Our Favorite Cowboy Is On A Roll

Usurious Bastards

by Ed Encho

The history of the last century shows, as we shall see later, that the advice given to governments by bankers, like the advice they gave to industrialists, was consistently good for bankers, but was often disastrous for governments, businessmen, and the people generally.-Carroll Quigley

As the conventional wisdom goes, the stock market is predicated on trust and as a crusty old uncle of mine once said to a young and impressionable teenager with zero knowledge of the way that the world really worked: “trust me is just another two letter word that means the same as fuck you.” Old Uncle Harvey’s words of wisdom came home to roost on this Monday morning in America when the finance oligarchs were able to use their inside juice to pull off the grandest and most audacious heist yet in this season of sleazy swindles. Obama Treasury Secretary and Wall Street fixer Timothy Geithner delivered the bacon for the bankers, gave the crack ho stock market a wonderful and intoxicating fix that sent the Dow screaming up by nearly 7 percent in a matter of hours and locked in the losses for the great grandchildren of every poor schmuck with the misfortune to be living through this period of plunder and wealth consolidation.

In phase two of the ongoing SPLURGE (any similarity to the con-game called the surge that allowed us to become winners in Iraq is fully intentioned), on Tuesday night, our very own national Teflon coated bullshit salesman, President Barack Obama, the banker’s gofer and shill for the new generation began to sell it to the saps and a marvelous job he is doing. This man my friends is no new Roosevelt, he is the devil in disguise and he (as many progressives had warned) is in the bag for the establishment. What we really have is a by proxy continuation of the Clinton administration, of course Hillary was to have been the one but in the waning days of the ruinous Bush-Cheney neocon war on America it was just too tough to pimp another dynasty so the crooks who run the system found another pitchman. I cannot possibly articulate the sense of disgust and betrayal that I am experiencing as I write this, it is very difficult to restrain my gag reflex and keep from vomiting on my keyboard because once again the scum wins again and Americans have been played for chumps. Nobel Prize winning economist Paul Krugman(another Nobel Prize winner Joseph Stiglitz decried its "perverse incentives”) and columnist for the damned liberal New York Times put it best in his Monday column Financial Policy Despair:

Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.

This is more than disappointing. In fact, it fills me with a sense of despair.

But the Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. So this isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets.

The likely cost to taxpayers aside, there’s something strange going on here. By my count, this is the third time Obama administration officials have floated a scheme that is essentially a rehash of the Paulson plan, each time adding a new set of bells and whistles and claiming that they’re doing something completely different. This is starting to look obsessive.

But the real problem with this plan is that it won’t work. Yes, troubled assets may be somewhat undervalued. But the fact is that financial executives literally bet their banks on the belief that there was no housing bubble, and the related belief that unprecedented levels of household debt were no problem. They lost that bet. And no amount of financial hocus-pocus — for that is what the Geithner plan amounts to — will change that fact.

You might say, why not try the plan and see what happens? One answer is that time is wasting: every month that we fail to come to grips with the economic crisis another 600,000 jobs are lost.Even more important, however, is the way Mr. Obama is squandering his credibility. If this plan fails — as it almost surely will — it’s unlikely that he’ll be able to persuade Congress to come up with more funds to do what he should have done in the first place.

This isn’t likely to win Krugman any friends in the Obama White House, especially with a sleazy little political gangster like Rahm Emanuel who I predict will eventually make even the Great Satan Karl Rove look like an amateur running the show and protecting the interests of his investment banker buddies. While Barack Obama may be the friendly Fozzie Bear face of this latest hostile takeover of the White House the real example of how things are really done is in this incredible NYT piece from back in January:

Early this month, Barack Obama was meeting with the House speaker, Nancy Pelosi, and other lawmakers when Rahm Emanuel, his chief of staff, began nervously cracking a knuckle.Mr. Obama then turned to complain to Mr. Emanuel about his noisy habit.At which point, Mr. Emanuel held the offending knuckle up to Mr. Obama’s left ear and, like an annoying little brother, snapped off a few special cracks.

The venomous cobra that is Emanuel is of course Mr. Obama’s minder and handler, note that he was the first announced member of the new administration, the first of a reoccupation of Washington by Clintonistas. The promised change, at least to this point has been strictly cosmetic, the wars still continue, more troops are headed to Afghanistan, the graveyard of empires past, Gitmo is still open, the new administration is engaging in Clintonian language manipulation regarding ‘torture’ that invokes memories of “it depends on what the meaning of is is”, the military is getting ready to be sent to the Mexican border and there has been no serious discussion of reigning in the run amok police state and the Stasi style high tech domestic spying operations. Yep, change has come to America alright, just like “the check’s in the mail”, “this won’t hurt a bit”, “I love you” and “I promise not to come in your mouth”…and it was all wrapped up in a big bundle of stinking dogshit with a $ sign on it and parked on the doorsteps of Americans and set afire by the Geithner-Bernanke-Paulson triad with the unarguable message that you are either cops or little people.

Webster Tarpley had a good one that I heard that saving the banks is like trying to save one of Count Dracula's victims by giving the blood transfusion to the victim through the vampire when the real remedy is to just pull him off and drive a stake through his heart. Now that it has become pretty apparent that Obama is just more of the same and like Bush has his own legions of cultlike devotees and apologists we can all just take Bobby Knight's advice that if rape is intevitable relax and enjoy it because really what choice do we really have? Before it even really started the revolution has been hijacked, progressives are still getting the shaft, the Employee Free Choice Act is going to be dead on arrival, there is NO antiwar movement if the media refuses to acknowledge that there is a fucking war and even the Ron Paul movement libertarians have been marginalized by the old fool's proclivity to ghettoize himself and keep showing up at Nazi bund meetings like CPAC and regularly appearing on FOX.

The oligarchy has it's shit together, this is their homefield, they own the refs and there is no replay booth. Welcome to chumpland, when a show like HBO's Real Time With Bill Maher features Keith Olbermann as a guest and they both mock the very real detention camps by conflating their existence with the weeping, at the edge of sanity fascist basket case Glenn Beck it's a done deal that the agents have seized control of all phones and the only way out of the matrix will be in a body bag. Despite the rear guard cover that the corporate media is giving to the ongoing looting spree by laying poison bait for maxed-out marks and rubes to get back into the casino and start spending their money at usurious interest rates by rapacious banks that are fast approaching the same sort of deal that you can score at pay day lenders there are those who really get it, too bad that their observations are drowned out by Dancing With the Stars,

American Idol and the rest of the standard bread and circuses that placate the masses of asses. Some very excellent work has been done for those with an inclination for the truth by alternative media types and dissenting with the official state line experts who have been consistently right about this catastrophic clusterfuck from the outset. The gold standard in calling out the great robbery and financier's coup d'etat has to go to Matt Taibbi whose piece in the new issue of Rolling Stone magazine entitled The Big Takeover is a must read. I excerpt a few pieces of this long but brilliant expose:

