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Yellen’s Effed up Attack on Working People, Sad

by Mike Whitney

CounterPunch (March 17 2017)


Photo by DonkeyHotey | CC BY 2.0

Why did the Federal Reserve (“Fed”) raise its benchmark interest rate when inflation is still running below the Fed’s target, workers wages have hardly budged and the economy is not even growing at one percent?

Yellen was asked that question at a press conference on Wednesday following the release of the Federal Open Market Committee’s (FOMC’s) statement. Her answer helps to show how the Fed makes its policy decisions based on factors most people would never consider. Here’s what she said:

Janet Yellen:

 

 

Well, look, our policy is not set in stone. It is data-dependent and we’re – we’re not locked into any particular policy path … As you said, the data have not notably strengthened.

 

 

Translation: So after saying the Fed bases its decisions on the data, Yellen does a quick 180 and says the data hasn’t changed. Okay.

Janet Yellen:

 

 

There’s always noise in the data from quarter to quarter. But we haven’t changed our view of the outlook.

 

 

Translation: The Fed expects economic growth will remain in the doldrums (two percent or less).

Janet Yellen:

 

 

We haven’t boosted the outlook, projected faster growth.

 

 

Translation: The Fed is determined to maintain a slow-growth environment in order to continue its “easy money” policy which benefits Wall Street.

Janet Yellen:

 

 

We think we’re moving along the same course we’ve been on, but it’s one that involves gradual tightening in the labor market.

 

 

Translation: Ah ha. Now we’re getting somewhere. Now we can see what the rate hike is really all about. It’s all about the minuscule improvements in the labor market. Yellen thinks the improvements are a big red flag.

Janet Yellen:

 

 

I would describe some measures of wage growth as having moved up some.

 

 

Translation: Battle Stations! Battle Stations! Full Red Alert!

Janet Yellen:

 

 

Some measures haven’t moved up, but there’s is also suggestive of a strengthening labor market.

 

 

Translation: “Suggestive”? In other words, the mere hint of improving conditions in the labor market – which could result in higher wages – is enough to send Yellen into a rate-hike frenzy? Is that what she’s saying?

Janet Yellen:

 

 

And we expect policy to remain accommodative now for some time.

 

 

Translation:

So don’t worry Wall Street, we’re not cutting off the flow of cheap money, we just need to tweak rates a bit to dampen the prospect of higher wages.

Janet Yellen:

 

 

So we’re talking about a gradual path of removing policy accommodation as the economy makes progress moving toward neutral.

 

 

Translation: We’re keeping our eyes peeled for even the slightest uptick in wages, but we’ll continue to price cash below the rate of inflation so the investor class can make out like bandits.

Janet Yellen:

 

 

But we’re continuing to provide accommodation to the economy that’s allowing it to grow at an above-trend pace that’s consistent with further improvement in the labor market.

 

 

Translation: We’ll make sure the economy doesn’t grow any faster than two percent GDP for the foreseeable future so we can continue to provide cheap credit to our constituents on Wall Street who need money that is priced below the rate of inflation to push stocks and bonds higher into the stratosphere. Also, we think that rising wages are merely a fleeting blip on the radar, even so, we are prepared to raise rates until the threat has been thoroughly extinguished.

So the Fed hasn’t changed its policy or its projections. Yellen basically raised rates because she had a “gut-feeling” that the demand for labor is strengthening which means that wages could rise. (Her feelings on this matter are not supported by the data, but whatever.) As the primary steward of the system, it’s Yellen’s job to make sure that doesn’t happen. Any sign that of improvement in labor markets (like higher wages or, god forbid, rising standards of living) must be squelched before they ever get started. At the same time, the Fed has to balance its anti-worker duties with its stealth mandate to shower the investor class with below market-priced credit to help them game the system and rake off hefty profits. It’s a tough job, but the Fed has proved that it’s more than ready to meet the challenge.

The idea that the Fed is an impartial referee that serves the public by setting interest rates and regulating the financial system, is the nuttiest of all the conspiracy theories. The Fed is not only a creature of the banks, it is also the most destructive institution in the country today. Just look at the growing social unrest, the political instability and the sudden surge in right-wing movements. Does anyone seriously believe these phenomena just popped out of nowhere? These are all the result of the gaping inequality that has emerged under the Fed’s malign stewardship. There’s nothing accidental in the way that wealth has been transferred from one class to another. It’s all part of a plan, a plan to enrich the few while everyone sees their incomes shrivel, their wages stagnate, the health care costs soar, their education expenses explode, their personal debts balloon, and their standards of living steadily decline.

Check out this chart from Bloomberg that shows with stunning clarity the real impact the Fed’s misguided policies. Rather than try to persuade readers that the Fed is a thoroughly corrupt and heinous institution that is a threat to every man, woman and child in the USA, I ask readers to study the chart and draw your own conclusions. The question that arises is this: Did the Fed choose the policy that would best serve the interests of the American people (by restoring economic growth and increasing employment) or did they choose a policy that they knew would maximize the profits for the investor class at the expense of everyone else?

You decide.

unnamed
(Here’s One Chart That Captures the Debate Over Quantitative Easing, Bloomberg {1})

One more thing: How much of our fractious and increasingly-polarized political culture is the result of economic and monetary policies that have intensified feelings of hopelessness among the public? Would the American people have voted for a rightwing demagogue unless they were so desperate about the slide in their standards of living that they felt compelled to look for remedies outside the political mainstream?

Isn’t it true that Donald Trump wouldn’t be president today if it wasn’t for the Fed?
Think about it.

