Don’t be Fooled by ‘Conspiracy Theory’ Smears

US Media Lie, Yet Again

by Andrew Kreig    (May 28 2014)

CNN and Newsweek recently launched dubious tirades against what they called “conspiracy theories”.

Meanwhile, the Wall Street Journal published “UN Considers Reopening Probe into 1961 Crash that Killed Dag Hammarskjold”, a report that broached the possibility that the United States may have been involved in the death of the secretary-general.

As a way to understand such varied messages, I urge readers to evaluate evidence with an open mind  –  and regard with special suspicion those commentators who slant their coverage with the loaded smear words “conspiracy theory” without citing specific evidence.

No one has time to investigate everything without preconceptions. For efficiency, we rely in part on slanted commentary by our favorite sources. But if the stakes are high and we want to be honest we should admit (at least to ourselves) that our preliminary conclusions should be subject to change based on new data.

My suggestions follow the spirit of the Justice Integrity Project’s JFK Assassination “Readers Guide” last fall. That eleven-part series began with a catalog of books, archives, reports and videos. Then it proceeded to assess various theories of President Kennedy’s 1963 murder.

By now, we know from declassified documents that the CIA undertook a massive secret campaign to smear critics of the Warren Commission with the label “conspiracy theorist”.

The campaign used members of mainstream media friendly to the CIA, for example, to discredit New Orleans District Attorney Jim Garrison. Garrison was prosecuting New Orleans businessman Clay Shaw in what Garrison alleged was a conspiracy to murder Kennedy. Shaw, an OSS liaison to high-ranking British officials during World War Two, founded a major regional trade mart in New Orleans shortly after the war. Garrison alleged that Shaw met with rightist opponents of JFK to plan the death.

A fifty-page CIA memo, known as “CIA Dispatch 1035-960”, instructed agents to contact their media contacts and disparage those, like Garrison, criticizing the Warren Commission findings that Lee Harvey Oswald killed JFK and acted alone. The 1967 document is here {1} in the original, and here {2} in reformatted text of its summary.

Minutes of CIA meeting that same year indicated fear that Garrison would win a conviction.

But a jury promptly acquitted Shaw following more than a dozen deaths (including suicide) of potential witnesses and an intense smear campaign against Garrison by the national media. NBC News hired former high-ranking Justice Department official Walter Sheridan, who had been an early recruit to the super-secret NSA in the 1950s. Publicly an investigative reporter, Sheridan was involved also in operational efforts to undermine Garrison.

More generally, Operation Mockingbird was the CIA’s secret program to plant stories in the nation’s most prestigious news outlets.

“With this [CIA] memo and the CIA’s influence in the media”, author Peter Janney wrote in a guest column on our site last fall, “the concept of ‘conspiracy theorist’ was engendered and infused into our political lexicon and became what it is today: a term to smear, denounce, ridicule, and defame anyone who dares to speak about any crime committed by the state, military or intelligence services”.

Janney, whose late father Wistar Janney had been a high-ranking CIA executive, continued: “People who want to pretend that conspiracies don’t exist  –  when in fact they are among the most common modus operandi of significant historical change throughout the world and in our country  –  become furious when their naive illusion is challenged”.

After that background, let’s look at more recent uses of the term by the mainstream media to discredit those who suggest government complicity in notorious events.

CNN, Newsweek Lash Out Against Government Critics

Last week, CNN‘s Jake Tapper engaged in little more than name-calling in his segment “Truthers” to protest 9/11 Museum. Tapper brought in a like-minded guest, Salon columnist Emily Bazelon, who relied on the same kind of seat-of-the-pants speculation to denounce protesters.

Another example of selective analysis was a Newsweek cover story May 15, “The Plots to Destroy America”, written by Kurt Eichenwald. Oddly, Newsweek‘s sensationalistic title itself implied a conspiracy  –  that the diverse government critics on the right and left whom the magazine attacked intended to “destroy” the nation with their “plots”.

I recognized the pattern. Three years ago, I hosted author Jonathan Kay on my weekly public affair radio show, Washington Update. Kay, a Canadian newspaper editor and law school graduate, had authored Among the Truthers (2011), a 340-page book. Upon reading it, however, I saw that it raised alarm and mocked critics of 9/11 official accounts but did not analyze their arguments.

Similarly, Eichenwald cited as authority a handful of establishment “experts” who mocked those who criticize government or other establishment institutions.

Among the experts the Newsweek author repeatedly quoted was Cass Sunstein, a Harvard Law professor, author of the recent book Conspiracy Theories and Other Dangerous Ideas (2014), and a former high-ranking Obama administration official. During the Obama first term, Sunstein in effect oversaw all federal regulation at the White House’s Office of Management and Budget.

A White House photo shows Sunstein with his wife, US Ambassador to the United Nations Samantha Power, when Vice President Joe Biden swore her into office last summer. Her appointment followed her high-level work in national security at the White House and State Department during Obama’s first term. As noted in my book, Presidential Puppetry (2013), she is a leading proponent for regime change and military intervention globally on the grounds of humanitarian principles.

Also last summer, Obama appointed Sunstein along with four others to the president’s review commission for a response to NSA whistleblower Edward Snowden’s revelations of massive illegal spying on the American public.