It's over — we're officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.AndPeople are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.AndThere are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That's the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers' credit card.The people who have spent their lives cloistered in this Wall Street community aren't much for sharing information with the great unwashed. Because all of this shit is complicated, because most of us mortals don't know what the hell LIBOR is or how a REIT works or how to use the word "zero coupon bond" in a sentence without sounding stupid — well, then, the people who do speak this idiotic language cannot under any circumstances be bothered to explain it to us and instead spend a lot of time rolling their eyes and asking us to trust them.That roll of the eyes is a key part of the psychology of Paulsonism. The state is now being asked not just to call off its regulators or give tax breaks or funnel a few contracts to connected companies; it is intervening directly in the economy, for the sole purpose of preserving the influence of the megafirms. In essence, Paulson used the bailout to transform the government into a giant bureaucracy of entitled assholedom, one that would socialize "toxic" risks but keep both the profits and the management of the bailed-out firms in private hands. Moreover, this whole process would be done in secret, away from the prying eyes of NASCAR dads, broke-ass liberals who read translations of French novels, subprime mortgage holders and other such financial losers.

In addition to Taibbi's magnum opus on the greedy pigs who have destroyed the economy I would also recommend Thomas Georghegan's treatise on the legalization of usury in the latest Harper's entitled Infinite Debt: How Unlimited Interest Rates Destroyed the Economy, the same April issue has Daniel Brook's article on the payday lending industry Usury Country, a piece in Washington Monthly by James K. Galbraith that calls bullshit on the 'the worst is over' folderol being foisted upon us by the high-rollers, the looters and the banksters where he speaks the forbidden heresy of No Return to Normal:

The most likely scenario, should the Geithner plan go through, is a combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil. Ultimately the losses fall on the public anyway, since deposits are largely insured. There is no chance that the banks will simply resume normal long-term lending. To whom would they lend? For what? Against what collateral? And if banks are recapitalized without changing their management, why should we expect them to change the behavior that caused the insolvency in the first place?The oddest thing about the Geithner program is its failure to act as though the financial crisis is a true crisis—an integrated, long-term economic threat—rather than merely a couple of related but temporary problems, one in banking and the other in jobs. In banking, the dominant metaphor is of plumbing: there is a blockage to be cleared. Take a plunger to the toxic assets, it is said, and credit conditions will return to normal. This, then, will make the recession essentially normal, validating the stimulus package. Solve these two problems, and the crisis will end. That’s the thinking.

But the plumbing metaphor is misleading. Credit is not a flow. It is not something that can be forced downstream by clearing a pipe. Credit is a contract. It requires a borrower as well as a lender, a customer as well as a bank. And the borrower must meet two conditions. One is creditworthiness, meaning a secure income and, usually, a house with equity in it. Asset prices therefore matter. With a chronic oversupply of houses, prices fall, collateral disappears, and even if borrowers are willing they can’t qualify for loans.The other requirement is a willingness to borrow, motivated by what Keynes called the "animal spirits" of entrepreneurial enthusiasm. In a slump, such optimism is scarce. Even if people have collateral, they want the security of cash. And it is precisely because they want cash that they will not deplete their reserves by plunking down a payment on a new car. The aforementioned pieces by Taibbi, Geoghegan and Brooks all merited appearances on Amy Goodman's Democracy Now the past three days but perhaps the greatest statement of all was made by former Reagan administration Assistant Treasury Secretary Paul Craig Roberts who in his latest column, Is the Bailout Plan Breeding a Bigger Crisis? is coming very close to actually endorsing - GASP - Socialism! Roberts mentions that ugly little story that flew below the radar that our number one creditor China is starting to make noises about dumping the dollar as the world reserve currency:

Rome eventually understood that its imperial frontiers exceeded its resources and pulled back. This realization has yet to dawn on Washington.More budget savings could come from a different approach to the financial crisis. The entire question of bailing out private financial institutions needs rethinking. The probability is that the bailouts are not over. The commercial real estate defaults are yet to present themselves.Would it be cheaper for government to buy the shares of the banks and AIG at the current low prices than to pour trillions of taxpayers’ dollars into them in an effort to drive up private share prices with public money? The Bush/Paulson bailout plan of approximately $800 billion has been followed a few months later by the Obama/Geithner stimulus-bailout plan of another approximately $800 billion. Together it adds to $1.6 trillion in new Treasury debt, much of which might have to be monetized.Could this massive debt issue be avoided if the government took over the banks and netted out the losses between the constituent parts? A staid socialized financial sector run by civil servants is preferable to the gambling casino of greed-driven, innovative, unregulated capitalism operated by banksters who have caused crisis throughout the world.Perhaps the Federal Reserve should be socialized as well. The notion of an independent, privately-owned Federal Reserve system was never more than a ruse to get a national bank into place. Once the central bank is part of the state-owned banking system, the government can create money without having to accumulate a massive public debt that saddles taxpayers’ and future budgets with hundreds of billions of dollars in annual interest payments.

Roberts has been ahead of the curve since his early realization that the Republican party had been taken over by drooling brownshirts in the early years of the Bush-Cheney nightmare and he consistently serves as a reminder of that bygone era when some conservatives actually had principles, ideas and a respect for intellectualism way back back before Joe the Plumber became the man.The DOW was up 174 today, it's morning in America again, time to pull yerself up by those good ole star-spangled bootstraps, go shopping... but if you look around you will notice that gas prices are creeping up again too since speculation is back in vogue, it could crack 8000 tomorrow when Barack Obama goes to give a progress report (grovel) to his banker bosses. But that's not important, hey, didja hear the one about the Michigan dude who just got 90 days for being caught with his dick in a car wash vacuum cleaner?Move Along, Nothing to See Here...

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. I.U. has no affiliation whatsoever with the originator of this article nor is I.U endorsed or sponsored by the originator.)


The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.

American Capitalism In Free-fall

AIG at Risk; $700 Billion In Shareholder Value Vanishes

By Glenn Kessler and David S. Hilzenrath
Washington Post Staff Writers
Tuesday, September 16, 2008; A01

The Federal Reserve and Treasury Department struggled yesterday to contain the fallout from an upheaval among the country's largest investment banks as they moved on to their next challenge -- engineering a $75 billion private rescue of the nation's largest insurance company.

The insurer, American International Group, faces a cash crunch that grew more severe last night when the major credit-rating agencies warned investors that the company could have greater difficulty in meeting its obligations. It was unclear whether the downgrades by the agencies would force AIG to post additional collateral at a time when it is having difficulty raising money.

Investors sent the Dow Jones industrial average plunging more than 500 points, or 4.4 percent, for the biggest point loss since the Sept. 11 terrorist attacks seven years ago. About $700 billion in shareholder value disappeared in a single day of trading.

The wrenching reshaping of Wall Street -- which over the weekend included the demise of one big firm and the sale of another -- also pushed the value of the dollar lower. It sent the price of crude oil below $100 a barrel for the first time since Feb. 15 as traders bet a global downturn would reduce the demand for energy.