Link:

{1} https://www.bloomberg.com/news/articles/2017-03-15/one-chart-captures-debate-over-qe-from-markets-to-politics

http://www.counterpunch.org/2017/03/17/yellens-effed-up-attack-on-working-people-sad/

Categories: Uncategorized

It’s Time to Get Painfully Honest

Banks are Evil

by Adam Taggart via PeakProsperity.com

Zero Hedge (March 18 2017)

I don’t talk to my classmates from business school anymore, many of whom went to work in the financial industry.

Why?

Because, through the lens we use here at PeakProsperity.com to look at the world, I’ve increasingly come to see the financial industry – with the big banks at its core – as the root cause of injustice in today’s society. I can no longer separate any personal affections I might have for my fellow alumni from the evil that their companies perpetrate.

And I’m choosing that word deliberately: Evil.

In my opinion, it’s long past time we be brutally honest about the banks. Their influence and reach has metastasized to the point where we now live under a captive system. From our retirement accounts, to our homes, to the laws we live under – the banks control it all. And they run the system for their benefit, not ours.

While the banks spent much of the past century consolidating their power, the repeal of the Glass-Steagall Act {1} in 1999 emboldened them to accelerate their efforts. Since then, the key trends in the financial industry have been to dismantle regulation and defang those responsible for enforcing it, to manipulate market prices (an ambition tremendously helped by the rise of high-frequency trading algorithms), and to push downside risk onto “muppets” and taxpayers.

Oh, and of course, this hasn’t hurt either: having the ability to print up trillions in thin-air money and then get first-at-the-trough access to it. Don’t forget, the Federal Reserve (“Fed”) is made up of and run by {2} – drum roll, please – the banks.

How much “thin air” money are we talking about? The Fed and the rest of the world’s central banking cartel has printed over $12 Trillion {3} since the Great Recession. Between the ECB and the BoJ, nearly $200 Billion of additional liquidity has been – and continues to be – injected into world markets each month(!) since the beginning of 2016:

With their first-in-line access to this money tsunami, as well as their stranglehold on the financial system that it all runs through, the banks are like a parasite feasting from a gusher on the mother-lode artery.

It should come as little surprise that, with all this advantage they’ve amassed, the banks have enriched themselves and their cronies spectacularly. They have made themselves too big to fail, and too big to jail. Remember that their reckless greed caused the 2008 financial crisis, and yet, in 2009, not only did bankers avoid criminal prosecutions {4}, not only did the banks receive hundreds of billions in government bailouts {5}, but they paid themselves record bonuses {6}?

And the bonanza continues unabated today. By being able to borrow capital for essentially free today from the Fed, the banks simply lever that money up and buy Treasurys. Voila! Risk-free profits. That giveaway has been going on for years.

Couple that with the banks’ ability to push market prices around using their wide arsenal of unfair tactics – frontrunning, HFT spoofing and quote stuffing, stop-running, insider knowledge, collusion, et cetera – the list is long. James Howard Kunstler is dead on: we don’t have a free market anymore. Instead, we have rackets {7}, run by racketeers. The rest of us are simply suckers to be fleeced.

Nobel Prize-winning economist Angus Deaton recently agreed:

 

 

Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might, said Nobel-winning economist Angus Deaton on Monday.

If an entrepreneur invents something on the order of another Facebook, Deaton said he has no problem with that person becoming wealthy.

“What is not okay is for rent-seekers to get rich”, Deaton said in a luncheon speech to the National Association for Business Economics.

Rent seekers lobby and persuade governments to give them special favors.

Bankers during the financial crisis, and much of the health-care system, are two prime examples, Deaton said.

Rent-seeking not only does not generate new product, it actually slows down economic growth, Deaton said.

“All that talent is devoted to stealing things, instead of making things”, he said. {8}

As further proof, let’s look at this data recently obtained by Zero Hedge {9}. In the past four years, JP Morgan’s in-house trading group has had exactly two days of losses:

That’s not trading. Trading involves uncertainty and risk. This situation has none. It’s an extraction process – siphoning value from the market day after day with ironclad dependability.

And it’s not just a few dollars here and there. In 2016, JP Morgan’s daily average trading revenues were $80 million. Per day! That’s nearly $20 billion for the year.

So if not “trading”, what should we call it when a bank can extract tens of billions of dollars a year from the markets, with no downside risk? “Sanctioned theft” sounds about right.

Because for every trade there is a buyer and a seller. If JP Morgan is the winner every day, who is losing? Turns out, it’s the big pools of “dumb money” that don’t have the cheat codes for the system the way the banks do. These are the pension funds, the index funds, the retirement accounts – the aggregated money of all the “little people” out there. Little people who don’t have visibility into how they’re being constantly fleeced; nor do they have agency to do anything about it even if they did.

So yeah, “theft” feels like a pretty accurate term.

And it’s reached the point where the banks don’t even care about hiding it anymore. If you had a nice inside racket going on, wouldn’t you at least pretend to hide your advantage, to avoid drawing attention? Not the banks. They’re either too proud or too obtuse to conceal it. Look at our string of perfect trading days! Look at our record bonuses!

These boasts fall on the ears of everyday American’s as the modern version of Let them eat cake!

And just like the out-of-touch French monarchs, the banks have positioned themselves as the enemy of the public. For as I claimed at the beginning of this article, a tremendous amount of the injustice in this country can be laid at the feet of the banks directly, or indirectly via the Federal Reserve.

Are you a senior who can’t afford to retire because you can’t live off your fixed-income savings? Thank the Fed’s zero percent interest rates for that.

Are you a millennial who can’t afford to buy a home? Again, thank the Fed’s policy of suppressing interest rates and thereby blowing another housing bubble.

