Archive for March 2010
European Union Debt Crises: Ireland Next
Bloomberg reports that Ireland banks need a $43 billion dollar bailout due to “appalling” lending practices, using the same Wall Street “financial innovations” that got Greece into so much trouble:
“Our worst fears have been surpassed,” Finance Minister Brian Lenihan said in the parliament in Dublin yesterday. “Irish banking made appalling lending decisions that will cost the taxpayer dearly for years to come.”
Dublin-based Allied Irish needs to raise 7.4 billion euros to meet the capital targets, while cross-town rival Bank of Ireland will need 2.66 billion euros. Anglo Irish Bank Corp., nationalized last year, may need as much 18.3 billion euros. Customer-owned lenders Irish Nationwide and EBS will need 2.6 billion euros and 875 million euros, respectively.
Greece wasn’t the first European country to go under, and it sure as hell wont’ be the last. After Ireland goes, Italy, Portugal, Spain, or even “Great” Britain are all worthy candidates for the next European collapse.
Ghosts of Vietnam
I want to draw attention to the Chicago Tribune’s fantastic investigative series on the long-term effects of our chemical warfare in Vietnam (euphemistically, “Agent Orange”). Millions of Vietnamese and thousands of former US infantry continue to suffer the effects of our indiscriminate spraying of “herbicides” throughout Vietnam during the ’70s, with birth defects, limb amputations, mental degradation and premature death.
An excerpt from their flagship article:
In central Indiana, two sisters struggle through another day, afflicted by a painful condition in which their brains are wedged against their spinal cords. They are in their 30s, but their bodies are slowly shutting down.
Thousands of miles away, amid the rice paddies of Vietnam, a father holds down his 19-year-old daughter as she writhes in pain from a seizure brought on by fluid in her skull, which has been drained four times in the past four years.
“The doctors said that they were sorry, but they could not cure her,” the father says. “They told me I should take her home and that she would pass away very soon.”
These women come from different cultures, from nations separated by more than 8,300 miles. Their fathers fought on opposite sides of the Vietnam War, but they are linked by the stubborn legacy of Agent Orange and other defoliants sprayed by the U.S. military decades ago.
Contaminated with dioxin, a chemical now considered the most toxic ever created by man, the defoliants are linked to a higher risk of multiple cancers, birth defects and other conditions that are contributing to a dramatic increase in financial compensation for U.S. veterans and their families.
Remember when we invaded Iraq because we thought Saddam Hussein was planning to manufacture chemical weapons?
Majority of NYT Science Editors Disbelieve in Climate Change
(via Fair Blog)
John Horgan over at Scientific American came out last week with the stunning revelation that a majority of the editors of the Science Times section of NYT do not believe in climate change:
Two sources at the Science Times section of the New York Times have told me that a majority of the section’s editorial staff doubts that human-induced global warming represents a serious threat to humanity.
My brain just exploded.
Oh, also:
Iraq Elections: US Chooses its Favorite
It looks as though our trusty client Maliki will come out ahead in the 2010 Iraqi elections after all, if this McClatchy dispatch is any indication. Carrying out long-standing political discrimination against the disgraced Ba’ath party, six major candidates will lose their votes and seats, costing Allawi (another US client) his victory. The six candidates committed the awful crime of having been associated with the Ba’ath party before the US invasion:
Six winning candidates in Iraq elections will be stripped of their votes and lose their seats – which would cost secular politician Iyad Allawi’s bloc its narrow victory – if a federal court upholds a broad purge of candidates who are suspected of past involvement with the late dictator Saddam Hussein’s outlawed Baath Party, Iraqi officials said Monday.
What’s most appalling about this development is not that the Iraqis had to choose between two pro-occupation candidates, but that Ahmad Chalabi is in charge of the so-called ‘de-baathification”, and thus in a position to unilaterally decide who can and cannot contest elections in Iraq. Chalabi, you must remember, was a major architect of the 2003 invasion, and went so far as to provide fake intelligence to convince Bush to bomb Baghdad. Astoundingly, Chalabi also contested the 2010 Iraqi Elections, while retaining the power to disqualify candidates at will. (Unsurprisingly, he won re-election.)
Aram Roston has written several excellent articles detailing Ahmad Chalabi’s crucial role in the Iraq invasion, and his 2008 article in The Nation entitled “Chalabi’s lobby” is a must read. Why Chalabi is still in such a powerful position after the Senate Intelligence Committee determined he had (in their words) “attempted to influence United States policy on Iraq by providing false information” is totally beyond me.
Somewhere in the bowels of the Pentagon, some master brain or another must have decided that the US would rather have Maliki in the Prime Minster’s seat rather than Allawi, and gave the order to Chalabi (who has been collaborating with the US Department of War since the ’90s) to disqualify such-and-such candidates to make Maliki come out on top.
The truth is, it doesn’t really matter – not to the Iraqis, anyway. Either Allawi or Maliki would have carried out US policy like the obedient servants they are. Whoever won, the Iraqis would still be saddled with a long-term occupation force of 50,000, their oil would still have gone up on the international market, with no chance of nationalizing it, and their elections would continue to be rigged in favor of the US – just as this one was.
When they said we’d be bringing “democracy” to Iraq, I’m sure our leaders meant “US-style democracy”. You know, the kind where the electorate chooses between two candidates with identical policies and who are funded by the same corrupt sources. Just like we have it here!
Death Threats Against Members of Congress: Old News
Gail Chaddock of the Christian Science Monitor has a nice antidote to the hysteria now gripping our mainstream media regarding the recent death threats and vandalism towards members of congress. As she notes, these actions are, strictly speaking, nothing new:
The House increased security screenings for weapons following 1954 shootings in the House chamber. After a bomb 1971 bomb explosion outside the Senate chamber, metal detectors were installed at doorways in the Capitol. In 1983, after another bombing in the Capitol, metal detectors were extended to Senate and House office buildings. After the 9/11 attacks, Congress completed a Visitors Center and issued tamper-proof badges to staff.
Thankfully we haven’t seen anything like that.
Oilman T.Boone Pickens Says Peak Oil is Here
Via the Christian Science Monitor:
Speaking in a Senate committee hearing, the legendary Texas oilman T. Boone Pickens said that world crude oil production has topped out.
“I do believe you have peaked out at 85 million barrels a day globally,” he told the Senate Energy and Natural Resources Committee Tuesday, according to Reuters.
He noted that the United States is consuming “21 million barrels of the 85 million and producing about 7 of the 21, so if I could take just a minute on this point, the demand is about 86.4 million barrels a day, and when the demand is greater than the supply, the price has to go up until it kills demand.”
