Saturday, December 29, 2012

More from economist Bill Black on the "fiscal cliff," austerity, the "Grand Bargain" (more correctly termed the "Grand Betrayal") ...and Obama's role in inventing the cliff as an excuse to inflict on the American people austerity (which would result in more and deeper recessions and give rise to higher unemployment and national debt) and the Grand Betrayal (which would cut social programs and safety nets just when Americans would need them the most).

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December 28, 2012

Fiscal Cliff: Going Nuclear and the Grand Betrayal

Bill Black: GOP threatens to use debt ceiling as leverage, creates conditions for more austerity measures by Obama

More at The Real News


William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics. Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. Black developed the concept of "control fraud" frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management.
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President Barack Obama speaks at a campaign rally in Fayetteville, North Carolina 10/19/08.
(photo: Jim Young/Reuters)

Obama Should Listen to Obama

By William K. Black, Reader Supported News
27 December 12

n Friday, December 21, 2012, President Obama announced:
"As of today I am still ready and willing to get a comprehensive package done," Obama said, specifically urging lawmakers to craft a deal that would protect middle-class Americans from a tax hike set to be implemented if no deal is met.

Obama said he spoke with GOP House Speaker John Boehner and Senate Majority Leader Harry Reid (D-Nev.) Friday, asking the congressional leaders to come up with a smaller fiscal package in the next 10 days.

"Now is not the time for more self-inflicted wounds, certainly not coming from Washington," Obama said.
What is the "self-inflicted wound" that Obama warns us we must avoid?

According to the AP, "'Everybody's got to give a little bit in a sensible way' to prevent the economy from pitching over a recession-threatening fiscal cliff, he said."

Austerity is the weapon that is about to inflict the self-inflicted wounds on our nation. The fiscal cliff is the ammunition about to be used to inflict austerity on the nation. One of the wounds is a recession, which would increase unemployment and the federal budget deficit. The other terrible wounds are cuts to social programs and the safety net that would add greatly to human misery.

Reporters need to ask Obama two series of questions. Who insisted on creating the fiscal cliff, threatened Republicans in Fall 2011 when they wanted to eliminate or reduce it, and after the "failure" of the November 2011 "super committee" to reach a deal to inflict even greater austerity on the nation, made a veto threat to block a Republican proposal to eliminate or delay the fiscal cliff? The answer is: Obama. "The White House wanted a 'trigger' that would automatically raise taxes on the wealthy and cut health spending, an idea the Republicans opposed." Obama's "trigger" became the "fiscal cliff." I have explained how he then kept the "fiscal cliff" alive by blocking Republican efforts to eliminate or delay it.

Obama's driving role in creating and maintaining the "fiscal cliff" makes his warning of the necessity of avoiding "self-inflicted wounds" (recession by austerity) imposed by the fiscal cliff another proof of our family rule that it is impossible to compete with unintentional self-parody. We need to convince Obama to follow his own advice and eliminate the self-inflicted wound (recession) by eliminating, not delaying, the fiscal cliff and safeguarding the safety net.

The second question Obama should be asked is: given your warning that the fiscal cliff's austerity would cause a recession, why are you demanding a Grand Bargain (sic, actually the Grand Betrayal) that would inflict austerity for a decade and likely cause multiple recessions and larger deficits?

Consider the incoherence of Obama's statement: "'Everybody's got to give a little bit in a sensible way' to prevent the economy from pitching over a recession-threatening fiscal cliff, he said." That statement makes no sense. Austerity is the problem. Obama and the Republicans agree that it is a self-destructive policy that would cause a recession, just as it did in the eurozone. The solution is (1) not to raise overall taxes and (2) not to cut overall spending.