Are you struggling to get out of poverty? Are you finding it hard to remain in the middle class? Whatever your income, are you having to work harder and harder to just stay in the same place? See how the Fed’s money printing, and the banks’ first-position access to it, has created the most concentrated imbalance of wealth in our country’s history {10}:

Are you frustrated with how our lawmakers seem to serve corporations instead of the people? Listen to this mind-blowing podcast of how gobs of lobbyist money {11}, much of it provided by Wall Street, dictates how our politicians legislate:

This American Life

Click {12} to launch podcast

Whether it’s social equity, the security of your job or retirement, your day-to-day existence, or the fairness of the laws we live under – our fate is currently in the hands of the banks. And, of course, should their behavior trigger another meltdown of the global economy – something we warn about often here at PeakProsperity.com – we’ll have them to thank for that, too.

Yes, the banks are going to keep writing the rules in their favor; and yes, there’s little agency any of us has individually to do much about it. But as a society, we need to start addressing the dire situation we’re in honestly and openly. By whatever path, we have granted the banks far too much control over our lives, and they are taking gross advantage of that. Exactly like a parasite, the banking system is siphoning off our wealth and limiting our freedoms and future prospects – all for the benefit of an elite few.

That’s wrong. It’s immoral. And it’s Evil.

It’s far beyond time to call a spade and spade. The path to change always begins with an accurate assessment of the problem. We need to start using accurate language – like “evil” – when discussing the harm we’re being subjected to. We need to make it clear to our elected officials and to our communities that we understand what the banks are doing and that we find it unacceptable.

We need to make the criticism specific and personal. To JP Morgan CEO Jamie Dimon. To Fed Chair Janet Yellen. We need to turn up the heat on the perpetrating decision-makers, so that the borg-like structure of the banking system no longer serves as a deflective shield to scrutiny and criticism. These people need to feel the disapproving stares when speaking to the public. They need to hear the disdainful boos, and see their faces on the protest signs and nightly media reports.

And if you yourself work in the financial system, I’ll be blunt. You’re part of the problem. Just like my former classmates, I’m sure you’re a very nice person in many ways – but you’re complicit in the banks’ rapaciousness.

I know it’s not pleasant to hear, or admit. I worked for an investment bank for a few years early on my career. I was part of the problem, too.

But we have a choice, both as individuals and as a society, to align our actions with our values. It’s not always easy. And likely not as profitable if you indeed end up leaving the financial industry (as I can tell you from personal experience). But it’s the only way we’ll ultimately gain back control of our destiny.

Look, the banks’ dominion is going to end one day. Either due to collapsing under the weight of the stupendous amount of debt {13} they’ve helped laden our economy with, or due to an uprising from the bottom 99% once it has become fully destitute. Neither path is appealing.

So our best choice here as individuals is to position ourselves where we can be least subjected to the game the banks want to force us to play.

The three-part series we’ve just concluded: The Mother of All Financial Bubbles {13}, The Coming Great Wealth Transfer {14}, and When This All Blows Up {15} offers our best guidance for preserving wealth from the predation of the bankers. If you haven’t read them yet, make that your weekend reading assignment.

Finally, as a society, we need to wake up and make some hard, courageous choices. Obviously, the banks will not relinquish their control willingly. But if we start speaking truthfully and openly about the evil we’re dealing with, we’ll start fearing it less. It’s time for us all to speak up.

Links:

{1} https://dealbook.nytimes.com/2009/11/12/10-years-later-looking-at-repeal-of-glass-steagall/

{2} https://en.wikipedia.org/wiki/Federal_Reserve_System#/media/File:FederalReserve_System.png

{3} http://www.yardeni.com/pub/peacockfedecbassets.pdf

{4} https://www.theatlantic.com/magazine/archive/2015/09/how-wall-streets-bankers-stayed-out-of-jail/399368/

{5} https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008

{6} http://www.nytimes.com/2009/07/31/business/31pay.html

{7} https://www.peakprosperity.com/podcast/100707/james-howard-kunstler-racketeering-ruining-us

{8} http://www.marketwatch.com/story/nobel-economist-takes-aim-at-rent-seeking-banking-and-healthcare-industries-2017-03-06?siteid=rss

{9} http://www.zerohedge.com/news/2017-03-01/jpmorgans-trading-desk-lost-money-just-two-days-past-4-years

{10} https://youtu.be/QPKKQnijnsM

{11} https://www.thisamericanlife.org/radio-archives/episode/461/transcript

{12} https://www.thisamericanlife.org/radio-archives/episode/461/take-the-money-and-run-for-office

{13} https://www.peakprosperity.com/blog/107199/mother-all-financial-bubbles

{14} https://www.peakprosperity.com/blog/107462/coming-great-wealth-transfer

{15} https://www.peakprosperity.com/blog/107796/when-all-blows

https://www.peakprosperity.com/blog/107415/banks-evil

http://www.zerohedge.com/news/2017-03-18/its-time-get-painfully-honest-banks-are-evil

Categories: Uncategorized

America’s Democracy has become Illiberal

by Fareed Zakaria, Opinion Writer

The Washington Post (December 29 2016)

Two decades ago, I wrote an essay in Foreign Affairs that described an unusual and worrying trend: the rise of illiberal democracy. Around the world, dictators were being deposed and elections were proliferating. But in many of the places where ballots were being counted, the rule of law, respect for minorities, freedom of the press and other such traditions were being ignored or abused. Today, I worry that we might be watching the rise of illiberal democracy in the United States – something that should concern anyone, Republican or Democrat, Donald Trump supporter or critic.