Eichenwald glosses over this heavy national security background and the rhetoric needed to foster public support for global interventions.

Even more relevant is that Eichenwald failed to note that Sunstein co-authored in 2008 what has become a notorious paper advocating propaganda techniques.

In the paper “Conspiracy Theories”, Sunstein advocated that the government secretly hire academics and journalists to thwart the dissemination of what federal authorities might regard as dangerous beliefs held by millions of voters, such as suggestion that officials were complicit in 9/11 or a cover-up.

Sunstein’s own proposal sounds, in other words, like the kind of plot government critics most fear as a violation of constitutional rights by an Orwellian, Big Brother state.

Yet Eichenwald argued that “not a scintilla of evidence” exists for the theories he disparaged. He called them “unsubstantiated nonsense”. But he failed, like most with his mind-set, to refute the best arguments of his targets.

Instead, he repeatedly cited well-credential experts, who applauded government officials for the most part and trivialized the concerns of complainers.

Such elitist, slanted reporting by Newsweek and CNN suggests why their audiences are plunging and the outlets find themselves focused on half-truths important to someone, but not audiences. The Internet provides alternative news sources.

In 2010, the Washington Post sold Newsweek for just $1 and assumption of debts. The Post announced that it wanted to place the publication into the hands of a like-minded publisher. This was Sidney Harman, the husband of Congresswoman Jane Harman (Democrat, California), a Harvard Law graduate and prominent advocate of the intelligence-military complex. Newsweek, much like CNN, retains only a shell of its former clout and has twice been sold since Sidney Harman died.

That said, most of us still rely heavily on the mainstream media to complement our information from other sources.

A striking example last week was a bold, exclusive report by Joe Lauria, the Wall Street Journal‘s United Nations correspondent.

Lauria drew on his years on the beat to report for the Journal that the United Nations may reactivate on the basis of new evidence its dormant inquiry on whether its late leader, Hammarskjold, was intentionally killed during his 1961 peace-keeping mission.

As a former stringer for the Journal for two years earlier in my career, I can imagine how much research the reporter must have produced before such a story would make it into print. His achievement is especially striking at a Murdoch-owned paper, whose owner is better known for benefiting from high-level intrigues than exposing them.

And what if the United Nations proceeds  –  and finds that the secretary-general died from foul play?

For one thing, that would not be good news for those who deny conspiracies. But they would surely find a way to avoid in-depth reporting.


Contact the author Andrew Kreig:

Cross-posted with additional reference materials at Justice Integrity Project (




In addition to the two links above, the original version of this article, at the URL below, contains several other links to further information.

Review: Age of Limits 2014

by Dmitry Orlov

Club Orlov (May 28 2014)

I got back to the boat late last night, after an intense three days of presentations and discussions. This was my third year presenting at this conference, and I am at this point quite heavily invested in this annual event and have started to take on roles I didn’t even know existed when I first showed up there three years ago not knowing what to expect.

For those who haven’t heard of this conference before, here is a synopsis. The venue is unusual for a conference: it is a large campground that occupies a bit of high ground surrounded by a fast-flowing creek nestled in the Allegheny mountains, a few miles from the Maryland border, but quite accessible because it is just a few miles from Interstate 68 and a fast two-hour drive from Baltimore. For those flying via BWI airport, there are usually enough locals driving by BWI on the way to the conference that rides can be arranged. If flying with camping gear is problematic, there is a dormitory with bunk beds and some semi-private rooms. The accommodations are basic, but there are flush toilets, hot showers, free tea and coffee available virtually around the clock, bonfires for when it gets chilly, and two satisfying and plentiful meals a day. A visit to the sweat lodge, optionally followed by a dip in the creek, rounds out the non-intellectual part of the experience.

The intellectual part of the experience is a sort of Epicurean feast for the connoisseurs of collapse. (There are plenty of conferences at which the topic of collapse has been banned; consequently, I am no longer invited to them – to my relief, because life is short, and speaking at these conferences makes it that much shorter.) Virtually all of the attendees without exception have successfully navigated their way through the grieving stage of denial prior to showing up, and there is almost no discussion of whether financial, economic, social or civilizational collapses are possible and/or likely, or whether this is something that beautiful people shouldn’t even worry their pretty little heads about. If you show up while still grappling with denial, then, in all likelihood, your head will explode, and while there will be helpful people on hand to help you find scattered pieces of your cranium in the tall grass, you will spend most of the conference gluing the pieces back together, and will miss out on all the fun. So, if you are new to the topic of collapse but curious about it, please acquaint yourself with the Kubler-Ross model and do whatever you have to, prior to showing up, to get past Stage 1. For maximum effectiveness, try to make it all the way to Stage 5 (acceptance).

In addition to the usual suspects (Gail Tveberg, Albert Bates, John-Michael Greer and me) this year featured a couple of star speakers: Dennis Meadows and Mark Corchrane.