Obama, however, immediately after warning that it is essential to prevent the "fiscal cliff's" austerity from causing the "self-inflicted wound" of a recession, calls for austerity. He wants a Grand Betrayal that (net) raises taxes, cuts social spending and cuts the safety net. The Democrats are supposed to "give a little bit" by making roughly a trillion dollars in cuts in social programs and the safety net and the Republicans are supposed to "give a little bit" by allowing roughly a half trillion dollars in "revenue enhancements." Obama's austerity policy is so incoherent that in the same sentence he says that austerity (in the form of the fiscal cliff) must be prevented because it would cause a recession -- and that the nation must embrace austerity not only today but for at least a decade. An austerity deal of that nature and length cannot be "sensible." It would force us back into a recession and could cause or deepen several recessions. We need to stop Obama and the Republicans from causing the "self-inflicted wounds" of the "fiscal cliff" and the Grand Betrayal.

Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.

Thursday, December 27, 2012


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 December 27, 2012                                                                                                         Original Here

Congress Delays Aid Bill As Sandy Victims Suffer

Joel Kuperfman: Increased funding and accountability needed for government's response to Superstorm Sandy
Watch full multipart Many Still Wait for Help in Storm Battered Communities

More at The Real News
December 27, 2012                                                                                                         Original Here

What's Wrong with Baltimore Public Schools?

A discussion with Lester Spence and Marc Steiner about the historical roots of the problems facing Baltimore public schools
Watch full multipart The Real Baltimore

More at The Real News

December 27, 2012                                                                                                         Original Here

Ambassador: Iran and US Must Reach a Comprehensive Deal in Direct Talks

Ambassador Hossein Mousavian: The nuclear issue is not the real problem; the US objects to Iran's influence in the region
Watch full multipart Iran

More at The Real News


Ambassador Seyed Hossein Mousavian is a research scholar at Princeton’s Woodrow Wilson School and a former spokesman for Iran’s nuclear negotiators. His latest book is The Iranian Nuclear Crisis: A Memoir, published by Carnegie Endowment for International Peace.

Tuesday, December 25, 2012

Economist Bill Black: "Everyone involved in creating the fiscal cliff acted irresponsibly and inhumanely in seeking to inflict austerity, cause a recession, and unravel the safety net." "The fiscal cliff was an act of idiocy in pursuit of a policy of depravity called 'the Grand Bargain' that was actually the Grand Betrayal." "President Obama wants to begin to unravel the safety net and cut social programs even though an overwhelming majority of Democrats oppose it and even though doing so will inflict even greater austerity. That will cause a deeper recession and likely make the deficit larger, so it is as nonsensical as it is cruel."

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President Obama and House Speaker John Boehner. (photo: Saul Loeb/AFP/Getty Images)







Kill the 'Fiscal Cliff' Instead of the Economy

By William K. Black, Reader Supported News
24 December 12

veryone now agrees that the so-called "fiscal cliff" is a stupid policy that threatens our economy and our people. Everyone agrees why the "fiscal cliff" is stupid -- it inflicts austerity at a time when it is likely to throw the nation into a gratuitous recession. Causing a recession leads to increased unemployment and a larger budget deficit. We have all seen austerity force the Eurozone into a gratuitous recession in which Italy, Spain and Greece have Great Depression levels of unemployment.

Here's the short version of why austerity is a self-destructive response to the Great Recession. A recession occurs when demand to purchase goods and services falls and the economy contracts, causing increased unemployment. This simultaneously causes tax revenues to fall and government expenditures for programs like unemployment compensation to increase. The fall in revenues and increase in expenses causes the federal budget deficit to grow rapidly.

Austerity is a policy of raising taxes and/or cutting governmental spending for the purported purpose of cutting the deficit. If one raises overall taxes in response to the Great Recession the result is a reduction in private sector demand. If one cuts governmental spending the result is a reduction in public sector demand. The result of reducing private and public sector demand in the recovery phase from the Great Recession, where overall demand is already grossly inadequate, is to throw the nation back into recession or even a depression. That causes the budget deficit to grow. A policy of austerity undertaken under the claim that it will reduce the deficit causes a gratuitous recession that leads to a massive loss of wealth, far higher unemployment, and in increased deficit. That is why austerity is a policy that is the self-destructive economic analogy to the medical insanity of bleeding patients.