Wall Street's biggest shakeout since the Great Depression stems from a collapse in housing prices, which spread losses among firms that bet on securities linked to mortgages. Twice in the past year, regulators intervened to save financial firms and prevent further erosion in the housing markets. But over the weekend, officials drew the line at rescuing the storied investment bank Lehman Brothers, which yesterday filed for bankruptcy protection.

"We had a very, very tough day on the market," said Art Hogan, chief market analyst at Jefferies & Co. "Investors are anxious about the spillover effect of Lehman and what is the next shoe to drop."

As investors digested the news, some economists worried whether Wall Street's troubles were spilling over into other parts of the economy, renewing pressure on the Federal Reserve to cut interest rates when it meets today.

Fed leaders, however, believe it is too early to tell what the impact might be, and they are unlikely to cut rates for now.

In the meantime, Treasury Secretary Henry M. Paulson Jr. signaled yesterday that taxpayer funds could still be used broadly to "maintain the stability and orderliness of our financial system" but that he was pressing healthier Wall Street firms and commercial banks to join together to assist in rescuing individual firms -- much like the purchase of Merrill Lynch on Sunday by Bank of America.

Goldman Sachs, for instance, was asked by the Federal Reserve Bank of New York to help AIG, a $1 trillion-asset insurance company that serves 74 million consumers in 130 countries. AIG had been heavily involved in the business of issuing complex insurance contracts to investors in securities backed by mortgages, and the collapse of subprime and other home loans threatened to hobble the company and trigger a chain reaction in the financial system.

J.P. Morgan Chase, which is serving as AIG's financial adviser, was seeking support for a credit line of $70 billion to $75 billion that would involve multiple lenders, spreading the risk, according to two sources familiar with the discussions. They spoke on condition of anonymity because the talks were private.

New York's governor, meanwhile, said his state would allow AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. By posting the assets as collateral, AIG can borrow money to run its day-to-day operations, Gov. David A. Paterson (D) said. The move required special dispensation from state insurance superintendent Eric R. Dinallo, who is responsible for protecting the stability of AIG insurance companies in New York and their policyholders.

"It's no secret that the company has been talking to the Feds and talking to us," Paterson said. "They asked us what assistance we could provide, and this is our idea."

A deal to rescue AIG may have to come quickly now that Standard & Poor's and Moody's Investors Service have lowered their credit ratings for the firm, should the decision force AIG to boost its collateral to meet its obligations.

The Fed has maintained that it will not offer AIG a bridge loan or other direct injection from the government, according to sources familiar with the conversations. AIG executives huddled at their Manhattan headquarters over the weekend with potential private investors including J.C. Flowers, Kohlberg Kravis Roberts, and TPG as well as Paterson's representatives, including Dinallo; AIG was also talking to Warren E. Buffett's Berkshire Hathaway.

"I don't think anybody is going to lend that amount of money at terms that are anywhere near economically feasible without a backstop, without some form of guarantee, say by the Fed or another party," said Donn Vickrey of Gradient Analytics, who has been warning of trouble at AIG for months.

Vickrey said it appeared the Fed was playing a game of chicken with Wall Street, trying to pressure firms with a big stake in AIG's continued viability to step up to the plate.

AIG's stock fell 61 percent, to close at $4.76, yesterday.

At the same time, the Fed over the weekend made it easier for investment banking firms to borrow money by agreeing to accept a wider range of assets as collateral, including mortgage-backed securities that banks may not be able to sell. The increased availability of cash could be crucial to the investment banks, the rough equivalent of a home-equity line for a house-rich, cash-poor family.

"The actions of the Federal Reserve, it was the most overlooked but the most important thing that happened this weekend," said Steve Bartlett, president of the Financial Services Roundtable, which represents the largest financial companies.

The Fed's willingness to take those assets off banks' balance sheets could also help the institutions avoid further write-downs if those assets continue to lose value.

The Fed, for its part, is betting that the assets could eventually be sold for more than the market is willing to pay right now. If not, taxpayers could lose money.

Patricia McCoy, who served on the Fed's Consumer Advisory Council from 2002 to 2004, cautioned that "it's a big, big risk . . . Right now it's really hard to value that collateral. And in the meantime, even though the Fed financing is temporary, it sends a huge message to the investment banking industry to continue to arrange your balance sheets to be dependent on short-term financing, because when you get into a liquidity crunch, you can turn to us and we'll help you out."

Stocks' plunge yesterday showed that investors remained nervous. Shares opened lower but generally traded in the same range until the last hour of trading -- when a 300-point drop in the Dow became a 504.48-point rout, bringing it to 10,917.51, moving below the 11,000 mark for the first time since mid-July. The technology-heavy Nasdaq was down more than 3.5 percent, and the Standard & Poor's 500-stock index was down 4.7 percent.

The financial sector was among the hardest hit. Bank of America closed down 21 percent, while Wachovia fell 25 percent. Goldman Sachs and Morgan Stanley, the two remaining survivors of what were once Wall Street's Big Five, report quarterly earnings this week -- and closed down 12 and 14 percent respectively.

Although it was a horrible day for the market, it was no worse than Treasury and Fed officials had expected when they declined to intervene to save Lehman. Indeed, officials said they were pleased that the credit markets seemed to generally to function alright.

Another bit of good news for consumers: Oil prices fell about $5 a barrel, to close at $95.71, the first time prices have closed below $100 in months. Hurricane Ike did not do as much damage as some had feared and overall demand for fuel continues to decline, analysts said.

"One of the reasons that oil is weak is that [there is an acknowledgment that] the slowdown in the economy could affect everything, and that includes demand for oil," said Phil Flynn, oil analyst at Alaron Trading in Chicago.

Risk-adverse investors are likely to move away from U.S. assets, dragging down the value of the dollar compared with a range of foreign currencies, said Joseph Brusuelas, chief U.S. economist at California-based Merk Investments. Already, Treasury bond prices surged yesterday, meaning that yields fell. "There is a concern about the basic stability of the market going forward," he said.

Global stocks also plunged on the weekend news, and central bankers tried to calm the situation during deepening uncertainty about the resilience of the global financial system and the strength of the world economy. China's central bank announced it was cutting a key interest rate to uphold growth, and U.S. industrial production fell faster than expected in August.

Meanwhile, the sidewalk outside Lehman's headquarters in midtown Manhattan took on a carnivalesque atmosphere yesterday, as dozens of reporters clamored outside the doors, a half-dozen television trucks parked on the street, tourists grouped on the sidewalk taking photos, a few political partisans preached their platforms -- and occasionally an employee came out dragging a suitcase on wheels.

One man waved a red flag, calling for a workers' revolution and yelling, "The capitalist order is in free-fall collapse!"

Staff writers Binyamin Appelbaum, David Cho, Zachary A. Goldfarb, Neil Irwin, Heather Landy, Renae Merle, and Robin Shulman contributed to this report.