And when Mr. Pickens speaks about energy, the world listens. His ability to read markets has vaulted him into the ranks of the world’s wealthiest people. His hedge fund, BP Capital, manages more than $4 billion in assets.
This is about a year and a half old, but the trends Mr. Pickens identified have only progressed since he made his pronouncement. The Obama Administration, on the other hand, refuses to believe in the “Peak Oil theory”, instead plumping for something called the “undulating plateau”, which has absolutely no scientific basis. So naturally, he’s doing nothing about reducing our reliance on liquid fuels.
Folks, we are in a lot of trouble.
Students devise 2,487 MPG Car
Via The Oil Drum:
Extreme mileage was the goal this weekend on the streets of downtown Houston as 42 student teams competed in the 2010 Shell Eco-marathon Americas®, a challenge for students to design, build and test fuel-efficient vehicles that travel the farthest distance using the least amount of energy. More than 400 students were on hand to stretch the boundaries of fuel efficiency and participate in the first-ever street course challenge for the Americas eventSo who came out on top? For the second year in a row, the student team from Laval University in Quebec, Canada took home the grand prize with an astonishing 2,487.5 miles per gallon, equivalent to 1,057.5 kilometres per liter, in the “Prototype” category. And in the “UrbanConcept” category, the team from Mater Dei High School in Evansville, IN took the grand prize for the second year in a row by achieving 437.2 mpg, equivalent to 185.87 km/l.
I wonder if Exxon-Mobil will kill this like they did the electric car.
US Client in Indonesia Uses Slash and Burn Deforestation for US Exports
Our client in Indonesia has a novel “food estate” idea that involves cutting down what precious little forest still remains in that country in order to grow corn, soybeans, sugar and palm oil, which they will then export to the US.
Under the project expected to start this year, 1.6 million hectares of land in Merauke district will be converted to grow crops such as rice, corn, soybean, sugar and palm oil as part of the government’s efforts to reduce dependence on imports and turn Indonesia into a global food producer.
Merauke is virtually the last forested island in Indonesia, with more than 95% forest cover. The Indonesian government claims that “no forests will be cut down”, but this is impossible since their plan also stipulates the use of “millions of hectares”. The land simply isn’t there unless you count forest cover.
Anyone interested in the pernicious relationship between Washington and Indonesia would do well to read this article in last week’s The Nation, which helpfully details our current exploitation of that archipelagic state. Keep in mind this has been going on since 1965.
Leave of Absence
Sparse updates over the next few weeks, as I will be traveling around India before heading back to the States on April 20th.
Mendacity and the Recent Iraq Elections
The Times has a review of Iraq’s recent parliamentary elections that is written from a rather blatant pro-occupation standpoint. Our main client, Nuri al-Malki, the current Prime Minister, has apparently just lost, leaving Iraq’s future “uncertain” and maybe provoking “violence that could threaten plans to withdraw American troops.”
The rest of the article covers how our client is outraged that he lost and demands a recount, something of which the Times would seem to approve. The Times quotes some scary-sounding US generals to justify its fears of “violence”, even though very little has yet occurred. Then comes the obligatory “one side says – the other side says”, as they give us a couple spot interviews with Allawi supporters and detractors. They end the article with speculation that Allawi may not be able to form a government, and if this is the case, the Prime Ministership will go back into the hands of our faithful client Maliki. After reading the article one gets the distinct impression that the Iraqis have to choose between Allawi and Maliki, with Al-Sadr (the “anti-American cleric) a somewhat distant third.
Mind-bogglingly, The Times completely neglects to mention that Ayad Allawi is also an American client, having led the Iraqi interim government along with Ahmed Chalabi, the main Iraqi collaborator in the US invasion. (It was Chalabi that sold us fake records of Saddam’s WMD program). I cannot wrap my mind around why The Times would not consider this important information. All they say is that Allawi was “once derided as an American puppet”, a phrase that gives the distinct impression Allawi has stoped collaborating with the US – but he hasn’t.
By focusing primarily on the mysterious “violence” that may or may not occur as a result of this election, the Times elides the true scandal of this election, that only pro-occupation candidates are allowed to win. Hyping up this rather pathetic squabble between to very similar candidates does nothing to help us understand the political undercurrents in Iraq. Al-Sadr was mentioned only once in this article (as a “possible kingmaker”), but remains largely irrelevant to the narrative The Times purveys, one which seeks to justify further US occupation of Iraq and gives voice only to candidates who will ensure that.
Congress Votes to End Corporate Loan-Sharking of Students
This is very good news:
Ending one of the fiercest lobbying fights in Washington, Congress voted Thursday to force commercial banks out of the federal student loan market, cutting off billions of dollars in profits in a sweeping restructuring of financial-aid programs and redirecting most of the money to new education initiatives.
…
Since the bank-based loan program began in 1965, commercial banks like Sallie Mae and Nelnet have received guaranteed federal subsidies to lend money to students, with the government assuming nearly all the risk. Democrats have long denounced the program, saying it fattened the bottom line for banks at the expense of students and taxpayers.
Like most (if not all) of President Obama’s initiatives, this remains a half-measure, but it is all the more heartening because it indicates at least that our lawmakers are aware of the massive unsecured debts we oblige college student to shoulder.
Supporters of the existing loan-shark industry decry the measure as another ‘government takeover’, but I think those accusations can be dismissed with the same dearth of thought that went into them. Significantly, the bill reduces the mandatory service of these loans from 15% to 10%, and it provides for more direct loans from the government (whose rates are sure to be more favorable compared with that of private banks). The existing system, wherein the government subsidizes banks like Sallie Mae who then use those subsidies to gouge students with usurious rates, was fair to no one but the financiers.
More EU/IMF Confusion
The Times gets credit for scooping the new plans for Germany and France to help Greece after all. I guess all those big bad threats to leave Greece to the mercy of the IMF weren’t really serious.
In one sense, it really doesn’t matter whether Germany or the IMF ends up on the hook for Greece’s bailout (which is supposed to cost 22 billion Euros, or something like $38 billion). The point is that Greece is not going to be the last country who needs this kind of assistance. As I mentioned previously, Britain, France, Portugal, Ireland, Belgium, Italy, and Spain all have debt crises looming on the horizon. Whoever cleans up after Greece will likely end up mopping up all of Europe. So it’s natural that neither Germany or the IMF want to set the precedent alone.
Again, I cannot stress Wall Street’s complicity in this affair. They were the ones selling Greece absurd amounts of debt on one hand and then buying credit default swaps against that debt on the other. That’s bandit behavior, and they shouldn’t be allowed to walk away from this colossal imbroglio they created without any repercussions. I think it’s clear that Wall Street deserves to pay for some of this mess, if not all of it.
