Escalating Reaganomics
By ISMAEL HOSSEIN-ZADEH | January 28, 2011
President Reagan did not make any bones about his intention to reverse the New Deal economics when he set out to promote the Neoliberal economics. Likewise, President George W. Bush did not conceal his agenda of aggressive, unilateral militarism abroad and curtailment of civil liberties at home.
There is a major similarity and a key difference between these two presidents, on the one hand, and President Obama, on the other. The similarity lies in the fact that, like his predecessor, President Obama faithfully, and indeed vigorously, carries out both the Neoliberal and militaristic policies he inherited.
The difference is that while Reagan and Bush were, more or less, truthful to their constituents, President Obama is not: while catering to the powerful interests vested in finance and military capitals, he pretends to be an agent of “change” and a source of “hope” for the masses.
There has been a wide-ranging consensus that the excessive financial/economic de-regulations that started in the late 1970s and early 1980s played a critical role in both the financial bubble that imploded in 2007-2008 and the continuing persistence of the chronic recession, especially in the labor and housing markets.
Prior to his recent U-turn on the regulation-deregulation issue, President Obama shared this near unanimous view of the destructive role of the excessive deregulation of the past several decades and, indeed, strongly supported the need to bolster regulation: “It’s time to get serious about regulatory oversight,” Mr. Obama argued as the Democratic nominee for President; and again, “…this crisis has reminded us that without a watchful eye, the market can spin out of control,” as he stated in his inaugural speech.
Expressions of such pro-regulation sentiments were part of his earlier promises of “hope” and “change” in a new direction. Back then, that is, before showing his Neoliberal hand, the majority of the American people believed him—the middle, lower-middle, poor and working people who were tired of three decades of steady losses of economic security were desperately willing to believe a charismatic leader who peddled hope and change in their favor.
Recently, however, the president seems to have had a change of heart, or perhaps an epiphany, regarding the regulation-deregulation debate: he now argues that protracted recession and persistent high levels of unemployment are not due to excessive deregulation but to overregulation! Accordingly, he issued an executive order on 18 January 2011 that requires a comprehensive review of all existing government regulations. On the same day, the president wrote an op-ed piece for the Wall Street Journal in which he argued that the executive order was necessary in order “to remove outdated regulations that stifle job creation and make our economy less competitive.” The president further argued that “Sometimes, those [regulatory] rules have gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs. . . . As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends—giving careful consideration to benefits and costs.”
Stripped from its Orwellian language, this “cost-benefit” approach to health, safety and environmental standards is clearly the familiar Neoliberal rhetoric that is designed to help big business and their lobbies that have been working feverishly to stifle the widespread pro-regulation voices that have grown louder since the 2007-08 financial melt-down.
Indeed, the president’s recent agenda of further deregulation has already born fruits for big business. The Wall Street Journal reported on 20 January 2011:
“A day after President Barack Obama ordered the government to get rid of burdensome rules, two federal agencies backed down from proposals that had drawn jeers from businesses. . . . The Labor Department said it was withdrawing a proposal on noise in the workplace that could have forced manufacturers to install noise-reducing equipment. And the Food and Drug Administration retreated from plans to tighten rules on medical-device approvals, postponing a proposal that would have given the FDA power to order additional post-market studies of devices. . . . Industry leaders praised the moves, while consumer advocates expressed disappointment. . . . ‘This is a very positive step forward,’ said Bill Hawkins, chief executive of medical-devices heavyweight Medtronic Inc.”
How is the president’s sharp turnaround on the regulation-deregulation debate to be explained? What “outdated deregulation” is he talking about? How could deregulation, which is widely believed to have been the problem, also be the solution? Why this sudden U-turn?
The change in the president’s view from the need for regulation to that of further deregulation can be explained on a number of planes.
On a narrow, personal and (perhaps) simplistic level, it can be argued that the president’s about-face on the issue of deregulation should not really be surprising; the turnaround represents quintessential Obama: spineless and/or unscrupulous, if you are a critic of the president; pragmatic and/or complex, if you are an apologist or defender of him.
There are also, of course, re-election considerations here. And here it seems that the president’s team is pinning his chances for re-election on big business and big media; confident that once he is able to win their hearts and minds, they will, in turn, be able to manipulate the public to vote for him—just as they did in the 2008 election.
On a deeper (but still personal) level, that is, on a philosophical or ideological level, it can be argued that the president has always been a Neoliberal thinker, albeit a stealth Neoliberal, who is coming out of the closet, so to speak, carefully and gradually. Evidence of his being ideologically more a partisan of Neoliberal than New Deal economics is overwhelming (see, for example, Pam Martin and Alan Nasser).
It is necessary to point out that although the stealth Neoliberal president has been taking baby steps out of the closet, he would always stay by the entrance: as long as there is no popular anger or pressure against his Neoliberal policies, he would stay on the outside; at the first signs of a threatening pressure from the grassroots, however, he would crawl back inside the closet, and begin preaching populism or uttering ineffectual, benign corporate-bashing rhetoric. This is his mission and his political forte – a master demagogue. And this is why the politico-economic establishment promoted him to presidency as they found him the most serviceable presidential candidate. None of his presidential rivals could have served the tycoons of the finance world and the kings of Wall Street as well as he has.
On a more fundamental level, President Obama’s reversal of his view from the need for rigorous regulation to the need for further deregulation, and his economic policies in general, show that while the politics and personalities of a president ought not be ignored, presidential economic policies cannot be explained by purely personality issues such as a failure of nerve, conviction, or ideas. The more crucial determinants of national economic policies are often submerged: the balance of social forces and the dominant economic interests that shape such policies from behind the scene. Stabilization, restructuring or regulatory policies are often subtle products of the outcome of the class struggle.
Thus, when the balance of social forces is tilted in favor of the rich and powerful, crisis-management economic policies would be crafted at the expense of the working people and other grassroots. In other words, as long as the costly consequences of the brutal Neoliberal restructuring policies (in terms of job losses, economic insecurity, and environmental degradation) are tolerated, business and government leaders, Republican or Democrat, would not hesitate to put into effect draconian measures to restore conditions of capitalist profitability at the expense of the impoverishment of the public.
On the other hand, when crisis periods give rise to severe resistance from the people to cuts in social spending, such crisis-management policy measures could also benefit the public. A comparison/contrast of policy responses to major economic crises in the United States clearly supports this point. Economic historians have identified four major economic crises in the past 150 years or so: The First Great Depression (1873-97), The Second Great Depression (1929-37), the long recession of 1973-83 (also known as the stagflation of the 1970s), and the current long recession that started in 2007-08.
Since there was no compelling grassroots pressure in response to either the First Great Depression of 1873-97 or the long recession of the 1970s, crisis management policies in both instances were decisively of the Neoliberal, supply-side type: suppression of trade unions and curtailment of wages and benefits; promotion of mergers, concentrated industries and big business; extensive de-regulations and generous corporate welfare plans; in short, huge transfers of income from labor to capital. Likewise, a glaring lack of grassroots resistance in the face of the current long recession has allowed the ruling kleptocracy (both in the US and beyond) to adopt similarly brutal austerity policies that are gradually reviving financial/corporate profitability at the expense of the poor and working people.
By contrast, in response to the Great Depression of the 1930s workers and other popular forces achieved employment and income security as a result of a sustained pressure from “below.”
