The Coming European Debt Wars

http://michael-hudson.com/2010/04/the-coming-european-debt-wars/

Government debt in Greece is just the first in a series of European debt bombs that are set to explode.

The mortgage debts in post-Soviet economies and Iceland are more explosive.  Although these countries are not in the Eurozone, most of their debts are denominated in euros. Some 87% of Latvia’s debts are in euros or other foreign currencies, and are owed mainly to Swedish banks, while Hungary and Romania owe euro-debts mainly to Austrian banks. So their government borrowing by non-euro members has been to support exchange rates to pay these private-sector debts to foreign banks, not to finance a domestic budget deficit as in Greece.

All these debts are unpayably high because most of these countries are running deepening trade deficits and are sinking into depression. Now that real estate prices are plunging, trade deficits are no longer financed by an inflow of foreign-currency mortgage lending and property buyouts. There is no visible means of support to stabilize currencies (e.g., healthy economies). For the past year these countries have supported their exchange rates by borrowing from the EU and IMF. The terms of this borrowing are politically unsustainable: sharp public sector budget cuts, higher tax rates on already over-taxed labor, and austerity plans that shrink economies and drive more labor to emigrate.

Bankers in Sweden and Austria, Germany and Britain are about to discover that extending credit to nations that can’t (or won’t) pay may be their problem, not that of their debtors. No one wants to accept the fact that debts that can’t be paid, won’t be. Someone must bear the cost as debts go into default or are written down, to be paid in sharply depreciated currencies, but many legal experts find debt agreements calling for repayment in euros unenforceable.

Every sovereign nation has the right to legislate its own debt terms, and the coming currency re-alignments and debt write-downs will be much more than mere “haircuts.”

There is no point in devaluing, unless “to excess” – that is, by enough to actually change trade and production patterns. That is why Franklin Roosevelt devalued the US dollar by 75% against gold in 1933, raising its official price from $20 to $35 an ounce. And to avoid raising the U.S. debt burden proportionally, he annulled the “gold clause” indexing payment of bank loans to the price of gold. This is where the political fight will occur today – over the payment of debt in currencies that are devalued. Another byproduct of the Great Depression in the United States and Canada was to free mortgage debtors from personal liability, making it possible to recover from bankruptcy.

Foreclosing banks can take possession of collateral real estate, but do not have any further claim on the mortgagees. This practice – grounded in common law – shows how North America has freed itself from the legacy of feudal-style creditor power and the debtors’ prisons that made earlier European debt laws so harsh.

The question is, who will bear the loss? Keeping debts denominated in euros would bankrupt much local business and real estate. Conversely, re-denominating these debts in local depreciated currency will wipe out the capital of many euro-based banks. But these banks are foreigners, after all – and in the end, governments must represent their own home electorates. Foreign banks do not vote.

Foreign dollar holders have lost 29/30th of the gold value of their holdings since the United States stopped settling its balance-of-payments deficits in gold in 1971. They now receive less than a thirtieth of this, as the price has risen to $1,100 an ounce. If the world can take that, why shouldn’t it take the coming European debt write-downs in stride?

There is growing recognition that the post-Soviet economies were structured from the start to benefit foreign interests, not local economies. For example, Latvian labor is taxed at over 50% (labor, employer, and social tax) – so high as to make it noncompetitive, while property taxes are less than 1%, providing an incentive toward rampant speculation. This skewed tax philosophy made the “Baltic Tigers” and central Europe prime loan markets for Swedish and Austrian banks, but their labor could not find well-paying work at home. Nothing like this (or their abysmal workplace protection laws) is found in the Western European, North American or Asian economies.

It seems unreasonable and unrealistic to expect that large sectors of the New European population can be made subject to salary garnishment throughout their lives, reducing them to a lifetime of debt peonage. Future relations between Old and New Europe will depend on the Eurozone’s willingness to re-design the post-Soviet economies on more solvent lines – with more productive credit and a less rentier-biased tax system that promotes employment rather than asset-price inflation that drives labor to emigrate. In addition to currency realignments to deal with unaffordable debt, the indicated line of solution for these countries is a major shift of taxes off labor onto land, making them more like Western Europe. There is no just alternative. Otherwise, the age-old conflict-of-interest between creditors and debtors threatens to split Europe into opposing political camps, with Iceland the dress rehearsal.

Until this debt problem is resolved – and the only way to resolve it is to negotiate a debt write-off – European expansion (the absorption of New Europe into Old Europe) seems over. But the transition to this future solution will not be easy. Financial interests still wield dominant power over the EU, and will resist the inevitable. Gordon Brown already has shown his colors in his threats against Iceland to illegally and improperly use the IMF as a collection agent for debts that Iceland doesn’t legally owe, and to blackball Icelandic membership in the EU.

Confronted with Mr. Brown’s bullying – and that of Britain’s Dutch poodles – 97% of Icelandic voters opposed the debt settlement that Britain and the Netherlands sought to force down the throat of Allthing members last month. This high a vote has not been seen in the world since the old Stalinist era.

It is only a foretaste. The choice that Europe ends up making will likely drive millions into the streets. Political and economic alliances will shift, currencies will crumble and governments will fall. The European Union and indeed, the international financial system will change in ways yet to be seen. This will be especially the case if nations adopt the Argentina model and refuse to make payment until steep discounts are made.

Paying in euros – for real estate and personal income streams in negative equity, where the debts exceed the current value of income flows available to pay mortgages or for that matter, personal debts – is impossible for nations that hope to maintain a modicum of civil society.

“Austerity plans” IMF and EU style is an antiseptic, technocratic jargon for life-shortening and killing impact of gutting income, social services, spending on health on hospitals, education and other basic needs, and selling off public infrastructure for buyers to turn nations into “tollbooth economies” where everyone is obliged to pay access prices for roads, education, medical care and other costs of living and doing business that have long been subsidized by progressive taxation in North America and Western Europe.

The battle lines are being drawn regarding how private and public debts are to be repaid. For nations that balk at repayment in euros, the creditor nations have their “muscle” waiting in the wings: the credit rating agencies. At the first sign a nation is balking in paying in hard currency, or even at the first hint of it questioning a foreign debt as improper, the agencies will move in to reduce a nation’s credit rating. This will increase the cost of borrowing and threaten to paralyze the economy by starving it for credit.

The most recent shot was fired n April 6 when Moody’s downgraded Iceland’s debt from stable to negative. “Moody’s acknowledged that Iceland might still achieve a better deal in renewed negotiations, but said the current uncertainty was hurting the country’s short-term economic and financial prospects.”

The fight is on. It should be an interesting decade.

*Prof. Hudson is Chief Economic Advisor to the Reform Task Force Latvia (RTFL).

What Have We Done to Democracy?

Of Nearsighted Progress, Feral Howls, Consensus, Chaos, and a New Cold War in Kashmir

By Arundhati Roy

While we're still arguing about whether there's life after death, can we add another question to the cart? Is there life after democracy? What sort of life will it be? By "democracy" I don't mean democracy as an ideal or an aspiration. I mean the working model: Western liberal democracy, and its variants, such as they are.

So, is there life after democracy?

Attempts to answer this question often turn into a comparison of different systems of governance, and end with a somewhat prickly, combative defense of democracy. It's flawed, we say. It isn't perfect, but it's better than everything else that's on offer. Inevitably, someone in the room will say: "Afghanistan, Pakistan, Saudi Arabia, Somalia... is that what you would prefer?"

Whether democracy should be the utopia that all "developing" societies aspire to is a separate question altogether. (I think it should. The early, idealistic phase can be quite heady.) The question about life after democracy is addressed to those of us who already live in democracies, or in countries that pretend to be democracies. It isn't meant to suggest that we lapse into older, discredited models of totalitarian or authoritarian governance. It's meant to suggest that the system of representative democracy -- too much representation, too little democracy -- needs some structural adjustment.

The question here, really, is what have we done to democracy? What have we turned it into? What happens once democracy has been used up? When it has been hollowed out and emptied of meaning? What happens when each of its institutions has metastasized into something dangerous? What happens now that democracy and the free market have fused into a single predatory organism with a thin, constricted imagination that revolves almost entirely around the idea of maximizing profit?

Is it possible to reverse this process? Can something that has mutated go back to being what it used to be? What we need today, for the sake of the survival of this planet, is long-term vision. Can governments whose very survival depends on immediate, extractive, short-term gain provide this? Could it be that democracy, the sacred answer to our short-term hopes and prayers, the protector of our individual freedoms and nurturer of our avaricious dreams, will turn out to be the endgame for the human race? Could it be that democracy is such a hit with modern humans precisely because it mirrors our greatest folly -- our nearsightedness?

Our inability to live entirely in the present (like most animals do), combined with our inability to see very far into the future, makes us strange in-between creatures, neither beast nor prophet. Our amazing intelligence seems to have outstripped our instinct for survival. We plunder the earth hoping that accumulating material surplus will make up for the profound, unfathomable thing that we have lost. It would be conceit to pretend I have the answers to any of these questions. But it does look as if the beacon could be failing and democracy can perhaps no longer be relied upon to deliver the justice and stability we once dreamed it would.

Arundhati Roy was born in 1959 in Shillong, India. She studied architecture in New Delhi, where she now lives. She has worked as a film designer and screenplay writer in India. Roy is the author of the novel The God of Small Things, for which she received the 1997 Booker Prize. Her new book, just published by Haymarket Books, is Field Notes on Democracy: Listening to Grasshoppers. This post is adapted from the introduction to that book.

