a video podcast about computer hacking and security. “When people find out how trivial and easy it is to see and even modify what you do online, they are shocked”.

Until recently, only determined and knowledgeable hackers with fancy tools and lots of time on their hands could spy while you used your laptop or smartphone at Wi-Fi hot spots. But a free program called Firesheep, released in October, has made it simple to see what other users of an unsecured Wi-Fi network are doing and then log on as them at the sites they visited.

Without issuing any warnings of the possible threat, Web site administrators have since been scrambling to provide added protections.

“I released Firesheep to show that a core and widespread issue in Web site security is being ignored”, said Eric Butler, a freelance software developer in Seattle who created the program. “It points out the lack of end-to-end encryption”.

What he means is that while the password you initially enter on Web sites like Facebook, Twitter, Flickr, Amazon, eBay and The New York Times is encrypted, the Web browser’s cookie, a bit of code that that identifies your computer, your settings on the site or other private information, is often not encrypted. Firesheep grabs that cookie, allowing nosy or malicious users to, in essence, be you on the site and have full access to your account.

More than a million people have downloaded the program in the last three months (including this reporter, who is not exactly a computer genius). And it is easy to use.

The only sites that are safe from snoopers are those that employ the cryptographic protocol Transport Layer Security or its predecessor, Secure Sockets Layer, throughout your session. PayPal and many banks do this, but a startling number of sites that people trust to safeguard their privacy do not. You know you are shielded from prying eyes if a little lock appears in the corner of your browser or the Web address starts with “https” rather than “http”.

“The usual reason Web sites give for not encrypting all communication is that it will slow down the site and would be a huge engineering expense”, said Chris Palmer, technology director at the Electronic Frontier Foundation, an electronic rights advocacy group based in San Francisco. “Yes, there are operational hurdles, but they are solvable”.

Indeed, Gmail made end-to-end encryption its default mode in January 2010. Facebook began to offer the same protection as an opt-in security feature last month, though it is so far available only to a small percentage of users and has limitations. For example, it doesn’t work with many third-party applications.

“It’s worth noting that Facebook took this step, but it’s too early to congratulate them”, said Mr Butler, who is frustrated that “https” is not the site’s default setting. “Most people aren’t going to know about it or won’t think it’s important or won’t want to use it when they find out that it disables major applications”.

Joe Sullivan, chief security officer at Facebook, said the company was engaged in a “deliberative rollout process”, to access and address any unforeseen difficulties. “We hope to have it available for all users in the next several weeks”, he said, adding that the company was also working to address problems with third-party applications and to make “https” the default setting.

Many Web sites offer some support for encryption via “https”, but they make it difficult to use. To address these problems, the Electronic Frontier Foundation in collaboration with the Tor Project, another group concerned with Internet privacy, released in June an add-on to the browser Firefox, called Https Everywhere. The extension, which can be downloaded at eff.org/https-everywhere, makes “https” the stubbornly unchangeable default on all sites that support it.

Since not all Web sites have “https” capability, Bill Pennington, chief strategy officer with the Web site risk management firm WhiteHat Security in Santa Clara, California, said: “I tell people that if you’re doing things with sensitive data, don’t do it at a Wi-Fi hot spot. Do it at home.”

But home wireless networks may not be all that safe either, because of free and widely available Wi-Fi cracking programs like Gerix WiFi Cracker, Aircrack-ng and Wifite. The programs work by faking legitimate user activity to collect a series of so-called weak keys or clues to the password. The process is wholly automated, said Mr Kitchen at Hak5, allowing even techno-ignoramuses to recover a wireless router’s password in a matter of seconds. “I’ve yet to find a WEP-protected network not susceptible to this kind of attack”, Mr Kitchen said.

A WEP-encrypted password (for wired equivalent privacy) is not as strong as a WPA (or Wi-Fi protected access) password, so it’s best to use a WPA password instead. Even so, hackers can use the same free software programs to get on WPA password-protected networks as well. It just takes much longer (think weeks) and more computer expertise.

Using such programs along with high-powered Wi-Fi antennas that cost less than $90, hackers can pull in signals from home networks two to three miles away. There are also some computerized cracking devices with built-in antennas on the market, like WifiRobin ($156). But experts said they were not as fast or effective as the latest free cracking programs, because the devices worked only on WEP-protected networks.

To protect yourself, changing the Service Set Identifier or SSID of your wireless network from the default name of your router (like Linksys or Netgear) to something less predictable helps, as does choosing a lengthy and complicated alphanumeric password.

Setting up a virtual private network, or VPN, which encrypts all communications you transmit wirelessly whether on your home network or at a hot spot, is even more secure. The data looks like gibberish to a snooper as it travels from your computer to a secure server before it is blasted onto the Internet.

Popular VPN providers include VyperVPN, HotSpotVPN and LogMeIn Hamachi. Some are free; others are as much as $18 a month, depending on how much data is encrypted. Free versions tend to encrypt only Web activity and not e-mail exchanges.

However, Mr Palmer at the Electronic Frontier Foundation blames poorly designed Web sites, not vulnerable Wi-Fi connections, for security lapses. “Many popular sites were not designed for security from the beginning, and now we are suffering the consequences”, he said. “People need to demand ‘https’ so Web sites will do the painful integration work that needs to be done”.


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