The contrast between these two entirely different types of restructuring strategies shows that, as Mark Vorpahl, a union steward, recently put it, “Working people and the unemployed cannot rely on the politicians to get the change we need. We can only rely on our own collective strength. That is, we need to organize and mobilize as a united, massive, powerful force that cannot be ignored by those more intent to do Wall Street’s bidding.” Only the threat of revolution can force people-friendly reform on the ruling kleptocracy.
Ismael Hossein-zadeh, author of The Political Economy of U.S. Militarism (Palgrave-Macmillan 2007), teaches economics at Drake University, Des Moines, Iowa.
Source
January 29, 2011
Posted by aletho |
Economics, Progressive Hypocrite, Solidarity and Activism, Timeless or most popular | Food and Drug Administration, Militarism, Neoliberal, Obama, Ronald Reagan |
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Technology cooperation with China will bolster Venezuela’s industrial capacity, a government minister said.
The bilateral strategic ties are “very important” to Venezuela, Basic Industry and Mining Minister Jose Khan told Xinhua on Sunday, adding that the joint commissions of the two nations have held nine meetings to design production projects to boost Venezuelan economic development.
He said that the plans designed would cover various fundamental areas, such as transportation, agriculture, food production and telecom.
“In the case of basic industries, we have been discussing and approving a series of projects which will allow in 2011 the basic industries to recover their production and improve their productiveness,” he said.
Khan also told Xinhua the government plans to expand ports along the Orinoco River, the major transport system for eastern and interior Venezuela, in order to streamline the transportation of mining products.
There are also plans to buy hi-tech machinery for iron extraction, he said. In the case of aluminum, the government plans to upgrade existing plants and build new extraction plants.
He said these projects will improve “not only the conditions of the workers, but also the conditions of the people, because these materials will be used for the national housing plan.”
January 26, 2011
Posted by aletho |
Economics |
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Corpses are still under tons of rocks and mud in the hills of Rio de Janeiro, but some experts are already rushing to the microphones here in Brazil and abroad to declare the worst natural disaster in the Brazilian history as a clear and unequivocal evidence of global warming (a.k.a. global climate disruption).
The Brazilian media is not immune to the frenzy on global warming and extreme weather events. The Folha de Sao Paulo newspaper, one of the most important media outlets in the country, published a report connecting the Rio de Janeiro disaster to the Queensland flooding in Australia and the recent snowstorms in the United States and Western Europe.
To establish the ongoing catastrophe in Brazil as a global warming product is a bogus claim in the view of the staff of MetSul Meteorologia. The same can be said to the events of cold snaps and snow in the Northern Hemisphere – strong negative Arctic Oscillation related – and the massive flooding in Australia, a direct result of the strong and natural derived La Niña event.
Rio de Janeiro is subject to heavy or extreme rainfall every year, but this time the amount of precipitation was very heavy and in a short period of time, creating an inland tsunami-like torrent. The risk of major extreme rain episodes this summer was widely anticipated by MetSul meteorologists as analog years strongly pointed to a summer similar to the ones with disastrous events in the past. Rain gauges in Nova Friburgo measured 300 millimeters (12 inches) of rain in just 24 hours from January 11th to 12th. The tragedy happened in the Sierras of Rio de Janeiro (Região Serrana) where major topographical forcing is usually present in extreme rainfall. Moisture flow from the ocean (SSTs are above average in the South Atlantic) find a natural physical barrier in the mountains of Rio de Janeiro, making the region prone to extreme rainfall during summer months and early autumn.
The most affected cities (Petrópolis, Teresópolis and Nova Fribrugo) are located between mountains as high as 5 to 6 thousand feet and besides rivers cross these towns. The only way the water can take are the valleys and the regional rivers. Due to the regional terrain, the major menace to the population is landslide. For many decades Brazilian authorities allowed construction of homes and buildings in the slopes, so every single year landslides with numerous deaths are recorded in the states of Rio de Janeiro, Sao Paulo and Minas Gerais.
The front page of the Extra newspaper from Rio de Janeiro (click over the picture for a wider view) published on January 13th 2010 showed that every single year in the last decade witnessed tragedies caused by rain in the state of Rio. The newspaper headline is “Até quando?” (When will it end?). The paper argues: “The government excuse is always the same…it rained an equivalent to…”. The dominant opinion in the Brazilian media and public arena is that these repeated tragedies must be above all attributed to poor risk management and ridiculous urban planning instead of only blaming nature. Despite recognizing the ferocity of the rain, many are calling this week’s tragedy a manmade disaster.
In the state of Rio de Janeiro, there is massive occupation of the slopes and the hills, so landslides tend to be much more devastating and tragedies much more frequent. If this week’s rainfall had happened in the same region 35 years ago, the consequences would have been incredibly less dramatic. Satellite pictures released by the Brazilian Global TV Network show clearly some of the risky areas that concentrate most of the victims (Caleme, Posse and Meudon) as heavily populated nowadays in contrast to low or no land occupation 35 years ago.
There are anecdotal and historic accounts of extreme rainfall in the state of Rio de Janeiro since Brazil was a Portuguese colony in the 1600’s and 1700’s, but meteorological records are not available for that period. Great tragedies caused by rain and landslides in Rio de Janeiro began mainly in the second half of the 20th century coinciding with the demographic explosion and the massive and unorganized occupation of the hills. The risky areas of today, where the tragedies of the modern times use to happen almost every year, were not occupied 100 years ago, and for that reason the vast majority of the tragic events concentrate in the last 50 years.
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April 1756 – Three days of heavy rainfall caused flooding, home collapses and “lots of victims” all over the town – still small – of Rio de Janeiro.
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February 1811 – Between February 10th and 17th heavy rains caused a “catastrophe” in the city of Rio de Janeiro. Hills collapsed, the city was flooded and landslides were widespread with a torrent of water and mud invading town. Historical accounts tell of many victims, but there is no official number. The regent prince – designated by Portugal – ordered the churches to be open to serve as shelters.
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January 1962 – Heavy flooding and several landslides in the city of Rio de Janeiro after 242 mm of precipitation during a storm.
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January 1966 – The storm of January 2nd, 1966, brought record rainfall to the city of Rio de Janeiro. Flooding and massive landslides caused 250 casualties. Other 70 people died after the storm due to diseases.
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November 1981 – Landslides in the Sierras of Rio kill 20 people in the city of Teresopolis.
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February 1987 – Flooding and landslides kill 292 people. The city of Rio de Janeiro and the Sierras of the state concentrate the damages and the victims.
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February 1988 – 277 people died in flooding and landslides in the Baixada Fluminense region and in the city of Petrópolis in the Sierras. In the rest of the month hundreds more died in new landslides and flooding. A hospital collapsed, killing 18 people. Damages topped 1 billion dollars.
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Summer of 1996 – Dozens of deaths in flooding and landslides.
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January 1999 – Dozens of deaths in flooding and landslides.
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2010 – Nearly 100 people died in the cities of Angra dos Reis and Rio de Janeiro due to landslides on January 1st. In April, record rainfall caused over 200 deaths in massive landslides in the cities of Rio and the neighboring town of Niteroi.
Tragic events will happen again in the future, but can be less dramatic if some steps are taken urgently and seriously: improvement of risk management, urban reorganizing, investments in weather forecast and monitoring equipments and staff, a new media approach to weather warnings’ importance and a good public governance. History proves these areas will be hit again, but we as society have the power to mitigate the consequences. It is a matter of serious and urgent public priority for our authorities and the population’s will.