We have known that austerity is an idiotic response to a severe crisis for 75 years. The U.S. was in the midst of a strong recovery from the Great Depression until FDR's neo-liberal economists convinced him in 1937 that is was essential that the U.S. adopt an austerity program to reduce the federal deficit. Austerity forced our economy back into a Great Depression.

It was only the stimulus of federal spending in World War II that brought the U.S. out of the depression. During World War II and for the remainder of that decade the ratio of debt-to-GDP was at or near historically record levels. The result was the greatest industrial expansion in history, full employment (including a massive influx of women), strong economic growth, and sharply declining deficits and debt-to-GDP ratio because the growth led to large increases in revenue and the low unemployment greatly reduced spending on the unemployed. We also defeated the Axis powers, created Social Security and the GI Bill, and began an extraordinary expansion of our housing stock to house the baby boom.

We learned many lessons from the catastrophic failure of austerity and the extraordinary success of stimulus in this era. The U.S. adopted a fiscal system of "automatic stabilizers." These are counter-cyclical (they push in the opposite direction of the business cycle) fiscal effects that are designed into the system and do not require new legislation once the recession or inflation begins. The result of these automatic stabilizers has been to reduce the severity and duration of recessions. Indeed, studies show that the larger the national governmental role in the economy, the less volatile the economy. This makes sense because the stabilization function should be more effective if the stabilizers are larger relative to the economy.

Unfortunately, these sensible counter-cyclical policies that make theoretical and common sense and have repeatedly worked in the real world were forgotten by many due to a campaign of deficit hysteria funded by Pete Peterson, a Republican billionaire financier who has made it his mission in life to destroy the safety net. His ultimate goal is to privatize social security so that Wall Street can receive hundreds of billions of dollars in fees investing our retirement funds.

I've explained in a prior column how the fiscal cliff was created through an insane bipartisan deal in August 2011. The fiscal cliff was always a terrible job-destroying idea that also began to unravel the safety net by cutting Medicare. Everyone involved in creating the fiscal cliff acted irresponsibly and inhumanely in seeking to inflict austerity, cause a recession, and unravel the safety net.

What is forgotten, however, in discussions of the idiocy of creating the fiscal cliff is that it was part of a broader bipartisan deal intended to inflict even more self-destructive austerity and even greater damage to the safety net. The fiscal cliff was an act of idiocy in pursuit of a policy of depravity called "the Grand Bargain" that was actually the Grand Betrayal.

The bipartisan madness has increased since the August 2011 budget deal. Today, the parties are simultaneously screaming (1) that the fiscal cliff is a disaster because it imposes austerity and will cause a recession and (2) that it is essential that we agree to a Grand Betrayal that will inflict even greater austerity and cause an even more severe recession. Indeed, the Grand Betrayal mandates austerity over a decade so it is likely to cause and/or deepen multiple recessions. The Republican and Democratic variants of the Grand Betrayal are doubly destructive and inhumane because they cut the safety net. President Obama wants to begin to unravel the safety net and cut social programs even though an overwhelming majority of Democrats oppose it and even though doing so will inflict even greater austerity. That will cause a deeper recession and likely make the deficit larger, so it is as nonsensical as it is cruel.

During this this entire financial farce I have been unable to get the dominant media to make the most obvious point. Since we all agree that austerity (the fiscal cliff) is a terrible idea that will cause a recession and likely increase the deficit, we must logically conclude that all variants of the Grand Betrayal are austerity programs that must be defeated in order to prevent a recession that is likely to increase the deficit. We should all be opposing any cuts in the safety net because they would inflict austerity. An overwhelming majority of Democrats and a majority of Republicans also oppose cuts in the safety net as inhumane.

So why don't the Democrats and Republicans stop trying to do a deal that will inflict austerity? Why not simply repeal the Budget Act of August 2011? That would kill the fiscal cliff. Repeal would kill austerity, prevent the recession, save the safety net, increase growth, and shrink the deficit. All versions of the Grand Betrayal (Republican and Democratic) inflict austerity, are likely to cause a recession, begin to unravel the safety net, destroy growth, and increase the deficit.