Tomgram: Arundhati Roy, Is Democracy Melting?

So you, as a citizen, want to run for a seat in the House of Representatives? Well, you may be too late. Back in 1990, according to OpenSecrets.org, a website of the Center for Responsive Politics, the average cost of a winning campaign for the House was $407,556. Pocket change for your average citizen. But that was so twentieth century. The average cost for winning a House seat in 2008: almost $1.4 million. Keep in mind, as well, that most of those House seats don't change hands, because in the American democratic system of the twenty-first century, incumbents basically don't lose, they retire or die.

In 2008, 403 incumbents ran for seats in the House and 380 of them won. Just to run a losing race last year would have cost you, on average, $492,928, almost $100,000 more than it cost to win in 1990. As for becoming a Senator? Not in your wildest dreams, unless you have some really good pals in pharmaceuticals and health care ($236,022,031 in lobbying paid out in 2008), insurance ($153,694,224), or oil and gas ($131,978,521). A winning senatorial seat came in at a nifty $8,531,267 and a losing seat at $4,130,078 in 2008. In other words, you don't have a hope in hell of being a loser in the American Congressional system, and what does that make you?

Of course, if you're a young, red-blooded American, you may have set your sights a little higher. So you want to be president? In that case, just to be safe for 2012, you probably should consider raising somewhere in the range of one billion dollars. After all, the 2008 campaign cost Barack Obama's team approximately $730 million and the price of a place at the table just keeps going up. Of course, it helps to know the right people. Last year, the total lobbying bill, including money that went out for electoral campaigns and for lobbying Congress and federal agencies, came to $3.3 billion and almost 9 months into 2009, another $1.63 billion has already gone out without an election in sight.

Let's face it. At the national level, this is what American democracy comes down to today, and this is what George W. Bush & Co. were so infernally proud to export by force of arms to Afghanistan and Iraq. This is why we need to think about the questions that Arundhati Roy -- to my mind, a heroic figure in a rather unheroic age -- raises about democracy globally in an essay adapted from the introduction to her latest book. That book, Field Notes on Democracy: Listening to Grasshoppers, has just been published (with one essay included that originally appeared at TomDispatch). Let's face it, she's just one of those authors -- I count Eduardo Galeano as another -- who must be read. Need I say more? Tom

The Inner Workings of the Monetary System

A review of Ellen Brown's book
By Stephen Lendman

This is the first of several articles on Ellen Brown's superb 2007 book titled "Web of Debt," now updated in a December 2008 third edition. It tells "the shocking truth about our money system, (how it) trapped us in debt, and how we can break free." Given today's global economic crisis, it's an appropriate time to review it and urge readers to digest the entire work, easily gotten through Amazon or Brown's webofdebt.com site. Her book is a remarkable achievement - in its scope, depth, and importance.

In the forward, banker/developer Reed Simpson said:

"I have been a banker for most of my career, and I can report that even most bankers (don't know) what goes on behind (top echelon) closed doors....I am more familiar than most with the issues (Brown covered, and) still found it an eye-opener, a remarkable window into what is really going on....(Although many banks follow high ethical practices), corruption is also rampant, (especially) in the large money center banks, in one of which I worked."

"Credible evidence (reveals) a world (banking) power elite intent on gaining absolute control over the planet and its natural resources, including its subservient human (ones)." Money is their "lifeblood," and "fear (their) weapon." Ill-used, they can "enslave nations and ensure perpetual wars and bondage." Brown exposes the scheme and offers a solution.

Debt Bondage

What president Andrew Jackson called "a hydra-headed monster...." entraps entire nations in debt. Financial commentator Hans Schicht listed how:

• by making concentrated wealth invisible,


• "exercising control through leverage(d) mergers, takeovers" or other holdings "annexed to loans;" and


• using a minimum of insider front-men to exercise "tight personal management and control."

Powerful bankers want to rule the world by creating and controlling money, the very lifeblood of world economies without which commerce would cease. Professor Henry Liu calls the monetary system a "cruel hoax" in that (except for government issued coins) "there is virtually no 'real' money in the system, only debts" - to bankers "for money they created with accounting entries....all done by a sleight of hand," only possible because governments empowered them to do it.

The solution is simple but untaken. As the Constitution mandates, money-creation power must "be returned to the government and the people it represents." Imagine the possibilities:

• the federal debt could be eliminated, at least a more manageable amount before it mushroomed to stratospheric levels;


• federal income taxes could as well; entirely for low and middle income people and at least substantially overall;


• "social programs could be expanded....without sparking runaway inflation;" and


• financial resources would be available to grow the nation economically and produce stable prosperity.

It's not pie-in-the-sky. It happened successfully under Abraham Lincoln and early colonists. More on that below.

Brown's book explains that:

• the Federal Reserve isn't federal; it's a private banking cartel owned by its major bank members in 12 Fed districts;


• except for coins, they "create" money called Federal Reserve notes, in violation of the Constitution under Article I, Section 8 that gives Congress alone the right "To coin (create) money (and) regulate the value thereof....;"


• "tangible currency (coins and paper money comprise) less than 3 percent of the US money supply;" the rest is in computer entries for loans;


• money that banks lend is "new money" that didn't exist before;


• 30% of bank-created money "is invested for their own accounts;"


• banks once made productive loans for industrial development; today they're "a giant betting machine" using countless trillions for high-risk casino-type operations - through devices like derivatives and securitization scams;


• since Andrew Jackson's presidency (1829 - 1837), the federal debt hasn't been paid, only the interest - to private bankers and other owners of US obligations;


• the 16th Amendment authorized Congress to levy an income tax; it was done "to coerce (the public) to pay interest to the banks on the federal debt;"


• the amount has mushroomed to about $500 billion annually and keeps rising;


• creating money doesn't cause inflation; it's "caused by banks expanding the money supply with loans;"


• developing nations' inflation was caused "by global institutional speculators attacking local currencies and devaluing them on international markets;"


• it could happen in America or anywhere else just as easily; and


• escaping this trap is simple if Washington reclaims its money-issuing power; early colonists did it; so did Lincoln.

As long as bankers control our money, we'll remain in a permanent "web of debt" and experience cycles of boom, bust, inflation, deflation, instability and crisis. Yet none of this has to be nor repeated and inevitable bubbles - created by design, not chance, to advantage empowered "moneychangers," much like today with its fallout causing global havoc.

Prior to the Fed's creation, the House of Morgan was dominant in contrast to the early colonists' model. Operating out of Philadelphia, the nation's first capital, it favored state-issued and loaned out money, collecting the interest, and "return(ing) it to the provincial government" in lieu of taxes.

Lincoln used the same system to finance the Civil War, after which he was assassinated and bankers reclaimed their money-issuing power. Wall Street's "silent coup (was) the passage of the (1913) Federal Reserve Act," the most destructive ever congressional legislation, thereafter extracting a huge toll amounting to permanent debt bondage with national wealth transference from the public to private bankers - with most people none the wiser.

Continue reading here

U-20: Will the Global Economy Resurface?

Foreign Policy In Focus

By Walden Bello

The Group of 20 (G20) is making a big show of getting together to come to grips with the global economic crisis. But here's the problem with the upcoming summit in London on April 2: It's all show. What the show masks is a very deep worry and fear among the global elite that it really doesn't know the direction in which the world economy is heading and the measures needed to stabilize it.

The latest statistics are exceeding even the gloomiest projections made earlier. Establishment analysts are beginning to mention the dreaded "D" word and there is a spreading sense that a tidal wave just now gathering momentum will simply overwhelm the trillions of dollars allocated for stimulus spending. In this environment, the G20 conveys the impression that they're more commanded by than in command of developments (In addition to the seven wealthy industrial nations that belong to the G7, the G20 includes China, India, Indonesia, Mexico, Brazil, Argentina, Russia, Saudi Arabia, Australia, South Korea, Turkey, Italy, and South Africa.).

Indeed, perhaps no image is more evocative of the current state of the global economy than that of a World War II German U-Boat depth-charged in the North Atlantic by British destroyers. It's going down fast, and the crew doesn't know when it will hit rock bottom. And when it does hit the ocean floor, the big question is: Will the crew be able to make the submarine rise again by pumping compressed air into the severely damaged ballast tanks, like the sailors in Wolfgang Petersen's classic film Das Boot? Or will the U-Boat simply stay at the bottom, its crew doomed to contemplate a fate worse than sudden death?

The current capitalist crew manning the global economy doesn't know whether Keynesian methods can re-inflate the global economy. Meanwhile, an increasing number of people are asking whether using a clutch of Social Democratic-like reforms is enough to repair the global economy, or whether the crisis will lead to a new international economic order.

A New Bretton Woods?

The G20 meeting has been trumpeted as a new "Bretton Woods." In July 1944, in Bretton Woods, New Hampshire, representatives of the state-managed capitalist economies designed the postwar multilateral order with themselves at the center.

In fact, the two meetings couldn't be further apart.

The London meeting will last one day; the Bretton Woods conference was a tough 21-day working session.

The London meeting is exclusive, with 20 governments arrogating to themselves the power to decide for 172 other countries. The Bretton Woods meeting tried hard to be inclusive to avoid precisely the illegitimacy that dogs the G20's London tryst. Even in the midst of global war, it brought together 44 countries, including the still-dependent Commonwealth of the Philippines and the tiny, now-vanished Siberian state of Tannu Tuva.

