Wednesday, February 3, 2010

U.S. agrees to timetable for UN Gun Ban

The United Nations and Secretary of State Hillary Clinton are moving forward with their plan to confiscate your guns.

The United States joined 152 other countries in support of the Arms Trade Treaty Resolution, which establishes the dates for the 2012 UN conference intended to attack American sovereignty by stripping Americans of the right to keep and bear arms.

Working groups of anti-gun countries will begin scripting language for the conference this year, creating a blueprint for other countries when they meet at the full conference.

The stakes couldn’t be higher.

Former United Nation’s ambassador John Bolton has cautioned gun owners about the Arms Trade Treaty and says the UN “is trying to act as though this is really just a treaty about international arms trade between nation states, but there’s no doubt that the real agenda here is domestic firearms control.”

Establishing the dates for the Arms Trade Treaty Conference is just the first step toward their plans for total gun confiscation.

The worldwide gun control mob will ensure the passage of an egregious, anti-gun treaty…

. . .and that’s where Secretary of State Hillary Clinton steps in.

Once the UN Gun Ban is passed by the General Assembly of the United Nations it must be ratified by each nation, including the United States.

As an arch enemy of gun owners, Clinton has pledged to push the U.S. Senate to ratify the treaty. She will push for passage of this outrageous treaty designed to register, ban and CONFISCATE firearms owned by private citizens like YOU.

That’s why it’s vital you sign the special petition I’ve made up for your signature that DEMANDS your U.S. Senators vote AGAINST ratification of the UN’s “Small Arms Treaty.”

So far, the gun-grabbers have successfully kept the exact wording of their new scheme under wraps.

But looking at previous versions of the UN “Small Arms Treaty,” you and I can get a good idea of what’s likely in the works.

Don’t let any of the “experts” lull you to sleep by saying “Oh, we have it handled” or “Until you know exactly what’s in the treaty you can’t fight against it.”

Judging by Ambassador Bolton’s comments — who certainly knows what to expect from the American-freedom-hating international crowd that infests the U.N. — we are certain the treaty’s going to address the private ownership of firearms.

If passed by the UN and ratified by the U.S. Senate (which is where we must ultimately make our stand), the UN “Small Arms Treaty” would almost certainly FORCE national governments to:

*** Enact tougher licensing requirements, making law-abiding citizens cut through even more bureaucratic red tape just to own a firearm legally;

*** CONFISCATE and DESTROY ALL “unauthorized” civilian firearms (all firearms owned by the government are excluded, of course);

*** BAN the trade, sale and private ownership of ALL semi-automatic weapons;

*** Create an INTERNATIONAL gun registry, setting the stage for full-scale gun CONFISCATION. So please click here to sign the petition to your U.S. Senators before it’s too late!

You see, this is NOT a fight we can afford to lose.

Here’s what you can do to help the National Association for Gun Rights fight Hillary Clinton and her United Nations cronies:

Click here and sign our petition to DEMAND that your United States Senators vote AGAINST the United Nations Small Arms Treaty.

• Forward this petition to your friends and relatives who share your concern for American sovereignty and protecting our right to keep and bear arms.

Please consider making a generous contribution to the National Association for Gun Rights to help us fight Hillary Clinton and the United Nations “Small Arms Treaty.”

The Fort Knox Conundrum: Chinese say they received bogus bars of gold traced to U.S.

Could over 1 million bars of gold, much of which is still held in Fort Knox, Ky., be counterfeit? An October 2009 discovery that suggests this may be true has been suppressed by the mainstream media but has been circulating among the “big money” brokers and financial kingpins. It is just now being revealed to the public.

Gold is regularly exchanged between countries to pay debts and to settle the so-called balance of trade. It is often also used as a hedge against a falling currency. Gold is regularly traded and stored in vaults under the strict supervision of a special organization based in London, known as the London Bullion Market Association (LBMA). That’s why news of counterfeit gold bars was a surprise to many experts.

In October 2009, China reportedly received a large shipment of gold, containing some 6,000 bars, weighing 400 ounces each. When it was received, the Chinese government asked that tests be performed to guarantee the purity and weight of the gold bars. In this test, four small holes were drilled into the bars, and the metal was analyzed. Officials were shocked to find the bars were bogus. They contained cores of tungsten, with only an outer coating of real gold. What’s more, these gold bars, containing serial numbers for tracking, originated in the United States and had reportedly been stored in Fort Knox for years.

According to gold expert Theo Gray, there are very few metals that are as dense as gold. With only two exceptions, they all cost as much or more than gold. The standard gold bar for bank-to-bank trade, known as a “London good delivery bar,” weighs 400 troy ounces (more than 33 pounds), yet is no bigger than a paperback novel. To put it in perspective, a bar of steel the same size weighs only 13.5 pounds.

This was the problem that the Ethiopians had in early 2008 when they tried to dump millions of dollars in fake gold into South African banks. What were supposed to be bars of solid gold turned out to be nothing more than gold-plated steel. The South Africans quickly figured this out and sent the shipment back—apparently discovering the hoax with only minimal investigation.

The first exception to the weight of gold is depleted uranium (DU). This material is dirt cheap if you’re a government, but is hard for individuals to get. It’s also radioactive, which makes the handling of it impractical.

Interestingly enough, before DU was widely used as a U.S. weapons component to make shells more able to penetrate hardened targets, tungsten was used for that purpose.

But tungsten is vastly cheaper than gold—maybe $30 dollars a pound, compared to $1,200 an ounce for gold right now. It has exactly the same density as gold, to three decimal places. Therefore, it has to be drilled to detect the fraud. The only differences are that it’s the wrong color, and that it’s much harder than gold. Pure gold is soft and can be dented with a fingernail.

At first, many gold experts speculated that the fake gold must have originated in China, which is considered the world’s best knock-off producers. However, the Chinese government investigated and issued a statement pointing a finger squarely at the United States.

The Chinese claim that in 1995—during the Clinton administration (Robert Rubin, Alan Greenspan and Lawrence Summers)—between 1.3 million and 1.5 million 400-ounce tungsten blanks were manufactured by a sophisticated refiner in the United States, amounting to more than 16,000 metric tons. Some 640,000 of these tungsten blanks were then gold plated and shipped to Fort Knox, according to the Chinese, where they are said to remain to this day. The Chinese contend that the remaining collection of these 400-ounce fakes was eventually gold-plated and then “sold” into international markets.

The global market is literally “stuffed full of 400 ounce salted bars,” said one unnamed expert. “It’s enough to destroy the world markets.”

Much of 9/11 Commission’s Findings Cite Intelligence

Source: rawstory.com

Much of the material cited in the 9/11 Commission’s findings was derived from terror war detainees during brutal CIA interrogations authorized by the Bush administration, according to a Wednesday report.

“More than one-quarter of all footnotes in the 9/11 Report refer to CIA interrogations of al Qaeda operatives subjected to the now-controversial interrogation techniques,” writes former NBC producer Robert Windrem in The Daily Beast. “In fact, information derived from the interrogations was central to the 9/11 Report’s most critical chapters, those on the planning and execution of the attacks.”

“… [Information] derived from the interrogations is central to the Report’s most critical chapters, those on the planning and execution of the attacks,” reported NBC. “The analysis also shows – and agency and commission staffers concur – there was a separate, second round of interrogations in early 2004, done specifically to answer new questions from the Commission.

