People living in Colorado Springs wondered why their rain water barrel was almost empty every day. They set up a couple of cameras and look what they caught on film.
In an article published in Vanity Fair (Dec 21, 2011), Joseph Stiglitz, professor of economics at Columbia University, recipient of the Nobel Memorial Prize in Economics, former Chief Economist of the World Bank and author of Globalization and its Discontents (2003) takes a different tack, arguing that monetary policy changes are not as important as a vigorous jobs policy.
It has now been almost five years since the bursting of the housing bubble, and four years since the onset of the recession. There are 6.6 million fewer jobs in the United States than there were four years ago. Some 23 million Americans who would like to work full-time cannot get a job. Almost half of those who are unemployed have been unemployed long-term. Wages are falling—the real income of a typical American household is now below the level it was in 1997. …
Many, especially in the financial sector, argued that strong, resolute, and generous action to save not just the banks but the bankers, their shareholders, and their creditors would return the economy to where it had been before the crisis. In the meantime, a short-term stimulus, moderate in size, would suffice to tide the economy over until the banks could be restored to health. The banks got their bailout. Some of the money went to bonuses. Little of it went to lending. And the economy didn’t really recover—output is barely greater than it was before the crisis, and the job situation is bleak. …
But incomes for most working Americans still hadn’t returned to their levels prior to the previous recession. The American standard of living was sustained only by rising debt—debt so large that the U.S. savings rate had dropped to near zero. And “zero” doesn’t really tell the story. Because the rich have always been able to save a significant percentage of their income, putting them in the positive column, an average rate of close to zero means that everyone else must be in negative numbers. (Here’s the reality: in the years leading up to the recession, according to research done by my Columbia University colleague Bruce Greenwald, the bottom 80 percent of the American population had been spending around 110 percent of its income.) What made this level of indebtedness possible was the housing bubble, which Alan Greenspan and then Ben Bernanke, chairmen of the Federal Reserve Board, helped to engineer through low interest rates and nonregulation.
The fact is the economy in the years before the current crisis was fundamentally weak, with the bubble, and the unsustainable consumption to which it gave rise, acting as life support. Without these, unemployment would have been high. …
Until now, the Depression was the last time in American history that unemployment exceeded 8 percent four years after the onset of recession. And never in the last 60 years has economic output been barely greater, four years after a recession, than it was before the recession started. The percentage of the civilian population at work has fallen by twice as much as in any post-World War II downturn. Not surprisingly, economists have begun to reflect on the similarities and differences between our Long Slump and the Great Depression. Extracting the right lessons is not easy.
Many have argued that the Depression was caused primarily by excessive tightening of the money supply on the part of the Federal Reserve Board. Ben Bernanke, a scholar of the Depression, has stated publicly that this was the lesson he took away, and the reason he opened the monetary spigots. He opened them very wide. Beginning in 2008, the balance sheet of the Fed doubled and then rose to three times its earlier level. Today it is $2.8 trillion. While the Fed, by doing this, may have succeeded in saving the banks, it didn’t succeed in saving the economy.
Filed under: Current Events, Economics & Finance, Modern History, Politics | Tagged: Alan Greenspan, banks, Ben Bernanke, Bruce Greenwald, depression, economy, Federal Reserve Board, globalization, Globalization and its Discontents, jobs, Joseph Stiglitz, monetary policy, recession, The long Slump, unemployment, unsustainable consumption, Vanity Fair Magazine, Worl Bank | Leave a comment »
As the world’s, especially the West’s, economies careen wildly between inflationary and deflationary trends, conservative hard-money proponents are predicting or announcing the demise of the dollar as the de facto reserve currency and pushing for the return of some kind of modified gold standard, or gold-silver standard, to stabilize economic fluctuations. In a column for Forbes magazine,
Ralph Benko writes
The world dollar standard’s death certificate arrives in the mail this week. The Bank of England— one of the most staid, cautious, and dignified entities in the world of monetary policy — signals that the fiduciary currency standard ushered in on August 15, 1971 is, empirically measured, far inferior to the (dilute form of the) gold standard erected at Bretton Woods.
The Bank of England’s Financial Stability Paper No. 13, Reform of the International Monetary and Financial System, reported at Bloomberg BusinessWeek and reviewed here, is being seen by many monetary policy observers around the world as the “coroner’s report” on the death of the world dollar standard.