Under the same logic we should be able to agree on two related actions -- renew the extension of long-term unemployment compensation and renew the moratorium on collecting the payroll tax. These policies are superb counter-cyclical programs and have the added advantage of reducing human misery and inequality. Republicans and Democrats have agreed in the past on the desirability of both actions.

Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.

Economist Bill Black: "...since everybody agrees now that the fiscal cliff is incredibly stupid and really dangerous, in the sense that it's designed to impose austerity, and they're saying that if we were to continue this austerity for very long, we would throw the nation back into recession, I went back and looked. How did we come about—you know, who's the moron that created this fiscal cliff that they're talking about? And it turns out it's President Obama."

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December 23, 2012

Black: Too Big to Prosecute and It's Obama's Fiscal Cliff

Bill Black: Criminal money laundering goes unpunished and Fiscal Cliff was created by Obama
Watch full multipart The Black Financial and Fraud Report:

More at The Real News


William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics. Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. Black developed the concept of "control fraud" frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management. 

Friday, December 21, 2012


Headlined to H3 12/21/12
Obama/Boehner Two-Step

By Stephen Lendman (about the author)            Permalink
OpEdNews Op Eds 12/21/2012 at 01:26:14  

Obama/Boehner Two-Step
Both parties on board to destroy America's social contract.

by Stephen Lendman

Previous articles explained fiscal cliff duplicity in detail. At issue is destroying America's social contract. Both parties agreed early in Obama's first term. They plan killing it incrementally by a 1,000 cuts.

Class war rages. Private wealth and power are pitted against essential public needs. Property rights, individualism, and free-market mumbo jumbo hammer ordinary people mercilessly. Neoliberal harshness reflects it.

Warren Buffet once said, "There's class warfare, all right, but it's my class, the rich class, that's winning."

Obama, Boehner and complicit congressional leaders agree. Plans are to give corporations and America's privileged class more. Unprecedented wealth extremes will widen. 

Public needs will grow. Shared sacrifice is one-way. Both parties concur. Obama and Boehner publicly dance around what both leaders agreed on months or years ago. Media scoundrels pretend otherwise.

On September 19, 2011, economist Richard Wolff headlined his Guardian op-ed "The truth about 'class war' in America," saying:

"Republicans claim (Obama's) millionaire tax is 'class war.' The reality is that the super-rich won the war" long ago.

Tax hike fear-mongering claims:

(1) raising them "amount(s) to un-American 'class warfare,' pitting" ordinary Americans against corporations and super-rich elites; and

(2) tax hikes negatively affect productive investment and job creation.

Evidence proves otherwise. Post-WW II, every personal income dollar raised was matched by $1.50 on business profits. Now it's 25 cents.

Ordinary households bear today's burden. Social justice are four-letter words. Corporations pay increasingly less. Nominally from 1989 - 2007, they paid 24.7% of profits. Since 2010, they averaged 12.4%. In reality, many pay much less.

Obama/Boehner's grand bargain assures new cuts. Obama's on record favoring lower corporate taxes. Expect nominal reductions from today top 35% rate to 28%. What's paid, of course, is much less.

Sometime next year, major tax code revisions will be quietly announced. Discussions about them are concealed. Otherwise, major social benefit cuts would look like double-dealing duplicity to fund corporate largese. More on what's coming below.

Wolff said US taxes over the last half century saw "a massive double (burden) shift from the richest individuals to everyone else."

Corporations and super-rich elites won America's class war. Everyone else lost out.

On December 13, Wolff revisited the topic. His Guardian op-ed headlined "Class war redux: how the American right embraced Marxist struggle," saying:

Republicans and conservatives used to say little about "classes and class warfare." America is a "classless" society, they claimed.

Most Americans are "wondrously comfortable and secure consumers," they say. Harsher views now prevail. Unguarded moments reveal them.

Prime targets are called "moochers." Romney called them "the 47%" always voting Democrat.
"Moochers" depend on government handouts, they claim. They include contractual federal obligations. They're for qualified eligible recipients. 