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. I.U. has no affiliation whatsoever with the originator of this article nor is I.U endorsed or sponsored by the originator.)


The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.

US Bailout of Mortgage Giants Sets Stage for Wider Financial Crisis

We Are All So Screwed!!!!


By Barry Grey


12/09/08 WSW" -- - -Since the Bush administration announced on Sunday the US government takeover of mortgage finance giants Fannie Mae and Freddie Mac, in the largest corporate bailout in American history, developments have underscored the profound and systemic nature of the crisis that precipitated the action.

A week of wild gyrations on US stock markets, fueled by fears of an impending collapse of the Wall Street investment bank Lehman Brothers and the country’s largest savings and loan bank, Washington Mutual, demonstrates that the rescue of the government-sponsored mortgage companies is a stop-gap measure that does not begin to resolve the underlying crisis of American capitalism.

On the contrary, the bailout of Fannie Mae and Freddie Mac sets the stage for an intensification of the crisis in the coming months. At heart, the demise of the mortgage firms, which account for 80 percent of new home mortgages in the US and have a combined liability of $5.3 trillion in mortgage-backed securities which they own or guarantee, is a result of the collapse of the colossal credit bubble which sustained the super-profits of US banks and investment firms and the seven- and eight-figure salaries of their top executives.

It is the product of an economic system that has increasingly based itself on speculation and various forms of economic parasitism, while gutting the productive base of the country—at the cost of millions of jobs and the living standards of the American working class.

The decay of American capitalism has produced an economy that is drowning in debt and is dependent on massive inflows of capital from abroad for its survival. Now, the assumption by the government of the debt of the mortgage companies, carried out to protect the financial interests of banks and big investors, has placed a question mark over the solvency of the US government itself.

This threatens a curtailment of the inflow of international capital, a further erosion in the status of the US dollar and a drastic increase in the interest paid by the government to borrow money from its creditors. The US is already by far the world’s biggest debtor nation, with a balance of payments deficit of $800 billion and an economy that is sustained by a yearly inflow of $1 trillion in overseas capital.

The quantum leap in the national debt and government budget deficits resulting from the bailout of Fannie Mae and Freddie Mac—and the further corporate bailouts that are all but certain to follow—must inevitably lead to a realignment of social conditions within the US in accordance with the actual, deeply eroded, position of the United States in the world economy. This means an even more drastic lowering of the living standards of the American people.

On Tuesday, the Congressional Budget Office (CBO) declared that as a result of the government bailout, the finances of Fannie Mae and Freddie Mac had to be “directly incorporated into the federal budget,” and its liabilities added to the US national debt. This means, in effect, a near doubling of the US sovereign debt to a figure equivalent to the country’s gross domestic product (GDP).

The Financial Times reported Wednesday that the bailout had already resulted in a sharp rise in the price of credit default swaps on five-year US government debt. Credit default swaps are private contracts to buy insurance against the default of various forms of debt.

As the Financial Times wrote, “... the price suggests the market believes the US government is more likely to default on its obligations than some other industrialised countries.” It went on to cite a credit research strategist as saying, “The USA is now ‘riskier’ than Norway, Germany, Netherlands, Sweden, Finland, Austria, France, Denmark, Quebec and Japan.”

The CBO statement on Fannie Mae and Freddie Mac accompanied its report on the US government budget deficit for the current fiscal year, which ends September 31, and its projections for fiscal 2009 and beyond. The CBO put the current deficit at $407 billion, more than double the $161 billion deficit for fiscal 2007.

It projected, on the basis of current tax laws, that the budget gap would rise to a record $438 billion in the 2009 fiscal year that begins October 1. However, as CBO Director Peter Orszag noted, that figure could easily climb to $540 billion if Congress acts in the coming months, as expected, to curtail the growth in the alternative minimum tax and extend a variety of expiring business tax breaks.

Orszag further noted that these figures did not take into account the full scale of government expenditures related to the bailout of Fannie Mae and Freddie Mac. Treasury Secretary Henry Paulson said on Sunday the government would commit up to $200 billion to prop up the companies. Given the continuing decline in home prices and rise in foreclosures, that figure is virtually certain to rise by tens, if not hundreds, of billions.

Orszag said that the deficit would remain at between 3 and 4 percent of the GDP for the next decade, resulting in a $7 trillion rise in the national debt. Even these dire projections assume that Bush’s massive tax cuts for the rich will not be extended beyond their scheduled expiration in 2010.

Significantly, Orszag pointed to government health care spending—not the cost of corporate bailouts or the wars in Iraq and Afghanistan (which have to date consumed a combined sum of $850 billion)—as the main source of exploding deficits going forward. The CBO warned that Medicare and Medicaid spending, which currently account for an estimated 4.6 percent of GDP, could account for up to 12 percent of GDP by 2050.

The mounting financial crisis of American capitalism was further underscored by the Commerce Department’s report Thursday on the US trade deficit, which surged in July by 5.2 percent to $62.2 billion, the highest level in 16 months.

The headlong rush of Lehman Brothers and Washington Mutual toward collapse—or new federal bailouts—within days of the government takeover of Fannie Mae and Freddie Mac has underscored the depth of the financial crisis.

The stock of the 158-year-old Wall Street investment bank collapsed this week after it was reported that Lehman’s efforts to secure a capital infusion from the state-owned Korea Development Bank had collapsed. At the close of the financial markets on Thursday, the value of Lehman’s stock—down by more than 90 percent since its peak last February—was about $2.9 billion. It stood at $37.2 billion at the start of 2008.

Once the biggest underwriter of mortgage-backed securities, the firm has seen its speculative investments collapse and would have already gone bankrupt were it not for the Federal Reserve’s decision, taken at the time of the government-subsidized sale of Bear Stearns to JP Morgan Chase last March, to extend low-cost loans to investment banks and accept virtually worthless mortgage-related securities in return for highly rated Treasury securities.

It was reported Thursday that the firm was in talks with potential buyers, including Bank of America, for a buyout that would avoid bankruptcy or a government bailout—at the cost of billions in losses to shareholders and the jobs of thousands of Lehman employees. On Wednesday, when it announced a third quarter loss of $3.9 billion and a plan to spin off much of its business and shrink its operations, the company said it was slashing 1,000 to 1,500 jobs, its fourth round of layoffs this year.

Over the past year, US banks and brokerages have cut more than 110,000 jobs.

The collapse of both Lehman and the two government-sponsored mortgage giants starkly illustrates the immense dependence of American capitalism on overseas capital. Lehman went to ground after its bid for funds from a South Korean bank failed, and the government bailout of Fannie Mae and Freddie Mac was precipitated by the dumping of the firms’ securities by central banks and major investors in Asia and Russia.

The stock of the giant savings and loan bank Washington Mutual, which has some $180 billion in mortgage-related loans, has fallen by 34 percent since Monday and 92 percent over the past year. This week it reported a $3.33 billion second quarter net loss and has said its mortgage losses could reach $19 billion through 2011.