The Bretton Woods Conference created new multilateral institutions and rules to manage the postwar world. The G20 is recycling failed institutions: the G20 itself, the Financial Stability Forum (FSF), the Bank of International Settlements and "Basel II," and the now 65-year-old International Monetary Fund (IMF). Some of these institutions were established by the elite Group of 7 after the 1997 Asian financial crisis to come up with a new financial architecture that would prevent a repetition of the debacle brought about by IMF policies of capital account liberalization. But instead of coming up with safeguards, all these institutions bought the global financial elite's strategy of "self-regulation."

Among the mantras they thus legitimized were that capital controls were bad for developing economies; short-selling, or speculating on the movement of borrowed stocks, was a legitimate market operation; and derivatives — or securities that allow betting on the movements of an underlying asset — "perfected" the market. The implicit recommendation of their inaction was that the best way to regulate the market was to leave it to market players, who had developed sophisticated but allegedly reliable models of "risk assessment."

In short, institutions that were part of the problem are now being asked to become the central part of the solution. Unwittingly, the G20 are following Marx's maxim that history first repeats itself as tragedy, then as farce.

Resurrecting the Fund

The most problematic component of the G20 solution is its proposals for the International Monetary Fund (IMF). The United States and the European Union are seeking an increase in the capital of the IMF from $250 billion to $500 billion. The plan is for the IMF to lend these funds to developing countries to use to stimulate their economies, with U.S. Treasury Secretary Tim Geithner proposing that the Fund supervise this global exercise.

If ever there was a non-starter, this is it.

First of all, the representation question continues to exercise much of the global South. So far, only marginal changes have been made in the allocation of voting rights at the IMF. Despite the clamor for greater voting power for members from the global South, the rich countries are still overrepresented on the Fund's decision-making executive board and developing countries, especially those in Asia and Africa, are vastly underrepresented. Europe holds a third of the chairs in the executive board and claims the feudal right to have a European always occupy the role of managing director. The United States, for its part, has nearly 17% of voting power, giving it veto power.

Second, the IMF's performance during the Asian financial crisis of 1997, more than anything, torpedoed its credibility. The IMF helped bring about the crisis by pushing the Asian countries to eliminate capital controls and liberalize their financial sectors, promoting both the massive entry of speculative capital as well as its destabilizing exit at the slightest sign of crisis. The Fund then pushed governments to cut expenditures, on the theory that inflation was the problem, when it should have been pushing for greater government spending to counteract the collapse of the private sector. This pro-cyclical measure ended up accelerating the regional collapse into recession. Finally, the billions of dollars of IMF rescue funds went not to rescuing the collapsing economies but to compensate foreign financial institutions for their losses — a development that has become a textbook example of "moral hazard" or the encouragement of irresponsible lending behavior.

Thailand paid off the IMF in 2003 and declared its "financial independence." Brazil, Venezuela, and Argentina followed suit, and Indonesia also declared its intention to repay its debts as quickly as possible. Other countries likewise decided to stay away, preferring to build up their foreign exchange reserves to defend themselves against external developments rather than contract new IMF loans. This led to the IMF's budget crisis, for most of its income was from debt payments made by the bigger developing countries.

Partisans of the Fund say that the IMF now sees the merit of massive deficit spending and that, like Richard Nixon, it can now say, "we are all Keynesians now." Many critics do not agree. Eurodad, a non-governmental organization that monitors IMF loans, says that the Fund still attaches onerous conditions to loans to developing countries. Very recent IMF loans also still encourage financial and banking liberalization. And despite the current focus on fiscal stimulus — with some countries, like the United States, pushing for governments to raise their stimulus spending to at least 2% of GDP — the IMF still requires low income borrowers to keep their deficit spending to no more than 1% of GDP.

Finally, there is the question of whether or not the Fund knows what it's doing. One of the key factors discrediting the IMF has been its almost total inability to anticipate the brewing financial crisis. In concluding the 2007 Article IV consultation with the United States, the IMF board stated that "[t]he financial system has shown impressive resilience, including to recent difficulties in the subprime mortgage market." In short, the Fund hasn't only failed miserably in its policy prescriptions, but despite its supposedly top-flight stable of economists, it has drastically fallen short in its surveillance responsibilities.

However large the resources the G20 provide the IMF, there will be little international buy-in to a global stimulus program managed by the Fund.

The Way Forward

The North's response to the current crisis, which is to revive fossilized institutions, is reminiscent of Keynes' famous saying: "The difficulty lies not so much in developing new ideas as in escaping from old ones." So, in Keynes' spirit, let's try to identify ways of abandoning old ways of thinking.

First of all, since legitimacy is a very scarce commodity at this point, the UN secretary general and the UN General Assembly — rather than the G20 — should convoke a special session to design the new global multilateral order. A Commission of Experts on Reforms to the International Monetary and Financial System, set up by the president of the General Assembly and headed by Nobel Prize laureate Joseph Stiglitz, has already done the preparatory policy work for such a meeting. The meeting would be an inclusive process like the Bretton Woods Conference, and like Bretton Woods, it should be a working session lasting several weeks. One of the key outcomes might be the setting up of a representative forum such as the "Global Coordination Council" suggested by the Stiglitz Commission that would broadly coordinate global economic and financial reform.

Second, to immediately assist countries to deal with the crisis, the debts of developing countries to Northern institutions should be cancelled. Most of these debts, as the Jubilee movement reminds us, were contracted under onerous conditions and have already been paid many times over. Debt cancellation or a debt moratorium will allow developing countries access to greater resources and will have a greater stimulus effect than money channeled through the IMF.

Third, regional structures to deal with financial issues, including development finance, should be the centerpiece of the new architecture of new global governance, not another financial system where the countries of the North dominate centralized institutions like the IMF and monopolize resources and power. In East Asia, the "ASEAN Plus Three" Grouping, or "Chiang Mai Initiative," is a promising development that needs to be expanded, although it also needs to be made more accountable to the peoples of the region. In Latin America, several promising regional initiatives are already in progress, like the Bolivarian Alternative for the Americas and the Bank of the South. Any new global order must have socially accountable regional institutions as its pillars.

These are, of course, immediate steps to be made in the context of a longer-term, more fundamental and strategic reconfiguration of a global capitalist system now on the verge of collapsing. The current crisis is a grand opportunity to craft a new system that ends not just the failed system of neoliberal global governance but the Euro-American domination of the capitalist global economy, and put in its place a more decentralized, deglobalized, democratic post-capitalist order. Unless this more fundamental restructuring takes place, the global economy might not be worth bringing back to the surface.

Foreign Policy In Focus columnist Walden Bello is president of the Freedom from Debt Coalition, senior analyst at the Bangkok-based Focus on the Global South, and professor of sociology at the University of the Philippines.

The Market Wizards Were Exposed as Frauds

Too Bad Obama's Team Still Believes in Their Magic

By Paul Krugman

The New York Times / AlterNet.Org

The Obama administration thinks a little regulatory tinkering will take Wall Street back to its glory days of fraudulent finance.

On Monday, Lawrence Summers, the head of the National Economic Council, responded to criticisms of the Obama administration’s plan to subsidize private purchases of toxic assets. “I don’t know of any economist,” he declared, “who doesn’t believe that better functioning capital markets in which assets can be traded are a good idea.”

Leave aside for a moment the question of whether a market in which buyers have to be bribed to participate can really be described as “better functioning.” Even so, Mr. Summers needs to get out more. Quite a few economists have reconsidered their favorable opinion of capital markets and asset trading in the light of the current crisis.

But it has become increasingly clear over the past few days that top officials in the Obama administration are still in the grip of the market mystique. They still believe in the magic of the financial marketplace and in the prowess of the wizards who perform that magic.

The market mystique didn’t always rule financial policy. America emerged from the Great Depression with a tightly regulated banking system, which made finance a staid, even boring business. Banks attracted depositors by providing convenient branch locations and maybe a free toaster or two; they used the money thus attracted to make loans, and that was that.

And the financial system wasn’t just boring. It was also, by today’s standards, small. Even during the “go-go years,” the bull market of the 1960s, finance and insurance together accounted for less than 4 percent of G.D.P. The relative unimportance of finance was reflected in the list of stocks making up the Dow Jones Industrial Average, which until 1982 contained not a single financial company.

It all sounds primitive by today’s standards. Yet that boring, primitive financial system serviced an economy that doubled living standards over the course of a generation.

After 1980, of course, a very different financial system emerged. In the deregulation-minded Reagan era, old-fashioned banking was increasingly replaced by wheeling and dealing on a grand scale. The new system was much bigger than the old regime: On the eve of the current crisis, finance and insurance accounted for 8 percent of G.D.P., more than twice their share in the 1960s. By early last year, the Dow contained five financial companies — giants like A.I.G., Citigroup and Bank of America.

And finance became anything but boring. It attracted many of our sharpest minds and made a select few immensely rich.

Underlying the glamorous new world of finance was the process of securitization. Loans no longer stayed with the lender. Instead, they were sold on to others, who sliced, diced and puréed individual debts to synthesize new assets. Subprime mortgages, credit card debts, car loans — all went into the financial system’s juicer. Out the other end, supposedly, came sweet-tasting AAA investments. And financial wizards were lavishly rewarded for overseeing the process.