Dennis is Emeritus Professor of Systems Management, former Director of the Institute for Policy and Social Science Research at the University of New Hampshire, and Lead Researcher and co-author of the Club of Rome’s 1972 publication, The Limits to Growth. He successfully predicted the collapse of industrial civilization four decades ago – successfully in that the model he presented back in 1972 has been in remarkable agreement with observations ever since. Since then, he has collected several large boxes of articles attempting to disprove his claims, and a slender stack of articles pointing out that he was right. Even in science, getting it right is not the path to recognition if the truth contradicts the dominant paradigm (of infinite economic growth on a finite planet).

Dennis had agreed to present at this conference reluctantly. He has retired from Club of Rome discussions, and has found more cheerful uses for his time. But he seemed happy with the outcome, saying that this is the first time he faced an audience that did not need convincing. Instead, he took the time to add some details that I think are crucially important, among them the fact that his WORLD3 model is only accurate until the peaks are reached. Once the peaks occur (between 2015 and 2020) all bets are off: past that point, the model’s predictive ability is not to be relied on because the assumptions on which it relies will no longer be valid. Thus, the author of this particular plot, claiming that peak population will occur in 2030, committed the exact error that Dennis warned us against: of looking too far to the right. Once the initial peaks come and go, we will be in a different world than the one he modeled in 1972 – a world in which, I foresee, accurate population statistics will no longer be available. We know that the dynamics of global growth are very different from the dynamics of global die-off, but perhaps that is all that we will ever know, because there won’t be anyone left to model or measure the die-off.

Mark Corchrane is Senior Scientist and Professor with the Geospatial Sciences Center of South Dakota State University who specializes in the use of remote sensing to study the impacts of climate change. Mark’s talk was a very thorough demolition job on the various shibboleths that haunt what passes for discourse on climate change in certain intellectually stunted corners of the world. He demolished the denialist claims, and then proceeded to demolish the techno-utopian “solutions”, such as seeding the oceans, seeding the clouds, space mirrors and so on. In doing so, he did not use climate models, explaining that models are quite complicated and open to dispute. Instead, he relied on climate theories which are not in dispute because they agree with observations, and on historical measurements of climate change – its known causes and its apparent effects.

Mark’s conclusions included some tongue-in-cheek “good news” – “We’re all gonna die!” – which I took to be a nod in the general direction of Guy McPherson, who presented at this conference last year, and who predicts near-term human extinction – whereas he clearly feels that “nature bats” (vespertilio naturalis?) do last. But Mark also gave a much more nuanced summation: that while global effects of climate change can be predicted to some extent, the local effects are unpredictable but are certain to be sufficiently dramatic to make life very difficult and perhaps impossible for the vast majority of us. Apparently, there is no place on Earth where you can hide from climate change. Be it the boreal forests of Siberia or the tropics of Borneo, the local destructive effects of climate change on ecosystems are unpredictable. Most of the species alive today have evolved long after the last time such conditions occurred anywhere on Earth, plus the rate of climate change is now very fast, giving them insufficient time to adapt. Consequently, no historical data exists on which such predictions could be based. We do know some things: fish, corals and shellfish will do badly; sea grass and jellyfish will do well. (I hope that there is a sea-grass-and-jellyfish soup recipe out there that results in something palatable!) Overall, his presentation reinforced my feeling that it will be essential to remain mobile, because no one place can be expected to continue to reliably produce food.

This year, each talk was followed by an ample period of moderated discussion. Most of these Q&A sessions quite well, with people queueing up at one of two microphones to ask questions, with plenty of follow-up and group discussion. As always, there were some people who simply craved attention and hogged the microphone in spite of having little to say. But overall this format worked amazingly well: after my talk, one fellow voiced an opinion that home-schooled kids were badly socialized. There followed a spontaneous barrage of commentary on the subject of home schooling (many of the attendees have home-schooled their kids) pretty much blowing his little boat out of the water. After the talk, the discussion continued, with several professional educators providing a lot of detail on how exactly the educational system in the US is broken beyond repair. I walked away with a depth of understanding that I don’t think I would have achieved just by reading books and articles. This is a question that comes up a lot: How do we teach our kids given that the schools (both public and private) are now largely useless (if not harmful)? And the answer seems to be: home-school, or leave the country.

One of the previous presenters who unfortunately did not attend this year was Carolyn Baker. Her presentations had been unique in that they were not all in the head but attempted to get at the emotional side of collapse, and had been found to be helpful by approximately a third of the attendees in overcoming the feelings of shock and grief that naturally arise when delving into the deeply distressing subject matter of this conference. But many other people chose to cope by blocking their emotions and considering collapse as a strictly intellectual challenge, while a small minority compensated for their emotional discomfort by becoming disruptive. An age-old technique for drawing people out of their heads is through drumming and chanting, but certain people chose to ridicule Carolyn’s quite effective use of this technique as “Kumbaya and bongos”. Thus, Carolyn’s work was to some extent polarizing – but in good way, because these people didn’t show up this year. Last year’s attendees included one particularly odious one percenter whose name I forgot, together with her entourage, and they did their best to disrupt things. Needless to say, their absence this year was not missed by anyone.