Social Security and Medicare aren't entitlements. They're not welfare. They're insurance policies. They're funded by worker/employer payroll tax deductions. 

Social Security provides retirement, disability, survivorship, and death benefits. It's America's most effective poverty reduction program.

It's worked remarkably well since inception. It once provided secure inflation-adjusted retirement or disability income. Manipulated CPI numbers erode annual amounts received. 
It protects personal savings. It avoids risky private investments. 

It's not going broke. When properly administered, it's sound and secure. Over time, it needs only modest adjustments. Doing so properly keeps it viable in perpetuity.

Medicare is America's largest health insurance program. Tens of millions are covered. Everyone over 65 and some younger disabled people qualify. So do others of all ages with end-stage renal disease.

Obama/Boehner/complicit congressional leaders/and corporate America want both programs privatized and eroded en route to ending them in their present form. They want Medicaid and public pensions treated the same way.

Death by a 1,000 cuts is policy. Expect it to play out over the next decade.

Both parties support class warfare. They want people most in need denied help. They want government reduced to militarism, national defense, homeland security, and defending corporate and super-rich privileges.

They want everyone else spurned, on their own, sink or swim. At issue is destroying America's social contract by neoliberal austerity.

Democrats feign resistance. It's cover for what they agreed on years ago. Obama's fully on board. He's corporate America's point man. 

His people-friendly persona masks his diabolical dark side. No pun intended. He's contemptuous of popular needs. He heads the fight to destroy them.

Battle lines are drawn. Ordinary people are in the crosshairs. Political theater conceals what's coming. 

Both sides agreed on $4 trillion in largely domestic cuts over the next decade. It's for starters. Quietly they're on board for much more.

Deficit cutting urgency is a ruse. Whatever amounts are cut, annual deficits will rise exponentially. Cutting them depends on sound policies both parties spurn.

They include ending permanent US wars, cutting defense spending sharply, shutting down overseas bases, reinstating progressive taxes, and making corporations and large investors pay their fair share.

Most important is putting money power back in public hands where it belongs. Doing so ensures long-term, inflation-free prosperity. It's possible with minimal taxes on ordinary people.

Good policy isn't rocket science. It's time-tested effective. What worked in other countries and colonial America can be replicated now. Both parties reject it. They have other fish to fry. 

Their plans involve thirdworldizing America. Political theater will unveil it step by step. Obama agreed to $1.2 trillion in largely domestic yearend cuts.

Boehner raised his initial $800 billion to $1 trillion. Expect agreement on around $1.1 trillion. Simpson-Bowles recommended it two years ago for starters. All parties have much more in mind.

Boehner's on board for modest tax increases on incomes of $1 million or more. Obama suggests $400 million. Expect compromise around $600 million. On average it's what America's 1% earns.

Word awaits on expected tax revenues raised v. bracket manipulation and specific spending cuts. Expect Medicare and Medicaid to be hit hard. 

Final deal terms may mandate around $500 million cut from Medicare alone. Expect it mostly in higher Part B and Part D deductibles and copays.

Defense increases, not cuts, are planned. War profiteers rest easy. Reductions will come from weapons systems Pentagon officials don't want, overseas troop drawdowns, and veterans benefits most of all.

Retirees will pay higher healthcare premiums and co-pays. Overall benefits will be cut. Promises made were broken. Neoliberal harshness targets them like other Americans. Even wounded and disabled vets increasingly are on their own.

"Broadening the tax base" is code language for major code revisions coming. Ordinary people will be hit hardest. 

Expect mortgage deduction caps, state and local tax deduction limits, less allowed for charitable and medical insurance deductions, lower education credits, raising the Social Security retirement age to 67 or higher, and other ways to squeeze America's middle class and least advantaged.

Obama and Boehner feign negotiations. They're on board in principle. Public two-stepping is deceptive. Deal parameters and terms were agreed on long ago.

Corporate bosses are on board. Obama's been meeting with them multiple times weekly. Tax relief, greater handouts, and other incentives bought their support. What they back becomes policy.