What we think of as democracy in the modern world is really the fusing of two different traditions. One is, of course, public participation in selecting leaders. But there is a much older tradition in Western politics that, since the Magna Carta in 1215, has centered on the rights of individuals – against arbitrary arrest, religious conversion, censorship of thought. These individual freedoms (of speech, belief, property ownership and dissent) were eventually protected, not just from the abuse of a tyrant but also from democratic majorities. The Bill of Rights, after all, is a list of things that majorities cannot do.

In the West, these two traditions – liberty and law on the one hand, and popular participation on the other – became intertwined, creating what we call liberal democracy. It was noticeable when I wrote the essay, and even clearer now, that in a number of countries – including Hungary, Russia, Turkey, Iraq and the Philippines – the two strands have come apart. Democracy persists (in many cases), but liberty is under siege. In these countries, the rich and varied inner stuffing of liberal democracy is vanishing, leaving just the outer, democratic shell.

What stunned me as this process unfolded was that laws and rules did little to stop this descent. Many countries had adopted fine constitutions, put in place elaborate checks and balances, and followed best practices from the advanced world. But in the end, liberal democracy was eroded anyway. It turns out that what sustains democracy is not simply legal safeguards and rules, but norms and practices – democratic behavior. This culture of liberal democracy is waning in the United States today.

The Founding Fathers were skeptical of democracy and conceived of America as a republic to mitigate some of the dangers of illiberal democracy. The Bill of Rights, the Supreme Court, state governments and the Senate are all bulwarks against majoritarianism. But the United States also developed a democratic culture, formed in large part by a series of informal buffers that worked in similar ways. Alexis de Tocqueville called them “associations” – meaning nongovernmental groups such as choir societies, rotary clubs and professional groups – and argued that they acted to “weaken the moral empire of the majority”. Alexander Hamilton felt that ministers, lawyers and other professionals would be the “impartial arbiters” of American democracy, ensuring that rather than narrow, special interests, the society and its government would focus on the national interest.

The two prevailing dynamics in US society over the past few decades have been toward greater democratic openness and market efficiency. Congressional decision-making has gone from a closed, hierarchical system to an open and freewheeling one. Political parties have lost their internal strength and are now merely vessels for whoever wins the primaries. Guilds and other professional associations have lost nearly all moral authority and have become highly competitive and insecure organizations, whose members do not – and probably cannot – afford to act in ways that serve the public interest. In the media – the only industry protected explicitly in the Constitution – a tradition of public interest ownership and management aspired to educate the public. Today’s media have drifted from this tradition.

I recognize that this is a romantic view of the role of these elites and hierarchical structures. Parts of the media were partisan and scandal-hungry from the start. Lawyers often acted in their own narrow interests; accountants regularly conspired in frauds. And those smoke-filled rooms with party bosses often made terrible decisions.

But we are now getting to see what American democracy looks like without any real buffers in the way of sheer populism and demagoguery. The parties have collapsed, Congress has caved, professional groups are largely toothless, the media have been rendered irrelevant. When I wrote a book about “illiberal democracy” in 2003, I noted that in polls, Americans showed greatest respect for the three most undemocratic institutions in the country: the Supreme Court, the Federal Reserve and the armed forces. Today, the first two have lost much of their luster, and only the latter remains broadly admired.

What we are left with today is an open, meritocratic, competitive society in which everyone is an entrepreneur, from a congressman to an accountant, always hustling for personal advantage. But who and what remain to nourish and preserve the common good, civic life and liberal democracy?

_____

Read more from Faree Fareed Zakaria’s archive https://www.washingtonpost.com/people/fareed-zakaria/?tid=a_inl&utm_term=.280f778bccbc, follow him on Twitter or subscribe to his updates on Facebook.

https://www.washingtonpost.com/opinions/america-is-becoming-a-land-of-less-liberty/2016/12/29/2a91744c-ce09-11e6-a747-d03044780a02_story.html

Categories: Uncategorized

Our Hopelessly Dysfunctional Democracy

When the system is rigged, “democracy” is just another public-relations screen to mask the unsavory reality of Oligarchy.

by Charles Hugh-Smith

Of Two Minds (March 21 2017)

Zero Hedge (March 22 2017)

Democracy in America has become a hollow shell. The conventional markers of democracy – elections and elected representatives – exist, but they are mere facades; the mechanisms of setting the course of the nation are corrupt, and the power lies outside the public’s reach.

History has shown that democratic elections don’t guarantee an uncorrupt, functional government. Rather, democracy has become the public-relations stamp of approval for corrupt governance that runs roughshod over individual liberty while centralizing the power to enforce consent, silence critics and maintain the status quo.

Consider Smith’s Neofeudalism Principle #1: If the citizenry cannot replace a dysfunctional government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only.

In other words, if the citizenry changes the elected representation but the financial Aristocracy and the Deep State remain in charge, then the democracy is nothing but a public relations facade for an oppressive oligarchy.

If the erosion of civil liberties and rising inequality characterize the state of the nation, democracy is both dysfunctional and illiberal. A state that strips away the civil liberties of its citizens via civil forfeiture, a war-on-drugs Gulag and unlimited surveillance may be a democracy in name, but it is at heart an oppressive oligarchy.

If the super-wealthy continue to become ever wealthier while the bottom 95% of the citizenry struggle in various stages of debt-serfdom, the state may be a democracy in name, but it is at heart an oppressive oligarchy.

Author/commentator Fareed Zakaria recently addressed the illiberal aspects of America’s faded democracy in an article America’s democracy has become illiberal {1}.

Zakar’s prettified critique avoided the real worm at the heart of our democracy: the state exists to enforce cartels. Some might be private, some might be state-run, and others might be hybrids, such as our failed Sickcare system and our military industrial complex.