But herein lies the paradox! If Wall Street pays up to bail out Greece, it’s really the US doing it, since all five of the major bank-holding companies are still on TARP life support. So it’s really a no-win situation, unless you happen to be a major bank-holding company on government life support. Then you win.
The “Too Big To Fail” Problem
(c/o Ezra)
David Min over at Center for American Progress has one of the clearest and most concise explanations of our current banking system I’ve seen so far. And he’s honest enough to mention that the only true solution to our “too big to fails” is to nationalize them and break them up. This is a must-read article:
To address this problem, we first need to define “too big too fail” and how the problem can implode our financial system. “Too big to fail” is best understood as a bank panic problem, and has arisen as the result of two developments in the global financial markets over the past several decades. The first development was the tremendous growth of a “shadow banking system” operating outside of the rules that have governed depository banking since the Great Depression. This shadow banking system essentially performed the same functions as banking—attracting short-term investments and using them to finance long-term loans—but did so through the use of entities that were not depository banks, and the use of financing instruments (such as mortgage-backed securities, commercial paper, or short-term repurchase agreements) that were not deposits. Because of this nonbank, nondepository structure, the shadow banking system, which grew to an estimated $10 trillion in size, fell outside the rules and protections of the regulated banking system.
The second development was the concentration of risk within the shadow banking system, such that a small number of financial firms were and are responsible for the vast majority of its liabilities. Before the 2008 crash, the five major U.S. investment banks had a combined balance sheet size of approximately $4 trillion, and this may have understated the true level of liabilities they were holding. Witness the recent revelations about failed Wall Street investment bank Lehman Brothers, which raises questions about the extent to which shadow banks offloaded balance sheet risk through the use of dodgy transactions.
Good stuff.
Short Fiction: Two Views of a Street
I.
The white sedan crawled down the Indian thoroughfare. In front, the driver gripped the steering wheel with white knuckles, ever alert, ever watchful. A child ran in front of the car, and with a slight a motion, he pressed the brake. A cacophony of noise surrounded the vehicle; thousands of bodies swarmed in and out of shops lining the street. The road lay choked with vehicles blaring their horns and contributing to the white haze hanging above. It was a starry night.
Behind the driver, in the spacious rear compartment, Mohan was taking his family out to dinner – or trying to. His wife, docile and uneducated, gave her restaurant preference as she did all else: “You know what is best.” Mohan, having just grown richer through a series of land deals outside the city, wanted to spend the evening in style. Their son, Kumar, age 16, sulked in the back, not saying a word. They decided upon Pizza Hut, which they referred to as “Pidja Hut”.
It was an awkward journey. Mohan, his mind still reeling from the millions of rupees he pulled in that week, thought of what he could do with it. The smart thing, these days, was to give it to the Americans. Now they knew how to make money! You give a cool million to some white entrepreneur, watch your money double! Stock market, buildings, IT sector – it was all booming. You just had to be careful not to invest in a fraud, something Mohan was sure his American partner would be able to avoid.
At the back of his mind he thought of his teenage son. His wife had found a small bottle of liquor in his backpack two weeks ago, and they still hadn’t confronted him. Mohan began to wonder if they would – or should. After all, were these not the same freedoms he worked so hard to provide for his son? The freedom to be rebellious, to be free of tradition, from the need to work incessantly not to starve? A confrontation would only alienate their son – and he was all they had.
Mohan looked out the window and saw a man and his daughter huddled beneath an overpass. Their filthy rags gleamed in the streetlight. Mohan’s wife, Parvati, looked out the same window at the same scene – and perhaps thought the same as Mohan: That is what we worked to avoid. Our son may be a lout, but at least he’s a rich lout!
As if reading their thoughts, Kumar piped up: “Listen, when will you get me those Reebok shoes? You know I need them for school.”
Mohan laughed, a booming laugh: “Oh, we’ll get them tomorrow, I suppose, but for now, aren’t you excited? You love Pidja Hut.”
Kumar sniffed. They were driving through an affluent portion of town, and dozens of signs and billboards assaulted Kumar’s eyes: Reebok, Nike, McDonald’s, Ralph Lauren, Levi’s. Kumar wanted them all.
“Look, the store’s right here,” he whined, “Couldn’t we just stop and get them now? In America they say: ‘Shoes make the man.’.”
“Ah, but we are not in America!” Mohan was in a playful mood. The transgression with the liquor momentarily forgotten, he ribbed his son. “Reebok-Geebok – what is all this? You know when I was your age I wore sandals made of old tires!”
“When you were my age, you couldn’t get Reebok in India,” Kumar said, “All of my classmates have them – why shouldn’t I? They’ll make fun of me! I’ll be miserable without them. What kind of father are you, anyway?” Kumar’s tone was not playful.
Mohan laughed, nervously this time, “Take it easy, Kumar – I’ll get them for you.”
Parvati watched the exchange in silence. She had seen it play out a thousand times, for brand-name clothes, for a television in Kumar’s room, to justify Kumar’s school-marks which descended every year, for Kumar’s ever-growing allowance. She wondered where her son spent the thousands of rupees monthly, and refrained from asking only out of fear for the answer.
Mohan was proud of the things he could buy his son, proud of the business acumen which allowed him to rise above the teeming millions, but he wondered whether his long work hours and scarce interaction had poisoned his relationship with Kumar. At such times he always made an effort to connect with his son, efforts which he increasingly believed were a waste. They followed a similar pattern.
Mohan cleared his throat. “So, Kumar, tell me… how are your studies?”
Kumar looked up from his cell phone, on which he was writing a text message to his friends: “meet at pub 10:30 PM”. “Fine,” he said, “why do you ask?”
“Any subject you’re interested in particularly?”, asked Mohan.
“No, not really…”
“Have you given any thought to what you would like to be when you grow up?”
“I want to be rich like you.”
“What do you think will be your vehicle to riches?”
At this point, Kumar invariably grew irritated. “How should I know?”, he snapped, “I’m only 16! What, don’t you make enough money to support us? I’ll think of some way when the time comes.”
“Your grades have been slipping,” Mohan said hesitantly. It was a sensitive subject.
“Not this again! I told you, I’ll improve them! What more do you want from me? I’m doing the best I can!” Kumar crossed his arms and began to pout.
“All right, all right,” said Mohan, not wanting to fight, “So how are your friends doing?”
“They’re fine,” said Kumar.
Mohan could not think of what else to ask. Kumar broke the silence.