But the wizards were frauds, whether they knew it or not, and their magic turned out to be no more than a collection of cheap stage tricks. Above all, the key promise of securitization — that it would make the financial system more robust by spreading risk more widely — turned out to be a lie. Banks used securitization to increase their risk, not reduce it, and in the process they made the economy more, not less, vulnerable to financial disruption.

Sooner or later, things were bound to go wrong, and eventually they did. Bear Stearns failed; Lehman failed; but most of all, securitization failed.

Which brings us back to the Obama administration’s approach to the financial crisis.

Much discussion of the toxic-asset plan has focused on the details and the arithmetic, and rightly so. Beyond that, however, what’s striking is the vision expressed both in the content of the financial plan and in statements by administration officials. In essence, the administration seems to believe that once investors calm down, securitization — and the business of finance — can resume where it left off a year or two ago.

To be fair, officials are calling for more regulation. Indeed, on Thursday Tim Geithner, the Treasury secretary, laid out plans for enhanced regulation that would have been considered radical not long ago.

But the underlying vision remains that of a financial system more or less the same as it was two years ago, albeit somewhat tamed by new rules.

As you can guess, I don’t share that vision. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try.

CAPTURED BY THE DEBT SPIDER

Web of Debt
By Ellen Hodgson Brown

Read the Introduction for an eye-opening look at what's really going on with your money!

President Andrew Jackson called the banking cartel a "hydra-headed monster eating the flesh of the common man." New York Mayor John Hylan, writing in the 1920s, called it a "giant octopus" that "seizes in its long and powerful tentacles our executive officers, our legislative bodies, our schools, our courts, our newspapers, and every agency created for the public protection." The debt spider has devoured farms, homes and whole countries that have become trapped in its web. In a February 2005 article called "The Death of Banking," financial commentator Hans Schicht wrote:

The fact that the Banker is allowed to extend credit several times his own capital base and that the Banking Cartels, the Central Banks, are licensed to issue fresh paper money in exchange for treasury paper, [has] provided them with free lunch for eternity. . . . Through a network of anonymous financial spider webbing only a handful of global King Bankers own and control it all. . . . Everybody, people, enterprise, State and foreign countries, all have become slaves chained to the Banker's credit ropes.1

Schicht writes that he had an opportunity in his career to observe the wizards of finance as an insider at close range. The game has gotten so centralized and concentrated, he says, that the greater part of U.S. banking and enterprise is now under the control of a small inner circle of men. He calls the game "spider webbing." Its rules include:

• Making any concentration of wealth invisible.
• Exercising control through "leverage" – mergers, takeovers, chain share holdings where one company holds shares of other companies, conditions annexed to loans, and so forth.
• Exercising tight personal management and control, with a minimum of insiders and front-men who themselves have only partial knowledge of the game.

The late Dr. Carroll Quigley was a writer and professor of history at Georgetown University, where he was President Bill Clinton's mentor. Dr. Quigley wrote from personal knowledge of an elite clique of global financiers bent on controlling the world. Their aim, he said, was "nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole." This system was "to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements."2 He called this clique simply the "international bankers." Their essence was not race, religion or nationality but was just a passion for control over other humans. The key to their success was that they would control and manipulate the money system of a nation while letting it appear to be controlled by the government.

The international bankers have succeeded in doing more than just controlling the money supply. Today they actually create the money supply, while making it appear to be created by the government. This devious scheme was revealed by Sir Josiah Stamp, director of the Bank of England and the second richest man in Britain in the 1920s. Speaking at the University of Texas in 1927, he dropped this bombshell:

The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.3 Read more

Excerpts
Introduction
Table of Contents
Foreword by Reed Simpson
Chapter 1 — "Lessons FromThe Wizard Of Oz"
Chapter 22 — "The Tequila Trap: The Real Story Behind the Illegal Alien Invasion"

Web of Debt:

The Shocking Truth About Our Money System
and How We Can Break Free

Ellen Hodgson Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown developed an interest in the developing world and its problems while living abroad for eleven years in Kenya, Honduras, Guatemala and Nicaragua. She returned to practicing law when she was asked to join the legal team of a popular Tijuana healer with an innovative cancer therapy, who was targeted by the chemotherapy industry in the 1990s. That experience produced her book Forbidden Medicine, which traces the suppression of natural health treatments to the same corrupting influences that have captured the money system. Brown's eleven books include the bestselling Nature's Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies.

EXPLODING THE MYTHS ABOUT MONEY

Our money system is not what we have been led to believe. The creation of money has been "privatized," or taken over by a private money cartel. Except for coins, all of our money is now created as loans advanced by private banking institutions — including the private Federal Reserve. Banks create the principal but not the interest to service their loans. To find the interest, new loans must continually be taken out, expanding the money supply, inflating prices — and robbing you of the value of your money.

Not only is virtually the entire money supply created privately by banks, but a mere handful of very big banks is responsible for a massive investment scheme known as "derivatives," which now tallies in at hundreds of trillions of dollars. The banking system has been contrived so that these big banks always get bailed out by the taxpayers from their risky ventures, but the scheme has reached its mathematical limits. There isn't enough money in the entire global economy to bail out the banks from a massive derivatives default today. When the investors realize that the "insurance" against catastrophe that they have purchased in the form of derivatives is worthless, they are liable to jump ship and bring the whole shaky edifice crashing down.

Web of Debt unravels the deceptions in our money scheme and presents a crystal clear picture of the financial abyss towards which we are heading. Then it explores a workable alternative, one that was tested in colonial America and is grounded in the best of American economic thought, including the writings of Benjamin Franklin, Thomas Jefferson and Abraham Lincoln. If you care about financial security, your own or the nation's, you should read this book.

YES! Magazine Online: Path to a New Economy

Laissez-Faire Capitalism

Should Be as Dead as Soviet Communism

by Arianna Huffington

The collapse of Communism as a political system sounded the death knell for Marxism as an ideology. But while laissez-faire capitalism has been a monumental failure in practice, and soundly defeated at the polls, the ideology is still alive and kicking.

The only place you can find an American Marxist these days is teaching a college linguistic theory class. But you can find all manner of free market fundamentalists still on the Senate floor or in Governor's mansions or showing up on TV trying to peddle the deregulation snake oil.

Take Sen. John Ensign, chairman of the National Republican Senatorial Committee, who went on Face the Nation and, with a straight face, said of the economic meltdown: "Unfortunately, it was allowed to be portrayed that this was a result of deregulation, when in fact it was a result of overregulation."

Or Gov. Mark Sanford, who told Joe Scarborough he was against bailing out the auto industry because it would "threaten the very market-based system that has created the wealth that this country has enjoyed."

If a politician announced he was running on a platform of "from each according to his ability, to each according to his need" he would be laughed off the stage. That is also the correct response to anyone who continues to make the case that markets do best when left alone.

It's time to drive the final nail into the coffin of laissez-faire capitalism by treating it like the discredited ideology it inarguably is. If not, the Dr. Frankensteins of the right will surely try to revive the monster and send it marauding through our economy once again.

We've only just begun to bury the financially dead, and the free market fundamentalists are already looking to deflect the blame.

In a comprehensive piece on what led to the mortgage crisis and the subsequent financial meltdown, the New York Times shows how the Bush administration's devotion to unregulated markets was a primary cause of our economy to ruin. But the otherwise fascinating piece puts too much focus on the "mistakes" the Bush team made by not paying attention to the warning signs popping up all around them.

"There is no question we did not recognize the severity of the problems," claimed Al Hubbard, Bush's former chief economic adviser. "Had we, we would have attacked them."

But the mistake wasn't in not recognizing the "severity of the problems" -- the mistake was the ideology that led to the problems. Communism didn't fail because Soviet leaders didn't execute it well enough. Same with free market fundamentalism. In fact, Bush and his team did a bang-up job executing a defective theory. The problem wasn't just the bathwater; the baby itself is rotten to the core.

William Seidman, the longtime GOP economic advisor who oversaw the S&L bailout in 1991, cuts to the chase: "This administration made decisions that allowed the free market to operate as a barroom brawl instead of a prize fight. To make the market work well, you have to have a lot of rules."

Even Alan Greenspan, whose owl-eyed visage would adorn a Mount Rushmore of unregulated capitalists, has begun to see the light, telling a House committee in October that he "made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms."

But most Republicans are still refusing to see what's right in front of them. Especially Bush, our CEO president, who lays the blame not on the failures of the marketplace but on past administrations and corporate greed. "Wall Street got drunk," he says. Maybe so, but who made the last 8 years Happy Hour, and kept serving up the drinks?

Last week, Ben Smith reported that the GOP was launching "a new, in-house think tank aimed at reviving the party's policy heft." In a private memo explaining the think tank, RNC chairman Mike Duncan wrote: "We must show how our ideology can be applied to solve problems." But, of course, it's that very ideology that's causing the problems. It's like the old horror movie cliché: "We've traced the call -- it's coming from inside the house!"

We've got to do everything we can to make sure there will be no sequels to this political horror. The blame shifters cannot be allowed to make their case without the truth being pointed out at every turn. It's time to relegate free market fundamentalists to the same standing as Marxist ideologues: intellectual curiosities occasionally trotted out as relics of a failed philosophy.