(note there’s much more here at METSUL’s blog)
January 16, 2011
Posted by aletho |
Deception, Economics, Science and Pseudo-Science |
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No matter what Barack Obama says in his State of the Union Address later this month, it is clear where he is headed: ever rightward. His appointments tell the tale. Obama also gave the game away – that he would govern from the center-right and attempt a grand consensus with the GOP – in the weeks before he was first sworn into office, January 20, 2009. That is, his appointments of Bill Clinton’s Wall Street deregulation crowd to head economic policy and his retention of George Bush’s Secretary of Defense to guard and expand the empire, should have signaled to every sober observer that Obama’s political orientation might differ dramatically from his predecessor’s in tone, but not in substance. The problem was, there were very few sober Left political observers around two years ago, and nearly all Black folks were falling down drunk on ObamaL’aid – a brain-softening condition that persists among many, to this day.
In the intervening 24 months, the Right has achieved a near-miraculous comeback, a reversal of fortune that could not have happened without considerable assistance from Mr. Obama. By positioning his administration to the Right of center from the vey beginning, becoming more intimately identified with Wall Street bankers even than Bush, and waging relentless war on the Left half of his party, Obama reduced fellow Democrats to a state of demoralized confusion, leading to catastrophic defeat. Defeat, that is, for the party, but not for the president, who has at last arrived in his comfort zone.
Indeed, in order for Obama to reach his comfort zone, it was necessary that the Democrats be defeated. Only then could New Democrat Obama’s collaboration with the GOP in furtherance of corporate rule appear to be an act of statesmanship, a grand compromise (as the tax deal was pitched) in the interest of orderly government by the “grownups.”
With Obama’s appointment of JP Morgan Chase executive William Daley as his chief of staff and Gene Sperling to head the National Economic Council, the White House is tooled to coordinate even more seamlessly with Wall Street. Both are seasoned operatives in subverting government to private purposes, having made their bones in Bill Clinton’s administration, where Daley was the indispensable man in passing the Clinton/Republican NAFTA bill despite the opposition of 60 percent of Democrats in the House. Both are now rich banksters specializing in moving effortlessly from the boardroom to wherever the public’s money is kept.
Economist Dean Baker, of the Center for Economic and Policy Research, doesn’t mind the money Sperling made from Goldman Sachs. His problem with Obama’s new top economic advisor is:
“Sperling saw nothing wrong with the stock market bubble that laid the basis for the 2001 recession. The economy did not begin to create jobs again until two and a half years after the beginning of this recession and even then it was only due to the growth of the housing bubble. Gene Sperling also saw nothing wrong with the growth of that bubble. Gene Sperling also saw nothing wrong with the financial deregulation of the Clinton years which, by the way, helped make Goldman Sachs lots of money. And, he saw nothing wrong with the over-valued dollar which gave the United States an enormous trade deficit. This trade deficit undermined the bargaining power of manufacturing workers and helped to redistribute income upward.
“In short, Sperling has a horrible track record of supporting policies that were bad for the country and good for Wall Street.”
Which makes him perfect for Barack Obama, who is Wall Street’s guy by choice, and always has been. In fact, it is disrespectful to Obama to argue that his consistent appointment of Clinton’s clique of deregulating Wall Street warriors as his economic generals is not reflective of the president’s own worldview. Either Obama is his own man, or he is a hireling, a whore, and a mere figurehead.
I operate on the assumption that Obama is a purposeful, talented, and extremely effective center-right politician straight out of the Clinton Democratic Leadership Council mold who is determined to shape all of the public sector to finance capital’s advantage. He has chosen the best men for the damnable job.
With Wall Street’s hegemony at the commanding heights of the world’s sole superpower unchallenged, the crisis of finance capital has become a crisis of the U.S. state and a threat to every other capitalist economy and state on the planet. But of course, Wall Street calls that an opportunity. Not an opportunity, mind you, to invest in anything remotely productive. The team that brought us NAFTA in order to export the U.S. manufacturing sector, and destroyed the financial regulatory infrastructure of the New Deal so that Wall Street could dominate every aspect of American economic and political life, has no interest in productive enterprise or good jobs creation.
And neither does Barack Obama – or else he wouldn’t have appointed Daley and Sperling or the 2009 crew. All of which should be perfectly obvious, except to the mush-brains who are still sipping from vinegary old bottles of ObamaL’aid.
BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com
January 12, 2011
Posted by aletho |
Economics, Militarism, Progressive Hypocrite |
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OCCUPIED JERUSALEM — European diplomats in Jerusalem have filed a report recommending that the EU take punitive measures against Israel and recognize east Jerusalem as a capital for the Palestinians.
The diplomats, mostly general consuls to Jerusalem, after assessing the situation in the eastern part of the holy city called developments in the last few years “negative” in light of continued Jewish settlement activity, Palestinian home demolitions and evictions, and inequality in educational and medical services provided to the Palestinian makeup of the city.
The document says that the government’s cooperation with such groups as the Elad settlement association in archaeological excavations in the Silwan district is conclusive evidence that Israel is backing settlement activity in east Jerusalem.
The European diplomats recommended that EU politicians boycott Israeli ministries beyond the Green Line and products from east Jerusalem and other settlements as well as blacklist “violent settlers” in European countries.
In a similar development, the EU consuls are proposing that international observers be assigned to monitor Israeli demolition operations targeting Palestinian-owned structures in east Jerusalem.
High-profile Israeli politicians have stated that Israel will not allow European observers to monitor demolitions in east Jerusalem.
The move came in the wake of the demolition of the Palestinian-owned Shepherd Hotel in Sheikh Jarrah.
After Israel conquered and annexed East Jerusalem in 1967, a government agency, the Custodian of Absentee Property, took possession of the building. In the mid-1980s, it was sold to a corporation owned by American millionaire Irving Moskowitz, the financial angel of far-right Israeli groups intent on settling Jews in Palestinian neighborhoods inside and encircling the Old City.
January 11, 2011
Posted by aletho |
Economics, Ethnic Cleansing, Racism, Zionism, Illegal Occupation, Solidarity and Activism |
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An 18-year-old youth has been killed in riots in Algeria, becoming the first casualty since the outbreak of clashes over soaring food prices and rampant unemployment in the African country.
Azzedine Lebza was hit by a bullet in Ain Lahdjel in the M’Sila region, 300 kilometers (180 miles) southeast of Algiers and died instantly as youths clashed with police in the capital and several other towns, AFP reported on Saturday.
But Algerian authorities have not yet confirmed the death.
Citizens in the North African country started to protest nationwide when the government announced price increases for basic commodities such as oil and sugar at the beginning of this year.
The official APS news agency said protesters ransacked government buildings, bank branches and post offices in “several eastern cities” overnight, including Constantine, Jijel, Setif and Bouira.
On Friday afternoon, rioting youths set shops on fire in the capital and clashed with police in several other cities.
Meanwhile, police fired tear gas and water cannons at young people hurling stones and glass bottles at security forces.
The General Union of Algerian Traders and Artisans said consumer prices had increased 20% to 30% in recent days, especially the prices of sugar and oil.
The prices of flour, cooking oil, and sugar have doubled in Algeria over the past few months.
According to the International Monetary Fund, about 75 percent of Algerians are under the age of 30, and 20 percent of the youth are unemployed.