Key bosses matter most. They're lobbying Congress for Obama. Heavy lifting is done. Final details await announcement. Most planned cuts are backloaded. They'll begin in 2014 or 2015. Others will kick in later.

December 31/January 1 are fictitious deadlines. Cuts can come any time. They can be made retroactive to yearend.

March 27, 2013 is a real deadline. America runs out of money when its debt ceiling is reached. US law requires Congress  authorize borrowing limits to fund federal programs. 

Doing it means raising the ceiling by late March or sooner. Expect agreement in principle by year end. Details come later. Two-stepping continues. 

Media scoundrels provide background music. Corporate approval sealed a done deal. Neither side of the isle dares disagree. 

Campaign contributions depend on going along. Money talks. In Washington it buys influence. It demands consigning America's social contract to history's trash bin. 

Middle class and disadvantaged households are increasingly on their own. Harder than ever hard times await them.

A Final Comment

In 2009, the Nobel Committee continued its long/inglorious tradition. Another war criminal got its peace prize. 

Obama followed Henry Kissinger, Shimon Peres, Yitkak Rabin, Menachem Begin, Al Gore, Kofi Annan, three other US warrior presidents, and other candidates deserving harsh condemnation.

On December 19, Time magazine added another award. Obama became its person of the year for the second time. It called him "both the symbol and in some ways the architect of this new America."

It omitted saying he helped make it unsafe and unfit to live in. 

It ignored his war on humanity, his police state governance, his kill list, his self-appointment as judge, jury and executioner, and his self-designating himself power to have any US citizen arrested and imprisoned uncharged indefinitely for life. 

It forgot about numerous other violations of international, US statute and constitutional laws. So many exist, it's hard remembering them all. Instead of denouncing his rogue governance, it praised what causes so much harm to so many.

It shouldn't surprise. In 1938, Time named Hitler person of the year. In 1939, Stalin followed. Future Nazi collaborator Pierre Laval won in 1931. So did Nazi sympathizer Charles Lindbergh in 1927. 

In 1937, facist Chinese leader Chaing Kai-shek was Time's choice. Kissinger, Nixon, GHW Bush, Bill Clinton twice, Newt Gingrich, GW Bush twice, and Bernanke were future inglorious choices among others.

Perhaps Netanyahu will win next year. Qualifying depends on colonizing all valued parts of Palestine he doesn't yet control. Perhaps he's pushing overtime to meet Time's deadline.

Stephen Lendman lives in Chicago and can be reached at Email address removed
His new book is titled "Banker Occupation: Waging Financial War on Humanity."

Visit his blog site at and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

Thursday, December 20, 2012

Author-selected contents of the article: "US news is agenda-driven. As the media simply goes along with the official story and does not investigate, it is impossible to know what really happened. People just accept the official story. Children lost their lives, families lost their children, and the tragedy is being used to disarm Americans faced with a police state growing in power and menace."

Agenda Driven News

December 19, 2012 | Original Here

I have known for a long time that US news is agenda-driven. Tonight (December 18) I was made aware of the extent to which agenda-driven US news drives the news of the rest of the world.

For reasons unbeknownst to me, Russia Today Moscow requested a live TV interview via Skype about the Newtown, Connecticut, school shootings that killed 20 young children and several adults. I was interested to know what was Moscow’s interest in the shootings, and I agreed to the interview.

I was surprised to see that RT Moscow’s interest was to spread the official US story of the shootings and to ask me if I thought “assault weapons” would be banned as a consequence.

Many things can be an assault weapon. A baseball bat, a knife, a fist, a foot, a single shot .22 rifle, a double-barrel shotgun, a fireplace poker, a six-shot revolver, a brick, a sword, a bow and arrow, a lance. A person can add many items to this short list.

Gun-control advocates have defined “assault weapon” to be a semi-automatic civilian version of military weapons, such as AR-15, the civilian version of the military M-16, and AK-47. During the Clinton administration the civilian version of these weapons was not permitted to have various harmless features because the features made the rifles have a military appearance, and the weapons were restricted to magazines that held no more than ten rounds.