Raising the possibility of another government bailout, Christopher Whalen, a managing partner at Institutional Risk Analytics, said of Washington Mutual, “If this goes on until the end of the year, the bank is either going to have to be sold or recapitalized by the government. Those are the only choices.”

The Financial Times on Wednesday worried that the massive US budget deficits were limiting the ability of the government to continue propping up Wall Street with injections of hundreds of billions in capital. It wrote:

“Yesterday’s new deficit projections by the Congressional Budget Office highlight the troubled state of US government finances as it embarks on a new stage of interventions to contain the chronic impact of the credit crisis....

“Some economists worry that as the Federal Reserve has spent much of its ammunition, and as fighting the credit crisis falls more to the government, weak public finances mean the government does not have unlimited ammunition either.”

Noting that the Federal Reserve was seeking to conserve its capital for further corporate bailouts, the newspaper wrote, “Many Fed officials share this view, which is why the Fed is lukewarm on further fiscal stimulus, preferring to see the limited government funds spent on shoring up the financial system.”

The response to mushrooming budget deficits and soaring national indebtedness, as well as the spreading crisis on Wall Street, by the next administration, whether headed by Republican John McCain or Democrat Barack Obama, will be a policy of brutal austerity directed against the working class.

One can safely predict that not long after the November election, the incoming president will announce that his transition advisers have shown him the country’s financial books, that the dire state of the nation’s economy makes inoperative any and all promises of health care reform or relief to distressed homeowners, and that a regime of discipline and “sacrifice” will have to be imposed in the “national interest.”

Senator Kent Conrad, the Democratic chairman of the Senate Budget Committee, sounded just such a note when he said, in response to the CBO report, that “the next president will be inheriting a budget and economic outlook that is far worse than most people realize.”

As the CBO report indicates, the next administration will be tasked with dismantling basic entitlement programs such as Medicare and Medicaid.

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The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.

Study: Bankruptcies Soar For Senior Citizens

This, I fear, is only the beginning, the tip of the iceberg, as it were.............

By MATT SEDENSKY

ST. AUGUSTINE, Fla. (AP) — First came the health problems. Then, unable to work, Ada Noda watched the bills pile up. And then, suffocating in debt, the 80-year-old did something she never thought she'd be forced to do.

She declared bankruptcy.

While the bankruptcy filing rate for those under 55 has fallen, it has soared for older Americans, according to a new analysis from the Consumer Bankruptcy Project, which examined a sampling of noncommercial bankruptcies filed between 1991 and 2007.

The older the age group, the worse it got — people 65 and up became more than twice as likely to file during that period, and the filing rate for those 75 and older more than quadrupled.

"Older Americans are hit by a one-two punch of jobs and medical problems and the two are often intertwined," said Elizabeth Warren, a Harvard Law School professor who was one of the authors of the study. "They discover that they must work to keep some form of economic balance and when they can't, they're lost."

That's precisely what happened to Noda. She worked all her life, on a hospital's housekeeping staff, and later selling boat tickets to tourists. She cut corners when she needed to but always paid the bills she neatly logged in a ledger.

"I was born during the Depression," she said. "I paid the bills whether I ate or didn't, whether I went to the doctor or not."

It all worked fine for Noda, a widow for 23 years, until she was forced to undergo double-bypass surgery and deal with respiratory problems. She started using two credit cards more frequently for food and bills. Before long, she was $8,000 in debt and behind on car payments.

"I'd go to bed and all I had on my mind was bankruptcy," she said. "I had nothing left."

Noda's car was repossessed, but her trailer home wasn't in jeopardy because her daughter owns it. While she's covered by Medicare and receives $968 in Social Security each month, she relied on her job for other expenses. She had no choice but to get help from Jacksonville Legal Aid and declare bankruptcy.

Most bankruptcies are still filed by people far younger than Noda, but the percentage the younger filers make up has fallen over the 16-year period, according to the Consumer Bankruptcy Project analysis, which will be published in the Harvard Law and Policy Review in January.

In 1991, the 55-plus age group accounted for about 8 percent of bankruptcy filers, according to the study, which looked at more than 6,000 cases filed in 1991, 2001 or 2007. By last year, filers 55 and over accounted for 22 percent.

Each age group under 55 saw double-digit percentage drops in their bankruptcy filing rates over the survey period, older Americans saw remarkable increases. The filing rate per thousand people ages 55-64 was up 40 percent; among 65- to 74-year-olds it increased 125 percent; and among the 75-to-84-year-old set, it was up 433 percent.

A number of factors are contributing to the increase. Higher prices for ordinary consumer goods have hit seniors on fixed budgets. For older Americans living below the poverty level, or not far above, a safety net likely doesn't exist for economic setbacks such as medical problems. And some fall prey to scams that cripple their finances.

Warren noted increasing numbers of Americans are entering their retirement years with significant debt and are still paying off mortgages. She said it was wrong to assume that lives of luxury are bankrupting seniors; rather, they're incurring debts to meet needs such as medical treatment.

"There's no evidence that the problem is consumerism," the professor said.

Nor is there a significant aging trend to blame. While the country is set to experience a notable age shift in the coming years, no major one took place between 1991, when the average age was 33, and 2007, when it was 36.

Frank and Hazel Peters lived frugally their entire 53-year marriage. They always rented a home but decided after the husband's retirement from a factory job that they would cash in his 401(k) and buy a manufactured home down a gravel road in tiny Hastings, a town of cornfields and potato farms.

But they fell victim to fraud when they tried to fix a plumbing problem that had black, sulphur-smelling water coming through the pipes of their new home without enough funds to fall back on. They declared bankruptcy.

"We knew we had no other option," 73-year-old Hazel Peters said. "We'd probably be out on the street."

Bankruptcy, tough no matter a person's age, is especially hard when you don't have many years left to recover. Warren said some seniors fear telling their families because they're afraid they'll be put in a nursing home if they're seen as unable to take care of their affairs.

Many who file also express a sense of relief.

Wilona Harris, 71, filed bankruptcy two years ago because of medical bills she and her husband accrued.

"This phone rang all the time. It made you not even want to pick up. Sometimes you think, 'Let me go jump off a bridge somewhere,'" Harris said at her Jacksonville home. "You have to cry and try and figure out what in the world could I do."

At least now, Harris says, she can fall asleep without crying.

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The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.

R.I.P., Trickle Down.

The only thing that trickles down during every Republican administration I have witnessed is meanness, nastiness and hate crimes.

By Jared Bernstein - August 26, 2008, 11:11PM

Look for this obituary in tomorrow's paper:

Trickle-down economics died yesterday morning at 10AM. The cause of death was a data release from the US Census Bureau, but trickle-down had been ailing from lack of empirical support for decades. Also known as "supply-side economics," trickle-down was the love child of Ronald Reagan, Arthur Laffer, and Jude Wanniski. It is survived by Larry Kudlow and Co., and the editorial page of the Wall St. Journal.