“Oh, speaking of them, I need some money. Maybe 2,000 rupees?”
“2,000?” Mohan feigned shock. “I just gave you 5,000 last week! What did you spend it on?”
Kumar shifted uncomfortably, “Oh, you know, this and that – I went out a couple times with my friends – you know how it is.” He did not want to say he would spend it that night after dinner at the pub.
“Well, I’m sorry, Kumar”, said Mohan, “I need to teach you to be responsible with money.”
Kumar turned red. “Mom!” he exploded, “Tell Dad to give me some money! I’m a good soon to you aren’t I? I don’t deserve this! All my friends get to go out with money in their pockets – how can I show up like a pauper?”
“Oh, Mohan, just give him what he wants, poor thing – he doesn’t ask us for much, does he?” said Parvati, “How much did you make this week? What’s a paltry 5,000 rupees?”
Mohan quailed. He could not stand up to both Parvati and Kumar. He knew would give his son the money he asked, but did not want to know what he would spend it on.
This world of pubs and girls, of drinking and partying, of drugs and alcohol, was totally alien to Mohan. They had none of those things when Mohan grew up. For him it was study, study, study – and face a beating if you did not make the grade. He worked hard, miserable, throughout high school and university, and slogged his way through the ranks of a construction company, where he was an overseer, before leaving to work as an independent contractor. A few well-placed bribes, some insightful business deals, and Mohan could give his son the youth he never had. He would send Kumar to England to study – maybe even the United States. There he would learn business. There he would live the life Mohan could only dream of.
Kumar thought of the fun he would have after this ordeal with his parents. One of his friends had scored some marijuana; there would be girls, cigarettes, and plenty of beer at the pub. He felt not a tinge of guilt for deceiving his parents. Was this not what life was about? These nerds who sat up all night studying, they were dead – worse than dead; they were their parents’ creature. Kumar was free.
Parvati thought of the television shows she was missing on this excursion. She wondered if their servant had completed the housework.
Kumar said, “Listen, you just take the driver home after dinner; I’ll meet up with my friends and take a cab.”
Mohan said, “What will you and your friends be doing?”
Kumar said with irritation, “Look, I don’t know. We’ll figure it out when we meet. Why do you ask? You don’t trust me?”
Mohan was silent.
Parvati said, “Well, have fun. Don’t stay out too late.”
Kumar said, “Why not? I don’t have school tomorrow.”
Parvati was silent.
The driver heard everything.
II.
On a busy thoroughfare in India, a white sedan passed Gopal, who lived with his family underneath an overpass. This was their home, noisy and open though it was, and Gopal was proud of it. A migrant laborer, his experiences included working on a cotton plantation, standing in ankle-deep water for hours picking rice, and moving to the city to join the million day laborers who made the buildings rise. An accident at a construction site (for which he received no compensation) ended his industrial career and left him with a gamey leg and no employment prospects.
He had taken to rooting through garbage dumpsters for recyclable goods at night to earn an extra few rupees. He spent his days under the scorching sun by the roadside, begging what loose change could be extracted from the wealthy inhabitants of the neighborhood. Lately, they had grown stingy. On a good day, he could scrape together enough for some rice and lentils for him and his children. On a bad day, they went without lentils. His wife had died nine years before, giving birth to his second child, Pallavi. His son Sunil, age 15, and his daughter were all he had in the world.
It had been a good day. Gopal had returned three hundred bottles and netted 75 rupees. Sunil would return with at least 100 rupees. They would have lentils tonight, and could maybe even splurge on a bottle of Kinley brand fresh water.
Out of the rushing chaos in the street, Gopal saw Sunil approach.
“What kind of work did you find today, son?” he asked.
“Oh, father! I got a job at a shopping mall! Security, top class! They gave 150 rupees for the day!”
This was an unexpected windfall. Gopal hated that his son had to work, but with a 9-year-old sister and a crippled father, Sunil had little choice. Regular employment was far out of Sunil’s reach; instead, like many children of his economic means, he took odd jobs as they came: one day as construction worker, another as an amateur mechanic, a third serving tea in one of the city’s innumerable cafes. Few employers were looking for regular help – it was so much easier, after all, to hire unskilled labor by the day. You pay them less that way. Sunil was flush with pleasure – mall security was one of the most sought-after jobs for children like him: simple and lucrative.
Pallavi stirred from her bed, a heap of rags.
“Sunil! I was worried abut you. What did you bring me?”
She grinned a gap-toothed smile.
“Ah, little sister, do you think I had forgotten you? Here, one of the pakkas at the mall dropped this.”
In his outstretched hand lay a plastic guitar pick.
“What is it?” she asked before putting it in her mouth.
“No, no, this is what they use to play guitar. You know, like the rock stars.” Sunil pantomimed a rock star. “Here, with this you’ll grow up to be the most famous musician in India!”
Pallavi laughed with pleasure, but a passing bus obscured the sound.
Gopal looked around for a police officer and started a small fire. Fires were illegal, but one of the few ways for the city’s homeless to cook their food.
“Here Pallavi” he said, “go get two bottles of water and some buttermilk. When you come back we’ll have nice, hot rice and dal.”
Pallavi smiled and sprang to action.
When she was gone, Gopal turned to Sunil.
“Did you have a good day at work?” he asked.
“Oh, yes, father,” said Sunil, “The sun was not so hot today, and they let me go after only ten hours.”
Gopal’s face assumed a pained expression. “You shouldn’t have to work like this,” he began, “A boy your age… you should be in school. I wish you were in school.”
“No, no. Not at all,” said Sunil. This was a frequent conversation between him and his father, one in which he refused to feel the slightest self-pity. “I tell you, I am happy working to feed my family. Listen, at the mall today I saw so many kids my age. They had the nice clothes – the jeans, the T-shirt – walking in and out of the stores. They must have spent thousands of rupees on those clothes. And food! KFC, McDonald’s, Pizza Hut. But then I think – it all looks the same when it comes out the other end, doesn’t it?” Sunil smiled, “This rice and dal we eat, those pizzas they eat – it’s all the same in the end, isn’t it?”
“What a good son I have,” said Gopal, “I only wish he had as good a father.”
“You are a good father, and I am a good brother,” said Sunil, “We must think now of Pallavi, the little one. If we can avoid taking her out of school, at least we will have that success. She’s a smart girl – who knows? Maybe she’ll be the next CEO of Pepsi!”
Gopal laughed. “And maybe my leg will heal itself.”
Sunil smiled, “It isn’t so improbable as all that. Anyway, my life is pretty much set. What university will take an 8th class dropout? But Pallavi – if we can make sure she stays in school and gets good grades, she could easily get a place at a top university.”