In the second half of 2011 monetary policy scholars, policy virtuosi, financiers and activists have issued over half a dozen books and important monographs on the very subject heralded by Forbes whose call was seconded by Heritage’s president, Dr. Ed Feulner in an influential Washington Times op-ed:
That’s why we should welcome a debate about the role of the Fed and what our monetary policy should be. But we have to ask the right questions. … Should we fix the dollar price of gold? … ‘If the defect is inflation and an unstable dollar,’ asks Lewis Lehrman of the Lehrman Institute, ‘what is the remedy?’ We can’t answer that without a robust and full discussion. Let’s hope the hard questions being asked now about the Fed touch off a much-needed debate.
Earlier this autumn, Lewis E. Lehrman published the fruit of 40 years of study and thought, study that began with his tutelage by French monetary statesman Jacques Rueff, of The True Gold Standard — A Monetary Reform Plan Without Official Reserve Currencies. Other noteworthy works on how to restore the gold standard promptly followed. Financial analyst James Rickards’ Currency Wars: The Making of the Next Global Crisis is receiving significant popular attention and bestseller status, Detlev Schlichter’s Paper Money Collapse, and we see the publication of Paul Nathan’s The New Gold Standard, a new edition of prominent libertarian Dave Redick’s Monetary Revolution USA and, now, the keenly anticipated Fixing the Dollar Now: Why US Money Lost Its Integrity and How We Can Restore It by Judy Shelton.
The world dollar system has been pronounced, now almost officially, a failure. The main surprise is that the pronouncement took so long.
Filed under: Current Events, Economics & Finance, Modern History | Tagged: Forbes, gold-silver standard, International Monetary and Financial System, Ralph Benko, world dollar system | Leave a comment »
In an interview with The Afghan Youth Peace Volunteers, published Dec 16, 2011 in the online journal Waging Nonviolence and republished in TRUTHOUT.ORG, Noam Chomsky returns to his familiar though no less valid critique of the long-standing U.S. agenda of world imperial domination.
There is very little doubt that the U.S. government intends to maintain effective military control over Afghanistan by one means or another, either through a client state with military bases, and support for what they’ll call Afghan troops. That’s the pattern elsewhere as well. So, for example, after bombing Serbia in 1999, the United States maintains a huge military base in Kosovo, which was the goal of the bombing. In Iraq, they’re still building military bases even though there is rhetoric about leaving the country. And I presume they will do the same in Afghanistan too, which is regarded by the U.S. as of strategic significance in the long term, within the plans of maintaining control of essentially the energy resources and other resources of the region, including western and Central Asia. So this is a piece of ongoing plans which in fact go back to the Second World War.
Right now, the United States is militarily engaged in one form or another in almost a hundred countries, including bases, special forces operations, support for domestic military and security forces. This is a global program of world militarization, essentially tracing back to headquarters in Washington, and Afghanistan is a part of it. It will be up to Afghans to see if, first of all, if they want this; secondly, if they can act in ways which will exclude it. That’s pretty much what’s happening in Iraq. As late as early 2008, the United States was officially insisting that it maintain military bases and be able to carry out combat operations in Iraq, and that the Iraqi government must privilege U.S. investors for the oil and energy system. Well, Iraqi resistance has compelled the United States to withdraw somewhat from that, substantially, in fact. But the efforts will still continue. These are ongoing conflicts based on long standing principles.
New evidence has surfaced to add to the catalog of nefarious methods tested by the CIA during the Cold War. Many of such experiments were exposed in Martin Lee’s 1986 book Acid Dreams: The CIA, LSD and the Sixties Rebellion. In an article published in the U.K. Telegraph, H P Albarelli Jr., an investigative journalist, claims the outbreak resulted from a covert experiment directed by the CIA and the US Army’s top-secret Special Operations Division (SOD) at Fort Detrick, Maryland.
In 1951, a quiet, picturesque village in southern France was suddenly and mysteriously struck down with mass insanity and hallucinations. At least five people died, dozens were interned in asylums and hundreds afflicted. … The mystery of Le Pain Maudit (Cursed Bread) still haunts the inhabitants of Pont-Saint-Esprit, in the Gard, southeast France. The inhabitants were suddenly racked with frightful hallucinations of terrifying beasts and fire.
An American investigative journalist has uncovered evidence suggesting the CIA peppered local food with the hallucinogenic drug LSD as part of a mind control experiment at the height of the Cold War.