That's what you should see, but you probably won't. Let me explain.

The Census Bureau released some new data on Tuesday that strongly contradicts supply-side, trickle-down economics, but the truth is that if this brand of hucksterism could be brought down by evidence, it would have died long ago.

First, the new data. Every year the Census Bureau releases info on middle-class incomes and poverty for the prior year. So today's release refers to last year's data. Median household income, inflation-adjusted, was up slightly in 2007, but poverty rose too.

But the annual data are not of great interest here. Since 2007 was the last year of an economic expansion that began in 2001, that makes it an economic peak: the last year of a cycle. Which means we can now, for the first time, compare the results from this peak to the peak of the prior cycle: 2000.

Economists like such comparisons because they evaluate a given outcome across similar years in the cycle. If you were to compare, say, trough to peak, you'd expect things to improve. But peak-to-peak is considered the legit way to compare like-to-like.

So here are some key peak-to-peak comparisons:

Real (inflation-adjusted) median household income was essentially unchanged between 2000 and 2007 (it was $300 lower last year than in 2000, but the difference is not statistically significant).

This is the first cycle on record where the real median household income failed to surpass its prior peak.

For working-age households, real median income is $2,000 below its 2000 level.

Poverty rates were 1.2% higher in 2007 than in 2000, up from 11.3% to 12.5%, an addition of 5.7 million to the poverty rolls. This is the worst cycle for poverty on record. The second worse was 1979-89, a decade also dominated by trickle-down economics.

What is trickle-down? It's the set of economic policies based on the notion that if you provide economic incentives to the wealthy by cutting their taxes (or, as the supply-siders put it, "letting us keep our money") while deregulating industry, you'll unleash a tsunami of economic activities that will enrich even the least advantaged among us.

The theory doesn't make sense even on its face. Why would people work harder only if you cut their taxes? After all, their after-tax income goes up, so they might decide they can work less and still be as well off. Or, if you raise their taxes, they might decide to work harder to make up the after-tax losses.

No matter...this stuff is not based on logic. It's largely a rationale for upward redistribution that's been kept alive by the vested interests who benefit from it. Reagan put this stuff on the map, but GW Bush brought it back with a vengeance, and McCain goes even further. He extends the supply-side Bush tax cuts, and lards on about $75 billion more in corporate tax cuts on top of that.

The evidence from the 1980s and the 2000s shows that trickle-down works fine, if by "down" they mean "up." But is there any counter-evidence that shows the impact of a different policy regime on middle-class and low-incomes?

Exhibit A is the 1990s. When he came into office, Clinton eschewed supply-side, cutting taxes on lower-income households and raising them at the top end. Obama takes a similar approach.

Now, take a look at Figures 5 and 6, and especially Table 2 in this document, drawing on today's report from the Census. There you will see evidence of the strong real growth in median incomes and sharp declines in poverty that occurred over the 1990s, contrasted with the opposite trends in the 2000s.

Remember those working-age households that lost a couple of grand in the 2000s? Their income was up 10%, or $5,200 in the 1990s (1989-2000). Had this growth rate prevailed in the 2000s, their median income would have gone up $3,600 instead of falling $2,000.

Note that these results are strongest for minorities. The median household income of African-American households grew 22% in the 1990s and fell 5% in the 2000s. Note also the poverty results from black children (Table 2 from the above link). If evidence were bullets, trickle-down would perish in a pool of blood.

Yet, its obit is premature. It lives on in the Republican platform, the right-wing think tanks, and conservative media (really, in the mainstream media...you may recall that during a Democratic primary debate on ABC, Charles Gibson claimed that due to the magic of supply-side, capital gains tax cuts pay for themselves).

Frankly, I'm not sure how to kill it, and am earnestly interested in any ideas you might have for exposing and discrediting this deeply damaging ruse. In the meantime, the best we can hope for is to throw its practitioners out of the White House and Congress.


(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. I.U. has no affiliation whatsoever with the originator of this article nor is I.U endorsed or sponsored by the originator.)


The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.

Just Another Market Problem or System Collapse?

My bet would be on total collapse.

Posted on July 28, 2008, Printed on July 28, 2008
http://www.alternet.org/story/93031/

The question we face in late July, as regulators seize two more banks, is: will we be engulfed by a further collapse in our economy or can the damage be contained, or, even turned around?

We know what goes up must come down but when will what's down go back up?

It isn't looking good -- and, even now, the two presumptive major party presidential candidates are talking about everything but this deepening crisis. They are debating terrorists and Afghanistan and how to meander out of Iraq but not the reality that so many Americans are living with: a squeeze that is leaving so many of us broke, in deeper and deeper debt and disgusted.

Until now, the doom and gloomsters were mostly to be found in the margins, in financial blogs or in the campaigns of Ron Paul, Ralph Nader or the Greens. The mainstream media has been looking the other way and mostly downplaying the unfolding disaster. Even as foreclosures double, and the price of gas and food rises sharply, it's been business as usual on the business pages, and among the liberal political pundits who would rather debate the cover of the New Yorker than the growing desperation of so many Americans.

The Congress finally passed a housing bill a year into the crisis with most of the money allocated to try to shore up two housing agencies with more than a half a trillion in housing assets. The markets are melting down with more major stocks tanking, banks writing off still more billions. and unemployment rising.

People in the know like George Soros are saying this is the worst financial crisis since the depression. Others fear another depression. This pessimism has reached Newsweek, a guardian of conventional wisdom, which now says "It's Worse Than You Think, writing "this downturn is likely to last longer than the eight-month-long recession of 2001. While the U.S. financial system processes popped stock bubbles quickly, it has always taken longer to hack through the overhang of bad debt. The head winds that drove the economy into this dead calm -- a housing and credit crisis, and rising energy and food prices -- have strengthened rather than let up in recent months. To aggravate matters, the twin crises that dominate the financial news -- a credit crunch and the global commodity boom -- are blunting the stimulus efforts."

We have two challenges: understanding the gravity of what is threatening us, and then discussing what could or should be done. We might also want to think about what the press should be reporting and what policy makers should be proposing.

On the foreclosure crisis, for example, I was just in Washington for five days with NACA, the Neighborhood Assistance Corporation of America which took over a major hotel and set up a shop to counsel at risk home owners and advocate for affordable loans.

The Washington Post, based just across the street from the lines of some 20,000 people seeking help, did not cover it until it was over. But, to their credit, when they did they recognized that this effort by a not for profit citizens group was more effective in responding to the crisis than all the government agencies put together.

Writes Post Business columnist Steven Pearlstein:

They came by plane and train, car and subway, starting before dawn and continuing late into the night, all of them clutching tattered folders and envelopes stuffed with the documentary evidence of their financial hardship and miscalculation.

"It was striking how well-organized and executed it all was. Outside, there were plenty of volunteers and staff -- 350 were flown in from around the country -- doling out information, advice and sympathy to those waiting in line.