The still-unfolding riots have raised the specter of a political turmoil reminiscent of the 1990s that triggered 10 years of civil strife.
January 8, 2011
Posted by aletho |
Economics, Malthusian Ideology, Phony Scarcity |
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Sticking the Taxpayer (Not the Banks) With the Tab
The answer to that question has to be many more economists than we have in the United States. Very few economists saw or understood the growth of the $8 trillion housing bubble whose collapse wrecked the economy. This involved a degree of inexcusable incompetence from the economists at the Treasury, the Fed and other regulatory institutions who had the responsibility for managing the economy and the financial system.
There really was nothing mysterious about the bubble. Nationwide house prices in the United States had just kept even with the overall rate of inflation for 100 years from the mid 1890s to the mid 1990s. Suddenly house prices began to hugely outpace the overall rate of inflation. By their peak in 2006 house prices had risen by more than 70 percent after adjusting for inflation. Remarkably, virtually no U.S. economists paid any attention to this extraordinary movement in the largest market in the world.
Had they bothered, they would have quickly seen that there was no plausible explanation for this jump in prices in either the supply or demand side of the market. There were no major new restrictions on supply, with the builders putting up homes at near-record rates. Nothing on the demand side suggested that prices should rise. The healthy income growth of the late 90s was followed by stagnation in the last decade and population growth was relatively subdued. Finally, there was no unusual rise in rents, which just slightly outpaced inflation over this period.
Therefore it should have been easy for any competent economist to recognize the housing bubble. Moreover, the dangers for the economy should also have been apparent. The boom in construction (both residential and non-residential) had raised its share of GDP by more than 3 percentage points above its long-term average. In addition, the creation of $8 trillion in housing bubble wealth predictably led to a consumption boom, as households spend based on the new equity created by the bubble.
All of this presaged disaster for the time after the bubble burst. Construction spending was sure to plummet to below normal levels as the market recovered from the long period of overbuilding. Consumption would also fall back as households adjusted to the disappearance of the housing wealth that they expected to be available to them in future years.
Yet, almost no economists saw what was clearly in front of their eyes. They thought everything was just fine until the house of cards eventually collapsed in 2007-2008.
Unfortunately, the reign of error is not over. House prices in the United States are again declining and most of the economics profession remains clueless. The Case-Shiller 20-city house price index for October (the data is released with a two-month lag) showed a decline of 1.3 percent from September. This implied an acceleration from the prior month’s decline, which is now reported as 1.0 percent. In other words, house prices are again declining at double-digit rates.
A more careful examination of the data reveals the underlying logic. Prices are declining most rapidly in the bottom third of the market. Prices for this bottom tier of the market were in a literal free fall in recent months in several cities.
The reason is that a first-time buyers tax credit ended in June. This credit caused many buyers to move their purchase forward. People who might have otherwise bought in the second half of 2010 or in 2011 instead bought in the first half of 2010.
This tax credit had the effect of ending the plunge in house prices in 2009 and even leading to small rise in the second half of the year. But with the credit now expired, the price decline is resuming. It will likely spread from the bottom tier of the market to the middle and higher end, since the sellers of bottom-tier homes are the buyers of higher-end homes. If they must sell for much lower prices than they had anticipated, then they will have less money to buy these higher-end homes.
The further decline in house prices will have predictable consequences for the economy. If house prices drop by another 15 percent, completing the deflation of the housing bubble, this would imply a loss of $2.5 trillion in housing wealth. If consumers spend 6 cents for every dollar of housing wealth (near the middle of the range of estimates), this would mean a fall in consumption of roughly $150 billion or 1 percent of GDP. This will be a substantial drag on growth over the next two years that will no doubt surprise most economists.
The other important part of this story is that many more homes will fall underwater and there will be new losses for banks. However one result of the delay in this second round of price adjustments is that trillions of dollars of mortgages were taken out of private hands and shifted over to Fannie Mae and Freddie Mac, the mortgage giants that are currently owned by the government. This means that the losses on these mortgages will be the problem of the taxpayers, not the banks. Why is no one surprised?
Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR).
January 6, 2011
Posted by aletho |
Corruption, Economics |
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India’s Petroleum and Natural Gas Ministry says Iran’s oil exports to the country will not be affected as alternative payment routes have been put in place.
“There has been no disruption in supply since [Reserve Bank of India] RBI issued new payment guidelines. A cargo for delivery on January 8 and 9 is currently being loaded in Iran and we have no problems sourcing crude from Iran,” India Today quoted India’s Petroleum Secretary S. Sundareshan as saying on Tuesday.
He also said that the National Iranian Oil Company (NIOC) is willing to accept payments from Indian oil firms through the Europaisch-Iranische Handelsbank (EIH Bank) in Hamburg, Germany.
Oil companies working with Iran like Hindustan Petroleum Corp Ltd (HPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL) will make payments to NIOC’s EIH Bank account in Hamburg via the State Bank of India (SBI).
According to Sundareshan, the two central banks will meet in Tehran from January 14 to 16 to find a permanent solution to the matter.
Part of the meeting will involve choosing a payment currency, such as the Iranian Rial, Dirham and Yen, which are not susceptible to US pressure.
The problem arose when the Indian Central Bank said import payments to Iran would have to be settled outside the existing Asian Clearing Union (ACU) mechanism.
Under the ACU mechanism, every two months imports by the nine member-nations are settled by every member paying for its import surplus.
January 5, 2011
Posted by aletho |
Economics, Wars for Israel |
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This is what Ontario teachers are doing:
Petition to the Board of Directors of the Ontario Teachers Pension Plan Board
Petition
We, members of the Ontario Teachers Pension Plan, ask the Board of Governors of the Ontario Teachers Pension Plan Board to initiate the process that will make the necessary changes in legislation and investment policy which would enable the Plan to:
1. Immediately divest from the following five companies in its portfolio: Lockheed Martin, Finning International, Cement Roadstone Holdings, Siemens AG, and MacDonald, Dettwiler and Associates;
2. Become a signatory to the Principles of Responsible Investment Initiative;
and
3. Divest from, as well as refrain from investing in, any company that contributes to violations of human rights or international law by:
– directly profiting from, or contributing to, the Israeli occupation of Gaza and the West Bank, including East Jerusalem;
– providing products or services that contribute to the construction and maintenance of Israeli settlements and/or the Separation Wall, both of which are illegal under international law;
– providing products or services that contribute to or enable violent acts that target civilians.
Sign petition
January 4, 2011
Posted by aletho |
Economics, Solidarity and Activism |
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A Total Failure of Neoliberalism
For a decade, Ireland was heralded by the most ardent partisans of neo-liberal capitalism as a model to be imitated. The Celtic Tiger had a higher growth rate than the European average. Tax rate on companies had been reduced to 12.5%[2] and the rate actually paid by TNCs that had set up business there was between 3 and 4% – a CEO’s dream! Ireland’s budget deficit was nil in 2007, as was its unemployment rate in 2008. In this earthly paradise, everybody seemed to benefit. Workers had jobs (though often highly precarious), their families were busy consuming, benefiting as they were from the prevailing abundance, and both local and foreign capitalists were enjoying inordinate returns.