The ultimate role of democracy isn’t to “give the people a voice”; the only meaningful role of democracy is to protect the liberties of individuals from state encroachment, break up cartels and monopolies and limit the corruption of private/public money.

America’s democracy has failed on all counts. Civil liberties in a nation of ubiquitous central-state surveillance, a quasi-political Gulag (that nickel bag will earn you a tenner in America’s drug-war Gulag) and civil forfeiture (we suspect you’re up to no good, so we have the right to steal your car and cash) are eroding fast.

In America, the central government’s primary job is enforcing and funding cartels. As many of us have pointed out for years, a mere $10 million in lobbying, revolving-door graft (getting paid $250,000 for a speech or for a couple of board meetings) and bribes (cough-cough, I mean campaign contributions) can secure $100 million in profits – either by erecting regulatory/legal barriers or by direct federal funding of the cartel’s racket (healthcare, defense, “National Security”, et cetera).

I explain why this is so in my books Resistance, Revolution, Liberation {2}, Inequality and the Collapse of Privilege {3} and Why Our Status Quo Failed and Is Beyond Reform {4}.

The fact that the corruption is veiled does not mean it isn’t corruption. In the sort of nations Americans mock as fake democracies, the wealthy protect their wealth and incomes with bags of cash delivered at night to politicians.

Nothing so crass or obvious here, of course. Here, the government of Algiers gives $25 million to the Clinton Foundation for “favors”, the Russian government gives hundreds of thousands to John Podesta’s firm for “advice” (heh), the Koch Brothers fund an array of front-organizations that work on behalf of their agenda, K Street lobbying firms rake in tens of millions of dollars every year, and the first thing tech companies do when they realize some interest group might crimp their profits courtesy of lobbying the central state’s politicos is set up their own lavish lobbying and “contribution” schemes.

In theory, democracy enables advocacy by a variety of groups in order to reach a consensual solution to problems shared by everyone. In practice, the advocacy is limited to a select group of insiders, donors and the various fronts of the wealthy: foundations, think-tanks, lobbyists, et cetera.

Does anyone think America’s democracy is still capable of solving the truly major long-term problems threatening the nation? Based on what evidence? What we see is a corrupt machine of governance that kicks every can down the road rather than suffer the blowback of honestly facing problems that will require deep sacrifices and changes in the status quo.

We see a dysfunctional machine of governance that changes the name of legislation and proposes policy tweaks, while leaving the rapacious cartels untouched. (See the current sickcare “debate” for examples.)

We see an Imperial Project setting the state’s agenda to suit its own desires, and a corporate media that is quivering with rage now that the public no longer believes its tainted swill of “news” and “reporting”.

The divide between the haves and the have-nots is not limited to money – it’s also widening between the few with political power and the teeming serfs with effectively zero political power. When the system is rigged, “democracy” is just another public-relations screen to mask the unsavory reality of oligarchy.

Links:

{1} https://www.washingtonpost.com/opinions/america-is-becoming-a-land-of-less-liberty/2016/12/29/2a91744c-ce09-11e6-a747-d03044780a02_story.html

{2} http://www.amazon.com/gp/product/1468065084/ref=as_li_qf_sp_asin_tl?ie=UTF8&tag=charleshughsm-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=1468065084

{3} https://www.amazon.com/gp/product/B01MSP2SXM/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=B01MSP2SXM&linkCode=as2&tag=charleshughsm-20&linkId=e45dbb20ba66e69c33a3a26772391278

{4} http://www.amazon.com/gp/product/B01ELXQZGE/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=B01ELXQZGE&linkCode=as2&tag=charleshughsm-20&linkId=33DAOPEVGBNGBS37

http://charleshughsmith.blogspot.com/2017/03/our-hopelessly-dysfunctional-democracy.html

http://www.zerohedge.com/news/2017-03-22/our-hopelessly-dysfunctional-democracy

Categories: Uncategorized

The Crumbling American Superpower

by F William Engdahl

New Eastern Outlook (March 14 2017)

The catastrophic events around the California Oroville Dam in recent weeks underscores a far more urgent problem. The American Society of Civil Engineers has just released their quadrennial assessment of United States essential infrastructure – roads, clean water supplies, levees, ports, dams, bridges, electric grid. The report gives the nation a near-failing D+ grade. America is coming to resemble the economic infrastructure in the Soviet Union domestically at the collapse of communism during the late 1980s. The recently-announced Donald Trump proposal to invest $1 trillion over ten years to address the problem, mainly building high-speed trains (to date the USA has not one) doesn’t even come close to the scope of the problem.

A Wall Street-driven agenda of globalization of US manufacturing and out-sourcing of production has left America a hollowed-out, crumbling Superpower. Since the 1980s the United States has significantly under-invested in both new infrastructure and in renewing old. As US multinational corporations moved their factories overseas to cheap labor production in Mexico, then in Asia, especially China, and elsewhere, they found tax loopholes that allowed them to walk away from supporting the country that as recently as the 1960s was the world industrial economic leading nation. Today US corporations hold $2.4 trillion in overseas profits that they keep abroad to avoid US taxes.

The result of all this neglect is that over the past three decades since the end of the 1980s, federal funding of major infrastructure projects such as dams has dropped by half, from one percent to 0.5 percent of GDP.

Infrastructure Report Card

On March 9, the American Society of Civil Engineers (“ASCE”) released its 2017 “Infrastructure Report Card”. They review the state of national infrastructure every four years. Since their 2013 report, despite four years of an alleged Obama economic recovery, the state of affairs is unchanged at a near-failing D+ with F being fail.