The nature of the human ape being what it is, once in a while some borderline personalities always find their way into every group, resulting in some amount of drama. But a bigger problem is that the helpful, healthy kind of drama was also almost entirely missing. Most of the attendees seemed to be able to process the intellectual content of the conference, but collapse as an intellectual pursuit seems almost worthless to me. It cannot be reduced to problems and solutions. The universe, and life on earth (jellyfish, cockroaches and all) will go on with or without you, and so the only real problem is you, and how you may need to change in order to adapt. And this is not an entirely intellectual transformation, but also an emotional and a physiological one. To be sure, some of the adaptations are intellectual, and not everyone can surmount even this hurdle. There was one white-haired gentleman in attendance who complimented me on my talk on long-lasting communities by saying that it was interesting to hear “even though we find their business plan distasteful”. He gets an award for the most distasteful use of the phrase “business plan”.

But for those who did manage to grok the content of the conference on an intellectual level, there was nowhere to go further. This problem came up repeatedly in a number of conversations. I hope that these conversations continue, and I hope that next year’s conference does address the questions of personal transformation. Among the questions I would like to see the conference to address are:

1. How can we communicate the reality of collapse to family and friends in ways that are constructive rather than destructive and find helpful ways to reflect our “endarkenment” in our everyday behavior?

2. How can we form personal relationships with people that can survive the disappearance of official life support systems based on finance, commerce and centralized authority?

3. How can we transform our physical selves into ones that will stand a chance, by eliminating lifestyle diseases, bad habits, luxuries and comforts, and by finding maximally independent and resilient ways to provide the necessities?

4. How can we make use of ritual and spiritual practice to transform a group of individuals into a community?

If you have insights that you would like to contribute on any of these questions, please email me directly, and we’ll take it from there. Amazingly, it turns out that there is even some money to throw behind the effort of coming up with good answers to these questions. Don’t worry too much about the mechanics of writing: ClubOrlov’s crack team of editors and proofreaders will transform your writing into publication-quality content. Also, it’s not exactly a rush job: there are twelve months before next year’s conference. But we might as well get started now.

The Impossibility of Growth

Why collapse and salvation are hard to distinguish from each other.

by George Monbiot

The Guardian (May 28 2014}

Let us imagine that in 3030 BC the total possessions of the people of Egypt filled one cubic metre. Let us propose that these possessions grew by 4.5% a year. How big would that stash have been by the Battle of Actium in 30 BC? This is the calculation performed by the investment banker Jeremy Grantham {1}.

Go on, take a guess. Ten times the size of the pyramids? All the sand in the Sahara? The Atlantic ocean? The volume of the planet? A little more? It’s 2.5 billion billion solar systems {2}. It does not take you long, pondering this outcome, to reach the paradoxical position that salvation lies in collapse.

To succeed is to destroy ourselves. To fail is to destroy ourselves. That is the bind we have created. Ignore if you must climate change, biodiversity collapse, the depletion of water, soil, minerals, oil; even if all these issues were miraculously to vanish, the mathematics of compound growth make continuity impossible.

Economic growth is an artefact of the use of fossil fuels. Before large amounts of coal were extracted, every upswing in industrial production would be met with a downswing in agricultural production, as the charcoal or horse power required by industry reduced the land available for growing food. Every prior industrial revolution collapsed, as growth could not be sustained {3}. But coal broke this cycle and enabled – for a few hundred years – the phenomenon we now call sustained growth.

It was neither capitalism nor communism that made possible the progress and the pathologies (total war, the unprecedented concentration of global wealth, planetary destruction) of the modern age. It was coal, followed by oil and gas. The meta-trend, the mother narrative, is carbon-fuelled expansion. Our ideologies are mere subplots. Now, as the most accessible reserves have been exhausted, we must ransack the hidden corners of the planet to sustain our impossible proposition.

On Friday, a few days after scientists announced that the collapse of the West Antarctic ice sheet is now inevitable {4}, the Ecuadorean government decided that oil drilling would go ahead in the heart of the Yasuni national park {5}. It had made an offer to other governments: if they gave it half the value of the oil in that part of the park, it would leave the stuff in the ground. You could see this as blackmail or you could see it as fair trade. Ecuador is poor, its oil deposits are rich: why, the government argued, should it leave them untouched without compensation when everyone else is drilling down to the inner circle of hell? It asked for $3.6 billion and received $13 million. The result is that Petroamazonas, a company with a colourful record of destruction and spills {6}, will now enter one of the most biodiverse places on the planet, in which a hectare of rainforest is said to contain more species than exist in the entire continent of North America {7}.

The UK oil company Soco is now hoping to penetrate Africa’s oldest national park, Virunga, in the Democratic Republic of Congo {8}; one of the last strongholds of the mountain gorilla and the okapi, of chimpanzees and forest elephants. In Britain, where a possible 4.4 billion barrels of shale oil has just been identified in the south-east {9}, the government fantasises about turning the leafy suburbs into a new Niger delta. To this end it’s changing the trespass laws to enable drilling without consent and offering lavish bribes to local people {10,11}. These new reserves solve nothing. They do not end our hunger for resources; they exacerbate it.

The trajectory of compound growth shows that the scouring of the planet has only just begun. As the volume of the global economy expands, everywhere that contains something concentrated, unusual, precious will be sought out and exploited, its resources extracted and dispersed, the world’s diverse and differentiated marvels reduced to the same grey stubble.