In October 2008, a couple of days before the Belgian government bailed out the big “Belgian” banks Fortis and Dexia with taxpayers’ money, Bruno Colmant, head of the Brussels stock exchange and professor of economics, published an op-ed in Le Soir, the French-language daily newspaper of record, stating that Belgium imperatively had to follow the Irish example and further deregulate its financial system. According to Colmant, Belgium needed to change the legal and institutional framework so as to become a platform for international capital, just like Ireland. A few short weeks later the Celtic Tiger was crying mercy.
In Ireland, financial deregulation had triggered a boom in loans to households (household indebtedness had reached 190% of GDP on the eve of the crisis), particularly in real estate, a factor that helped boost the island’s economy (the building industry, financial activities, etc.). The banking sector had experienced exponential growth with the establishment of many foreign companies[3] and the increase in Irish banks’ assets. Real estate and stock market bubbles started forming. The total amount of stockmarket capitalizations, bond issues, and bank assets was fourteen times bigger than the country’s GDP.
What could not possibly happen in such a fairytale world then happened: in September-October 2008 the card castle collapsed and the real estate and financial bubbles burst. Companies closed down or left the country, unemployment rose from 0% in 2008 to 14% in early 2010. The number of families unable to repay their creditors swiftly increased too. The whole Irish banking system teetered on the edge of bankruptcy and a panic-stricken government blindly guaranteed bank deposits for EU480 billion (that is, about three times an Irish GDP of 168 billion). It nationalized the Allied Irish Bank, the main source of financing for real estate loans, with a transfusion of EU48.5 billion (about 30% of GDP).
Exports slowed down. State revenues declined. The budget deficit rose from 14% of GDP in 2009 to 32% in 2010 (more than half of this due to the massive support given to the banks: 46 billion in equity and 31 billion in purchases of toxic assets).
At the end of 2010 the European bail-out plan with IMF participation amounted to EU85 billion in loans (including 22.5 billion from the IMF) and it is already clear that it will not be enough. In exchange, a radical cure was enforced upon the Celtic Tiger in the form of a drastic austerity plan that heavily affects households’ purchasing power, with a resultant decrease in consumption, in public expenditure on welfare, in civil servants’ salaries, in infrastructure investments (to facilitate debt repayment), and in tax revenues. On the social level, the principal measures of the austerity plan are nothing short of disastrous:
– suppression of 24,750 positions in the civil service (8% of the workforce, which would mean 350,000 positions in France);
– newly recruited employees will earn 10% less;
– reduction of social transfers resulting in lower family and unemployment allowances, a significant reduction in the health budget, a freeze on retirement pensions;
– a rise in taxes, to be borne mostly by the majority of the population, already a victim of the crisis: notably a VAT increase from 21% to 23% in 2014; creation of a real estate tax (affecting half of the households that were formerly tax-exempt);
– a EU1 reduction in the minimum hourly wage (from EU8.65 to 7.65, or 11% less).
The rates for loans to Ireland are very high: 5.7% for the IMF loan and 6.05% for “EU” loans. These loans will be used to repay banks and other financial bodies that buy bonds on the Irish debt, borrowing money from the European Central Bank at a rate of 1% – another windfall for private financiers. According to AFP, IMF managing director Dominique Strauss-Kahn claimed that it would work, though of course “it would be difficult because it is hard for people who will have to make sacrifices for the sake of budget austerity”.
Both in the streets and in parliament, opposition has been very determined. The Dail, or lower house of parliament, voted the 85 billion rescue plan by a mere 81 to 75. Far from relinquishing its neo-liberal orientation, the IMF declared that among Ireland’s priorities it is counting on the adoption of reforms to do away with structural obstacles to business, so as to support competitiveness in the coming years. “Socialist” Dominique Strauss-Kahn said he was convinced that a new government after the elections in early 2011 would not change anything: “I’m confident that even if the opposition parties, Fine Gael and Labour, are criticizing the government and the programme […], they understand the need to implement the programme.”
In short, the economic and financial liberalization aimed at attracting foreign investments and transnational financial companies has utterly failed. To add insult to the damage the population must bear as a result of such a policy, the IMF and the Irish government are persevering in the neo-liberal orientation of the past two decades and, under pressure from international finance, are subjecting the population to a structural adjustment programme similar to those imposed on Third World countries for the past three decades. Yet these decades should show what must not be done, and why it is high time to enforce a radically different logic that benefits people and not private money.
Translated by Christine Pagnoulle in collaboration with Judith Harris.
Eric Toussaint, president of the Committee for the Cancellation of Third World Debt – Belgium www.cadtm.org , author of The World Bank: A Critical Primer, Pluto, London, 2008.
January 3, 2011
Posted by aletho |
Economics, Timeless or most popular |
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Imperial states build networks which link economic, military and political activities into a coherent mutually reinforcing system. This task is largely performed by the various institutions of the imperial state.
Thus imperial action is not always directly economic, as military action in one country or region is necessary to open or protect economic zones. Nor are all military actions decided by economic interests if the leading sector of the imperial state is decidedly militarist.
Moreover, the sequence of imperial action may vary according to the particular conditions necessary for empire building. Thus state aid may buy collaborators; military intervention may secure client regimes followed later by private investors. In other circumstances, the entry of private corporations may precede state intervention.
In either private or state economic and/or military led penetration, in furtherance of empire-building, the strategic purpose is to exploit the special economic and geopolitical features of the targeted country to create empire-centered networks. In the post Euro-centric colonial world, the privileged position of the US in its empire-centered policies, treaties, trade and military agreements is disguised and justified by an ideological gloss, which varies with time and circumstances. In the war to break-up Yugoslavia and establish client regimes, as in Kosovo, imperial ideology utilized humanitarian rhetoric. In the genocidal wars in the Middle East, anti-terrorism and anti-Islamic ideology is central. Against China, democratic and human rights rhetoric predominates. In Latin America, receding imperial power relies on democratic and anti-authoritarian rhetoric aimed at the democratically elected Chavez government.
The effectiveness of imperial ideology is in direct relation to the capacity of empire to promote viable and dynamic development alternatives to their targeted countries. By that criteria imperial ideology has had little persuasive power among target populations. The Islamophobic and anti-terrorist rhetoric has made no impact on the people of the Middle East and alienated the Islamic world. Latin America’s lucrative trade relations with the Chavist government and the decline of the US economy has undermined Washington’s ideological campaign to isolate Venezuela. The US human rights campaign against China has been totally ignored throughout the EU, Africa, Latin America, Oceana and by the 500 biggest US MNC (and even by the US Treasury busy selling treasury bonds to China to finance the ballooning US budget deficit).
The weakening influence of imperial propaganda and the declining economic leverage of Washington, means that the US imperial networks built over the past half century are being eroded or at least subject to centrifugal forces. Former fully integrated networks in Asia are now merely military bases as the economies secure greater autonomy and orient toward China and beyond. In other words the imperial networks are now being transformed into limited operations’ outposts, rather than centers for imperial economic plunder.
Imperial Networks: The Central Role of Collaborators
Empire-building is essentially a process of penetrating a country or region, establishing a privileged position and retaining control in order to secure (1) lucrative resources, markets and cheap labor (2) establish a military platform to expand into adjoining countries and regions (3) military bases to establish a chock-hold over strategic road or waterways to deny or limit access of competitors or adversaries (4) intelligence and clandestine operations against adversaries and competitors.