“9/11 Commission staffers say they ‘guessed’ but did not know for certain that harsh techniques had been used, and they were concerned that the techniques had affected the operatives’ credibility. At least four of the operatives whose interrogation figured in the 9/11 Commission Report have claimed that they told interrogators critical information as a way to stop being ‘tortured.’ The claims came during their hearings last spring at the U.S. military facility in Guantanamo Bay, Cuba.”

“Commission executive director Philip Zelikow (later counselor to Secretary of State Condoleezza Rice) admitted, ‘We were not aware, but we guessed, that things like that were going on. We were wary…we tried to find different sources to enhance our credibility,’” Windrem continued. “(Zelikow testified before the Senate on Wednesday, May 13, that he had argued in a 2005 memo that some of the tactics used on suspected terrorists violated the constitutional ban on cruel and unusual punishment.)”

He adds: “At least four operatives whose interrogation figured in the 9/11 Commission Report have claimed that they told interrogators critical information as a way to stop being ‘tortured.’ Those claims came during their hearings in the spring of 2007 at the U.S. military facility in Guantanamo Bay, Cuba.”

Philip Zelikow, a former colleague of then-National Security Adviser Condoleeza Rice, was appointed executive director of the 9/11 Commission despite his close ties to the Bush White House, and he remained in regular contact with Rove while overseeing the commission, according to New York Times reporter Philip Shenon’s new book, The Commission: The Uncensored History of the 9/11 Investigation.
Shenon, who led the Times coverage of the 9/11 Commission and still writes for the paper, based his book on myriad interviews with staffers and members of the commission, according to Holland. In addition to his ties to Rice and Rove, Zelikow had been the “architect” of a plan to demote Clinton-era counterterrorism czar Richard Clarke, who sounded the alarm about Osama bin Laden and al Qaeda months before the Sept. 11, 2001, terror attacks they perpetrated.

Zelikow “had laid the groundwork for much of what went wrong at the White House in the weeks and months before September 11. Would he want people to know that?” Shenon writes, according to Holland’s summary.

Shenon also reports that Zelikow received at least two calls from Rove while serving as 9/11 Commission executive director, and he made numerous calls to the White House, Holland says.

Zelikow has not denied speaking to Rove, but he apparently claimed their conversations involved his old job as director of the University of Virginia’s Miller Center of Public Affairs.

9/11 Commission members Thomas Kean and Lee H. Hamilton wrote that although US President George W. Bush had ordered all executive branch agencies to cooperate with the probe, “recent revelations that the CIA destroyed videotaped interrogations of Qaeda operatives leads us to conclude that the agency failed to respond to our lawful requests for information about the 9/11 plot.”

“Those who knew about those videotapes — and did not tell us about them — obstructed our investigation.”

They continued: “There could have been absolutely no doubt in the mind of anyone at the CIA — or the White House — of the commission’s interest in any and all information related to Qaeda detainees involved in the 9/11 plot.

“Yet no one in the administration ever told the commission of the existence of videotapes of detainee interrogations,” Kean and Hamilton wrote.
They said the panel made repeated, detailed requests to the spy agency in 2003 and 2004 for information about the interrogation of members of the Islamic extremist network but were never notified about the existence of the tapes.

The CIA has since revealed that in 2005 it destroyed videotapes of prisoners being tortured.

“I’m not a lawyer and I’m not sure if they broke the law or not but what they did do, I think, is try to impede our investigation,” said Kean. “Because we asked for…anything to do with those detainees, because they were the ones who knew most about the plot of 9/11 and that was our mandate.”

He continued: “We asked for every single thing that they had, and then my vice chairman, Lee Hamilton, looked the director of the CIA in the face and said, ‘look, even if we haven’t asked for something, if it’s pertinent to our investigation, make it available to us.’ And our staff asked again and again of their staff and the tapes were not given to us. So there was no question.”

In a telephone survey of 1200 individuals, just 47% agreed that “the 9/11 attacks were thoroughly investigated and that any speculation about US government involvement is nonsense.” Almost as many, 45%, indicated they were more likely to agree “that so many unanswered questions about 9/11 remain that Congress or an International Tribunal should re-investigate the attacks, including whether any US government officials consciously allowed or helped facilitate their success.”

A number of widows of the victims of attacks on Sept. 11, 2001 said the 9/11 Commission was a failure for not addressing all the concerns and questions about the day’s events. They have called for a new, independent commission to probe the real history of that day.

http://world911truth.org/much-of-911-commission-findings-cite-intelligence-garnered-by-torture/

Coast-to-coast double-digit college tuition hikes

State budget deficits contribute to higher education costs

SEATTLE - As students around the country anxiously wait for college acceptance letters, their parents are sweating the looming tuition bills at public universities.

Florida college students could face yearly 15 percent tuition increases for years, and University of Illinois students will pay at least 9 percent more. The University of Washington will charge 14 percent more at its flagship campus. And in California, tuition increases of more than 30 percent have sparked protests reminiscent of the 1960s.

Tuition has been trending upward for years, but debate in statehouses and trustee meeting rooms has been more urgent this year as most states struggle their way out of the economic meltdown.

The College Board says families are paying about $172 to $1,096 more in tuition and fees this school year. The national average for 2009-2010 is about $7,020, not including room and board, according to the nonprofit association of colleges that oversees the SATs and Advanced Placement tests.

Mike Sarb, a University of Illinois senior from suburban-Chicago Elk Grove Village, Ill., says money is a big concern for his blue-collar family scrambling to find the money to pay more than $20,000 for tuition, room and board.

They are not pleased that university officials are likely to raise tuition 9 percent this summer.

"They do complain that the school's taking advantage of people (by raising tuition)," Sarb said.

But interim President Stanley Ikenberry says the school has run out of options. With a budget deficit expected to top $11 billion this year, the state of Illinois owes the university more than $430 million, money he doesn't expect to see any time soon.

Florida on a long, rising road
In some cases, one student's tuition disaster is another's bargain.

State officials have told Florida students they can expect 15 percent tuition increases every year until tuition reaches the national average. That could be a long slog, as the state is starting its tuition realignment from a place other students envy — about $3,000 a year.

In California, unprecedented budget cuts to higher education have led to huge fee increases at the state's two public university systems, as well as layoffs, furloughs, enrollment cuts and reduced course offerings.

At the University of California, which has 10 campuses and about 220,000 students, in-state undergraduate fees in fall 2010 are set to reach $10,302 — 32 percent more than in fall 2009 and three times what California residents paid 10 years ago.

But at California State University, the nation's largest public university system with 23 campuses and 450,000 students, resident undergraduate fees rose 32 percent from fall 2008 to fall 2009 to $4,026, which is nearly three times what students paid 10 years ago. Gov. Arnold Schwarzenegger's budget proposal for 2010-2011 assumes that the system will raise fees another 10 percent in the coming academic year.

"We're paying more and getting less," said Steve Dixon, a Humboldt State University senior who heads the California State Students Association.

One in Five Americans Believe States Have the Right to Secede

July 23, 2008

UTICA, New York – One in five American adults – 22% – believe that any state or region has the right to “peaceably secede from the United States and become an independent republic,” a new Middlebury Institute/Zogby International telephone poll shows.