One man tried to drown himself, screaming that his belly was being eaten by snakes… Many were taken to the local asylum in strait jackets. Time magazine wrote at the time: “Among the stricken, delirium rose: patients thrashed wildly on their beds, screaming that red flowers were blossoming from their bodies, that their heads had turned to molten lead.”
Eventually, it was determined that the best-known local baker had unwittingly contaminated his flour with ergot, a hallucinogenic mould that infects rye grain. Note: LSD is a semi-synthetic derivative of ergot; ergotamine, also derived from ergot, is used in obstetrics) Both were produced by the Swiss-based Sandoz Pharmaceutical Company, which was then secretly supplying both the Army and CIA with LSD for their chemical warfare experiments.
The Telegraph story continues..
Mr Albarelli came across CIA documents while investigating the suspicious suicide of Frank Olson, a biochemist working for the SOD who fell from a 13th floor window two years after the Cursed Bread incident. One note transcribes a conversation between a CIA agent and a Sandoz official who mentions the “secret of Pont-Saint-Esprit” and explains that it was not “at all” caused by mould but by diethylamide, the D in LSD.
While compiling his book, A Terrible Mistake: The Murder of Frank Olson and the CIA’s Secret Cold War Experiments, Mr Albarelli spoke to former colleagues of Mr Olson, two of whom told him that the Pont-Saint-Esprit incident was part of a mind control experiment run by the CIA and US army. …
Mr Albarelli said the real “smoking gun” was a White House document sent to members of the Rockefeller Commission formed in 1975 to investigate CIA abuses. It contained the names of a number of French nationals who had been secretly employed by the CIA and made direct reference to the “Pont St. Esprit incident.”
In its quest to research LSD as an offensive weapon, Mr Albarelli claims, the US army also drugged over 5,700 unwitting American servicemen between 1953 and 1965.
None of his sources would indicate whether the French secret services were aware of the alleged operation. According to US news reports, French intelligence chiefs have demanded the CIA explain itself following the book’s revelations. French intelligence officially denies this.
Locals in Pont-Saint-Esprit still want to know why they were hit by such apocalyptic scenes.
Filed under: Current Events, Modern History, Politics, Psychedelics, Science | Tagged: Acid Dreams, CIA, cold war, ergot poisoning, Frank Olson, H P Albarelli, LSD, Martin Lee, mind control experiments, Sandoz Pharmaceutical, Special Operations Division, The Telegraph, UK | 1 Comment »
In an article published on Alternet (Jan 4, 2012) Les Leopold wrote about the steps we (the people, the regulators, Congress) could and should take to get control of finance system back from the financial speculators and the predatory investment banks that support them. “These banks and those who run them are living off the rest of us and have no intention, ever, of suffering through the ups and downs of capitalist rewards and losses. When you run the casino, it’s always payday for the house.”
How to Really Overhaul Wall Street
I put this question to Marshall Auerback, global portfolio strategist for Madison Street Partners, a Denver-based fund management group, and a fellow for the Economists for Peace and Security. Here’s his brilliant wish list:
1. Banks should only be allowed to lend directly to borrowers and then service and keep those loans on their own balance sheets.
2. Banks should not be allowed to have subsidiaries of any kind.
3. Banks should not be allowed to accept financial assets as collateral for loans.
4. Banks should not be allowed to lend off shore.
5. Banks should not be allowed to buy (or sell) credit default insurance.
6. Banks should not be allowed to engage in proprietary trading or any profit-making ventures beyond basic lending.
7. Abandon “too-big-to-fail” and “systemically important” doctrine in favor of a “too-big-to-save” and “systemically dangerous” approach. They should be broken up, so that they are not “too big to fail.” Guarantee the deposits and punish the shareholders.
Break the power of finance once and for all. Amen!