Some people try to solve the impossible equation with the myth of dematerialisation: the claim that as processes become more efficient and gadgets are miniaturised, we use, in aggregate, fewer materials. There is no sign that this is happening. Iron ore production has risen 180% in ten years{12}. The trade body Forest Industries tell us that “global paper consumption is at a record high level and it will continue to grow”. {13} If, in the digital age, we won’t reduce even our consumption of paper, what hope is there for other commodities?

Look at the lives of the super-rich, who set the pace for global consumption. Are their yachts getting smaller? Their houses? Their artworks? Their purchase of rare woods, rare fish, rare stone? Those with the means buy ever bigger houses to store the growing stash of stuff they will not live long enough to use. By unremarked accretions, ever more of the surface of the planet is used to extract, manufacture and store things we don’t need. Perhaps it’s unsurprising that fantasies about the colonisation of space – which tell us we can export our problems instead of solving them – have resurfaced {14}.

As the philosopher Michael Rowan points out, the inevitabilities of compound growth mean that if last year’s predicted global growth rate for 2014 (3.1%) is sustained, even if we were miraculously to reduce the consumption of raw materials by ninety per cent we delay the inevitable by just 75 years {15}. Efficiency solves nothing while growth continues.

The inescapable failure of a society built upon growth and its destruction of the Earth’s living systems are the overwhelming facts of our existence. As a result they are mentioned almost nowhere. They are the 21st Century’s great taboo, the subjects guaranteed to alienate your friends and neighbours. We live as if trapped inside a Sunday supplement: obsessed with fame, fashion and the three dreary staples of middle class conversation: recipes, renovations and resorts. Anything but the topic that demands our attention.

Statements of the bleeding obvious, the outcomes of basic arithmetic, are treated as exotic and unpardonable distractions, while the impossible proposition by which we live is regarded as so sane and normal and unremarkable that it isn’t worthy of mention. That’s how you measure the depth of this problem: by our inability even to discuss it.



{2} Grantham expressed this volume as 1057 cubic metres. In his paper We Need To Talk About Growth, Michael Rowan translated this as 2.5 billion billion solar systems. This source gives the volume of the solar system (if it is treated as a sphere) at 39,629,013,196,241.7 cubic kilometres, which is roughly 40 x 1021 cubic metres. Multiplied by 2.5 billion billion, this gives 1041 cubic metres. So, unless I’ve got the wrong figure for the volume of the solar system or screwed my units up, which is eminently possible, Michael Rowan’s translation looks like an underestimate. I’ll stick with his figure though, as I don’t have much confidence in my own. Any improvements, comments or corrections via the contact form gratefully received.

{3} E A Wrigley, 2010. Energy and the English Industrial Revolution. Cambridge University Press.









{12} Philippe Sibaud, 2012. Opening Pandora’s Box: The New Wave of Land Grabbing by the Extractive Industries and the Devastating Impact on Earth. The Gaia Foundation.



{15} Michael Rowan, 2014. We Need To Talk About Growth (And we need to do the sums as well.)

‘Death of Money’

Author Rickards predicts collapse of global monetary system (May 28 2014)

The collapse of the monetary system awaits the world in the near future, says financial expert James Rickards. Russia and China’s desire to rid the US dollar of its global reserve currency status is an early sign of the “increasingly inevitable” crisis.

“China has three trillion dollars, but they are buying gold as fast as they can. China worries that the US is going to devalue the dollar through inflation so they want to have a hedge if the dollar goes down, so the gold will go up”, Rickards told RT.

As one of the key events in support of his forecast, Rickards points to the words uttered by Russian President Vladimir Putin at the 18th International Economic Forum in Saint Petersburg that took place earlier this month.

“Putin said he envisions a Eurasian economic zone involving Eastern Europe, Central Asia, and Russia. The Russian ruble is nowhere near ready to be a global reserve currency, but it could be a regional reserve currency”, he said, as quoted by ETF Daily News.

Rickards’ book about the demise of the dollar was released in April under quite an apocalyptic name – ‘The Death of Money‘. However, the author is surprised that the events are unfolding much faster than he predicted.

“If anything, the tempo of events is faster than expected. Therefore, some of these catastrophic outcomes may come sooner than I wrote about.”

Last Wednesday, China and Russia signed a historic US$400 billion gas deal which will provide the world’s fastest growing economy with the natural gas it needs to keep pace for the next thirty years. Experts say this could be the catalyst that dethrones the greenback as the world’s reserve currency.

The best-selling author writes that the “linchpin” of the collapse is the approaching failure of the dollar since it is at the foundation of the system. Powerful countries such as Russia, China, Iran, and India do not rely on the US in their national security and would benefit from the US economy being weaker, thus desiring to break free from the dollar standard.

He elaborates that the dual collapse “looks increasingly inevitable”.

“The mistakes have already been made. The instability is already in the system. We’re just waiting for that catalyst that I call the snowflake that starts the avalanche”, he said, as quoted by ETF.

There are three big international factors that are pressuring the dollar right now – Russia, China, and Saudi Arabia.

“Since the 1970s, Saudi Arabia [has been] the leader in what’s called the petrodollar. It basically means that Saudi Arabia and, by extension, OPEC, price oil in dollars, so the world market is in dollars.