Today 20 and 30 round magazines are available. For a professional, the capacity of the magazines is immaterial. With experience a person can change clips in a second. A button is pushed, the clip drops out and a new one is inserted. For reasons hard to follow, gun control advocates think that a ten-round clip turns an “assault weapon” into something else.

I told RT Moscow that the United States was the most compete police state in human history. Thanks to modern technology, Washington is able to spy on its subjects far beyond the capabilities of Joseph Stalin and Adolf Hitler. Even George Orwell’s imagination in his dystopian novel, 1984, has been surpassed by Washington’s current practice. The “war on terror” is the excuse for the American Police State.

A police state, I said, was inconsistent with an armed population, and as all other constitutional amendments have fallen, the sole remaining amendment, the Second Amendment, will not survive much longer.

But why RT Moscow’s focus on “assault weapons”? The accused, Adam Lanza, was immediately declared guilty. According to the Associated Press, the Newtown, Connecticut medical examiner, Dr H. Wayne Carver said that “all the victims of the Connecticut elementary school shooting were killed up close by multiple rifle shots.”

Yet Fox News reports that “A CNN reporter said police recovered three weapons at the scene: a Glock and a Sig-Sauer, which are handguns, as well as a .223 Bushmaster rifle. The rifle was in the back seat of the car the gunman drove to the school, the handguns were inside the school.”

The same Fox News report says: “Security measures implemented this year at Sandy Hook [the school] kept doors locked during class hours, and people have to be buzzed in before entering. There is a camera to view whoever enters the building.” If this report is correct, how did an armed Lanza gain entry to the school?

I tried to point out to RT Moscow that these news reports indicate that the accused dead gunman, whom no one can interrogate, if he is indeed the culprit, killed the children with handguns, not with an “assault rifle” left in the car, but that the medical examiner said the children were killed with rifle shots.

The discrepancy is obvious. Either the news reports are incorrect, the medical examiner is wrong, or someone other than Adam Lanza shot the children.

This was too much for RT Moscow’s news anchor. She cut me off with her statement that the children were dead by whatever gun. Yet, the focus of the program was on “assault rifles.” This focus was reinforced when I was asked to stay online for a post-interview question.

The question from RT Moscow was whether I thought assault weapons would be banned. I answered that I thought all guns would be banned. I had already told the TV anchor that I thought that all guns would be taken away from US subjects, but that I doubted the efficacy of the ban. I told the news anchor that during the early part of the 20th century, the US, in all its wisdom, had a ban on alcohol, but alcohol was everywhere available. The alcohol ban was the origin of the crime syndicates’ fortunes. Today we have the drug ban, going back decades. The result is that drugs are everywhere, and drug syndicates are making billions. It will not be much different with a gun ban. England has a gun ban, but criminals have guns, and today the formerly unarmed British police are heavily armed. When I lived in England, guns were not banned and the police carried nightsticks, not firearms.

The focus on “assault weapons” is puzzling for another reason. According to news reports Lanza had a personality or mental disorder, or perhaps he was just different.

Regardless, he was on medication. So does the blame lie with guns or with medication?
As the agenda is to ban guns, the blame is placed on guns.

In the previous mass shooting at the Colorado movie theater, eyewitness accounts differed from the official account, and according to news accounts the suspect was involved with the government in some sort of mind control experiments and was found after the shooting sitting in a car in the movie theater parking lot.

Similarly, the Connecticut school shooting has puzzling aspects. In the real time report to the police, a teacher says that she saw “two shadows running past the gym.” The police radio recording also reports two men in a van at the school stopped and detained, and various news sources report that the police arrested a man in the nearby woods. The man says, “I didn’t do it,” but how would a man out in the woods know what had just happened? There are no TVs to watch in the woods; yet, the man denied doing the shooting. Very strange.