The US President just met with leading industry representatives to discuss his proposal for spending $1 trillion in a combination of public-private funds over ten years, most apparently on roads and high-speed rail. The ASCE estimates that almost five times that, or $4.59 trillion, is urgently needed over the next eight years only to bring the situation to a level of “adequate” or B grade by 2025. The economic cost to the national economy of the crumbling infrastructure is calculated annually in the hundreds of billions of dollars in wasted economic inefficiency.

Yet even that modest Trump proposal to spend $1 trillion in infrastructure is likely to be “dead on arrival” according to Wall Street analyst Randall Forsyth in a report in Barrons. One effect of more than eight years of abnormally low Federal Reserve interest rates have left the various state pension funds seriously underfunded, requiring them to draw more from state general budget funds. States will not have the money to join with the Trump national plan even were that to be passed by Congress, which itself is not at all clear. Forsyth notes, “In the United States, state and local governments count infrastructure projects as current spending – as opposed to investments, capitalized over the life of the projects, as with private corporations – budget constraints hampered their ability to fund projects”.

In addition, Trump has promised another Federal tax cut at the same time. In short, The Donald’s economic team don’t even have their infrastructure ducks in the pond, let alone in a row with reality.

Third World-Style Blackouts

Some of the report highlights are instructive and alarming. The nation’s basic electric grid is in dire straits. Most USA electric transmission and distribution lines were constructed in the 1950s and 1960s, with a fifty-year life expectancy. Lines built in 1967 are today at their life end, yet still being used.

The increasing demand for electricity also means that the 640,000 miles of high-voltage transmission lines in the power grids of the nation are at full capacity. Given the lack of investment in the power grid, aging equipment, capacity bottlenecks, and increased demand, as well as increasing storm and climate impacts, third world-style blackouts or power failures are in store for the nation unless urgently-needed investment is made.

Highway Arteries in Dire Condition

The nation’s highways are in dire condition. Sixty years ago the US Congress passed the Federal Aid Highway Act of 1956 during the Eisenhower Administration, the National Defense Highway Act as it was also called. The Act authorized the then-huge sum of $25 billion for the construction of 41,000 miles (66,000 kilometers) of the Interstate Highway System over a ten-year period. It was the largest public works infrastructure project in American history until then, comparable to spending $218 billion today. The US freight economy was deliberately being moved from rails as it had been before World War Two, to large tractor-trailer truck transport and the Interstate Highway Act created a huge economic gain in time and efficiency for that transformation. The flexibility of truck freight over rail was significant and the financing was paid ninety percent by the Federal Government through a Highway Trust Fund paid for by federal fuel taxes to be used exclusively for highway construction and maintenance. The states paid ten percent.

Since about 2007~2008 and the financial and economic crisis, the Federal Highway Trust Fund has been seriously underfunded, requiring emergency injections from the General Budget to maintain solvency. Because of the repeated refusal of the US Congress to raise national gasoline or fuel taxes to insure adequate repair of the Interstate Highway System, present condition of the nation’s roads is abysmal to put it politely. The current Federal fuel tax for the Highway Trust Fund has been set at $0.184 per US gallon, a level where it has remained since 1993. In Germany the Federal fuel tax is $6.14 per US gallon.

In addition, states that finance the maintenance of their roads with a state fuel tax have severely underfunded taxes there as well. As of July 2016, twenty one states out of fifty had gone ten years or more without an increase in their state per-gallon gasoline tax rate.

The result of this severe and chronic underfunding of Federal and state highway funds, according to the ASCE infrastructure report, is that more than forty percent of America’s urban Interstate highways are congested and traffic delays cost the country $160 billion in wasted time and fuel in 2014. One out of every five miles of highway pavement is in poor condition.

Bridges to Oblivion

The United States is a vast expanse of land from New York to California in the so-called Lower 48 states (excluding Alaska and Hawaii). Along Interstate I-80 you drive almost 3000 miles by car or 4800 kilometers. Many bridges make that national transportation possible.

The infrastructure report of the ASCE notes that of the 614,387 bridges, almost four in ten are fifty years or older. Not just ageing, but 56,007 – 9.1% – of the nation’s bridges were structurally deficient in 2016. They calculate that daily on average there were 188 million trips across one or another structurally deficient bridges. They estimate a cost of $123 billion needed to rehabilitate those structural deficiencies.

Water, water everywhere, not a drop to drink …

In the early 1960s the clean water status of United States water supplies was world class. As an example, the water management practices of Dallas, Texas where I grew up, were under the direction of Henry J Graeser, father of a close high school friend. Graeser went on to become president of the American Water Works Association. His consulting on clean water management engineering was in demand around the world. That’s merely one personal anecdote of the high quality of American water management just five or so decades ago. That’s no longer the case.

The report of the American Society of Civil Engineers states that in 2017 drinking water across the United States is delivered through some 1.8 million miles of pipes. Many of those water pipes were laid between World War One and World War Two. Since they were laid, total US population has increased by two to three times from 100 million citizens in 1914, 140 million in 1945 to more than 310 million today.

The infrastructure to provide water to the significantly larger US population today includes dams and reservoirs, well fields, pumping stations, aqueducts for transport of large quantities of water over long distances, water treatment plants, reservoirs in the distribution system.

The water pipelines were designed with a lifespan of between 75 and 100 years. As one result of the deteriorating drinking water pipeline grid, the US undergoes an estimated 240,000 water main breaks per year. Over two trillion gallons of treated drinking water annually is wasted as a result. That equals about half of total national water consumption for an entire month. According to the American Water Works Association, an estimated $1 trillion is necessary to maintain and expand service to meet demands over the next 25 years.