“Russia is a major natural resource exporter; they price their exports in dollars as well. But Russia now is engaged in a financial war with the US around the issues in Crimea and Ukraine.”

The threats to the dollar are “ubiquitous”, the author states in his book. The only way the US can pay off its $17 trillion debt is with inflation, which would drive other countries away from the dollar while the accumulation of gold by Russia and China presages the shift to a new reserve asset.

“The next time we will have a liquidity crisis in the world it’s going to be bigger than the ability of central banks to deal with it. The IMF will basically have to bail out the world by printing the SDRs (an international reserve asset created by the IMF in 1969 to supplement its member countries’ official reserves). By that time, you will see the SDR emerge as the new global world currency”, Rickards told RT.

The Digital Revolution That Wasn’t

by Jeff Madrick

The Anti-Economist

Harper’s Magazine (January 2014)

For as long as there have been machines, there have been worries about their power to destroy jobs. The Luddites – early-nineteenth-century artisans who bitterly resisted the new textile machinery that was making them obsolete – are only the most famous example of workers who fought the mechanization of labor. A similar fight has played out many times since the beginning of the Industrial Revolution, over water mills and steam engines, electricity and the assembly line.

But no one today would wish away these technologies. That is because, over time, economies kept growing, jobs were created, wages rose, and prosperity was shared throughout the population. In the wake of the Industrial Revolution, human rights were increasingly – if never adequately – protected, democracy became more firmly rooted, and new inventions, from the automobile to the television, made daily life more pleasant for the vast majority of American workers. There is a simple economic explanation for why technologies that disrupt the labor force in one area tend eventually to benefit everyone: productivity. Increases in the amount of goods made or services delivered per hour of work generally lead to greater prosperity. Some jobs are eliminated, but more and better-paying jobs often replace them.

It should be noted that this trend requires government support through wage regulations, the protection of labor unions, and a social safety net of unemployment insurance, employment tax credits, and retirement and health-care programs for the elderly. But on balance, the Industrial Revolution was a natural experiment that proved one of Adam Smith’s central points: Rising productivity is the source of the wealth of nations. The founding of the United States coincided almost exactly with the start of the Industrial Revolution, so we are a nation that has always experienced this rising productivity. While we reached a true golden age in the 1950s and 1960s, when both productivity and wages rose unusually rapidly and unemployment remained low, increasing prosperity has been the norm for most of American history.

In the 1970s, however, productivity growth slowed down suddenly and significantly – and it did so just as the use of the computer began to sweep through business. Surely this invention, which so many have compared to the greatest breakthroughs of the eighteenth and nineteenth centuries, should have brought with it a surge in productivity. But this never came. After years of disappointment – in the words of the economist Robert Solow, the computer was everywhere but in the productivity numbers – the development of the Internet became the next great electronic hope. If individual computers had failed to deliver the expected gains, certainly networking them would.

The Internet caused the same short-term job disruption that all major technologies do. Amazon destroyed bookstores and other brick-and-mortar retailers, newspapers began to fold, and the offshoring of various routine jobs became much easier. But free-market advocates assured us that in the long term the lost jobs would be made up elsewhere, as they had in countless similar situations since the 1770s. In 1997, The Economist claimed that the “communications revolution” would produce “a change even more far-reaching than the harnessing of electrical power a century ago”. Businessweek, one of the most reliable outlets for New Economy boosterism, called the computer “a transcendent technology – like railroads in the nineteenth century and automobiles in the twerntieth … Forget two percent real growth. We’re talking about three percent, or even four percent”.

For a little while, it looked possible. Productivity rose at about three percent annually between 1996 and 2005. In the late 1990s, hardware and software companies such as Intel and Microsoft helped add millions of jobs to the economy. Like the Ford Motor Company before them, these companies paid good wages. Even Walmart and other big-box retailers responded to productivity increases in the late 1990s by adding jobs. By 1999, the unemployment rate had fallen to just over four percent, its lowest point since the Sixties. But the boom subsided far sooner than New Economy advocates anticipated. Productivity growth had begun to fall by 2005, well before the onset of the Great Recession. Since then, it has averaged a mere 1.5 percent annually – a similar level as in the disappointing period from the early Seventies to the mid-Nineties – and it grew at closer to half a percent in 2011 and 2012. Productivity has grown at the average golden-age rate for eleven of the past forty years.

If we examine the data more closely, we can see how little new technologies have helped the United States return to the rapid growth that made it so rich. “Computers and related electronics, the rest of manufacturing, and information sectors have contributed around half of overall productivity growth since the turn of the century”, notes a recent report from the consulting group McKinsey & Company, “but reduced employment by 4.5 million jobs”. Walmart and copycat retailers also started shedding jobs while continuing to offer workers miserable wages and benefits. Outsourcing enabled manufacturers to reduce the domestic workforce and put pressure on the wages of those who remained. The result was that the economic expansion under George W Bush from 2001 to 2007 saw the weakest growth in employment figures of any expansion since World War Two.