Tears sprang to Gopal’s eyes. “You are truly your mother’s son,” he said, “Now let us tend to the food. The water is boiling – do you have the rice?”
They poured four cups of rice into the boiling water, covered the tin pail, and began preparing to boil the lentils. Gopal sang softly to himself. He had raised two fine children, alone, and with a game leg to boot. He felt proud. He was happy.
Half a kilometer away, a crowd began to form. Gopal and Sunil could hear sirens in the distance.
Gopal shouted to a friend across the street: “What’s going on? Some big-shot actor with police protection?”
His friend shouted back: “I think there was an accident. Let me go find out!”
He left and returned.
“I couldn’t get through the crowd,” he reported, “But I think a little girl was struck by a car. All anyone could make out was a white vehicle speeding away. A hit and run! The bastards!”
Fraud at the University of Phoenix
ProPublica with a fantastic investigation:
Phoenix allegedly had broken the law by tying recruiters’ pay to enrollment numbers [2], U.S. Department of Education investigators found, creating pressure to sign up unqualified students.
In the years since, Phoenix cemented its stature as the nation’s largest for-profit school and the single biggest recipient of federal student aid. But some of the school’s recruiters have continued to use high-pressure, deceptive tactics, according to a dozen current and former students and two former recruiters who spoke to ProPublica and Marketplace [3] as part of a joint investigation.
The students said Phoenix counselors misled them about whether credits would transfer to other schools, pretended to befriend them and lied about financial aid. The recruiters said they were told to rope students in with phony claims that classes were filling fast, or by suggesting that federal grants would cover costs, even if that was uncertain.
It’s the old trifecta of deception: under-estimate the cost of tuition, over-estimate the size of available grants, and promise the credits will be transferable (even when they’re not). These poor kids are getting taken for a ride!
Health Care: Final Appraisal
I haven’t posted to heavily on the miserable bit of political theater we call the “health-care debate” because after Obama’s cowardly about-face on the public option it became clear this was reform designed solely in the interests of corporations. And it is interesting to examine how closely the final product (which is to be passed later today) hews to their original demands, how they slowly set the parameters for debate, killing proposal after proposal, until now the majority of our so-called “left” warmly cheers its passage.
Now, there can be no doubt that HCR will have a few benefits for the public. The bill vastly expands coverage (albeit at the barrel of a mandate), outlaws discrimination against pre-existing conditions, claims to lower costs, and supposedly provides generous subsidies for those who can’t afford insurance (still unclear on how that’s supposed to work). But I want to stress that these public benefits are incidental to the bill’s primary purpose, which was to preserve the employer-based model of health insurance, and particularly to enrich the pharmaceutical and insurance industries. As I mentioned earlier, health stocks have shot upward on news of the bill’s passage.
A short history of health-care reform, detailing its spiral into in oblivion:
First, President Obama announced that a single-payer system would be completely off the table. Britain, Canada, France, Australia, New Zealand, Sweden, Denmark and Finland, Norway, Germany, and many other “developed” countries, all use single-payer – and while one can hotly debate the efficacy from a user-standpoint, those countries all get universal coverage for a fraction of the cost – which was supposed to be the goal of this bill.
Single-Payer means the government automatically covers every citizen and negotiates directly with doctor and pharmaceutical agencies. This, naturally, gives it greater bargaining power, which is one reason Canada pays 40% less for its medicine. President Obama even admitted that the US cannot insure all Americans – and thus, cannot claim “universal healthcare” – without single-payer. However, such a plan would have demolished the massive profits and control our health care providers enjoy, so it wasn’t even discussed.
Defeated, progressives consoled themselves with the knowledge that President Obama favors a “public option”. This would have entailed setting up a government-run nonprofit health care provider to compete with private insurers, much in the way public universities compete with private universities or the USPS competes with Fed Ex. President Obama campaigned strongly for a public option, but then vacillated once in office, and finally came out against it. The bill, finally, does not contain a public option, and it should be easy to see why private insurers would be pleased with that exclusion.
Okay, a necessary loss – but can we at least buy into Medicare? Nope. Import drugs from counties where they’re cheaper? Hell no. Remove the anti-trust exemption, wherein price-fixing is legal for insurance companies? Not yet. So what, then, does the bill do?
It forces 35 million uninsured Americans to either qualify for a subsidy or reach into their pockets and fork over a few thousand dollars per year to the existing insurance monopolies, significantly increasing their power with an absence of any independent regulation. The insurance industry got literally everything they wanted – not a single new regulation, not one control on their frankly ludicrous system of pricing – and the so-called “liberals” got precisely nothing.
A few conclusions flow:
a) Insurance companies are essentially giant regional monopolies, each sovereign over all the health-insurance sold within a swath of land. They are exempt from anti-trust law, and are free to collaborate on their prices or arbitrarily set them as high as they wish.
b) The US Government is now authorized to use state power to compel its citizens to purchase this overpriced and frankly worthless product.
c) The companies, in return, promise not to callously deny coverage to the previously-afflicted and otherwise act with some modicum of humanity.
Michael Tomasky in The New York Review of Books gives an excellent rundown on “The Money Fighting Health Care Reform”, which is an odd title since his article ends up detailing the money fighting for the bill that just passed. Anyone who still thinks that the health insurance industry considers this bill a loss would do well to read it.
Some final notes:
- The Health insurance sector spent over half a billion dollars lobbying to shape the final HCR bill, by June ’09, more than a million dollars per day.
- The biggest pharmaceutical lobbying group, PhRMA, spent $6 million in the past few weeks advertising for the final HCR bill, and this is after they already spent $150 million earlier on the same thing.
- Major insurance providers WellPoint, Atena, Anthem Blue and many others also support the bill.
- The so-called “Baucus Plan”, which formed the basis for the final bill, was authored by his aide Liz Fowler, a former VP at WellPoint.
- Obama’s “health czar”, Nancy-Ann Deparle, who was also instrumental in arriving at the current bill, received $5.8 million dollars in 2009 from health insurance firms.
Health Care Stocks Boom on Passage of Bill
If anyone is still wondering whose interests the recently-passed health care bill represents, I invite you to read this article on Bloomberg’s front page today:
Merck & Co. and Pfizer Inc. climbed more than 1.7 percent to help lead health-care companies to the biggest gain among 10 groups in the Standard & Poor’s 500 Index after the House approved legislation that will ensure tens of millions of uninsured Americans will get medical coverage.