I believe any state or region has the right to peaceably secede and become an independent republic:

Agree

22%

Disagree

73%

Not sure

5%


The level of support for the right of secession was consistent in every region in the country, though the percentage was slightly higher in the South (26%) and the East (24%). The figures were also consistent for every age group, but backing was strongest among younger adults, as 40% among those age 18 to 24 and 24% among those age 25 to 34 agreed states and regions have secession rights.

Broken down by race, the highest percentage agreeing with the right to secede was among Hispanics (43%) and African-Americans (40%). Among white respondents, 17% said states or regions should have the right to peaceably secede.

I believe the United States' system is broken and cannot be fixed by traditional two-party politics and elections:

Agree

44%

Disagree

53%

Not sure

3%


Politically, liberal thinkers were much more likely to favor the right to secession for states and regions, as 32% of mainline liberals agreed with the concept. Among the very liberal the support was only slightly less enthusiastic – 28% said they favored such a right. Meanwhile, just 17% of mainline conservatives thought it should exist as an option for states or regions of the nation.

Asked whether they would support a secessionist movement in their own state, 18% said they would, with those in the South most likely to say they would back such an effort. In the South, 24% said they would support such an effort, while 15% in the West and Midwest said the same. Here, too, younger adults were more likely than older adults to be supportive – 35% of those under age 30 would support secession in their state, compared to just 17% of those over age 65. Among African Americans, 33% said they would support secession, compared to just 15% of white adults. The more education a respondent had, the less likely they were to support secession – as 38% of those with less than a high school diploma would support it, compared to just 10% of those with a college degree.

I would support a secessionist effort in my state:

Agree

18%

Disagree

72%

Not sure

10%


To gauge the extent to which support for secession comes from a sense that the nation’s current system is not working, a separate question was asked about agreement that “the United States’ system is broken and cannot be fixed by traditional two-party politics and elections.” Nearly half of respondents agreed with this statement, with 27% who somewhat agree and 18% who strongly agree.

The telephone poll, conducted by Zogby International, included 1,209 American adult respondents. It was conducted July 9-13, 2008, and carries a margin of error of +/- 2.9 per cent.

The sponsor of the poll was the Middlebury Institute, a think tank for “the study of separatism, secession, and self-determination,” based in Cold Spring, NY. Their website address is: MiddleburyInstitute.org.

FED GAVE Banks Access to 23.7 TRILLION DOLLARS NOT $700 Billion!

Click this link ....... http://www.youtube.com/watch?v=lDJc0PZV-Bk&feature=player_embedded#

Deficits May Alter U.S. Politics and Global Power

WASHINGTON — In a federal budget filled with mind-boggling statistics, two numbers stand out as particularly stunning, for the way they may change American politics and American power.

The first is the projected deficit in the coming year, nearly 11 percent of the country’s entire economic output. That is not unprecedented: During the Civil War, World War I and World War II, the United States ran soaring deficits, but usually with the expectation that they would come back down once peace was restored and war spending abated.

But the second number, buried deeper in the budget’s projections, is the one that really commands attention: By President Obama’s own optimistic projections, American deficits will not return to what are widely considered sustainable levels over the next 10 years. In fact, in 2019 and 2020 — years after Mr. Obama has left the political scene, even if he serves two terms — they start rising again sharply, to more than 5 percent of gross domestic product. His budget draws a picture of a nation that like many American homeowners simply cannot get above water.

For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors. Beyond that lies the possibility that the United States could begin to suffer the same disease that has afflicted Japan over the past decade. As debt grew more rapidly than income, that country’s influence around the world eroded.

Or, as Mr. Obama’s chief economic adviser, Lawrence H. Summers, used to ask before he entered government a year ago, “How long can the world’s biggest borrower remain the world’s biggest power?”

The Chinese leadership, which is lending much of the money to finance the American government’s spending, and which asked pointed questions about Mr. Obama’s budget when members visited Washington last summer, says it thinks the long-term answer to Mr. Summers’s question is self-evident. The Europeans will also tell you that this is a big worry about the next decade.

Mr. Obama himself hinted at his own concern when he announced in early December that he planned to send 30,000 American troops to Afghanistan, but insisted that the United States could not afford to stay for long.

“Our prosperity provides a foundation for our power,” he told cadets at West Point. “It pays for our military. It underwrites our diplomacy. It taps the potential of our people, and allows investment in new industry.”

And then he explained why even a “war of necessity,” as he called Afghanistan last summer, could not last for long.

“That’s why our troop commitment in Afghanistan cannot be open-ended,” he said then, “because the nation that I’m most interested in building is our own.”


Mr. Obama’s budget deserves credit for its candor. It does not sugarcoat, at least excessively, the potential magnitude of the problem. President George W. Bush kept claiming, until near the end of his presidency, that he would leave office with a balanced budget. He never got close; in fact, the deficits soared in his last years.

Mr. Obama has published the 10-year numbers in part, it seems, to make the point that the political gridlock of the past few years, in which most Republicans refuse to talk about tax increases and Democrats refuse to talk about cutting entitlement programs, is unsustainable. His prescription is that the problem has to be made worse, with intense deficit spending to lower the unemployment rate, before the deficits can come down.

Mr. Summers, in an interview on Monday afternoon, said, “The budget recognizes the imperatives of job creation and growth in the short run, and takes significant measures to increase confidence in the medium term.”

He was referring to the freeze on domestic, non-national-security-related spending, the troubled effort to cut health care costs, and the decision to let expire Bush-era tax cuts for corporations and families earning more than $250,000.

But Mr. Summers said that “through the budget and fiscal commission, the president has sought to provide maximum room for making further adjustments as necessary before any kind of crisis arrives.”

Turning that thought into political action, however, has proved harder and harder for the Washington establishment. Republicans stayed largely silent about the debt during the Bush years. Democrats have described it as a necessary evil during the economic crisis that defined Mr. Obama’s first year. Interest in a long-term solution seems limited. Or, as Isabel V. Sawhill of the Brookings Institution put it Monday on MSNBC, “The problem here is not honesty, but political will.”

One source of that absence of will is that the political warnings are contradicted by the market signals. The Treasury has borrowed money to finance the government’s deficits at remarkably low rates, the strongest indicator that the markets believe they will be paid back on time and in full.

The absence of political will is also facilitated by the fact that, as Prof. James K. Galbraith of the University of Texas puts it, “Forecasts 10 years out have no credibility.”

He is right. In the early years of the Clinton administration, government projections indicated huge deficits — over the “sustainable” level of 3 percent — by 2000. But by then, Mr. Clinton was running a modest surplus of about $200 billion, a point Mr. Obama made Monday as he tried anew to remind the country that the moment was squandered when “the previous administration and previous Congresses created an expensive new drug program, passed massive tax cuts for the wealthy, and funded two wars without paying for any of it.”

But with this budget, Mr. Obama now owns this deficit. And as Mr. Galbraith pointed out, it is possible that the gloomy projections for 2020 are equally flawed.

Simply projecting that health care costs will rise unabated is dangerous business.

“Much may depend on whether we put in place the financial reforms that can rebuild a functional financial system,” Mr. Galbraith said, to finance growth in the private sector — the kind of growth that ultimately saved Mr. Clinton from his own deficit projections.

His greatest hope, Mr. Galbraith said, was Stein’s law, named for Herbert Stein, chairman of the Council of Economic Advisers under Presidents Richard M. Nixon and Gerald R. Ford.