History has demonstrated that the lowest cost in sustaining long term, long scale imperial domination is by developing local collaborators, whether in the form of political, economic and/or military leaders operating from client regimes. Overt politico-military imperial rule results in costly wars and disruption, especially among a broad array of classes adversely affected by the imperial presence.
Formation of collaborator rulers and classes results from diverse short and long term imperial policies ranging from direct military, electoral and extra-parliamentary activities to middle to long term recruitment, training and orientation of promising young leaders via propaganda and educational programs, cultural-financial inducements, promises of political and economic backing on assuming political office and through substantial clandestine financial backing.
The most basic appeal by imperial policy-makers to the “new ruling class” in emerging client state is the opportunity to participate in an economic system tied to the imperial centers, in which local elites share economic wealth with their imperial benefactors. To secure mass support, the collaborator classes obfuscate the new forms of imperial subservience and economic exploitation by emphasizing political independence, personal freedom, economic opportunity and private consumerism.
The mechanisms for the transfer of power to an emerging client state combine imperial propaganda, financing of mass organizations and electoral parties, as well as violent coups or ‘popular uprisings’. Authoritarian bureaucratically ossified regimes relying on police controls to limit or oppose imperial expansion are “soft targets”. Selective human rights campaigns become the most effective organizational weapon to recruit activists and promote leaders for the imperial-centered new political order. Once the power transfer takes place, the former members of the political, economic and cultural elite are banned, repressed, arrested and jailed. A new homogenous political culture of competing parties embracing the imperial centered world order emerges. The first order of business beyond the political purge is the privatization and handover of the commanding heights of the economy to imperial enterprises. The client regimes proceed to provide soldiers to engage as paid mercenaries in imperial wars and to transfer military bases to imperial forces as platforms of intervention. The entire “independence charade” is accompanied by the massive dismantling of public social welfare programs (pensions, free health and education), labor codes and full employment policies. Promotion of a highly polarized class structure is the ultimate consequence of client rule. The imperial-centered economies of the client regimes, as a replica of any commonplace satrap state, is justified (or legitimated) in the name of an electoral system dubbed democratic – in fact a political system dominated by new capitalist elites and their heavily funded mass media.
Imperial centered regimes run by collaborating elites spanning the Baltic States, Central and Eastern Europe to the Balkans is the most striking example of imperial expansion in the 20th century. The break-up and take-over of the Soviet Union and the Eastern bloc and its incorporation into the US led NATO alliance and the European Union resulted in imperial hubris. Washington made premature declarations of a unipolar world while Western Europe proceeded to plunder public resources, ranging from factories to real estate, exploiting cheap labor, overseas and via immigration, drawing on a formidable ‘reserve army’ to undermine living standards of unionized labor in the West.
The unity of purpose of European and US imperial regimes allowed for the peaceful joint takeover of the wealth of the new regions by private monopolies. The imperial states initially subsidized the new client regimes with large scale transfers and loans on condition that they allowed imperial firms to seize resources, real estate, land, factories, service sectors, media outlets etc. Heavily indebted states went from a sharp crises in the initial period to ‘spectacular’ growth to profound and chronic social crises with double digit unemployment in the 20 year period of client building. While worker protests emerged as wages deteriorated, unemployment soared and welfare provisions were cut, destitution spread. However the ‘new middle class’ embedded in the political and media apparatuses and in joint economic ventures are sufficiently funded by imperial financial institutions to protect their dominance.
The dynamic of imperial expansion in East, Central and Southern Europe however did not provide the impetus for strategic advance, because of the ascendancy of highly volatile financial capital and a powerful militarist caste in the Euro-American political centers. In important respects military and political expansion was no longer harnessed to economic conquest. The reverse was true: economic plunder and political dominance served as instruments for projecting military power.
Imperial Sequences: From War for Exploitation to Exploitation for War
The relations between imperial military policies and economic interests are complex and changing over time and historical context. In some circumstances, an imperial regime will invest heavily in military personnel and augment monetary expenditures to overthrow an anti-imperialist ruler and establish a client regime far beyond any state or private economic return. For example, US wars in Iraq and Afghanistan, proxy wars in Somalia and Yemen have not resulted in greater profits for US multinational corporations’ nor has it enhanced private exploitation of raw materials, labor or markets. At best, imperial wars have provided profits for mercenary contractors, construction companies and related ‘war industries’ profiting through transfers from the US treasury and the exploitation of US taxpayers, mostly wage and salary earners.
In many cases, especially after the Second World War, the emerging US imperial state lavished a multi-billion dollar loan and aid program for Western Europe. The Marshall Plan forestalled anti-capitalist social upheavals and restored capitalist political dominance. This allowed for the emergence of NATO (a military alliance led and dominated by the US). Subsequently, US multi-national corporations invested in and traded with Western Europe reaping lucrative profits, once the imperial state created favorable political and economic conditions. In other words imperial state politico-military intervention preceded the rise and expansion of US multi-national capital. A myopic short term analysis of the initial post-war activity would downplay the importance of private US economic interests as the driving force of US policy. Extending the time period to the following two decades, the interplay between initial high cost state military and economic expenditures with later private high return gains provides a perfect example of how the process of imperial power operates.
The role of the imperial state as an instrument for opening, protecting and expanding private market, labor and resource exploitation corresponds to a time in which both the state and the dominant classes were primarily motivated by industrial empire building.
US directed military intervention and coups in Iran (1953), Guatemala (1954), Chile (1973), the Dominican Republic (1965) were linked to specific imperial economic interests and corporations. For example, US and English oil corporations sought to reverse the nationalization of oil in Iran. The US, United Fruit Company opposed the agrarian reform policies in Guatemala. The major US copper and telecommunication companies supported and called for the US backed coup in Chile.
In contrast, current US military interventions and wars in the Middle East, South Asia and the Horn of Africa are not promoted by US multi-nationals. The imperial policies are promoted by militarists and Zionists embedded in the state, mass media and powerful ‘civil’ organizations. The same imperial methods (coups and wars) serve different imperial rulers and interests.
Clients, Allies and Puppet Regimes
Imperial networks involve securing a variety of complementary economic, military and political ‘resource bases’ which are both part of the imperial system and retain varying degrees of political and economic autonomy. In the dynamic earlier stages of US Empire building, from roughly the 1950’s – 1970’s, US multi-national corporations and the economy as a whole dominated the world economy. Its allies in Europe and Asia were highly dependent on US markets, financing and development. US military hegemony was reflected in a series of regional military pacts which secured almost instant support for US regional wars, military coups and the construction of military bases and naval ports on their territory. Countries were divided into ‘specializations’ which served the particular interests of the US Empire. Western Europe was a military outpost, industrial partner and ideological collaborator. Asia, primarily Japan and South Korea served as ‘frontline military outposts’, as well as industrial partners. Indonesia, Malaysia, and the Philippines were essentially client regimes which provided raw materials as well as military bases. Singapore and Hong Kong were financial and commercial entrepots. Pakistan was a client military regime serving as a frontline pressure on China. Saudi Arabia, Iran and the Gulf mini-states, ruled by client authoritarian regimes, provided oil and military bases. Egypt and Jordan and Israel anchored imperial interests in the Middle East. Beirut served as the financial center for US, European and Middle East bankers.