Health-Reform Foes Hurl Epithets at Civil Rights Icon
[Civil Rights Veteran Congressman John] Lewis was leaving the Cannon Office Building Saturday afternoon when a crowd of demonstrators descended on him, shouting obscenities and screaming, “Kill the bill, kill the bill.”
Lewis responded, “I’m for the bill, I’m for the bill, I’m voting for the bill.”
Then, according to Lewis and others who were present, the Tea Party crowd then started began shouting: “Kill the bill, n—–.”
The incident, which took place barely blocks from where King delivered his “I Have a Dream” speech, was witnessed by other members of Congress and broadly reported by media outlets, including McClatchy Newspapers and Fox News.
I know one probably shouldn’t extrapolate too much from this one data point, but damn!
John Yoo and the Self-Satisfied Defense
John Yoo, the primary author of the legal memoranda that gave President Bush the power to detain and torture anyone he likes, has written a slimy op-ed in the Wall Street Journal defending his ethical lapses. I know that Mr. Yoo is a big-shot Berkeley Law professor (and I’m just a 22-year-old nothing), so for fear of sounding ignorant I suppose I won’t give his article too much time. But it does beg for comment.
He begins, detailing the marvelous gift he bestowed upon President Obama:
Barack Obama may not realize it, but I may have just helped save his presidency. How? By winning a drawn-out fight to protect his powers as commander in chief to wage war and keep Americans safe.
He sure didn’t make it easy. When Mr. Obama took office a year ago, receiving help from one of the lawyers involved in the development of George W. Bush’s counterterrorism policies was the furthest thing from his mind. Having won a great electoral victory, the new president promised a quick about-face. He rejected “as false the choice between our safety and our ideals” and moved to restore the law-enforcement system as the first line of defense against a hardened enemy devoted to killing Americans.
This is confusing for so many reasons. As I’m sure Mr. Yoo knows, President Obama has endorsed kidnapping “terrorism suspects” and holding them indefinitely at various sites around the globe. He’s opposed to any further investigation into our torture policy (something for which I imagine Mr. You would be quite grateful), and has, in fact, expanded the legal black hole at Bagram Air Base in Afghanistan, where no defense attorneys, judges or prosecutors can set foot.
Mr. Yoo mentions that President Obama has ordered Guantanamo closed (actually, Obama hasn’t closed it yet, and probably never will), but no other evidence to suggest President Obama has endorsed a meaningful review of executive power. I just don’t understand how one promise that anyway went unfulfilled means Obama is “[determined] to take us back to a Sept. 10, 2001, approach to terrorism”, as Yoo later writes.
Then Mr. Yoo complains of being “hounded” in the form of a superficial Office of Professional Responsibility (OPR) review. I admit I have not read the report, but Mr. Yoo claims:
OPR’s investigation was so biased, so flawed, and so beneath the Justice Department’s own standards that last week the department’s ranking civil servant and senior ethicist, David Margolis, completely rejected its recommendations.
Which says more, perhaps, about the Office of Professional responsibility than it does about the tactics which Mr. Yoo authorized, which include being forced to stand for weeks while shackled to the ceiling. And, of course, Mr. Yoo doesn’t deign to mention that the very “enhanced interrogation techniques” that he advised Presidents Bush and Obama to use, and defends in this article, are unconstitutional according to the Supreme Court.
Mr. Yoo lauds himself for sitting through the tedious hearings, even though he was under “no legal obligation to do so” and even though they had no impact on his lucrative professional career. Why should he make such a non-sacrifice?
I did not do this to win any popularity contests, least of all those held in the faculty lounge. I did it to help our president—President Obama, not Bush. Mr. Obama is fighting three wars simultaneously in Iraq, Afghanistan, and against al Qaeda.
Forgive me, but if one of the wars is specifically against al Qaeda, whom are we fighting in Iraq and Afghanistan? Are those merely “wars” in the general sense of the term, with no clear enemy or end? If they are, Mr. Yoo’s lengthy and repeated defenses of executive rule-by-decree during “wartime” means he advocates for a vast and permanent expansion of the President’s power. I don’t get it. Is that what he’s trying to say?
He ends his “op-ed piece”, which was really a self-serving polemic, with a bizzare example from five years ago:
n 2005, a Navy Seal team dropped into Afghanistan encountered goat herders who clearly intended to inform the Taliban of their whereabouts.
The team leader ordered them released, against his better military judgment, because of his worries about the media and political attacks that would follow. In less than an hour, more than 80 Taliban fighters attacked and killed all but one member of the Seal team and 16 Americans on a helicopter rescue mission.
So, according to John Yoo, those few American deaths justify the indefinite detention of any and all goathearders (and anyone else we might happen not to trust). Do not bother asking Mr. Yoo why it is we’re in Afghanistan in the first place, who it is we’re fighting, or what our ultimate goals are. That’s not his department.
Quote of the Day
If the right people had been in charge of Nixon’s funeral, his casket would have been launched into one of those open-sewage canals that empty into the ocean just south of Los Angeles. He was a swine of a man and a jabbering dupe of a president. Nixon was so crooked that he needed servants to help him screw his pants on every morning. Even his funeral was illegal. He was queer in the deepest way. His body should have been burned in a trash bin.
– Hunter S. Thompson
Merchandising “Cool” – The Never-Ending Search
PBS Frontline, in 2001, ran a frankly prophetic documentary on what were then cutting-edge techniques in brand marketing. It’s interesting to note how quickly these trends proliferated until now, nine years later, they seem frightfully commonplace. The transcript can be found here.
The piece begins by remarking that the “teen generation” of 2001, the one to which I belonged, had been the largest and most sought-after generation to date – even larger than the baby boomers. It collectively spent $100 billion dollars per year on itself, and induced its parents to spend an additional $50 billion. It had more disposable cash then ever before, and economic freedom to spend it. And so finding the best way to appeal to that generation became a pressing concern for the Madison Street advertising firms – and a lucrative one.
Early research quickly focused upon that implacable question – What is ‘cool’?How does one become cool? A species known in the marketing business as “Cool Hunters” made its niche to find that answer. As Malcolm Gladwell says in the piece:
“Cool hunting” is structured around, really, a search for a certain kind of personality and a certain kind of player in a given social network. For years and years on Madison Avenue, if you knew where the money was and where the power was and where the big houses were, then you knew what was going to happen next. And cool hunting was all about a kind of revolution that sets that earlier paradigm aside and says, in fact, it has to do with the influence held by those who have the respect and admiration and trust of their friends.