Stein’s law has been recited in many different versions. But all have a common theme: If a trend cannot continue, it will stop.

Roubini Sees ‘Very Dismal and Poor’ U.S. Expansion (Update1)

Feb. 1 (Bloomberg) -- Nouriel Roubini, the New York University professor who anticipated the financial crisis, said the U.S. growth outlook remains “very dismal” and White House economic adviser Lawrence Summers said the economy is still mired in a “human recession.”

Speaking at the World Economic Forum’s annual meeting in Davos, Switzerland, after the U.S. reported the fastest growth in six years, their comments underscored concern that emergency measures to rescue banks and fight the recession may be withdrawn too soon.

“The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” Roubini said in a Jan. 30 Bloomberg Television interview following a U.S. Commerce Department report that showed economic expansion of 5.7 percent in the fourth quarter. “I think we are in trouble.”

Roubini said more than half of the growth was related to a replenishing of depleted inventories and that consumption was reliant on monetary and fiscal stimulus. As these forces ebb, the rate will slow to 1.5 percent in the second half of 2010.

Roubini, who chairs New York-based Roubini Global Economics LLC, has become famous for his pessimistic projections. In 2007, he correctly predicted a “hard landing” for the world economy. He said last year that the global recession would shrink through 2009, only for growth to resume in the middle of the year.

‘Feel Like Recession’

He says now that while the world’s largest economy won’t relapse into recession, U.S. unemployment will rise from the current 10 percent amid “mediocre” growth.

“It’s going to feel like a recession even if technically we’re not going to be in a recession,” he said in the interview.

Also speaking in Davos, Summers, director of the White House National Economic Council, said that the statistical recovery won’t mask a “human recession.”

The U.S. expansion in the October-December period resulted from manufacturers cranking up assembly lines and companies increasing investment in equipment and software. The rebuilding of stocks contributed 3.4 percentage points to gross domestic product, the most in two decades.

The rebound followed the Federal Reserve’s decision to cut its benchmark interest rate to near zero in December 2008 and President Barack Obama’s $787 billion stimulus package. The jobless rate has the central bank promising to keep borrowing costs low and Obama making new proposals to create jobs.

‘Pretty Attractive’

The Obama administration is today presenting a $3.8 trillion fiscal 2011 budget today that calls for $100 billion in additional stimulus spending and projects this year’s deficit will hit a record $1.6 trillion.

Carlyle Group LP co-founder David Rubenstein countered Roubini’s concerns. He said that even after a rally in global stocks that drove the MSCI World Index up more than 60 percent from March 2009, it’s a “pretty attractive” time to invest.

“There are a lot of great opportunities we see in the United States and abroad,” Rubenstein told a Jan. 27 panel. “Sometimes generals fight the last war, economists fight the last recession.”

Policy makers may be undermining their effort to spur hiring by attacking banks, Blackstone Group LP Chief Executive Officer Steven Schwarzman said in a Jan. 28 interview in Davos. One in four of chief executive officers worldwide surveyed by PricewaterhouseCoopers LLP for the Davos conference already plans to cut jobs this year.

‘Moderate’ Growth

“Financial institutions will feel under siege and they will retreat,” Schwarzman said. “Their entire world is being shaken and they’re being attacked personally,” he said. “We don’t need those financial institutions insecure.”

Summers, a former U.S. Treasury secretary, predicted growth will continue “at least at a moderate rate.” The median forecast of economists surveyed by Bloomberg News is for the U.S. economy to grow 2.7 percent this quarter.

“What is disturbing is the level of unemployment,” said Summers.

“One in five men in the U.S. between the ages of 25 and 54 is not working right now,” he told a Jan. 30 panel discussion. Even after a “reasonable” recovery, it will be “one in seven or one in eight.” That compares to the mid-1960s, when 95 percent of men in that age range were working and “suggests quite profound issues that will ultimately impact on politics and decisions that businesses make,” he said.

‘Right Direction’

A report scheduled for release by the Labor Department on Feb. 5 may show the U.S. gained jobs in January for the second time in three months. Payrolls probably rose by 13,000 workers last month according to the median forecast of 62 economists surveyed by Bloomberg. The unemployment rate may have held at 10 percent for the third month.

Nobel Prize-winning economist Joseph Stiglitz said Obama’s previous efforts to bolster the economy are only “a step in the right direction.”

“I’m a bit worried that again it’s not enough,” Stiglitz said in a Jan. 28 Bloomberg Television interview in Davos. “He has to take a much more active” approach. “It has to be a second round in stimulus, focusing in particular on investment.”

International Monetary Fund Managing Director Dominique Strauss-Kahn, who two years ago used the Davos stage to lobby governments to increase spending, said policy makers in the U.S. and elsewhere risk narrowing their options if they withdraw emergency measures too soon and the recovery falters.

“If you exit too early then the risks are much bigger,” Strauss-Kahn told the Swiss gathering. If the economy relapses “I don’t know what we could do as most of the things we had in the toolkit have been used.”

Federal Judge in Germany: Numerous 9/11 Theories Screaming For Investigation

Federal Judge in Germany: Numerous 9/11 Theories Screaming For Investigation

Afghanistan War - Right to Self Defense Highly Questionable, December 15, 2009

Federal Judge Dieter Deiseroth: It is very unfortunate that the media is not prepared to face the issue of 9/11 and ask the unanswered questions

Question: Do you think the proposal of an independent 9/11 investigation to be realistic?

Judge Dieter Deiseroth:: I think the suggestion is reasonable and necessary. Because the official investigation is the central justification for the war ( "Operation Enduring Freedom") and for serious alterations of the U.S. legal system under the so-called homeland security legislation.

Question: This should be difficult because neither politics nor the big media, dare to question the official version of 9/11 critically.

Judge Dieter Deiseroth: If the official story of 9/11 is further effectively disseminated by all governments - then it is very costly and difficult because of the effect of solidified public opinion to question it . A major research effort is needed and extensive research, time and monetary resources must be available, which is difficult in a time when resources in the newsrooms are being cut down.

But then after all, even the construct of lies to justify the Iraq war was brought down. We now know that was the Bush administration in terms of credibility and veracity,was anything but trustworthy. It is unfortunate that many within the media, are still not sufficiently prepared to face the issue of 9/11 and the open unanswered questions . Maybe also because of the abyss that becomes clear then.

Question: Not too long ago alternative explanations of the 9/11 terrorist attacks in the US were discussed.

Judge Dieter Deiseroth: Indeed. Parliamentarians of the Democratic Party of Japan, which has won the last election in a landslide, for about 2 years in the Japanese parliament, have repeatedly questioned the official Bush version of 9/11 with very serious arguments and demanded explanations. Something like this did not take place in German parliament, which is rather unfortunate.

Question: But the alternative theories of 9/11 also have many shortcomings.

Judge Dieter Deiseroth: This is absolutely correct. I can warn to replace the official conspiracy theory of the Bush administration with hasty drawn alternative conspiracy theories. If the critics of the official version really want to achieve a new national or international investigation into the attacks of 9 / 11, then they must impose the highest levels of integrity, fact-orientation and openness to possible objections The only way they can avoid to discredit their own arguments, for example by Conjecture and speculation disguised as evidence. I assert: On both sides, that is, both at the official presentation of the Bush administration with the 9/11-Commission Report and on alternative side of the with its many counter-theories there is a sea of questions and also a sea of blatant untruth. This fact is almost screaming for explanations.