The newly dominant information companies are not job producers. In 1955, General Motors employed nearly 600,000 people. Today, in a much larger economy, Google employs fewer than 50,000; eBay employs about 20,000 people in the United States; Facebook, fewer than 6,000. The numbers for Apple, Microsoft, and Amazon – which each employ between 80,000 and 100,000 worldwide – are better, but still small potatoes compared with General Electric or Ford. By one calculation, the development of the iPod created fewer than 14,000 US jobs. Meanwhile, Americans work harder, equipped with devices that allow them to check in while at home, commuting, or on vacation. (We may actually be undercounting hours worked, which would mean productivity is even lower than currently estimated.)

Given the long-standing precedents, it is tempting to explain away the failure of the information age to provide more prosperity. Some argue that our sluggish recovery from the current economic crisis is to blame, but as I’ve already mentioned, the slowdown in productivity growth preceded the recession. Others say that the true output of the new technologies just doesn’t show up in GDP, since the daily utility of a cell phone or the pleasure of playing a video game is not easily counted – but neither were many of the pleasures derived from cars, transistor radios, or televisions, and measured productivity kept rising after the introduction of these devices.

Still others point to one area of the economy where innovation did bring greater productivity of a sort: the financial sector. As a proportion of the economy, finance has roughly doubled in size since 1980, and its productivity is high; and indeed, the amount of GDP contributed by finance served to exaggerate productivity figures in the early 2000s. Financial products were overpriced and oversold, contributing little to the nation’s welfare and a lot to bankers’ pocketbooks. Given how much damage they’ve caused, a large portion of Wall Street sales might be best characterized as negative GDP. The risky derivatives products bankers sold were really time bombs. The credit-default swaps designed as insurance against a downturn were never paid off. Now, finance may be coming back down to earth. Cheap, often fraudulent mortgages drove the economy of the 2000s more than true innovation in financial products.

If we set these excuses aside, how do we explain the apparent historical anomaly of technological progress without production gains? An increasing number of economists, Northwestern University’s Robert Gordon among them, argue that this most recent wave of technological innovation is simply not comparable in terms of productivity potential to those that preceded it. “The rapid progress made over the past 250 years”, Gordon writes, “could well turn out to be a unique episode in human history”. He concludes that the so-called third industrial revolution is unlikely to muster the gains in productivity brought about by steam power and railroads and then by electricity and the internal combustion engine.

Of course, no one can plausibly forecast the course of innovation. Famed economists such as Harvard’s Alvin Hansen (1887-1975) claimed as far back as the Great Depression that technology had run its course. I’d guess odds are high that major innovations are yet to come, even if research investment declines, simply because there are so many trained engineers, scientists, and entrepreneurial business leaders, and so many ideas to build on. Microchips could get radically cheaper still. The potential of nanotechnology may pay off at last. Breakthroughs in various fields could relieve the economic costs of reducing pollution.

In the meantime, the government could be doing much to make us a more productive society. Health care is one of the nation’s biggest industries, and it is delivered less efficiently here than almost anywhere else in the world. Even if it meets its stated aims, Obamacare should be only the beginning of reform. We need greater efforts to deliver health care to all – not just for the sake of fairness but also for that of our economy: jobs in the industry are difficult to move offshore, and a population that stays healthier longer is a major boon to productivity.

Education is another field in which the government can make a difference and jobs tend to stay at home. Better pay for teachers and administrators could go a long way toward improving elementary and high school education. Making higher education more affordable would free younger workers from the burden of debt.

Personal computers, cell phones, and the Internet have so radically changed our day-to-day lives that it’s natural to frame them as developments on par with the steam engine or indoor plumbing. But we’re four decades into the digital age, and the economic benefits have been paltry at best. Robert Gordon and others think our future rests mostly with narrowly defined technological advances from the private sector. He may be right, or another culture-changing innovation may be right around the corner. Either way, America’s productivity slowdown is cause for alarm, and there’s much we could be doing about it besides waiting around for the next big thing.



(c) Harper’s Magazine

The Great Western Gas Fiasco

by Eric Margolis (May 24 2014)

Russia’s leader Vladimir Putin usually wears a perfect poker face. But last week in Shangahi, the icy-cold Russian president came awfully close to bursting into a big grin.

And why not? Putin had just stolen a march on his western rivals. The US-British attempt to wound Russia’s economy and punish Putin for disobedience had just blown up in their red faces.

After twenty years of difficult talks, Russia and China had just signed a huge deal that called for Russia to export 38 billion cubic meters of gas worth some $400 billion to China. The agreement begins in 2018 and will involve one of the globe’s largest engineering projects that links Russia’s remote gas fields to China’s pipeline system.

In addition, China will invest at least $20 billion in Russian industry and boost imports of Russian products, notably military systems. China will become Russia’s largest trade partner.

This was not the much ballyhooed “pivot to Asia” that President Barack Obama expected. It is, however, the long-dreaded embrace between the Chinese dragon and Russian bear that has given western strategists the willies.

One must suspect that the recent fracas in Ukraine was the last straw that pushed China to make a strategic alignment with Russia. Until now, the two great powers had quietly cooperated, not always without problems. Thanks to all the bluster and sabre-rattling from the US and its allies over Eastern Europe and the South China Sea, China decided to deepen and expand its entente with Moscow.

The Republicans in the US Congress who have been beating the war drums and calling for Obama to get tough with Russia (whatever that means) now share blame for pushing Moscow into China’s arms. All perfectly predictable and perfectly dumb. A diplomatic fiasco of the first water.