"In the space of 30 to 60 minutes, the well-trained, upbeat counselors managed to win the trust of their new clients, wring promises of a more frugal lifestyle and enter into their computers the relevant financial details. At a push of a button, NACA's underwriting system declared how much the client could afford in monthly mortgage payments, and automatically requested the mortgage servicing company to modify the loan accordingly. Depending on the service and the loan, the answer might be available in a matter of days or even hours. In about half the cases, the result is likely to be a below-market, fixed-rate loan with hundreds of dollars cut from their monthly payments.

So here's one example of what can be done by an economic justice organization fusing services and advocacy. This all happened three blocks from the White House. While federal regulators visited, none of the progressive DC think tanks or even unions showed up in solidarity even though AFL-CIO headquarters is a block away.

Individuals need help but we all need change. Are we dealing with just another market mistake, the latest bubble gone bust in a volatile business cycle or a straining system on the verge of breakdown? Can we solve all this with an Alka-Seltzer-like infusion of new taxes or regulations?

Or, is Gerry Gold, economics editor of the UK's A World to Win, right when he argues, "The urgency of building a movement to replace capital, not to rescue it, cannot be overstated. This will mean a major program extending social ownership to all sectors of the economy, ending the distribution of profits to shareholders, and replacing the system of selling labor for wages with collective decision-making about the distribution of an organization's income."

Pie in the sky? Or is the sky really falling, made worse by global warming, wars without end, and resource depletion? If Obama or McCain are to "fix" what's broken, they better start talking about it. And once they inevitably do, will either one of them, once elected, be able to overcome Congressional inertia and the power of corporate/finance industry lobbies?

If the rest of us see what's coming, we better speak up too. Remember, when you see something say something? It's also time to do more than talk.

Danny Schechter writes a blog for MediaChannel.org. He is the author of "Embedded: Weapons of Mass Deception: How the Media Failed to Cover the War on Iraq" (Prometheus).

© 2008 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/93031/

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The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.

Oil Prices Too High? Just Wait. You Ain't Seen Nothin' Yet

If Americans had the sense God gave a dead jackass, they would begin drastic changes in their consumer habits, especially energy consumption.

For those of us who began making the needed shifts long ago, 15 cheers and keep up the good work!

Think oil prices hurt now? Just wait

www.reuters.com/article/wtMostRead/idUSN2248967220080522

Sky-high oil prices are causing pain at the pump, but bills for air conditioning this summer and heating next winter -- combined with rising food costs -- promise to squeeze U.S. consumers even more."For the areas of the economy that rely on heating oil, high fuel prices are going to be another blow to the consumer this winter," said Jack Kyser, chief economist at the LA County Economic Development Corp. "The hotter states will feel the pinch during the summer months but in the mid-America states where you get hot summers and cold winters, it's going to be very uncomfortable," he said. "This is going to eat into the disposable income of American consumers -- supposing they have any left."

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. I.U. has no affiliation whatsoever with the originator of this article nor is I.U endorsed or sponsored by the originator.)


The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.

A Prophecy and A Must Read

Never make predictions, especially about the future, is a wise piece of advice. But prophecy can also be understood as "suggesting the possible". The possible large-scale consequences of current global trends have been explored in an earlier column in this series (see "A century on the edge, 1945-2045", 29 December 2007). The future imagined, hoped for or feared today may not be so distant, however. What might the world look like only a little more than a decade ahead, in 2020? Here are two scenarios. Paul Rogers is professor of peace studies at Bradford University, northern England. He has been writing a weekly column on global security on openDemocracy since 26 September 2001 - this is his 350th column

2020, future one: an age of insurgencies

After the United States presidential election in November 2008, the incoming administration in Washington took office in the context of an unfolding global recession. It paid rather more attention to climate change than its predecessor, but - even as the scientific evidence of accelerating global warming mounted - it did little more than rhetorically support the goals agreed at the conferences in Bali, Poznan and Copenhagen between December 2007 and December 2009 (see "Climate change: a window to act" [22 November 2007] and "A global threat multiplier" [20 March 2008]).

In the security field, the new administration made some attempts to reduce US commitments in Iraq, while increasing forces in Afghanistan. Its efforts to manage and control either conflict were, however, constrained by resource pressures and local realities.

But it was the political reaction to a series of events in 2009-10 in the United States, Europe and the middle east that did much to determine the security environment of the 2010s. In London, multiple bomb-attacks on the Eurostar terminal at St Pancras International and the Kings Cross/St Pancras underground station killed well over a hundred people, many of them recent arrivals from Paris. The British and French governments reacted by imposing even tougher legal measures while further expanding their intelligence and security forces.

In Saudi Arabia, combined attacks on the Abqaiq oil-processing plant and the Ras Tanura oil-exporting port succeeded where the operation of February 2006 had failed (see "Abqaiq's message to Washington", 9 November 2006). The industrial disruption lasted only for a few months, but the impact on oil prices was massive. The Saudi authorities reluctantly acquiesced to American insistence on the return of a US military presence to augment internal security; this gave a renewed boost to the al-Qaida movement, whose propagandists could again highlight the "crusader" occupation of the "kingdom of the two holy places".

In the United Arab Emirates, the spectacular Burj Dubai skyscraper reached its planned height of just over 915 metres early in 2009. This symbol of Dubai's relentless property boom was hailed in much of the media as the eighth wonder of the world in an already extraordinary city (see Faisal Devji, "Dubai cosmopolis", 19 April 2007). The superlatives left unmentioned the half a million contract-workers from across south Asia who had provided the labour force for the emirate's building extravaganza. Many lived sixteen to a room in overcrowded labour camps out in the desert, separated for months or years from their families. Their grinding toil earned minimal wages and the same degree of protection from industrial accidents or health problems. They were the heirs to the slaves who had built the pyramids - one of those earlier wonders.

Six months after Burj Dubai's completion, explosives that had been hidden during construction detonated without warning, collapsing the building and killing over 20,000 people. Most were American, Russia and western European expatriates, though they also included many service workers. A group calling itself the Army of the Poor claimed responsibility.

Soon after, an Iraqi freight airline pilot crashed her Boeing 747 into the Capitol in Washington, killing over 1,000 people, including many members and staffers of Congress. It transpired that the pilot's parents had been killed by US marines at a checkpoint in Baghdad in 2004. Some analysts chose to regard this as an extreme instance of blowback.

The reaction to these attacks across the west, and especially in the United States, was to intensify the war on terror. In a hawkish political atmosphere, a selective draft was introduced, US intervention in Pakistan became routine, and the war in Iraq was at last extended to Iran (see "Iran: war and surprise" [13 September 2007] and "The Tehran fixation" [1 November 2007]. The retrospective view of the US's national military strategy of 2008 - envisaging an "era of persistent engagement" - confirmed earlier assessments that it formed the basis for a conflict without limits or ends (see John T Bennett, "Draft U.S. National Military Strategy Declares 'Era of Persistent Engagement'", Defense News, 14 April 2008 [subscription only]).