The report of the engineers’ society on infrastructure goes on to report similar alarming results for the US airports, as with the nation’s dams such as the still-endangered California Oroville Dam. The USA today has an estimated 2,170 deficient high-hazard-potential dams as a result of the lack of investment. Similar grim results are reported for America’s Inland Waterways, Levees, Ports, Rail, Schools, and Wastewater treatment plants.

During the Vietnam War era of the late 1960s President Lyndon Johnson spoke of “guns and butter”. It did not work then.

Given the vastly higher level of National debt, and the far worse state of basic economic infrastructure today compared with the 1960s, the guns and butter fantasies of the Trump Agenda have even less chance to work to restore the national economy.

Today, the sincerity of the Trump claim he wants to “make America great again”, rises or falls on the determination to prioritize the serious rebuilding of the economic infrastructure of the nation. That would actually return national economic value in form of increased jobs and increased economic efficiency and profitability. The wars with China, with Iran, with Syria and seemingly also with Russia that Trump’s team of warriors is intent on pursuing, are worse than a stupid waste of scarce national resources. Building up nations is far more appropriate and gratifying than destroying them.

_____

F William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine New Eastern Outlook.

http://journal-neo.org/2017/03/14/the-crumbling-american-superpower/

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The Collapse of Trust in the West

by Paul Craig Roberts

http://www.paulcraigroberts.org (March 20 2017)

Just as President Putin has stated that governments and media in the West have destroyed Russia’s trust in the West, the governments and media in the West have destroyed the trust of their citizens, who have been transformed into serfs to whom government no longer is accountable.

I have stressed in many columns that the absence of trust between nuclear powers is a great threat to all life on earth. Yet the Western governments and media continue to work 24/7 to worsen relations between the US and Russia and the US and China. Those of us who warn of the possible consequences are put on lists of “Russian dupes” and purveyors of “fake news”. These lists show the desperation behind the orchestrated “Russian threat”. A one thousand billion dollar annual military/security budget is at stake along with American financial and political hegemony.

In brief, greed for money and power are driving the world to destruction.

Greed and power have also driven Americans, indeed all of the Western world, into a more complete police state than George Orwell describes in his book, 1984 (1949).

Judge Andrew P Napolitano describes the extraordinary spy capability of the US government and the ease with which it can be used against even the President of the United States. Napolitano’s article appeared on LewRockwell.com, InformationClearingHouse.info, and antiwar.com. The antiwar.com link has a link to the response from the UK’s GCHQ, which has full access to NSA’s digital collection of all electronic communications of Americans, to Napolitano’s suggestion that Obama could have used the British to avoid leaving US fingerprints on his spying activities against Trump: http://original.antiwar.com/andrew-p-napolitano/2017/03/18/did-obama-spy-on-trump/

The British Government Communications Headquarters dismissed Napolitano’s suggestion as “nonsense, utterly ridiculous and should be ignored”. In other words, the GCHQ did not deny that it has access to every electronic communication made by Americans, including the President of the US. Instead, GCHQ tried to impugn Napolitano’s credibility. Keep in mind that it was British intelligence that permitted Prime Minister Tony Blair to lie to the British Parliament in behalf of the George W Bush regime’s orchestrated case for invading Iraq.

When you read Napolitano’s account of the completeness with which Americans have lost all privacy, you will understand that the US Constitution is erased, like the Confederate States of America and its battle flag. Our privacy is not only erased by government but also by private corporations. Those Americans so insouciant as to respond to the fact that they are spied upon by saying, “I’m doing nothing wrong, so I have nothing to fear”, should read the statement below from the American Civil Liberties Union:

Last year we won strong internet privacy rules. The Federal Communications Commission (“FCC”) introduced protections that require companies like Comcast, AT&T, and Verizon to get your permission before they sell your private information to the highest bidder.

Now some politicians are caving to industry pressure. The Senate introduced a resolution to overturn this important FCC rule – and if passed by Congress, the FCC would be blocked from issuing similar rules in the future.

Add your name to tell the Senate you don’t want companies selling your data without your permission.

For years, internet service providers have been trying to find ways to collect, use, and sell the sensitive data they collect from you – every website you visit, the times you log into and out of your online accounts, and even your location. These companies collect data that can paint an intimate picture of your religious practices, sexual activities, health problems, and more.

Who are the buyers? Advertisers, big-data brokers, and even government and law enforcement agencies.

Protecting privacy is also about stopping discrimination. Retailers can offer different online prices based on customers’ locations, sometimes giving worse deals to residents of low-income neighborhoods where there are fewer stores to compete with online prices.

Tell the Senate to keep common sense online privacy protections in place.

We’ve been on the front lines of the long fight to restrict what profiteers can do with the sensitive data they sweep up from your online activity.

Help put the pressure on politicians to keep crucial FCC rules in place.

 

 

The ease with which the US government has been able to destroy the US Constitution in the 21st century illustrates the weakness of democracy. Unconcerned and unaware people are incapable of protecting their civil liberties. Habeas corpus, due process, and privacy have been erased. The only remaining protection is the Second Amendment, which cannot stand alone.

The peoples of the West have allowed themselves to be deceived by lies, misled by orchestrated “threats”, and distracted into irrelevant matters. Consequently, they have lost their liberty.

And they might lose their lives.

Copyright (c) 2016 PaulCraigRoberts.org. All rights reserved.

http://www.paulcraigroberts.org/2017/03/20/collapse-trust-west-paul-craig-roberts/

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Relax, Global Citizen

The CIA Is Benign & Benevolent

by Pepe Escobar via Asia Times

Zero Hedge (March 15 2017)

The massive WikiLeaks Vault 7 {1} release is an extremely important public service. It’s hard to find anyone not concerned by a secret CIA hacking program targeting virtually the whole planet – using malware capable of bypassing encryption protection on any device from iOS to Android, and from Windows to Samsung TVs.