Africa and Latin America including client and nationalist-populist regimes were a source of raw materials as well as markets for finished goods and cheap labor. The prolonged US-Vietnam war and Washington’s subsequent defeat eroded the power of the empire. Western Europe, Japan and South Korea’s industrial expansion challenged US industrial primacy. Latin America’s pursuit of nationalist, import – substitution policies forced US investment toward overseas manufacturing. In the Middle East nationalist movements toppled US clients in Iran and Iraq and undermined military outposts. Revolutions in Angola, Namibia, Mozambique, Algeria, Nicaragua and elsewhere curtailed Euro-American ‘open ended’ access to raw materials, at least temporarily.
The decline of the US Empire was temporarily arrested by the collapse of Communism in the Soviet Union and Eastern Europe and the establishment of client regimes throughout the region. Likewise the upsurge of imperial-centered client regimes in Latin America between the mid 1970’s to the end of the 1990’s gave the appearance of an imperialist recovery. The 1990’s however was not the beginning of a repeat of the early 1950’s imperial take off: it was the “last hurrah” before a long term irreversible decline. The entire imperial political apparatus, so successful in its clandestine operations in subverting the Soviet and Eastern European regimes, played a marginal role when it came to capitalizing on the economic opportunities which ensued. Germany and other EU countries led the way in the takeover of lucrative privatized enterprises. Russian- Israeli oligarchs (seven of the top eight) seized and pillaged privatized strategic industries, banks and natural resources. The principal US beneficiaries were the banks and Wall Street firms which laundered billions of illicit earnings and collected lucrative fees from mergers, acquisitions, stock listings and other less than transparent activities. In other words, the collapse of Soviet collectivism strengthened the parasitical financial sector of the US Empire. Worse still, the assumption of a ‘unipolar world’ fostered by US ideologues, played into the hands of the militarists, who now assumed that former constraints on US military assaults on nationalists and Soviet allies had disappeared. As a result military intervention became the principle driving force in US empire building, leading to the first Iraq war, the Yugoslav and Somali invasion and the expansion of US military bases throughout the former Soviet bloc and Eastern Europe.
At the very pinnacle of US global-political and military power during the 1990’s, with all the major Latin American regimes enveloped in the empire-centered neo-liberal warp, the seeds of decay and decline set in. The economic crises of the late 1990’s, led to major uprisings and electoral defeats of practically all US clients in Latin America, spelling the decline of US imperial domination. China’s extraordinary dynamic and cumulative growth displaced US manufacturing capital and weakened US leverage over rulers in Asia, Africa and Latin America. The vast transfer of US state resources to overseas imperial adventures, military bases and the shoring up of clients and allies led to domestic decline.
The US empire, passively facing economic competitors displacing the US in vital markets and engaged in prolonged and unending wars which drained the treasury, attracted a cohort of mediocre policymakers who lacked a coherent strategy for rectifying policies and reconstructing the state to serve productive activity capable of ‘retaking markets’. Instead the policies of open-ended and unsustainable wars played into the hands of a special sub-group (sui generis) of militarists, American Zionists. They capitalized on their infiltration of strategic positions in the state, enhanced their influence in the mass media and a vast network of organized “pressure groups” to reinforce US subordination to Israel’s drive for Middle East supremacy.
The result was the total “unbalancing” of the US imperial apparatus: military action was unhinged from economic empire building. A highly influential upper caste of Zionist-militarists harnessed US military power to an economically marginal state (Israel), in perpetual hostility toward the 1.5 billion Muslim world. Equally damaging, American Zionist ideologues and policymakers promoted repressive institutions and legislation and Islamophobic ideological propaganda designed to terrorize the US population. Equally important islamophobic ideology served to justify permanent war in South Asia and the Middle East and the exorbitant military budgets, at a time of sharply deteriorating domestic socio-economic conditions. Hundreds of billions of dollars were spent unproductively as “Homeland Security” which strived in every way to recruit, train, frame and arrest Afro-American Muslim men as “terrorists”. Thousands of secret agencies with hundreds of thousands of national, state and local officials spied on US citizens who at some point may have sought to speak or act to rectify or reform the militarist-financial-Zionist centered imperialist policies.
By the end of the first decade of the 21st century, the US empire could only destroy adversaries (Iraq, Pakistan, and Afghanistan) provoke military tensions (Korean peninsula, China Sea) and undermine relations with potentially lucrative trading partners (Iran, Venezuela). Galloping authoritarianism fused with fifth column Zionist militarism to foment Islamophobic ideology. The convergence of authoritarian mediocrities, upwardly mobile knaves and fifth column tribal loyalists in the Obama regime precluded any foreseeable reversal of imperial decay.
China’s growing global economic network and dynamic advance in cutting edge applied technology in everything from alternative energy to high speed trains, stands in contrast to the Zionist-militarist infested empire of the US. The US demands on client Pakistani rulers to empty their treasury in support of US Islamic wars in Afghanistan and Pakistan, stands in contrast to the $30 billion dollar Chinese investments in infrastructure, energy and electrical power and multi-billion dollar increases in trade.
US $3 billion dollar military subsidies to Israel stand in contrast to China’s multi-billion dollar investments in Iranian oil and trade agreements. US funding of wars against Islamic countries in Central and South Asia stands in contrast to Turkey’s expanding economic trade and investment agreements in the same region. China has replaced the US as the key trading partner in leading South American countries, while the US unequal “free trade” agreement (NAFTA) impoverishes Mexico. Trade between the European Union and China exceeds that with the US.
In Africa, the US subsidizes wars in Somalia and other nations in the Horn of Africa, while China signs on to multi-billion dollar investment and trade agreements, building up African infrastructure in exchange for access to raw materials. There is no question that the economic future of Africa is increasingly linked to China.
The US Empire, in contrast, is in a deadly embrace with an insignificant colonial militarist state (Israel), failed states in Yemen and Somalia, corrupt stagnant client regimes in Jordan and Egypt and the decadent rent collecting absolutist petrol-states of Saudi Arabia and the Gulf. All form part of an unproductive atavistic coalition bent on retaining power via military supremacy. Yet Empires of the 21st century are built on the bases of productive economies with global networks linked to dynamic trading partners. Recognizing the economic primacy and market opportunities linked to becoming part of the Chinese global network, former or existing US clients and even puppet rulers have begun to edge away from submission to US mandates. Fundamental shifts in economic relations and political alignments have occurred throughout Latin America. Brazil, Venezuela, Bolivia and other countries support Iran’s non-military nuclear program in defiance of Zionist led Washington aggression. Several countries have defied Israel-US policymakers by recognizing Palestine as a state. Trade with China surpasses trade with the US in the biggest countries in the region.
Puppet regimes in Iraq, Afghanistan and Pakistan have signed major economic agreements with China, Iran and Turkey even while the US pours billions to bolster its military position. Turkey an erstwhile military client of the US-NATO command broadens its own quest for capitalist hegemony by expanding economic ties with Iran, Central Asia and the Arab-Muslim world, challenging US-Israeli military hegemony.
The US Empire still retains major clients and nearly a thousand military bases around the world. As client and puppet regimes decline, Washington increases the role and scope of extra-territorial death squad operations from 50 to 80 countries. The growing independence of regimes in the developing world is especially fueled by an economic calculus: China offers greater economic returns and less political-military interference than the US.
Washington’s imperial network is increasingly based on military ties with allies: Australia, Japan, South Korea, Taiwan in the Far East and Oceana; the European Union in the West; and a smattering of Central and South American states in the South. Even here, the military allies are no longer economic dependencies: Australia and New Zealand’s principle export markets are in Asia (China). EU-China trade is growing exponentially. Japan, South Korea and Taiwan are increasingly tied by trade and investment with China … as is Pakistan and India.