Question: Can the military engagement in Afghanistan be based on international law's self-defense right? Did 9/11 not give the U.S. the right to defend itself and its allies a reason for an emergency?

Judge Dieter Deiseroth: We need to realize that the (military) right to self defense, as guaranteed in Article 51 of the UN Charter, in general, may be obtained only in cases where a state is attacked militarily ("if in armed attack occurs"). It must be, therefore, a current military offensive act, which is currently carried out immediately present or imminent. This right may also self-directed only against the state, which has led the attack or at least the state needs to be accountable.

http://www.coffinman.co.uk/Nose-Out.jpg

http://u2r2h.blogspot.com/2008/08/nose-out.html


Three entries recently published in the 9/11 Timeline cover films with 9/11-style themes made before the attacks. 1977's ''Black Sunday'' had terrorists crashing an explosive-laden blimp into the Superbowl stadium, 1996's ''Executive Decision'' featured a planned suicide attack with a commercial jet, and a late 2001 Chuck Norris vehicle originally entitled ''The President's Man: Ground Zero'' was too close to real events for comfort and CBS refused to air it.

Elsewhere, al-Qaeda second-in-command Ayman al-Zawahiri was unsurprisingly unimpressed with Barrack Obama, two of the 9/11 hijackers asked a neighbour for their towel back shortly before the attacks, and some of the 2006 "liquid bomb" plotters were convicted in Britain in September, although others were acquitted. Their alleged leader Rashid Rauf was hit by a drone last year, although doubts about his death persist.

Finally, some Democrats kicked up a stink after the famous August 6 Presidential Daily Brief item was made public in 2002, former CIA agent Larry Kolb thought the US was less safe than ever in 2007, and alleged 9/11 mastermind Khalid Shaikh Mohammed and four associates expressed a desire to plead guilty to charges against them in military commissions late last year.

Screenwriters often use non-fiction materials as a source for ideas. I wonder what was around that the writers of this 'Lone Gunman' episode may have been using as source material? The paper co-authored by Zelikow on the likey effects of 'catastrophic terrorism' in the U.S. had been published in '98; while Brzezinski's 'The Grand Chessboard' had been out since '97. I wonder if production of the episode had yet begun when PNAC came out with the 'Rebuilding America's Defenses' paper in September 2000. And what else may have been available then?


MUST READ:

The Matrix - Prophetic Film - 911 coincidence.

"Unfortunately, no one can be told what the Matrix is. You have to see it for yourself."

Deepening Debt Crisis: The Bernanke Reappointment: Be Afraid, Very Afraid

If the economy deteriorates in the L-shaped “hockey-stick” rut that many economists forecast, what political price will President Obama and the Democrats pay for having returned the financial keys to the Bush Republican appointees who gave away the store in the first place? Reappointing Federal Reserve Chairman Ben Bernanke may end up injuring not only the economy but also the Democratic Party for years to come. Recognizing this, Republicans made populist points by opposing his reappointment during the Senate confirmation hearings last Thursday, January 27 – the day after Mr. Obama’s State of the Union address.

The hearings focused on the Fed’s role as Wall Street’s major lobbyist and deregulator. Despite the fact that its Charter starts off by directing it to promote full employment and stabilize prices, the Fed is anti-labor in practice. Alan Greenspan famously bragged that what has caused quiescence among labor union members when it comes to striking for higher wages – or even for better working conditions – is the fear of being fired and being unable to meet their mortgage and credit card payments. “One paycheck away from homelessness,” or a downgraded credit rating leading to soaring interest charges, has become a formula for labor management.

As for its designated task in promoting price stability, the Fed’s easy-credit bubble has made asset-price inflation the path to wealth, not tangible capital investment. This has brought joy to bank marketing departments as homeowners, consumers, corporate raiders, states and localities run further and further into debt in an attempt to improve their position by debt leveraging. But the economy has all but neglected its industrial base and the employment goes with manufacturing. The Fed’s motto from Bubblemeister Alan Greenspan to Ben Bernanke has been “Asset-price inflation, good; wage and commodity price inflation, bad.”

Here’s the problem with that policy. Rising prices for housing have increased the cost of living and doing business, widening the excess of market price over socially necessary costs. In times past the government would have collected the rising location rent created by increasing prosperity and public investment in transportation and other infrastructure making specific sites more valuable. But in recent years taxes have been rolled back. Land sites still cost as much as ever, because their price is set by the market. Land itself has no cost of production. Locational value is created by society, and should be the natural tax base because a land tax does not increase the price of real estate; it lowers it by leaving less “free” rent to be paid to the banks.

The problem is that what the tax collector relinquishes is now available to be paid to banks as interest. And prospective buyers bid against each other until the winner is whoever is first to pay the land’s location rent to the banks as interest.

This tax shift – to the benefit of the bankers, not homeowners – has made Mr. Obama’s hope of doubling U.S. exports during the next five years ring hollow. This is the upshot of “creating wealth” in the form of a debt-leveraged real estate and stock market bubble. Labor must pay more for debt-financed housing and education, not to mention payments to health insurance oligopoly and higher sales and income taxes shifted off the shoulders of financial and real estate.

Once the Republicans were certain which way the vote would go, they were able to voice some nice populist sound bites for the mid-term elections this November. Jeff Sessions of Alabama and Sam Brownback of Kansas voted against Mr. Bernanke’s confirmation. Jim deMint of South Carolina warned that reappointing him would be “The biggest mistake that we’re going to make for a long time.” He added: “Confirming Bernanke is a continuation of the policies that brought our economy down.”

Among Democrats running for re-election, Barbara Boxer of California pointed out that by spurring the asset-price inflation, the Fed’s pro-Bubble (that is, pro-debt policy) has crashed the economy, shrinking employment. The Fed is supposed to protect consumers, yet Mr. Bernanke is a vocal opponent of the Consumer Finance Products Agency, claiming that the deregulatory Fed alone should be the sole financial regulator – seemingly an oxymoron.

Mr. Obama supports Mr. Bernanke and his State of the Union address conspicuously avoided endorsing the Consumer Financial Products Agency that he earlier had claimed would be the centrepiece of financial reform. Wall Street lobbyists have turned him around. Their logic was the same mantra that Connecticut insurance industry’s Sen. Chris Dodd repeated at the confirmation hearings: Mr. Bernanke has “saved the economy.”

How can the Fed be said to do this when the volume of debt is growing exponentially beyond the ability to pay? “Saving the debt” by bailing out creditors – by adding bad private-sector debts to the public sector’s balance sheet – is burdening the economy, not saving it. The policy only postpones the crisis while making the ultimate volume of debt that must be written off higher – and therefore more traumatic to write off, annulling a corresponding volume of savings on the other side of the balance sheet (because one party’s savings are another’s debts).

What really is at issue is the economic philosophy that Mr. Bernanke will apply during the coming four years. Unfortunately, Mr. Bernanke’s questioners failed to ask relevant questions along these policy lines and the economic theory or rationale underlying his basic approach. What needed to be addressed was not just his deregulatory stance in the face of the Bubble Economy and exploding consumer fraud, or even the mistakes he has made. Republican Sen. Jim Bunning elicited only smirks and pained looked as Mr. Bernanke rested his chin on his hand, as if to say, “I’m going to be patient and let you rant.” The other Senators were almost apologetic.