Filed under: Current Events, Economics & Finance, Modern History | Tagged: "too-big-to-fail", banks, credit default insurance, Economists for Peace and Security, financial speculators, insurance, Les Leopold, Marshall Auerback, plutocracy, proprietory trading, Wall Street | Leave a comment »
(These passages extracted from his newsletters)
The national conversation has been irreversibly changed. Now everyone is talking about how the 1% are getting away with all the money while the 99% struggle to make ends meet. People are no longer paralyzed by despair or apathy. Most know that now is the time to reclaim our country from the bankers, the lobbyists — and their gofers: the members of the United States Congress and the 50 state legislatures. … The winter gives us an amazing opportunity to expand our actions against the captains of capitalism who have occupied our homes with their fraudulent mortgage system which has tossed millions of families out onto the curb; a cruel health care system that has told 50 million Americans “if you can’t afford a doctor, go F yourself”; a student loan system that sends 22-year-olds into an immediate “debtors’ prison” of working lousy jobs for which they didn’t go to school but now have to take because they’re in hock for tens of thousands of dollars for the next two decades; and a jobs market that keeps 25 million Americans un- or under-employed — and much of the rest of the workers forced to accept wage cuts, health care reductions and zero job security. But we in the Occupy Movement reject this version of the “American Dream.” Instead, I suggest we shift our focus for this winter to the following actions:
1. Occupy Our Homes. Sorry, banks, a roof over one’s head is a human right, and you will no longer occupy our homes through foreclosure and eviction because well, you see, they are our homes, not yours. You may hold the mortgage; you don’t hold the right to throw us or our neighbors out into the cold. With almost one in three home mortgages currently in foreclosure, nearing foreclosure or “underwater,” the Occupy Movement must form local “Occupy Strike Forces” to create human shields when the banks come to throw people out of their homes. If the foreclosure has already happened, then we must help families move back into their foreclosed homes — literally (see this clip from my last film to watch how a home re-occupation is accomplished). Beginning today, Take Back the Land, plus many other citizens’ organizations nationwide, are kicking off Occupy Our Homes. please remember the words of Congresswoman Marcy Kaptur of Toledo (in the film ‘Capitalism: A Love Story’): “Do not leave your homes if the bank forecloses on you! Let them take you to court and then YOU ask the judge to make them produce a copy of your mortgage. They can’t. If they can’t produce the mortgage, they can’t evict you.”
2. Occupy Your College. In nearly every other democracy on the planet, students go to college for free or almost free. Why do those countries do that? Because they know that for their society to advance, they must have an educated population. Without that, productivity, innovation and an informed electorate is stunted and everyone suffers as a result. This has to end. Students should spend this winter doing what they are already doing on dozens of campuses — holding sit-ins, occupying the student loan office, nonviolently disrupting the university regents meetings, and pitching their tents on the administration’s lawn. Young people — we, the ’60s generation, promised to create a better world for you. We got halfway there — now you have to complete the job. Do not stop until these wars are ended, the Pentagon budget is cut in half, and the rich are forced to pay their taxes. And demand that that money go to your education.
3. Occupy Your Job. Let’s spend the winter organizing workplaces into unions. OR, if you already have a union, demand that your leaders get off their ass and get aggressive like our grandparents did. For chrissakes, surely you know we would not have a middle class if it weren’t for the strikes of the 1930s-1950s?! In three weeks we will celebrate the 75th anniversary of the workers in my hometown of Flint, Michigan taking over and occupying the General Motors factories for 44 days in the dead of winter. Their actions ignited a labor movement that lifted tens of millions out of poverty and into the middle class. It’s time to do it again. (According to the Census Bureau and the New York Times, 100 million Americans either live in or near poverty. Disgraceful. Greed has destroyed the core fabric of our communities. Enough!) Here are two good unions to get your fellow workers to sign up and join: UE and SEIU. The CWA are also good. Here’s how to get a quick primer in organizing your place of employment (don’t forget to be careful while you do this!).
4. Occupy Your Bank. This is an easy one. Just leave them. Move your checking and your credit card to a nonprofit credit union. It’s safe and the decisions made there aren’t based on greed. And if a bank tries to evict your neighbor, Occupy the local branch with 20 other people and call the press. Post it on the internet.
5. Occupy the Insurance Companies. It’s time to not only stand up for the 50 million without health insurance but to also issue a single, simple demand: The elimination of for-profit, privately-controlled health insurance companies. It is nothing short of barbaric to allow businesses to make a profit off people when they get sick. We don’t allow anyone to make a profit when we need the fire department or the police. The same should be true for when you need to see a doctor or stay in the hospital. It’s long overdue for us to Occupy the insurance company offices, the pharmaceutical companies’ headquarters and the for-profit hospitals until the White House and Congress pass the true single-payer universal health care bill they failed to pass in 2010. This is what is needed.