Equally important new regional networks which exclude the US are growing in Latin America and Asia, creating the potential for new economic blocs. In other words the US imperial economic network constructed after World War II and amplified by the collapse of the USSR is in the process of decay, even as the military bases and treaties remain as a formidable ‘platform’ for new military interventions.
What is clear is that the military, political and ideological gains in network-building by the US around the world with the collapse of the USSR and the post-Soviet wars are not sustainable. On the contrary the overdevelopment of the ideological-military-security apparatus raised economic expectations and depleted economic resources resulting in the incapacity to exploit economic opportunities or consolidate economic networks. US funded “popular uprisings” in the Ukraine led to client regimes incapable of promoting growth. In the case of Georgia, the regime engaged in an adventurous war with Russia resulting in trade and territorial losses. It is [only] a matter of time before existing client regimes in Egypt, Jordan, Saudi Arabia, the Philippines and Mexico will face major upheavals, due to the precarious bases of rule by corrupt, stagnant and repressive rulers.
The process of decay of the US Empire is both cause and consequence of the challenge by rising economic powers establishing alternative centers of growth and development. Changes within countries at the periphery of the empire and growing indebtedness and trade deficits at the ‘center’ of the empire are eroding the empire. The existing US governing class, in both its financial and militarist variants show neither will nor interest in confronting the causes of decay. Instead each mutually supports the other: the financial sector lowers taxes deepening the public debt and plunders the treasury. The military caste drains the treasury in pursuit of wars and military outposts and increases the trade deficit by undermining commercial and investment undertakings.
January 2, 2011
Posted by aletho |
Economics, Islamophobia, Militarism, Timeless or most popular |
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Thomas Freidman’s Folly
By ROBERT BRYCE | December 31, 2010
Debunking the tsunami of hype about biofuels doesn’t require much. A standard calculator will do. Alas, Thomas Friedman can’t be bothered to do the handful of simple calculations that prove the futility of the biofuels madness.
In a recent piece, the New York Times columnist and best-selling author praised the Navy and Marines for, as he put it “building a strategy for ‘out-greening’ Al Qaeda, ‘out-greening’ the Taliban and ‘out-greening’ the world’s petro-dictators.”
Hmm. I’ve never heard of Taliban fighters using tanks or F-15s. And if Osama bin Laden and his al-Qaeda operatives are worrying about the size of their carbon footprints, that revelation might eclipse the latest news about Lady Gaga – at least for a few hours.
Nevertheless, Friedman reports that the military is planning to “run its ships on nuclear energy, biofuels and hybrid engines, and fly its jets with bio-fuels.” Friedman goes on to say that the brass at the Pentagon is only pursuing “third generation” biofuels made from algae and non-food sources. But here’s the reality: the commercial viability of advanced biofuels is a lot like the Easter Bunny and the Tooth Fairy: lots of people believe in it but no one ever sees it.
To be sure, the logisticians at the Pentagon know that the US military’s profligate use of oil on the battlefield is a strategic liability. And while it’s obvious that the Defense Department could – given its nearly $700 billion in annual spending — make significant contributions in the development of new energy technologies, those advances are unlikely to happen on the biofuels front.
For decades, various pundits have been proclaiming that biofuels will displace our need for oil. Back in 1976, energy analyst Amory Lovins, a darling of the Green/Left, wrote a piece for Foreign Affairs in which he said that there are “exciting developments in the conversion of agricultural, forestry and urban wastes to methanol and other liquid and gaseous fuels.” He went on, saying that those fuels “now offer practical, economically interesting technologies sufficient to run an efficient U.S. transport sector.”
Today, 34 years after Lovins said that biofuels “now offer” the ability to run the transport sector, biofuels remain little more than a sinkhole for taxpayer dollars. According to the Congressional Budget Office, producing enough corn ethanol to match the energy contained in a single gallon of conventional gasoline costs taxpayers $1.78. Even with those subsidies, which total about $7 billion per year, corn ethanol still only provides about 3 percent of America’s oil needs. And by mandating the consumption of ethanol, Congress has created an industry that now gobbles up about one-third of America’s corn crop.
Those numbers are germane to Friedman’s claim that biofuels will be an essential part of the DOD’s new “green” future. The Pulitzer Prize-winning columnist lauded the Navy for its experiments with jet fuel derived from camellina, a plant in the mustard family. In April, the Navy flew an F-18 using a mixture of conventional jet fuel and camellina-based fuel. The cost of that biofuel: about $67.50 per gallon.
The fundamental problem with using plants to make liquid motor fuel isn’t want-to, it’s physics. We pump oil out of the earth because of its high energy density. That is it contains lots of stored chemical energy by both weight and volume. Camellina, like switchgrass, and nearly every other plant-based feedstock now being considered for “advanced” biofuel production, has low energy density. Thus, in order to produce a significant quantity of liquid fuels that have high energy density – such as jet fuel, diesel, or gasoline — from those plants, you need Bunyanesque quantities of the stuff.
Friedman would have understood that had he done a bit of math on soybean-based biodiesel. The US produces about 3.2 billion bushels of soybeans per year and each bushel can be processed into about 1.5 gallons of biodiesel. Thus, if it made sense to do so, we could convert all US soybean production into diesel with total output of about 4.8 billion gallons.
How much fuel is that? By Pentagon standards, it’s not much. In 2008, the DOD consumed 132.5 million barrels of oil products, or about 5.5 billion gallons. Put another way, even if the US decided to convert all of its soybean production into motor fuel, doing so would only provide about 87 percent of the Pentagon’s total oil needs.
Tim Searchinger, a research scholar at Princeton University’s Woodrow Wilson School who has written extensively about the problems with biofuels, says that biofuels don’t make much sense because it “takes a huge amount of land to produce a modest amount of energy.” The key issue, says Searchinger, is scale. He points out that even if we used “every piece of wood on the planet, every piece of grass eaten by livestock, and all food crops, that much biomass could only provide about 30 percent of the world’s total energy needs.”
Some crops can provide a relatively good feedstock for biofuels. For instance, Brazil utilizes sugar cane to produce ethanol. (Brazil is the world’s second-largest ethanol producer, behind the US.) But even if the US military commandeered all of Brazil’s ethanol production — which totaled 6.5 billion gallons in 2008 – that volume of energy still wouldn’t be enough to keep the Pentagon’s planes, trucks, and tanks moving. Recall that ethanol contains just two-thirds of the heat energy of gasoline. Therefore Brazil’s 6.5 billion gallons of ethanol is equal to 4.3 billion gallons of refined oil product, far less than the US military’s consumption of 5.5 billion gallons per year.
Going beyond Brazil, biomass-based fuels may be worthwhile on tropical islands, like Hawaii, that have lots of rainfall and plenty of arable land. Furthermore, fuels derived from photosynthetic algae might – repeat, might – someday become commercial.
Friedman ended his column by saying that “we might really get a green revolution in the military.” Sure, that’s a possibility. But before Friedman writes another article about the promise of biofuels he should invest in a calculator.
Source
December 31, 2010
Posted by aletho |
Deception, Economics, Mainstream Media, Warmongering | Brazil, New York Times, Pentagon, Pulitzer Prize, Thomas Friedman, United States |
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