One popular (and thoroughly misleading) description of Bernanke that has been cited ad nauseum to promote his reappointment is that he is an expert on the causes of the Great Depression. If you are going to create a new crash, it certainly helps to understand the last one. But economic historians who have compared Mr. Bernanke’s writings to actual history have found that it is precisely his misunderstanding of the Depression that is leading him tragically to repeat it.

As a trickle-down apologist for high finance, Prof. Bernanke has drawn systematically wrong conclusions as to the causes of the Great Depression. The ideological prejudice behind his view is of course what got him his job in the first place, for as numerous observers have quipped, a precondition for being hired as Fed Chairman is that one does not understand how the financial system actually works. Instead of recognizing that deepening debt, low wages and the siphoning up of wealth to the top of the economic pyramid were primary causes of the Depression, Prof. Bernanke attributes the main problem simply to a lack of liquidity, causing low prices.

As my Australian colleague Steve Keen recently has written in his Debtwatch No. 42 (http://www.debtdeflation.com/blogs/), the case against Mr. Bernanke should focus on his neoclassical approach that misses the fact that money is debt. He sees the financial problem as being too low a price level for assets to be collateralized for bank loans. And to Mr. Bernanke, “wealth” is synonymous with what banks will lend, under existing credit terms.

In 1933, the economist Irving Fischer (mainly responsible for the “modern” monetarist tautology MV = PT) wrote a classic article, “The Debt-Deflation Theory of the Great Depression,” recanting the neoclassical view that had led him to lose his personal fortune in the 1929 stock market crash. He explained how the inability to pay debts was forcing bankruptcies, wiping out bank credit and spending power, shrinking markets and hence the incentive to invest and employ labor.

Mr. Bernanke rejects this idea, or at least the travesty he paraphrases in his Essays on the Great Depression (Princeton, 2000, p. 24), as Prof. Keen quotes:

Fisher’ s idea was less influential in academic circles, though, because of the counterargument that debt-deflation represented no more than a redistribution from one group (debtors) to another (creditors). Absent implausibly large differences in marginal spending propensities among the groups, it was suggested, pure redistributions should have no significant macroeconomic effects.

All that a debt overhead does is transfer purchasing power from debtors to creditors. Bernanke is reminiscent here of Thomas Robert Malthus, whose Principles of Political Economy argued that landlords (Malthus’s own class) were necessary to maintain economic equilibrium in a way akin to trickle-down theorists through the ages. Where would English employment be, Malthus argued, without landlords spending their revenue on coachmen, fine clothes, butlers and servants? It was landlords spending their rental income (protected by England’s agricultural tariffs, the Corn Laws, until 1846) that kept buggy-makers and other suppliers working. And by the same logic, this is what wealthy Wall Street financiers do today with the money they make by lending to enable homeowners and savers to get rich making capital gains off asset-price inflation.

The reality is that wealthy Wall Street financiers who make multi-million dollar salaries and bonuses spend their money on trophies: fine arts, luxury apartments or houses in gated communities, yachts, fancy handbags and high fashion, birthday parties with appearances by modish pop singers. (“I see the yachts of the stock brokers; but where are those of their clients?”) This is not the kind of spending that reflects the “real” economy’s production profile.

Mr. Bernanke sees no problem, unless rich people spend less of their gains on consumer goods and the products of labor than average wage earners. But of course this propensity to consume is precisely the point John Maynard Keynes made in his General Theory (1936). The wealthier people become, the lower a proportion of their income they consume – and the more they save.

This falling propensity to consume is what worried Keynes about the future. He imagined that as economies saved more as their income levels rose, they would spend less on goods and services. So output and employment would not be able to keep pace – unless the government stepped in to make up the gap.

Consumer spending is indeed falling, but not because economies are experiencing a higher net saving rate. The U.S. saving rate has fallen to zero – because despite the fact that gross savings remain high (about 18 percent), most is lent out to become other peoples’ debts. The effect is thus a wash on an economy-wide basis. (18 percent saving less 18 percent debt = zero net saving.)

The problem is that workers and consumers have gone deeper and deeper into debt, saving less and less. This is just the opposite of what Keynes forecast. Only the wealthiest 10 percent or so of the population save more and more – mainly in the form of loans to the “bottom 90 percent.” Saving less, however, goes hand in hand with consuming less, because of the revenue that the financial sector drains out of the “real” economy’s circular flow (wage-earners spending their income to buy the goods they produce) as debt service. The financial sector is wrapped around the production-and-consumption economy. So an inability to consume is part and parcel of the debt problem. The basis of monetary policy throughout the world today therefore should be how to save economies from shrinking as a result of their exponentially growing debt overhead.

Bernanke’s apologetics for finance capital: Economies seem to need more debt, not less

Bernanke finds “declines in aggregate demand” to be the dominant factor in the Great Depression (p. ix, as cited by Steve Keen). This is true in any economic downturn. In his reading, however, debt seems not to have anything to do with falling spending on what labor produces. Taking a banker’s-eye view, he finds the most serious problem to be the demand for stocks and real estate. Mr. Bernanke promises not to let falling asset demand (and hence, falling asset prices) happen again. His antidote is to flood the economy with credit as he is now doing, emulating Alan Greenspan’s Bubble policy.

The wealthiest 10 percent of the population do indeed save most of their money. They lend savings – and create new credit – to the bottom 90 percent, or gamble in derivatives or other zero-sum activities in which their gain (if indeed they make any) finds its counterpart in some other parties’ loss. The system is kept going not by government spending, Keynesian-style, but by new credit creation. That supports consumption, and indeed, lending against real estate, stocks and bonds enables borrowers to bid up their prices, enabling their owners to borrow yet more against these assets. The economy expands – until current revenue no longer covers the debt’s carrying charges.

That’s what brings the Bubble Economy down with a crash. Asset-price inflation gives way to crashing prices and negative equity for real estate and for much financial debt leveraging as well. It is in this sense that Prof. Bernanke’s blames the Depression on lower prices. When prices for real estate or other collateral plunge, it no longer can be pledged for more loans to keep the circular flow of lending and debt repayment in motion.

This circular financial flow is quite different from the circular flow that Keynes (and Say’s Law) discussed – the circulation where workers and their employers spent their wages and profits on consumer goods and investment goods. The financial circular flow is between the banks and their clients. And this circular flow swells as it diverts more and more spending from the “real” economy’s circular flow between income and spending. Finance capital expands relative to industrial capital.[1]

Higher prices in the “real” economy may help maintain the circular financial flow, by giving borrowers more current income to pay their mortgages, student loans and other debts. Mr. Bernanke accordingly sees FDR’s devaluation of the dollar as helping reflate prices.

Today, however, a declining dollar would make imports (including raw materials as well as key consumer goods) more costly. This would squeeze the budgets of most families, given America’s rising import dependency as its economy is post-industrialized and financialized. So Mr. Bernanke’s favored policy is to get banks lending again – not for the government to spend more on deficit spending on infrastructure, social services or other full employment projects. The government spending that Mr. Bernanke has endorsed is pure bailouts to the banks, insurance companies, real estate packagers and other Wall Street institutions so that they can support asset prices and thereby save the economy’s financial balance sheet, not its employment and living standards.