PBS takes us briefly through the life of a corporate spy:
A correspondent is a person who’s been trained by us to be able to find a certain kind of kid, a kid that we call a trendsetter or an early adopter. This is a kid who’s very forward in their thinking, who looks outside their own backyard for inspiration, who is a leader within their own group.These kids are really difficult to find. So what this correspondent does is they go out and they, like, find and identify these trend-setting kids. They interview them. They get them interested in what we do. They send all that stuff in. We look at it. We compile it. We look for trends or themes that are happening through all the information, and that’s the stuff that we put on our Web site.
But there was a problem. The process essentially cannibalizes itself. As it turns out, a big part of being “cool” is having nothing to do with avaricious marketers with an intent to exploit. As soon as a certain trend becomes blatantly marketed, kids move on to the next thing. Trying to pin down “cool” is an infinite game of whack-a-mole, a perpetual cycle.
The piece details how Sprite improbably became the symbol of hip-hop by sponsoring DJs and MC’s to promote their drink. By the way, this is the reason contemporary music is awful:
[Advertising Executive] PINA SCIARRA: Hip-hop for us became the sort vehicle, or the lens, for us to get to teens and talk to them in a credible way. And the way we did that was to develop relationships with artists.
And it worked. Sprite’s sales skyrocketed, and in 2001, when the piece was done, had attained supremacy in the youth market.
The reporter, Douglas Rushkoff, intones chillingly:
DOUGLAS RUSHKOFF: Is it nostalgic to think that when we were young it was any different, that the thing we called “youth culture” wasn’t something that was just being sold to us, it was something that came from us, an act of expression, not just of consumption? Has that boundary been completely erased?
Today five enormous companies are responsible for selling nearly all of youth culture. These are the true merchants of cool: Rupert Murdoch’s Newscorp, Disney, Viacom, Universal Vivendi, and AOL/Time Warner.
Those companies own all of the networks. All advertising must go through them. And MTV, one of our primary outlets of branded youth culture, became a virtual laboratory, where the results of thousands of focus groups, undercover fact-finding missions, and interviews got to be tested on real consumers. Viacom, MTV’s parent, happened to be the ‘coolest’ conglomerate when this piece was made, and I have no doubt it still is. After all, they still own Jon Stewart, the White House court jester, who is authentically popular with the 18-24 demographic.
Exploring Viacom’s success, PBS examines how it gained popularity with the male demographic with several case studies, all centered around the idea of a “mook”, an advertising term that translates roughly to “boor”. In males, the “mook” takes its manifest in the lowbrow comedy acts like Howard Stern, Tom Green, the phenomena of professional wrestling, The Man Show and the Jackass franchise. The impulse there is always not to think, not to worry about anything in particular; just embrace your “manhood” – your penchant for slapstick comedy and outrageous statements – and above all, keep buying things.
The female counterpart to the “mook” emphasized overt sexuality, typified by Britney Spears. As the piece remarks of Ms. Spears:
She hit the scene at 16 with “Baby, One More Time,” as a naughty Catholic schoolgirl bursting out of her uniform. When it came time for a spread in Rolling Stone, the 17-year-old self-professed virgin Britney struck the classic nymphet pose. And at the Video Music Awards last year, when Britney finally and famously came out of her clothes, she wasn’t just pleasing eager young boys, she was delivering a powerful missive to girls: Your body is your best asset. Flaunt your sexuality even if you don’t understand it. And that’s the message that matters most because Britney’s most loyal fans are teenage girls.
PBS takes us through several other case studies, and the trend of anti-intellectualism pervades throughout. Through endless focus groups and iterations of the cool chase, our marketers have programmed us to be unthinking, unfeeling, buying machines. It would be easy to dismiss these techniques as rather severe examples of the sort of anti-intellectualism that prevailed around the time President Bush was elected; that they were a small part of an overall scheme to make a purely corporate candidate electable for office. Perhaps, many would argue, President Obama, the university intellectual, repudiated that culture.
However, to those detractors I would offer this last bit of evidence: the lyrics to a song entitled “Blah Blah Blah” by our newest musical sensation, 22-year-old “Ke$ha”, who has just released a best-selling record, one year into Obama’s presidency.
Coming out your mouth with your blah blah blah
Just zip your lips like a padlock
And meet me at the back with the jack and the jukebox
I don’t really care where you live at
Just turn around boy and let me hit that
Don’t be a little bitch with your chit chat
Just show me where your dick’s atMusic’s up
Listen hot stuff
I’m in love
With this song
So just hush
Baby shut up
Heard enoughStop ta-ta-talking that
Blah blah blah
Think you’ll be getting this
Nah nah nah
Not in the back of my
Car-ar-ar
If you keep talking that
Blah blah blah blah blahBoy come on get your rocks off
Come put a little love in my glove box
I wanna dance with no pants on
Meet me in the back with the jack and the jukebox
So cut to the chase kid
‘Cause I know you don’t care what my middle name is
I wanna be naked
But your wasted
For anyone who would like to know how these lyrics came to be, and still wonders how the machinery of political suppression is exercised, I highly recommend PBS Frontline’s investigation.
Update: You can watch the documentary online here.
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US Appeals Court: Fed Must Disclose Bailout Records
Finally some good news. Even if this doesn’t really change the reality of the situation (The too-big-to-fail banks are still even bigger; they still have an implicit guarantee for unlimited future bailouts; OTC Derivatives are legal, Glass-Stegall is still repealed, insider trading is still legal in commodities, etc.) – this is a much-needed move toward finding out what the Federal Reserve did with its trillions of bailout dollars.
The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of Lehman Brothers Holdings Inc. The ruling upholds a decision of a lower-court judge, who in August ordered that the information be released.
The Fed had argued that disclosure of the documents threatens to stigmatize borrowers and cause them “severe and irreparable competitive injury,” discouraging banks in distress from seeking help. A three-judge panel of the appeals court rejected that argument in a unanimous decision.
On a probably related note, Fed Chief Bernanke has come full circle from declaring that the bailouts were “necessary to stave off a depression” to now calling the situation “unconscionable“. Better late then never, I guess, but it should be clear by this point that if Bernanke truly believed what he said, he would insist on breaking up the big banks, banning the trade of OTC derivatives, and setting up some kind of independent regulatory commission to keep an eye on the banks.
Chris Dodd’s “financial reform bill” attempts to do these things, but only in the way that a corporate wage slave asks his employers for a raise – meekly. This should have been a foregone conclusion seeing that his major campaign contributors are all banks that received bailouts, but I suppose I was foolish enough to hope he’d sponsor a bill with some teeth. His bill incorporates none of the elements which many major economists say are minimum standards for serious reform, and worst of all, leaves oversight up to the Federal Reserve, not an independent commission.