The American Financial Regime

CARD CHECK: "You have nothing to lose but your chains"
by Mike Whitney

Even though the Federal Reserve is now the biggest single participant in the financial system, the myth of a "free market" still lingers on. It's mind boggling. The Fed has expanded its balance sheet by $2 trillion, guaranteed $8.3 trillion of dodgy mortgage-backed paper, provided a backstop for bank deposits, money markets, commercial paper, and created 8 separate lending facilities to ensure that underwater financial institutions can still appear to be solvent. The whole system is a state subsidized operation buoyed on a taxpayer-provided flotation device which bears no resemblance to an invisible hand. More astonishing, is the massive power grab engineered by the Fed which has taken place without the slightest protest from 535 shell-shocked congressmen and senators. Elected officials have either kept their finger in the air to see which way the political wind is blowing or timidly caved in to Treasury's every multi-billion dollar demand. It's flagrant blackmail and everyone knows it. Congressional oversight is an oxymoron.

Anyone who has followed the financial crisis from its origins knows that the Fed's bloody fingerprints are all over the crime scene. Still, that hasn't stopped well-meaning liberal economists (Krugman, Stiglitz, Reich) from supporting Bernanke's increasingly unorthodox attempts to flood the financial system with liquidity ("quantitative easing") and invoke whatever radical strategy pops into his head. In fact, many of the experts believe that Bernanke should do even more given the sheer size of the meltdown. There's growing support for a gigantic stimulus package ($700 billion) which will focus on road construction, infrastructure, state aid, extensions to unemployment benefits and green technologies. The Obama camp hopes that government programs and deficit spending will make up for the huge losses in aggregate demand which threaten to drag prices down even further in a self-reinforcing deflationary cycle. Even so, its natural to wonder at the wisdom of giving even more power to the very people who created the mess to begin with and who seem more interested in proving their depression-fighting theories than throwing a lifeline to struggling homeowners, consumers or auto workers. Maybe its time to try something different.

So far, Bernanke's monetarist approach has amounted to nothing. The stock indexes are off 45 percent and housing prices continue to plunge. The Fed's low interest rates and lending facilities have helped to keep the banking system from collapsing, but they've failed to get consumers or businesses spending again. The economy is tanking fast. Paul L. Kasriel, the Director of Economic Research at The Northern Trust Company summed up Bernanke's dilemma like this:

"In a sustained housing bust that causes banks to take a big hit to their capital (low interest rates) simply will not matter. This is essentially what happened recently in Japan and also in the US during the Great Depression. Most people are not aware of actions the Fed took during the Great Depression. Bernanke claims that the Fed did not act strong enough during the great depression. This is simply not true. The Fed slashed interest rates and injected huge sums of base money but it did no good. More recently, Japan did the same thing. It also did no good. If default rates get high enough, banks will simply be unwilling to lend which will severely limit money and credit creation." (Interview with Paul Kasriel; Mish's Global Economic Trend Analysis)

In fact, the banks are just one part of the problem. Another part is the shortage of creditworthy borrowers now that home equity is drying up and the standards for loans have gotten tougher. Most people have seen their personal wealth vanish as hosuing prices fall and and their 401-Ks shrivel to the size of a chickpea. The Fed chairman faces huge obstacles in trying to restart the credit engine and get maxed out consumers spending again.

Bernanke has expanded the money supply at record pace, but to little effect. The money is stagnating in pools because the financial plumbing is still gunked up from troubles in the banking system. The credit-transmission system has broken down causing a generalized contraction throughout the economy. Business activity has dropped off a cliff and consumer confidence is at a 40 year low. In his Forbes article "What Would Keynes Do?", Former Treasury Department economist, Bruce Bartlett, sheds light on a part of the problem which many of the pundits miss:

"Another problem that policymakers back then didn't grasp is that the money supply's effectiveness depends on how quickly people spend it; something economists call velocity. If velocity falls because people are hoarding cash, it may require a great deal more money to keep the economy operating.

Think of it this way: Velocity is the ratio of the money supply to the gross domestic product. If GDP is $10 trillion and money turns over 10 times per year, then $1 trillion in money supply will be sufficient. But if velocity falls to 9, a $1 trillion money supply will only support a $9 trillion GDP. If the Fed doesn't want GDP to shrink by 10%, it will have to increase the money supply by 10%.

This is essentially the problem we have today. Unlike in the 1930s, the Fed is not allowing the money supply to diminish. Also, we have programs like federal deposit insurance to prevent bank deposits from shrinking. But velocity is collapsing. Banks, businesses and households are all hoarding cash, not spending except for essentials. This is bringing on the deflation that is crippling the economy."

This is why Bernanke has launched his radical intervention, buying bonds, stocks and anything else that will keep asset-prices from crashing. It's an attempt to reignite spending by goosing the market. When businesses and consumers can't sustain demand, the government has to step in and take their place. Otherwise, businesses have to cut costs even more dramatically, sending unemployment soaring while prices continue to nosedive.

The real worry is that Bernanke's pet theory is merely an academic pipe-dream which is doing more harm than good. After all, his strategy is based on a controversial reading of history that is only accepted by disciples of Milton Friedman. The idea that a normal recession morphed into the Great Depression because the money supply decreased by one-third between 1929 to 1932, is likely an oversimplification of a very complex situation. If Bernanke's calculations are correct, then show us the goods? Why haven't the zero-percent interest rates and the trillion dollar lending facilities stimulated spending? Instead, the equities markets continue to tumble, corporate profits are down, foreclosures are on the rise, commodities are in freefall, and the unemployment lines are winding halfway across the continent. (Unemployment during the Great Depression didn't reach 25 percent for three years. It is actually accelerating faster in 2008 than it did in 1929) So, where's the progress, Ben?

The present list of remedies fail to address the underlying rot in the system itself. That's the problem. There's no doubt that Timothy Geithner and Larry Summers will have better luck mitigating the effects of the slumping economy, but to what end? To stitch together a system which diverts a larger and larger portion of the national wealth to a smaller and smaller group of corporatist and bankers? Is that the measure of success?

(Note: Redistribution US Style: In the United States the top 1 percent of wealth holders in 2001 together owned more than twice as much as the bottom 80 percent of the population. If this were measured simply in terms of financial wealth, i.e., excluding equity in owner-occupied housing, the top 1 percent owned more than four times the bottom 80 percent!)

No thanks. Besides, the financial crisis is not an accident of nature, like a tornado or an avalanche. It's a self-inflicted wound that can be traced back to particular policies that were put in place to shift wealth from one class to another. The low interest rates, the massive leveraging, the undercapitalized institutions, the off-balance sheets operations were all concocted with the same objective in mind. The Fed's repertoire may change, but the results are always the same; they reflect the deeply-held class bias which orders the economy according to the interests of rich and powerful.

Besides, there's reason to believe that Bernanke doesn't fully grasp the fundamental problem, that economic growth in recent years was predicated on a flawed model that can't be restored. Consumers were able to spend beyond their means because their personal assets were greatly inflated by the availability of easy credit and lax lending standards. Now that risk is being repriced, debt deflation has set in and prices are plummeting across the spectrum. Homeowners are feeling the pinch because they can't tap into their home equity which amounted to $800 billion in 2006. The process of lowering interest rates by spreading risk throughout the system (securitization) has frozen over, sending investors fleeing from the stock markets to the safety of US Treasurys and cold hard cash. Bernanke's attempts to reflate the bubble by buying up Fannie and Freddie's mortgage-backed securities (MBS) and bundled credit card debt from finance companies is a sign of utter desperation. He's like a man pumping air into a punctured tire, pushing up and down furiously while the air hisses out the other side.

The economy is contracting because the excessive spending was based on artificially low interest rates and debt leveraging. In The End of Prosperity Fred Magdoff and Paul Sweezy wrote:

“In the absence of a severe depression during which debts are forcefully wiped out or drastically reduced, government rescue measures to prevent collapse of the financial system merely lay the groundwork for still more layers of debt and additional strains during the next economic advance.” As Minsky put it, “Without a crisis and a debt-deflation process to offset beliefs in the success of speculative ventures, both an upward bias to prices and ever-higher financial layering are induced." (John Bellamy and Fred Magdoff, "Financial Implosion and Stagnation", Monthly Review)

This is the market model that Bernanke and Paulson are trying to resuscitate, but without much success. The credit that once gushed from the hedge funds and investment banks has slowed to a trickle. It's no longer possible to take complex debt-instruments and amplify their value 30 or 40 times over. Investors have seen through the swindle and boycotted the market for pools of debt packaged as securities. As foreclosures rise, the banks balance sheets will continue to hemorrhage, forcing them to make margin calls that will push more and more financial institutions into bankruptcy. It can't be stopped. This is what happens when the underlying economy can no longer support an oversized financial system where wages have stagnated and workers are unable to make the interest payments of their loans. The whole system begins to buckle. John Bellamy and Fred Magdoff explain the origins of "financialization" in their article "Financial Implosion and Stagnation":

"It was the reality of economic stagnation beginning in the 1970s, as heterodox economists Riccardo Bellofiore and Joseph Halevi have recently emphasized, that led to the emergence of “the new financialized capitalist regime,” a kind of “paradoxical financial Keynesianism” whereby demand in the economy was stimulated primarily “thanks to asset-bubbles.” Moreover, it was the leading role of the United States in generating such bubbles—despite (and also because of) the weakening of capital accumulation proper—together with the dollar’s reserve currency status, that made U.S. monopoly-finance capital the “catalyst of world effective demand.”