More debt thus is not the problem, in Chairman Bernanke’s view. It is the solution. This is what makes his re-appointment so dangerous.

Devaluation of the dollar FDR-style will make U.S. real estate, corporations and other assets cheaper to global investors. It thus will have the same “positive” effects (if you can call making homes and office buildings more costly to buyers a “positive” effect) as more credit – and without the debt service needing to be raked off from the economy. This policy is akin to the International Monetary Fund’s “stabilization” and austerity programs that have caused such havoc over the past few decades.[2] It is the policy being prepared for imposition on the United States. This too is what makes Bernanke’s re-appointment so dangerous.

The problem is a combination of Mr. Bernanke’s dangerous misreading of economic history, and the banker’s-eye perspective that underlies this view – which he now has been empowered to impose from his perch as central planner at the Federal Reserve Board. Pres. Obama’s support for his reappointment suggests that the recent economic rhetoric heard from the White House is a faux populism. The President promises that this time, it will be different. The former Bush appointees – Geithner, Bernanke and the Goldman Sachs managers on loan to the Treasury – will be willing to stand up to Goldman Sachs and the other bankers. And this time the Clinton-era Rubinomics boys will not do to the U.S. economy what they did to the Soviet Union.

With this stance, it is no wonder that the Obama Democrats are relinquishing the populist anti-Wall Street card to the Republicans!

The Bernanke albatross

Mr. Bernanke misses the problem that debts need to be repaid – or at least carried. This debt service deflates the non-financial “real” economy. But the Fed’s analysis stops just before the crash. It is a “good news” theory limited to the happy time while the bubble is expanding and homeowners borrow more and more from the banks to buy houses (or more accurately, their land sites) that are rising in price. This was the Greenspan-Bernanke bubble in a nutshell.

We need not look as far back as the Great Depression. Japan since 1990 is a good example. Its land prices declined every quarter for over 15 years after its bubble burst. The Bank of Japan did what the Federal Reserve is doing now: It lowered lending rates to banks below 1%. Banks “earned their way out of debt” by lending to global speculators who used the yen loans to convert into foreign currency and buy higher-yielding assets abroad – capped by Icelandic government bonds paying 15%, and pocketing the arbitrage difference.

This steady conversion of speculative money out of yen into foreign currency held down Japan’s exchange rate, helping its exporters. Likewise today, the Fed’s low-interest policy leads U.S. banks to borrow from it and lend to arbitrageurs buying higher-yielding bonds or other securities denominated in euros, sterling and other currencies.

The foreign-exchange problem develops when these loans are paid back. In Japan’s case, when global financial markets turned down and Japanese interest rates began to rise in 2008, arbitrageurs decided to unwind their positions. To pay back the yen they had borrowed from Japanese banks, they sold euro- and dollar-denominated bonds and bought the Japanese currency. This forced up the yen’s exchange rate – eroding its export competitiveness and throwing its economy into turmoil. The long-ruling Liberal Democratic Party was voted out of power as unemployment spread.

In the U.S. case today, Chairman Bernanke’s low interest-rate regime at the Fed has spurred a dollar-denominated carry trade estimated at $1.5 trillion. Speculators borrow low-interest dollars and buy high-interest foreign-currency bonds. This weakens the dollar’s exchange rate against foreign currencies (whose central banks are administering higher interest rates). The weakening dollar leads U.S. money managers to send more investment funds out of our economy to those promising stock market gains as well as a foreign-currency gain.

The prospect of undoing this credit creation threatens to lock the United States into a low-interest trap. The problem is that if and when the Fed begins to raise interest rates (for instance, to slow the new bubble that Mr. Bernanke is trying to inflate), global speculators will repay their dollar debts. As the U.S. carry trade is unwound, the dollar will soar in price. This threatens to make Mr. Obama’s promise to double U.S. exports within five years seem an impossible dream.

The prospect is for U.S. consumers to be hit by a triple whammy. They must pay higher prices for the goods they buy as the dollar declines, making imports more expensive. And the government will be spending less on the economy’s circular flow as a result of Pres. Obama’s three-year spending freeze to slow the budget deficits. Meanwhile, states and cities are raising taxes to balance their own budgets as tax receipts fall. Consumes and indeed the entire economy must run more deeply into debt simply to break even (or else see living standards eroded).

To Mr. Bernanke, economic recovery requires resuscitating the Goldman Sachs squid that Matt Taibbi so artfully has described as being affixed to the face of humanity, duly protected by the Fed. The banks will lend more to keep the debt pyramid growing to enable consumers, businesses and local government to avoid contraction.

All this will enrich the banks – as long as the debts can be paid. And if they can’t be paid, will the government bail them out all over again? Or will it “be different” this time around?

Will our economy flounder with Mr. Bernanke’s reappointment as the rich get richer and the American family comes under increasing financial pressure as incomes drop while debts grow exponentially? Or will Americans get rich off the new bubble as the Fed re-inflates asset prices?

The Road to Debt Peonage

Last week, Senator John Kerry of Massachusetts acknowledged many Americans’ anger about the bailouts of the big banks: “It’s understandable why there is debate, questioning and even anger” about Mr. Bernanke’s re-nomination. “Still,” he added, “out of this near calamity, I believe Chairman Bernanke provided leadership that was urgent, nimble, strong and vital in staving off greater disaster.”

Unfortunately, by “disaster” Sen. Kerry seems to mean losses for Wall Street. He shares with Chairman Bernanke the idea that gains in raising asset prices are good for the economy – for instance, by enabling pension funds to pay retirees and “build wealth” for America’s savers.

While the Bush-Obama team hopes to reflate the economy, the $13 trillion bailout money they have spent trying to fuel the destructive bubble takes the form of trickle-down economics. It has not run up public debt in the Keynesian way, by government spending such as in the modest “Stimulus” package to increase employment and income. And it is not providing better public services. It was designed simply to inflate asset prices – or more accurately, to prevent their decline.

This is what re-appointment of the Fed Chairman signifies. It means a policy intended to raise the price of housing on credit, with a corresponding rise in consumer income paid to bankers as mortgage debt service.

Meanwhile, rising stock and bond prices will increase the price of buying a retirement income. A higher stock price means a lower dividend yield. The same is true for bonds. Flooding the capital markets with credit to bid up asset prices thus holds down the yield of the assets of pension funds, pushing them into deficit. This enables corporate managers to threaten bankruptcy of their pension plans or entire companies, General Motors-style, if labor unions do not renegotiate their pension contracts downward. This “frees” yet more money for financial managers to pay creditors at the top of the economic pyramid.

Mr. Bernanke’s opposition to regulating Wall Street

How does one overcome this financial polarization? The seemingly obvious solution is to select Fed and Treasury administrators from outside the ranks of ideologues supported by – indeed, applauded by – Wall Street. Creation of a Consumer Financial Products Agency, for instance, would be largely meaningless if a deregulator such as Mr. Bernanke were to run it. But that is precisely what he is asking to do in testifying that his Federal Reserve should be the sole regulatory agency, nullifying the efforts of all others – just in case some state agency, some federal agency or some Congressional committee might move to protect consumers against fraudulent lending, extortionate fees and penalties and usurious interest rates.