In a series of tweets {2}, Edward Snowden confirmed the CIA program and said code names in the documents are real; that they could only be known by a “cleared insider”; the FBI and CIA knew all about the digital loopholes, but kept them open to spy; and that the leaks provided the “first public evidence” that the US government secretly paid to keep US software unsafe.

If that’s not serious enough, WikiLeaks alleges that “the CIA has lost control of the majority of its hacking arsenal”; several hundred million lines of code – more than what is used to run Facebook.

Someone among the former US government hackers and contractors ended up leaking portions of the CIA archive (Snowden II?). WikiLeaks also stressed how the CIA had created, in effect, its “own NSA” – maximum unaccountability included.

Even though millions already knew – without the technical details – that they were being spied upon by their iPhone or their 4K Samsung, the Vault 7 revelations are far more relevant – and practical – to the average citizen than the 24/7 hysteria fingering President Trump as a Putin puppet. Intel sources are volunteering the – still unexplored – Vault 7 treasure trove is more crucial than what Snowden himself revealed.

And still, vast corporate media sectors embedded with the neocon/neoliberal galaxy are spinning that Vault 7 benefits Trump by changing the subject from alleged Russian hacking interference in the US elections and possible Obama administration-ordered hacks of Team Trump’s communications.

So, if anyone hasn’t got the message, the song remains the same.

WikiLeaks + Snowden + Russia + Trump = the bad guys.
CIA deploying its own NSA around the world = the good guys.

After all, CIA spokesman Jonathan Liu duly issued a non-denial denial.

Loony mainstream factions are even advancing that “the Russians” leaked the CIA info to WikiLeaks, thus fueling more suspicion that Russia will interfere in upcoming French and German elections.

May I have an Orwellian iPhone, please?

As we’re mired deep in an Orwellian total screen environment, already conceptualized by Baudrillard {3} in the go-go 1980s, nothing so trivial as the technical proof we’re all being spied upon could alter the (im)balance. The US is already ravaged by a vicious sociopolitical war – and no “threat” to established narratives allows for nuance.

The implication is that, as it stands, there won’t be a US-Russia reset anytime soon – despite hosting invitations from Iceland, Finland or Slovenia; the neocon/neoliberal galaxy nestled in powerful deep state factions will do their best to deny it.

It hardly matters that Trump absolutely does not want war: his entire domestic US economy remix could not possibly allow it. The Pentagon now is essentially an extended special ops unit: it cannot possibly fight a land war (Iran? North Korea? Ukraine?)

Russia, on the other hand, would be ready for war if needs be. The S-500 missile defense system is being deployed: some analysts (not the Ministry of Defense) are sure it’s already protecting the whole Russian landmass. China, by 2021, will have more than 1,000 very mobile warheads, or hidden in those submarines lounging in Hainan. By that time, both Iran and Pakistan will be deep into a strategic defense network with Russia-China, via the Shanghai Cooperation Organization, shielded with their own S-400 and S-500 systems.

Putin is not playing chess. He’s playing Go – and if we look at the board, reality is indeed painful.

Moscow is all but deciding the practical future of Syria, in Astana. Russia virtually wrote the Minsk II agreements, routinely broken by Kiev. Crimea as part of Russia is a fait accompli. Novorossiya for all practical purposes is already a totally autonomous region, with the economy working in rubles. Erdogan owes his imminent regime change in reverse – a presidential sultanate? – to Putin, as Russia warned him about the military coup hours in advance, according to several Russian media sources. Moscow protected Iran’s energy industry during the hardcore OPEC negotiations. Putin all but designed the Russia-China strategic partnership.

Beijing has managed to convince Moscow that One Belt, One Road and the Eurasia Economic Union should be connected, merged and tackled as a win-win Eurasia integration process. If Russia eventually loses economic preeminence across the Central Asian “stans”, it maintains its paramount military/security status.

Russian Foreign Minister Sergei Lavrov {4} never ceases to stress that “our relations with China are at their best level ever in our two countries’ history”.

Add to it a geo-economic gambit; hints of key factions of European business elites getting ready to hitch themselves to China’s growing – slowly but surely – monetary/financial clout, linked to Beijing’s imperative of preventing a collapse of global supply chains. Xi Jinping’s “inclusive globalization”, announced in Davos, sounds more and more like a reality in the making.

In contrast to reality, where China-Russia expand their strategies without exceptionalist illusions, 24/7 neocon/neoliberal hysteria offers a constant barrage {5} of childish, pathetic eruptions. As the self-delusion school of foreign policy refuses to admit Moscow will not sell out China and Iran for a deal with Washington, the last refuge of the scoundrels is cognitive dissonance; fear of Russia incited to cold war 2.0 heights.

So, relax, global citizen; the CIA is benign and benevolent, even when they’re watching you. You have nothing to fear but fear itself – and its name is Russia.

Links:

{1} https://wikileaks.org/ciav7p1/

{2} https://twitter.com/Snowden

{3} https://sputniknews.com/columnists/201703071051346892-total-screen-how-baudrillard-anticipated-trump/

{4} https://www.memri.org/reports/russian-fm-lavrovs-news-conference-russian-diplomatic-achievements-2016-clash-between

{5} http://www.politico.com/magazine/story/2017/03/anti-democratic-propaganda-beijing-moscow-214858

http://www.atimes.com/article/wikileaks-trove-fails-shift-dial-trump-putin-narrative//

http://www.zerohedge.com/news/2017-03-15/relax-global-citizen-cia-benign-benevolent

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