Magdoff and Bellamy's theory confirms that there was a plan to expand financial markets into riskier areas to compensate for the stagnation which unavoidably occurs in capitalist economies. The real problem is rooted in the hostility of corporate bosses towards workers which translates into wages that don't keep pace with production. When wages languish, in an economy that is 70 percent consumer spending, the only way to increase GDP is by expanding credit. And that, in fact, is exactly how it has played out. Trickle down ideologues, like Henry Paulson, make every effort to extend credit to anyone with a pulse and a body temperature of 98.2 degrees, but they fight tooth and nail to crush the unions or any attempt to raise salaries. And Paulson, of course, is not alone in waging class warfare; he is just an extreme example.

The bottom line, is that financialization, which rests on the twin pillars of easy credit and ballooning debt, creates an inherently unstable system which is prone to wild swings and frequent busts. Bernanke is trying to restore this system ignoring the fact that workers--whose personal balance sheets are already bleeding red--can no longer support it. No amount of tinkering in the credit markets will reduce the overcapacity bulging throughout the system or add one farthing a poor man's bank account. There is a historic mismatch between supply and demand that cannot be reconciled by Bernanke's market meddling. Workers need a raise, that's how demand is created.

The same message goes out to Obama's economic team, too. The stimulus package might get the economy through the short-term rough patch, but if wages don't rise, the economy will continue to underperform. That's why the new commander in chief would be well advised to quickly pass The Employee Free Choice Act (also known as "card check") which would end secret ballots in union elections. It may be the most important piece of legislation in a decade. Its passage would ease union organizing and help to grow union membership which has dwindled to about 10 percent of the work force.

Forget about the fake differences between the two political parties. There aren't any. The only hope for deep structural change is to strengthen the unions and give workers a place at the policy table. That's the only peaceful way to dismantle this parasitic financial regime and bring about a more equitable distribution of wealth.

Mike Whitney is a frequent contributor to Global Research.

The Dirty Secret of the Financial Crisis:

Our Banking System's Broken

By William Greider, The Nation.
Posted November 22, 2008

No more free money from Washington. No more masters of the universe. No more business as usual. Time for a banking holiday.

Henry Paulson's $700 billion plan to save the world is dead or dying, but the bailout was not killed by his arrogance or his grossly misleading claims about what the public's money would buy. The plan collapsed because it didn't work. The Treasury secretary has launched a PR offensive to revive his falling influence. Too late. The Democrats should be equally embarrassed. In September their leaders in Congress rushed to embrace the Paulson solution, no hard questions asked. They now claim they were duped.

Paulson's squad at Treasury pumped $250 billion into the largest banks, buying their stock at inflated prices on the assumption it would persuade investors to step forward with their capital too. Instead, savvy financial players realized Paulson was spitting into a high wind, trying to save a system with stout talk.

Here is the ugly, unofficial truth that neither Wall Street nor the government will acknowledge: the pinnacle of the US financial system is broke -- with perhaps $2 trillion in rotten financial assets on the books. Nobody knows, exactly. The bankers won't say, and regulators won't ask, or at least don't dare tell the public. Official silence naturally feeds the conviction that banking's problems are far worse than we've been told. The Levy Economics Institute of Bard College puts it plainly: "It is probable that many and perhaps most financial institutions are insolvent today -- with a black hole of negative net worth that would swallow Paulson's entire $700 billion in one gulp."

The scale of this disaster explains why the Treasury secretary had to abandon his original plan to buy up failed mortgages and other bad assets from the banks. If government paid the true value for these nearly worthless assets, the banks would have to write down huge losses or, as Levy economists put it, "announce to the world that they are insolvent." On the other hand, if Paulson pumps the purchase price high enough to protect the banks from losses, $700 billion "will buy only a tiny fraction of the 'troubled' assets."

Paulson was trapped by these circumstances (and his own mendacity). Each time he tried to change the script, market insiders became even more alarmed. Congress is trapped too. So is President-elect Obama. From the outset of the crisis, the essential fallacy shared by governing influentials has been a wishful assumption that quick interventions with tons of public money would somehow restore the system to "normal" without disturbing free-market principles. Replenished banks would start lending again and lead us to recovery. "Normal" is not going to happen. If the new president does not break free of the denial and act decisively, his administration will be dangerously compromised from the start.

Obama can begin by declaring a "bank holiday" like FDR's in 1933 -- an opportunity to put the hard facts on the table and assume temporary control of the entire financial system. Nationalizing the banks sounds more radical than it is, since banking law already empowers regulators to impose extraordinary controls and close supervision over troubled institutions. Facing facts will be painful, but it's better than continuing a costly charade. Paulson's approach, endorsed by many Democrats, was designed to preserve oversized Wall Street titans. In fact, Paulson and the Federal Reserve are making things worse by creating new members of the privileged club of "too big to fail." Public money is being used to finance bank takeovers that will become new behemoths.
Read more

William Greider is the author of, most recently, "The Soul of Capitalism" (Simon & Schuster).
AlterNet.Org

How trade, the WTO and the financial crisis

reinforce each other
November 14th, 2008

Myriam Vander Stichele, SOMO, in a detailed and excellent brief, argues that the call made by the World Trade Organisation and some European leaders to finalise the Doha round at the same time of financial reform talks (so-called Bretton Woods II) completely ignores that this would impose on the South exactly the same recipe of deregulation and liberalisation of financial services that caused the crisis in the first place. In fact, Free Trade Agreements already signed by both nations in both the North and the South are already likely to make increasing regulation of the financial sector difficult, if not impossible.

WTO meeting on financial crisis only about more financing of trade

On 12th November 2008, the World Trade Organisation (WTO) held a selective conference about the impact of the financial crisis on trade. The main issues discussed were the lack of credit and finance for traders, and the slow down of the economy resulting in slowing down international trade. The main responses advocated, which are already widely used, were to increase co-sharing of risks by the international financial institutions and export credit agencies (ECAs).

What the WTO calls risk-sharing, however, turns out in practice to increase risk for developing countries and minimise risk for transnational corporations. Export credits ultimately have to be paid by developing countries, thus increasing the debt burden of developing countries. They also mean less risk is to be taken by the private sector, some of whom were attending the meeting –including some of the banks that have already received government support such as ING and Royal bank of Scotland despite their poor social and environmental record.

The wrong arguments used for pushing to finalise the Doha Round of WTO negotiations

Of course, the WTO Director General Mr Lamy, has in his many speeches during the last weeks argued that the WTO is a solution to the crisis, that WTO rules prevent “protectionist measures” and beggar-thy-neighbour policies which led to the economic depression in the 1930s and the consequent wars, and that conclusion of the Doha Round means strengthening regulation. Mr Lamy has admitted that some losses of jobs and income over the last years are to be attributed to trade liberalisation [speech of 29 October 2008] but that therefore “restoring citizens’ confidence in trade requires governments to ensure that sound domestic policies are in place.” However, since those sound and distributive domestic policies are not in place, and the WTO rules are even undermining such policies, there is little argument to liberalise further.

There are many arguments why the WTO’s rule based system is not sufficient and why finalising the Doha Round as currently negotiated would be disastrous to deal with the economic, social and environmental problems facing the world today:

• In the Doha Round, developing countries are asked to open up their markets much more than developed countries, so that they will have to bear more of the burden to cope with liberalisation. This is contrary to the Doha Round principles and inegates the responsibility of the developed countries for the financial crisis: the latter should indeed show solidarity and take the responsibility of unilaterally providing financial support to allow developing countries to trade without undermining social and environmental needs worldwide.
• Opening up more markets would give even less chances to smaller producers and traders to be able to survive. In many countries employment and income losses cannot easily be replaced. The current world economic system has so many unequal players that liberalisation does not provide the claimed benefits of open trade as argued in the comparison with the 1930s. The multinationals would be the winners of the increased competition game and not the workers, poor and jobless. The Doha Round negotiation draft text show a protectionism of the rich and multinationals who lobbied for their interests, and would result in a inequitable and unsustainable ‘rule-based system’.
• The Doha Round is about deregulation and minimising governments’ space to make policies, and is not about strengthening of regulation. The Doha Round would reinforce a failed model of laissez-faire, based on the belief that markets can be left on their own and that the common good will come out of leaving everybody to pursue their own interest. The financial crisis has shown how the free market is based on a failed ideology and why the gap between rich and poor is increasing. Free markets are unable to take environmental and social concerns into account.
• Lamy’s argument that “one’s protection is another one’s lost opportunity” should be turned around by “each market opening is one’s lost opportunity”: the importance is that there should be no lost opportunity for “raising standards of living, ensuring full employment and a large and steadily growing volume of real income” and “the optimal use of the world’s resources in accordance with the objective of sustainable development,” “in a manner consistent with [countries’] respective needs and concerns at different levels of economic development,” – as the preamble of the WTO says! However, the trade rules would need to change as well !

The WTO has so far not talked about how General Agreement on Trade in Services (GATS) and Free Trade Agreement (FTA) commitments to liberalise financial services and to undermine the ability of governments to prevent, or deal with, the financial crisis as explained below.