Mr. Bernanke’s fight against proposals for such regulatory agencies to protect consumers from predatory lending is thus a second reason not to re-appoint him. How can Mr. Obama campaign for his reappointment as Chairmanship of the Fed and at the same time endorse the consumer protection agency? Without dumping Bernanke and Geithner, it doesn’t seem to matter what the law says. The Democrats have learned from the Bush and Reagan administrations that all you have to do is appoint deregulators in key positions, and legal teeth are irrelevant.

Independence of the Federal Reserve is a euphemism for financial oligarchy

This brings up the third premise that defenders of Mr. Bernanke cite: the much vaunted independence of the Federal Reserve. This is supposed to be safeguarding democracy. But the Fed should be subject to representative democracy, not independent of it! It rightly should be part of the Treasury representing the national interest rather than that of Wall Street.

This has emerged as a major problem within America’s two-party political system. Like the Republican team, the Obama administration also puts financial interests first, on the premise that wealth flows from its credit activities, the financial time frame tends to be short-run and economically corrosive. It supports growth in the debt overhead at the expense of the “real” economy, thereby taking an anti-labor, anti-consumer, anti-debtor policy stance.

Why on earth should the most important sector of modern economies – finance – be independent from the electoral process? This is as bad as making the judiciary “independent,” which turns out to be a euphemism for seriously right-wing.

Over and above the independence issue, to be sure, is the problem that the government itself if being taken over by the financial sector. The Treasury Secretary, Fed Chairman and other financial administrators are subject to Wall Street’s advice and consent first and foremost. Lobbying power makes it difficult to defend the public interest, as we have seen from the tenure of Mr. Paulson and Mr. Geithner. I don’t believe Mr. Obama or the Democrats (to say nothing of the Republicans) is anywhere near rising to the occasion of solving this problem. One can only deplore Mr. Obama’s repetition of his endorsements.

Allied to the “independence” issue is a fourth reason to reject Mr. Bernanke personally: the Fed’s secrecy from Congressional oversight, highlighted by its refusal to release the names of the recipients of tens of billions of Fed bailouts and cash-for-trash swaps.

Does it matter?

Now that the confirmation arguments against Mr. Bernanke’s reappointment have been rejected, what does it mean for the future?

On the political front, his reappointment is being cited as yet another proof that the Democrats care more for bankers than for American families and employees. As a result, it will do what seemed unfathomable a year ago: enable GOP candidates to strike the pose of FDR-type saviors of the embattled middle class. No doubt another decade of abject GOP economic failure would simply make the corporate Democrats appear once again to be the alternative. And so it goes … unless we do something about it.

The problem is not merely that Mr. Bernanke failed to do what the Fed’s charter directs it to do: promote employment in an environment of stable prices. The Republicans – and some Democrats – read out the litany of Bernanke abuses. The Fed could have raised interest rates to slow the bubble. It didn’t. It could have stopped wholesale mortgage fraud. It didn’t. It could have protected consumers by limiting credit card rates. It didn’t.

For Bernanke, the current financial system (or more to the point, the debt overhead) is to be saved so that the redistribution of wealth upward will continue. The Congressional Research Service has calculated that from 1979 to 2003 the income from wealth (rent, dividends, interest and capital gains) for the top 1 percent of the population soared from 37.8% to 57.5%. This revenue has been expropriated from American employees pushed onto debt treadmills in the face of stagnating wages.

Meanwhile, the government is permitting corporate tollbooth to be erected across our economy – and un-taxing this revenue so that it can be capitalized into financialized wealth paying only a 15% tax rate on capital gains. It pays these taxes not as these gains accrue, but and only when they realize them. And the tax does not even have to be paid if the sales proceeds of these assets is reinvested! Financial and fiscal policy thus reinforce each other in a way that polarizes the economy between the financial sector and the “real” economy.

Behind these bad policies is a disturbing body of junk economics – one that, alas, is taught in most universities today. (Not at the University of Missouri at Kansas City, and a few others, to be sure.) Mr. Bernanke views money simply as part of a supply and demand equation between money and prices – and he refers here only to consumer prices, not the asset prices which the Fed failed to address. That is a big part of the Fed’s blind spot: Messrs. Greenspan and Bernanke imagined that its charter referred only to stabilizing consumer prices and wages – while asset prices – the cost of obtaining housing, an education or a retirement income – have soared as a result of debt leveraging.

What Mr. Bernanke misses – along with his neoclassical colleagues – is that the money that is spent bidding up prices is also debt. This means that it leaves a debt legacy. When banks “provide credit” by writing loans, what they are selling is debt.

The question their marketing departments ask is, how large is the market for debt? When I went to work for Chase Manhattan in 1967 as its balance-of-payments analyst, for example, I liaised with the marketing department to calculate how large the international debt market was – and how large a share of this market the bank could reasonably expect to get.

The bank quantified the debt market by measuring how large a surplus borrowers could squeeze out over and above basic break-even needs. For personal loans, the analogy was how much could a wage earner afford to pay the bank after meeting basic essentials (rent, food, transportation, taxes, etc.). For the real estate department, how much net rental income could a landlord pay out, after meeting fuel and other operating costs and taxes? The anticipated surplus revenue was capitalized into a loan. From the marketing department’s vantage point, banks aimed at absorbing the entire surplus as debt service.

Financial debt service is not spent on consumer goods. It is recycled into new loans, after paying dividends to stockholders and salaries and bonuses to its managers. Stockholders spend their money on buying other investments – more stocks and bonds. Managers buy trophies – yachts, trophy paintings, trophy cars, trophy apartments (whose main value is their location – the neighborhood where their land is situated), foreign travel and other luxury. None of this spending has much effect on the consumer price index, but it does affect asset prices.

This idea is lacking in neoclassical and monetarist theory. Once “money” (that is, debt) is spent, it has an effect on prices via supply and demand, and that is that. There is no dynamic over time of debt or wealth. Ever since Marxism pushed classical political economy to its logical conclusion in the late 19th century, economic orthodoxy has been traumatized from dealing about wealth and debt. So balance-sheet relationships are missing from the academic economics curriculum. That is why I stopped teaching economics in 1972, until the UMKC developed an alternative curriculum to the University of Chicago monetarism by focusing on debt creation and the recognition that bank loans create deposits, inverting the usual “Austrian” and other individualistic parallel universe theories.


Notes


[1] I elaborate the logic in greater detail in “Saving, Asset-Price Inflation, and Debt-Induced Deflation,” in L. Randall Wray and Matthew Forstater, eds., Money, Financial Instability and Stabilization Policy (Edward Elgar, 2006):104-24. And I explain how the recent expansion of credit and easing of lending terms fueled the real estate bubble in “The New Road to Serfdom: An illustrated guide to the coming real estate collapse,” Harpers, Vol. 312 (No. 1872), May 2006):39-46.

[2] I explain the workings of these plans in greater detail in Super Imperialism: The Economic Strategy of American Empire (1972; new ed., 2002), “Trends that can’t go on forever, won’t: financial bubbles, trade and exchange rates,” in Eckhard Hein, Torsten Niechoj, Peter Spahn and Achim Truger (eds.), Finance-led Capitalism? (Marburg: Metropolis-Verlag, 2008), and Trade, Development and Foreign Debt: A History of Theories of Polarization v. Convergence in the World Economy (1992, new ed. 2009).