Now, if there is one thing this crisis can be said to have taught us, it is that the Federal Reserve is not a credible or trustworthy judge of the ethics of modern banking practices. The whole time our major banks were engaging in predatory lending practices, fraudulent accounting, reckless gambling and insider trading, the Fed had nothing to say about it. They even encouraged such behavior by keeping interest rates low and making repeated pronouncements that “there is no housing bubble“, “the sub-prime mess is contained“, and that deregulating the derivatives market is somehow a good idea. The Federal Reserve is the last body I want to see regulating the banks, and they have shown themselves to be utterly incapable of doing so. It would be like asking President Bush to oversee an academic committee.
It will be interesting to see what comes out of this new ruling. As I write, I’m sure dozens of news organizations are busy setting their Freedom of Information Act requests to work. Will we see a heretofore unacknowledged bank revealed to have accepted a bailout? I’m sure many would like to see the minutes of the meeting where Lehman Brothers’ fate was decided. How much money did Bank of America run off with, and what were the real terms of its purchase of Merrill Lynch? All that and more, hopefully soon to come!
New “Enemy Belligerent” Act Allows for Indefinite Detention of US Citizens
Lilliana Segura of Alternet reports:
The bill is only 12 pages long, but that is plenty of room to grant the president the power to order the arrest, interrogation, and imprisonment of anyone — including a U.S. citizen — indefinitely, on the sole suspicion that he or she is affiliated with terrorism, and on the president’s sole authority as commander in chief.
…
A subsequent section, titled “Detention Without Trial of Unprivileged Enemy Belligerents,” states that suspects “may be detained without criminal charges and without trial for the duration of hostilities against the United States or its coalition partners.” In a press conference introducing the bill earlier this month, Sen. Joe Lieberman said, “I know that will be — that may be — a long time, but that’s the nature of this war.”
I’ve never seen a piece of legislation so baldly committed to subverting the rule of law. Remember, former Chief of Defense Staff has explicitly stated that the War on Terror (‘hostilities against the United States or its coalition partners’) could last 50 years. Or forever! No one knows!
Thankfully we still have a half-way independent judiciary which has repeatedly struck down similar legislation; so the odds are that this bill, if passed, will eventually be found unconstitutional (which, of course it is). But until then, anyone caught up in the drag-net of police state action this bill recommends will find themselves very lonely indeed, while they wait for the ‘war on terror’ to end.
And can we drop all this nonsense about “well, if you’re not a terrorist, you don’t need to worry”? Tell that to the 90% of inmates at Guantanamo Bay who are totally innocent. Tell that to the taxicab drivers, bakers and welders who were sold for bounties and found themselves held and tortured for years at the various US “black sites” around the globe. This bill isn’t so much an “anti-terrorism” bill as it is an “anti-Muslim” bill.
Seeing that the guy who flew his plane into a Texas IRS building (the very definition of Terrorism) was labeled a “tax protester” by our government and media, and our own Homeland Security department is on record saying that Timothy McVeigh (who bombed an Oklahoma government building, killing 168 people, including children) “wasn’t a terrorist“, it should be clear who that epithet refers to.
And if there’s any doubt still remaining, just check Newsweek‘s “handy guide” as to who is and is not a “terrorist”:
Lone wolfish American attacker who sees gov’t as threat to personal freedom: bomber, tax protester, survivalist, separatist
Group of Americans bombing/kidnapping to protest U.S. policies on war/poverty/personal freedom/ – radical left-wing movement, right-wing separatists
All foreign groups or foreign individuals bombing/shooting to protest American gov’t: terrorists
So it should be clear that this bill is specifically designed to more easily arrest “foreigners” (even those who happen to be US citizens), hold them indefinitely without trial, and – what the hell, why not – torture them. White people cannot, by definition, be terrorists. Only brown people can.
Germany Flip-Flops on Greek Bailout
Well, I certainly didn’t expect this. It looks as though Germany is going to rely on the IMF to bail Greece out should the dreaded moment arrive (hint: it will). This does not bode well for the European Union, and indeed, until now, many thought the only way to preserve the integrity of the Euro would be to treat this Greek crisis as an in-house affair. Resorting to IMF loans would do very little to assure investors that the EU is good for its members’ debt, as this basically signals to the rest of the world that Germany (virtually the only healthy economy left in the EU) is either unwilling or unable to shoulder the entire partnership’s burden.
Remember: France, Britain, Spain, Italy, Portugal, Ireland, and Belgium are all facing debt crises of their own, many just as deep, though not as visible, as that of Greece. Germany’s indication that it will not help Greece is effectively a pre-emptive warning to the rest of these countries that when their own respective economies collapse, not to come banging on Germany’s door. Bloomberg reports today that Greece’s Prime Minister has set a deadline for Germany to bail it out, before it goes to the IMF for help. Germany has already indicated that it’s going to let the IMF solve Greece’s problem, effectively rendering that threat moot.
This is big news for several reasons. With Germany, the last healthy EU economy, refusing to bail Greece out, we may be seeing the end of the European Union as a cohesive economic entity. The Euro has been taking a beating ever since fears of a Greek default arose (it’s down more than 10% since this crisis began), and it’s sure to drop further on today’s news. It is unlikely that Greece will default or be forced out of the economic partnership, but if the IMF gets its fingers into Greece, it will only be a matter of time before the rest of the EU comes to the IMF, arms outstretched. Greece will not be the last European country to undergo a debt crisis, as I hope I have shown.
If Greece accepts IMF help, it will be forced into far worse “austerity measures” than anything Germany would have imposed. “Austerity” is generally a euphemism for cutting off social services and indiscriminately firing middle class workers while the rich make off like bandits. Already these measures have caused massive riots and general strikes in Greece, and these are sure to continue if the IMF gets its way.
As always, one can draw a straight line between economic collapse and Wall Street. Many sources have already reported on how Wall Street helped Greece hide its debt for years, and, in fact, encouraged them to take on more debt via “securitized” trades.
But that isn’t all. Wall Street’s “innovative financial instruments” – its Collateralized Debt Obligations and other over-the-counter derivatives – proliferated throughout the European economy, and are at the heart of the myriad debt crises. They made billions selling Europe these worthless junk bonds, and now they’re slowly walking away, whistling, as though they had nothing to do with it. Greece should be demanding massive reparations for the unprecedented fraud of which they, and the rest of the EU, were the victims.
It’s difficult to see where this will end. The IMF bails out Greece instead of Germany – but then what? Portugal, Italy, Spain… then France? What if Britain needs a bailout? Does the IMF have such resources? Are they just going to print the money? Does anyone know what they’re doing?
The Reasoned Review 