Read more

Read also: The facilitating framework for free investment and capital

Casino Crash

Transnational Institute

The Crisis Has Hardly Begun

CounterCurrents.Org

By Paul Craig Roberts
17 November, 2008Vdare

"The prospects of a government rescue for the foundering American automakers dwindled Thursday as Democratic Congressional leaders conceded that they would face potentially insurmountable Republican opposition," reported the NY Times last Friday. [Chances Dwindle On Bailout Plan For Automakers, By David M. Herszenhorn, November 13, 2008]

Wow! The entire country is steamed up over the Republicans bailing out a bunch of financial crooks who have paid themselves fortunes in bonuses for destroying America’s pensions. Why do Democrats want to protect Republicans from further ignominy by not giving them the opportunity to vote down a bailout for workers? Quick, someone enroll the Democratic Party in Politics 101.

GM’s divisions in Canada and Germany are asking those governments for help. It will be something if Canada and Germany come through for the American automaker and the American government doesn’t.

Conservative talking heads are saying GM is a "failed business model" unworthy of a $25 billion bailout. These are the same talking heads who favored pouring $700 billion into a failed financial model.

The head of the FDIC is trying to get $25 billion--a measly 3.5 percent of the $700 billion for the banksters--with which to refinance the mortgages of 2 million of the banksters’ victims, and Bush’s Secretary of the Treasury Paulson says no. Why aren’t the Democrats all over this, too?
Apparently, the Democrats still think they are the minority party—or else their aim is to supplant the Republicans as the party of the rich.

Any bailout has its downsides. But if America loses its auto industry, it will lose the suppliers as well and will cease to have a manufacturing sector. For years no-think economists have been writing off America’s manufacturing jobs, while deluding themselves and the public with propaganda about a New Economy based on finance.

A country that doesn’t make anything doesn’t need a financial sector as there is nothing to finance.

The financial crisis has had one good effect. It has cured Democratic economists like Robert Reich and Paul Krugman of their fear of budget deficits. During the Reagan years these two economists saw doom in the "Reagan deficits" despite the fact that OECD data showed that the US at that time had one of the lowest ratios of general government debt to GDP in the industrialized world.

Today Reich and Krugman are unfazed by their recommendations of budget deficits that are many multiples of Reagan’s. Moreover, neither economist has given the slightest thought as to how the massive budget deficit that they recommend can be financed.

Both recommend large public spending programs. Krugman puts a price tag of $600 billion on his program. If it takes $700 billion to save the banks and only $600 billion to save the economy, it sounds like a good deal. But this $600 billion is on top of the $700 billion for the banks, the $200 billion for Fannie Mae and Freddie Mac, and the $85 billion for AIG. These figures add to one trillion five hundred eighty-five billion dollars, a sum that must be added to the budget deficit due to war and recession (or worse).

What we are talking about here is a minimum budget deficit of $2 trillion. The US has never had to finance a deficit of this magnitude. Where is the money coming from?

The US Treasury doesn’t have any money, and neither do Americans, who have lost up to half of their savings and retirement funds and are up to their eyeballs in mortgage and consumer debt. And unemployment is rising.

There are only two sources of financing: foreign creditors and the printing press.

I doubt that foreigners have $2 trillion to lend to the US. Thanks to the toxic US financial instruments, they have their own bailouts to finance and economies to stimulate. Moreover, I doubt that foreigners think the US can service a public debt that suddenly jumps by $2 trillion. At 5 percent interest, the additional debt would add $100 billion to the annual budget deficit. In order to pay interest to creditors, the US would have to borrow more money from them.

Economists and policy-makers are not thinking. This enormous financing need comes not to a well-managed economy that can take the additional debt in its stride. Instead, it comes to an economy so badly managed that there are no reserves.

Massive US trade deficits have been financed by giving up US assets to foreigners, who now own the income flows as well. Budget deficits from 6 years of pointless wars and from unsustainable levels of military spending have helped to flood the world with dollars and to drive down the dollar’s exchange value. Consumers themselves are drowning in debt and can provide no lift to the economy. Millions of the best jobs have been moved offshore, and research, design, and innovation have followed them. Considering America’s dependency on imports, part of any stimulus package that reaches the consumer will bleed off to foreign countries.

Generally, when countries acquire more debt than they can service, they inflate away the debt. If foreign creditors do not save the Obama administration, the Treasury will print bonds and give them to the Federal Reserve, which will issue money.

The inflation will be severe, particularly as Americans will not be able to pay for the imports of manufactured goods from abroad on which they have become dependent. The exchange value of the dollar will decline with the domestic inflation. Once inflation is off and running, the printing press dollars will only have goods made in America to chase after. The real crisis has not yet begun.

Paulson should rethink the automakers’ and FDIC’s proposals. A bank produces nothing but paper. Automakers produce real things that can be sold. Occupied homes are worth more than empty ones.

Paulson’s inability to see this is the logical outcome of Wall Street thinking that highly values deals made over pieces of paper at the expense of the real economy.

Paul Craig Roberts [email him] was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal.

The Predator State

How Conservatives Abandoned the Free Market and Why Liberals Should Too

James K. Galbraith holds the Lloyd M. Bentsen, Jr., Chair in Government / Business Relations at the LBJ School of Public Affairs at the University of Texas at Austin. He holds degrees from Harvard and Yale. He studied economics as a Marshall Scholar at King's College, Cambridge, and then served on the staff of the U.S. Congress, including as executive director of the Joint Economic Committee. He directs the University of Texas Inequality Project, an informal research group at the LBJ School, is a Senior Scholar of the Levy Economics Institute, and is chair of Economists for Peace and Security, a global professional association.

Description
The cult of the free market has dominated economic policy-talk since the Reagan revolution of nearly thirty years ago. Tax cuts and small government, monetarism, balanced budgets, deregulation, and free trade are the core elements of this dogma, a dogma so successful that even many liberals accept it. But a funny thing happened on the bridge to the twenty-first century. While liberals continue to bow before the free-market altar, conservatives in the style of George W. Bush have abandoned it altogether. That is why principled conservatives -- the Reagan true believers -- long ago abandoned Bush.

Enter James K. Galbraith, the iconoclastic economist. In this riveting book, Galbraith first dissects the stale remains of Reaganism and shows how Bush and company had no choice except to dump them into the trash. He then explores the true nature of the Bush regime: a "corporate republic," bringing the methods and mentality of big business to public life; a coalition of lobbies, doing the bidding of clients in the oil, mining, military, pharmaceutical, agribusiness, insurance, and media industries; and a predator state, intent not on reducing government but rather on diverting public cash into private hands. In plain English, the Republican Party has been hijacked by political leaders who long since stopped caring if reality conformed to their message.

Galbraith follows with an impertinent question: if conservatives no longer take free markets seriously, why should liberals? Why keep liberal thought in the straitjacket of pay-as-you-go, of assigning inflation control to the Federal Reserve, of attempting to "make markets work"? Why not build a new economic policy based on what is really happening in this country?

The real economy is not a free-market economy. It is a complex combination of private and public institutions, including Social Security, Medicare and Medicaid, higher education, the housing finance system, and a vast federal research establishment. The real problems and challenges -- inequality, climate change, the infrastructure deficit, the subprime crisis, and the future of the dollar -- are problems that cannot be solved by incantations about the market. They will be solved only with planning, with standards and other policies that transcend and even transform markets.

A timely, provocative work whose message will endure beyond this election season, The Predator State will appeal to the broad audience of thoughtful Americans who wish to understand the forces at work in our economy and culture and who seek to live in a nation that is both prosperous and progressive.

Find out more: Read an excerpt

Banking institutions are more dangerous to our liberties than standing armies.

Thomas Jefferson, US President; 1743 - 1826

Global Research

Death of the American Empire
- by Tanya Cariina Hsu - 2008-10-23
"Banking institutions are more dangerous to our liberties than standing armies" (Thomas Jefferson)

Financial Meltdown: The Greatest Transfer of Wealth in History
- by Ellen Brown - 2008-10-17
All the king’s men cannot put the private banking system together again: it is a Ponzi scheme that has reached its mathematical limits.

Who is Behind the Financial Meltdown?
- by Michel Chossudovsky - 2008-10-11
The financial market is heavily manipulated. Triggering market collapse can be a very profitable undertaking.

Behind the Panic: Financial Warfare and the Future of Global Bank Power
- by F. William Engdahl - 2008-10-09
Europe's Response to a Financial Crisis "Made in the USA"

Unscrupulous Manipulation of the US Financial Architecture:

The Failed Presidency of George W. Bush

Global Research, October 25, 2008

A Dismal Legacy. Part II

by Prof. Rodrigue Tremblay

"Greed is good. Greed is right. Greed Works."Gordon Gekko, corporate raider (played by Michael Douglas) in the movie Wall St.

“President [George W.] Bush will be remembered as the most fiscally irresponsible president in our nation’s history.” Sen. Kent Conrad, Chairman of the Senate Budget Committee

[The government's decision to buy shares in the nation's leading banks] “is not intended to take over the free market, but to preserve it.”President George W. Bush, October 14, 2008

"Our country for the first time in my life time has abandoned the basic principle of human rights. ...We've said that the Geneva Conventions do not apply to those people in Abu Ghraib prison and Guantanamo, and we've said we can torture prisoners and deprive them of an accusation of a crime to which they are accused." Jimmy Carter, former American president

“After [this] war [against Iraq] has ended, the United States will have to rebuild much more than the country of Iraq. We will have to rebuild America's image around the globe.”Sen. Robert Byrd, (D-W.Va), March 19, 2003

Economically, the Bush-Cheney administration is leaving behind a big financial and economic mess. In fact, this is an administration that has brought misery upon America by its misguided economic policies that have built a mountain of shaky debt and rendered dysfunctional large segments of the American banking industry and large sectors of the U.S. economy, through inappropriate deregulation to enrich greedy special interest characters, wheeler-dealers, corporate con men, professional short-sellers and other scam artists and swindlers. In so doing, it has empowered rich parasitic speculators and turned the financial sector into a giant casino, thus risking the health of the entire economy.