Russia has thus given its economy a big boost and made western sanctions look inconsequential. Chinese funds will allow cash-strapped Russia to modernize its oil and gas industry. The new gas pipelines will be a major economic boost for Russia’s distressed eastern regions and Siberia.

If the gas deal works and prospers, it will serve as a template for heightened Sino-Russian cooperation in military projects, such as fifth generation fighter aircraft, missile systems, naval forces and advanced electronics. Until today, Russia had been reluctant to share more advanced military systems with China because of China’s copying of Russian technology, then refusing to pay adequate royalties.

For China, the deal offers many advantages. China has been energy deficient for years. Beijing desperately needs to find new energy sources to fuel its growing economy. Russian gas offers a clean alternative to the filthy coal China has used for power and heat. Estimates are that a switch to gas will reduce air pollution by at least 25% in China’s northern cities, maybe much more. Having gasped for air through numerous Beijing nights, I fully appreciate what this means.

Russia has long been reluctant to cooperate too closely with China on Far East industrial projects. Russians have little love for China – or “Kitai” – because China evokes memories of the Mongol-Tatar invasions that ravaged large parts of Russia for hundreds of years. Distrust and even straight out dislike is wired into the mentality of many Russians. During the 19th century, Russia joined the western powers and Japan in raping China.

Demography lies at the heart of Russia’s fears of China. Russia’s far eastern regions, with the vital port of Vladivostok, has only 7.4 million citizens. Ten times as many Chinese lived just across the border in the northeast region known as the “Dongbei”. This highly strategic region and Manchuria became an arena of conflict at the end of the 19th century between Russia, Japan, and China, leading to the bloody 1904 & 1905 Russo-Japanese War, the first big, modern war of the 20th century.

Some 1.5 million Chinese infiltrate annually over the Russian border and settle illegally, producing a situation akin to that between the US and Mexico. Fears are expressed in Moscow that the two million illegal Chinese settlers in Russia’s Far East may one day expand to twenty or thirty million, outnumbering Russian inhabitants.

When I was invited in 1980 by Chinese military intelligence to “exchange views” in Beijing, I cheekily asked how long it would take for the Chinese Army to take Vladivostok. After a long, uncomfortable silence, a general spat out, “one week”.

Russia still holds vast tracts of land seized in the mid 1800s from China. Beijing and Moscow will have their work cut out to resolve lingering disputes and build mutual respect and trust. There is a big deficit on both sides right now.

Today, China’s growing energy imports are very vulnerable to interdiction. The US and lately India have the capability to block inbound Chinese oil tankers and maritime cargo exports, either of which would shut down China’s major industries.

Key choke points would be the inner and outer island chains of the South and North China Seas, and the narrow Malacca Strait. India’s new aircraft carriers and submarines are being specifically built to interdict China’s oil imports.

Pipeline oil from Russia would be secure from most attacks and offer China its long-sought energy security.

This new deal is so good on many levels that old fears and mistrust must yield to its logic.

Most important, the Sino-Russian energy deal may further alter the world’s balance of power to the East. Russia and China working in tandem could offset the great power and wealth of the US and its rich allies. It is a major geopolitical event.

Copyright (c) Eric S Margolis 2014

Unprecedented Corporate Privileges

by Robert Weissman, President

Public Citizen (May 28 2014)

You may have trouble believing this.

Big Business, in fact, is counting on your disbelief – and your inaction.

Read on to disappoint them.

Multinational corporations think they have an inalienable right to make unlimited profits – even to the detriment of our jobs, our health and the environment.

They don’t, of course.

But Big Business is scheming nonetheless for new powers to sue governments – in secret foreign tribunals – demanding taxpayer compensation for profits they allegedly lose over health and safety, environmental, financial and worker protections we all rely on.

Sign our petition if you oppose allowing foreign corporations to sue governments over public interest protections they claim limit their profits {1}.

This brazen assault on commonsense safeguards is one of the worst components of so-called “free trade” agreements – like the Trans-Pacific Partnership, the Trans-Atlantic Free Trade Agreement and others – that are being negotiated behind our backs.

Its technical-sounding name, “Investor-State Dispute Settlement”, masks an incredibly insidious corporate power-grab.

Join us in calling on governments to reject Investor-State Dispute Settlement in any current or future trade agreements {1}.

Do you want the air you breathe, the water you drink and the food you eat to be free of poisonous contaminants?

Do you want limits on Big Tobacco’s marketing of its deadly products and the Big Banks’ risky and discriminatory practices?

Do you want to preserve Internet freedom, buy-local policies and access to affordable medicines?

All of that, and much more, is threatened by the extraordinarily expansive terms of Investor-State Dispute Settlement agreements that empower foreign corporations to sue governments, in secret tribunals, for compensation over revenue purportedly lost as a result of vital public safeguards.

Critical safeguards in the US and elsewhere could be decimated by a calculus that credits foreign corporations with a “right” to expected profits.

Add your name to those demanding that international trade agreements exclude provisions that would permit foreign corporations to dismantle public interest protections by suing countries in mysterious, unaccountable tribunals. {1}

Thank you for taking action today.



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