In these circumstances, the early intention of the new administration in Washington to focus on the problems of the global economy and of climate change was forgotten. The sheer scale and longevity of what the United States was involved in and committed to were vividly reinforced (see "The world as a battlefield", 9 February 2006).

Thus, the early 2010s were dominated by an even more ferocious war on terror. In global terms, however, far more people were immediately affected by the rampant Naxalite rebellion in India and the protracted social conflicts of an economically booming but ever more divided China. The decade of 2010-20 is now widely characterised as an "age of insurgency", and - beyond the fevered and desperate imaginings of US neo-conservatives - there is at last among political and media establishments a developing recognition of the evolving impact of global polarisation and the prevention of access to sustainable livelihood of millions of people.

What was less anticipated, and in 2020 was still far from being properly recognised, was the combined effect of this human insecurity and socio-economic division and deprivation with unavoidable environmental constraints. True, the pressing realities of climate change across much of the world - and most devastatingly in the tropics - were increasingly apparent by the late 2010s. But the main outcome in the global north was a closing of the castle gates. The border barrier between the United States and Mexico was supplemented by a hugely expanded US Coast Guard - the fifth and smallest element of the US armed forces (after the army, navy, air force, and marines), responsible for patrolling the seas; most of Europe (as well as Australia) followed the lead of "fortress America" (see "The New Atlantic Century?", 24 January 2008).

In much of the rest of the world, the elites continued to thrive in their heavily protected enclaves, yet lived too with a permanent undercurrent of fear (see "A tale of two towns", 21 June 2007). This was intensified by the way that the Army of the Poor has become a global anti-elite phenomenon. There was no one leader, no particular focus, just a loose amalgam of groups. In this respect it resembled the al-Qaida movement of the 1998-2010 years, which is now seen much more as an early symptom rather than a core phenomenon. In the wake of the Burj Dubai attack, the targeting of nodes of economic power became almost routine (see "The asymmetry of economic war", 14 February 2008).

This is the global predicament in 2020. It may be that the world's institutions of governance and citizens will in the decade to come begin to move towards a sustainable future, founded on greater understanding of the world as it is. A lot of luck will be needed for this to happen - and even if it does, it will follow two lost decades of missed chances which have inflicted a level of suffering that will haunt humanity for the rest of the century.

2020, future two: some small steps

In 2009, the incoming administration in Washington was preoccupied with the domestic recession, but there were signals of a cautiously progressive approach in some aspects of its foreign policy. These included a limited withdrawal of forces from Iraq, a willingness to allow negotiations in Afghanistan and Pakistan, and a more proactive and determined search for a settlement of the Israel/Palestine dispute. This limited departure from the policies of the George W Bush administration helped change the global atmosphere of antagonism towards United States policies, and even had the beginnings of an effect (if fragile and conditional) on support for radical Islamist movements.

By 2011, and in the wake of the world food crisis of 2008-09, transnational civil-society groups were focusing on what was being called a "new international economic order"; it was broadly similar to proposals made in the early 1970s, but underpinned by a much more clear-cut policy agenda (see "The world's food insecurity", 24 April 2008). This embraced trade reform, large-scale debt cancellation and sustainable pro-poor development assistance, and also concentrated on the increasingly urgent matter of climate change.

By late 2011, the largely discredited World Trade Organisation was being sidelined by many states in the global south which were insisting that the United Nations should refocus on the UN Conference on Trade and Development (UNCTAD) as the main negotiating forum. The organisation's session in Qatar in 2012 - exactly forty years after the failure of UNCTAD III, in Santiago, Chile - was a formative moment for activists and media in arguing for this global reordering of political energies (see "Wanted: a new global paradigm", 8 November 2007).

In parallel with these arguments over food insecurity, poverty, development and trade, the issue of climate change was at last receiving serious government attention; Washington - and the American people and the country's states and cities - was engaged in a more than rhetorical way. Climate specialists continued to warn of a rapid acceleration of effects whose short-term consequences would include unpredictably febrile weather patterns. They were taken more seriously than ever - even more so when a series of formidable events hit in 2010-11: among them seven Category 5 storms within twenty months that caused extensive damage to Miami, Osaka and Hong Kong / Guangzhou, and severe heatwaves and floods across much of central and western Europe.

(In addition to his weekly openDemocracy column, Paul Rogers writes an international security monthly briefing for the Oxford Research Group; for details, click here

Paul Rogers's most recent book is Why We're Losing the War on Terror (Polity, 2007) - an analysis of the strategic misjudgments of the post-9/11 era and why a new security paradigm is needed But worst of all was the failure of the rains in a swathe of territory from east Africa to the eastern Mediterranean, southeast Turkey, northern Iraq and through most of Iran. The alarming decrease in the Nile flow created particular suffering in Egypt. The extensive social disruption was far more severe than during the 2008 food emergency, and included a massive escalation of migration pressures.)

These desperate environmental circumstances, in the context of the shifting security and political landscape, helped generate a new global balance of forces. An effective coalition of transnational civil pressure (in which many north-south movements played an important role), some enlightened political leadership and a reinvigorated United Nations began to have significant practical achievements to its credit.

A striking example was the decision in 2012 to replace the surface panels of the world's tallest building, the Burj Dubai, with third-generation quantum-well photovoltaics. On a site guaranteed to have at least 350 sunny days in the year, the building was transformed into a veritable power station, giving an enormous boost to the entire region's ecological transformation (see James Howarth, "The quiet revolution: energy futures in Iran, the Gulf, and Israel", 7 February 2008). This experimental use of green technology was not at the time subject to narrow economic criteria of utility, but it quickly came to have enormous practical as well as symbolic value: in the development of photovoltaics and other renewables, in advanced-energy storage technologies and energy conservation, as well as in the challenge to existing technologies to refine their application.

At the same time, industrialising states were beginning to succeed in evolving low-impact economies. The overall result was that by 2016, a serious downturn in carbon emissions worldwide was beginning to be evident.

In 2020, no one can pretend that the future is bright. It is accepted that a high-priority concern with climate change will persist for at least half a century; and that its effects will require sustained efforts of amelioration, especially in tropical and sub-tropical areas. It is also acknowledged that the world economy is very little fairer than in 2008; that rich elites live in ghettoised, protected communities divorced from their fellow-citizens and insulated from the sense of a public interest; and that radical movements continue to provoke and scarify political establishments.

Yet amid this mix of limited progress and rooted danger, there is an air of - restrained and qualified - optimism. A deep regret and anger at this century's first wasted decade is being supplemented by a sense that the 2010s have at least begun the process of facing the world's realities.

There is no respite. The decade ahead demands a new phase of qualitative and even more radical change. The 2020s will determine whether global emancipation in a sustainable world is feasible; even now the prospect remains more dream than reality.

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. I.U. has no affiliation whatsoever with the originator of this article nor is I.U endorsed or sponsored by the originator.)


The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.