Indeed, and to complete the picture, the Bush-Cheney administration has emptied the public treasury, debased the U.S. currency and fueled deflation, inflation and, in the end, produced stagflation and what can turn out to be a very serious recession.

This is understandable. Over the last eight years, the Bush-Cheney administration has adopted a laissez-faire policy based on a let-them-eat-cake ideology. It has pushed for economic deregulation throughout the government, beginning with the de-fanging of the Securities and Exchange Commission. It has pursued an aggressive policy of deregulation of the large global investment banks, which were basically left to self-regulate themselves and allowed to build up the largest mountain of flimsy backed debt instruments and risky financial derivative products ever seen in history. It did the same thing for other regulatory agencies such as the Consumer Product Safety Commission, the Environmental Protection Agency, worker safety and transportation agencies.

It is thus no accident that the Bush-Cheney administration has presided over one of the worst financial collapses and credit crises in U.S. history, by packing regulatory agencies with cronies whose mission it was to let rapacious speculators and market manipulators go wild. The result has been the creation of a casino-like speculative economy that is now crashing down before our very eyes.

Under Bush-Cheney, financial markets became manipulated by unscrupulous bankers and by rapacious hedge funds, as public regulation was reduced to a minimum. Millions of Americans lost their homes through foreclosure and many more saw their working and pension incomes eroded and destroyed by inflation and plant closings. And as what could be a protracted recession proceeds, many more will lose their jobs in the coming months, while some older employees may have to postpone their retirement because of the disappearance of their pension money.

In a parody of President Abraham Lincoln, we can say this has been an administration that deserved to be dubbed "a government of the wealthy, by the wealthy and for the wealthy." Some would not hesitate to say, also in parody, that it has been "a government of Goldman Sachs, by Goldman Sachs and for Goldman Sachs," considering the ubiquitous political and economic role which that firm has played within the Bush-Cheney administration. President Bush's own Chief of Staff, Mr. Joshua Bolten, comes from Goldman Sachs. And these days, everybody pretends not see the real and potential conflicts of interests of other public servants who are now on the giving public side of things, at the U.S. Treasury, and who are going to be on the receiving private side of public money, in a scant few months. It is the same thing with a lot of what the U.S. Treasury does. —Even the Governor of the Bank of Canada, Mr. Mark Carney, is a former employee of Goldman Sachs!

In a related matter, for historical purposes, it will be remembered that, in the fall of 2008, the Bush-Cheney administration sponsored a huge rescue-plus-bailout of the largest speculative Wall Street investment banks (which the Bush SEC had deregulated on March 28, 2004) and of a host of other banking and insurance institutions which had engaged in alchemy or synthetic finance and made risky investments. To that effect, it is ready to place at risk close to $2.0 trillion of public money and let the public debt explode, with few conditions attached to protect the public interest. In fact, the Bush administration stood ready to advance hundreds of billions of dollars and only requested non-voting preferred shares in the troubled banks and insurance companies that it rescued from bankruptcy. As a consequence, contrary to what the Roosevelt administration did in the 1930s, the U.S. government has no direct say about the way the troubled financial institutions are managed and run, and thus, if the bail-out were to be successful, most of the benefits would go to bank owners and their executives; but, if things continue to deteriorate, taxpayers will be the ones left holding the bag.

Some have said this is an example of corporate socialism for the rich. In fact, this has nothing to do with socialism per se, but everything to do with legal and unapologetical extortionism on a high level. For all these reasons, if the ongoing recession and financial crisis were to turn into a full-fledged economic depression, as it could possibly do, and as it did in 1873-1880 and 1929-1939, it would have to be dubbed by historians "the Bush-Cheney Grand Economic Depression" of 2008-20(?).

George W. Bush will also be remembered for having financed his whimsical and ill-conceived three-trillion-dollar war of aggression against Iraq on credit, thus worsening the U.S. financial situation in the world, perhaps irrevocably. He is leaving behind him a financial mess like no one has seen since the great depressions following 1873 and 1929.

In all fairness, it must be said that some Democrats in Congress, the so-called Bush Democrats who usually vote with Republicans on foreign policy issues, have also been supporters of the Iraq War from the beginning and have invariably voted for the hundreds of billions of dollars required to finance it.

The Bush-Cheney administration has presided over economic dislocations and greed-fed financial bubbles, and it has been an agent of poverty and of financial and economic crises. This is an administration that will be sadly remembered for its huge tax cuts for the super rich, for its huge fiscal deficits bequeathed to future generations and for its huge and costly bailouts for speculators and high flyers, and very little for families and ordinary citizens.

As a consequence, on the whole, Americans are today poorer than when this duo took power eight years ago, while the gap between the very rich and the average American has never been wider. It has been a regime that has borrowed and borrowed, debased the currency, waged unnecessary wars and doled out defense contracts in the most reckless possible way, with a minimum of oversight and accountability.

• International Mess: An Irresponsible Attempt to rekindle the Cold War

Internationally, Bush and Cheney not only started a war against Iraq, a country that had never attacked the United States, but they also did their utmost to recklessly restart the Cold War with Russia. They did that by unilaterally abrogating the Anti-Ballistic Missile Treaty, by transforming NATO into an offensive military alliance and by installing anti-missile sites, manned by American soldiers, in former Warsaw Pact countries, such as Poland and the Czech Republic, and in former Soviet republics, right next to Russia's borders.

The Bush-Cheney administration designed a policy of encircling Russia by arming pro-U.S. European client states. That is why they have directly provoked Russia by incorporating six former Warsaw Pact nations and three former soviet republics in the now offensive and U.S.-controlled military alliance that is NATO. They went as far as to openly support and arm aggression-prone governments in some former Soviet republics, especially in Georgia, the birthplace of Stalin. All this reflects a pro-active and aggressive military stance against Russia designed to provoke Russia and restart the Cold War, thus dangerously increasing the chances of a nuclear world war.

Let us recall that when Khrushchev's Soviet Union tried to install missiles in Cuba in 1962, it nearly started a world war. Now, half a century later, with Bush-Cheney, the brinkmanship is on the other side. They have acted irresponsibly in provoking Russia, as if they did not mind restarting a cold war with that country. Russian exasperation was well expressed by then Russian President Vladimir Putin when, in 2007, he said that “The United States [under Bush and Cheney] has overstepped its national borders in every way, and as a result, no one feels safe. . . . such a policy stimulates an arms race.”

• Disrespect of Military Advice

George W. Bush will be remembered as the man who brought within the walls of the White House not only corruption and incompetence in nearly every field of activity—as well as a lack of moral fortitude in approving torture—but also a quasi dictatorial gangster mentality in dealing with Congress, with the military, with other governments and with political opponents in general. For instance, Bush fired more generals and admirals than any other head of state since Adolf Hitler in Germany, some seventy years ago. Among others, Bush fired or forced into early retirement Gen. Eric K. Shinseki; Gen. John Abizaid; Gen. George Casey; and Adm. William J. Fallon, then top U.S. commander in the Middle East.

• A Propaganda-prone Administration

But perhaps one of the greatest indictments of the Bush-Cheney administration is the way it has used crude covert propaganda techniques worthy of a totalitarian regime. Indeed, it has launched a sophisticated propaganda campaign to manipulate information and public opinion that has had the effect of undermining democracy and the freedom of information. For one, it has subverted the major American TV and radio networks by provided them with false independent "analysts".

Second, it has paid journalists to push surreptitiously for government programs. Third, it has intervened within news organizations, using the power of government to have journalists and producers fired when they didn't toe the government line. Fourth, the Bush administration has embarked upon the business of censoring movies. And that is only the tip of the iceberg, considering how pervasive the Bush-Cheney administration's direct and indirect control of the media has been. Never has American journalism and U.S. corporate media been so corrupt and complicit, and this is because the United States has never had such a corrupt administration, i.e. the 2001-2009 Bush-Cheney administration.

• Conclusion

To conclude, it should be obvious by now to anybody who has eyes to see that the Texan politician named George W. Bush, son of former President George H. Bush, was unqualified for high office. He has amply and tragically demonstrated it. This is a politician who presided over an administration that has acted as a wrecking crew, destroying most of everything it has touched. [For more analysis on that, see my book "The New American Empire".]

In its countless failures, the Bush-Cheney administration has been an unhealthy mixture, rarely seen in a democracy, of immorality, lawlessness and incompetence. —It won't be missed by most people, both in the U.S. and around the world.

Rodrigue Tremblay is professor emeritus of economics at the University of Montreal and can be reached at: mailto:rodrigue.tremblay@%20yahoo.com.

He is the author of the book 'The New American Empire'.

Visit his blog site at www.thenewamericanempire.com/blog.

Author's Website: www.thenewamericanempire.com/

Check Dr. Tremblay's coming book "The Code for Global Ethics" at: www.TheCodeForGlobalEthics.com/

Rodrigue Tremblay is a frequent contributor to Global Research.

Global Research Articles by Rodrigue Tremblay