What often happens is that there are a number of initial false reports, such as in the Connecticut case the report that Lanza’s mother was a teacher at the school and was killed at the school, that Lanza had also killed his father, and that Lanza’s brother might have been involved. Any discrepancies in the official story then get thrown out with the false reports. As the media simply goes along with the official story and does not investigate, it is impossible to know what really happened. People just accept the official story.

It seems odd, however, that RT Moscow would uncritically follow the US media in reporting the official story after experiencing, for example, the US media’s intentional misreporting of the Georgian-Russian war, which was started by the former Soviet republic of Georgia but blamed on Russia. Does RT Moscow really believe the US media that the US missile bases surrounding Russia are directed at Iran?

Americans have been well armed for several centuries, but “gun violence” is new. Why?

Are there more disturbed people? More medicated people? Have Americans lost self-control, their moral conscience? Are Americans being molded by violent movies and video games and by eleven years of their government’s slaughter of other peoples? Have Americans lost empathy for others?

Tom McNamara, a lecturer at the French National Military Academy, asks: “Do Arabs Cry For Their Children Too?”

The Connecticut school shooting is a tragedy in more ways than one. Children lost their lives, families lost their children, and the tragedy is being used to disarm Americans faced with a police state growing in power and menace.

Wednesday, December 19, 2012


"Americans Kill People": Michael Moore on Newtown, Mass Shootings, and the U.S. Culture of Violence

We air an excerpt of an address by the legendary filmmaker Michael Moore delivered just hours after the Newtown massacre. Moore won an Academy Award for his 2002 documentary, "Bowling for Columbine," about gun violence in the United States. He discussed the Sandy Hook Elementary School massacre at a New York City event on Friday night. Video courtesy of filmmaker Lorna Tucker. [Original includes rush transcript] 

Monday, December 17, 2012


The Fiscal Cliff Is A Diversion: The Derivatives Tsunami and the Dollar Bubble

December 17, 2012 | Original Here

The “fiscal cliff” is another hoax designed to shift the attention of policymakers, the media, and the attentive public, if any, from huge problems to small ones.
The fiscal cliff is automatic spending cuts and tax increases in order to reduce the deficit by an insignificant amount over ten years if Congress takes no action itself to cut spending and to raise taxes. In other words, the “fiscal cliff” is going to happen either way.
The problem from the standpoint of conventional economics with the fiscal cliff is that it amounts to a double-barrel dose of austerity delivered to a faltering and recessionary economy. Ever since John Maynard Keynes, most economists have understood that austerity is not the answer to recession or depression.
Regardless, the fiscal cliff is about small numbers compared to the Derivatives Tsunami or to bond market and dollar market bubbles.
The fiscal cliff requires that the federal government cut spending by $1.3 trillion over ten years. The Guardian reports that means the federal deficit has to be reduced about $109 billion per year or 3 percent of the current budget. More simply, just divide $1.3 trillion by ten and it comes to $130 billion per year. This can be done by simply taking a three month vacation each year from Washington’s wars.
The Derivatives Tsunami and the bond and dollar bubbles are of a different magnitude.

Last June 5 in “Collapse At Hand” I pointed out that according to the Office of the Comptroller of the Currency’s fourth quarter report for 2011, about 95% of the $230 trillion in US derivative exposure was held by four US financial institutions: JP Morgan Chase Bank, Bank of America, Citibank, and Goldman Sachs.
Prior to financial deregulation, essentially the repeal of the Glass-Steagall Act and the non-regulation of derivatives–a joint achievement of the Clinton administration and the Republican Party–Chase, Bank of America, and Citibank were commercial banks that took depositors’ deposits and made loans to businesses and consumers and purchased Treasury bonds with any extra reserves.
With the repeal of Glass-Steagall these honest commercial banks became gambling casinos, like the investment bank, Goldman Sachs, betting not only their own money but also depositors money on uncovered bets on interest rates, currency exchange rates, mortgages, and prices of commodities and equities.
These bets soon exceeded many times not only US GDP but world GDP. Indeed, the gambling bets of JP Morgan Chase Bank alone are equal to world Gross Domestic Product.
According to the first quarter 2012 report from the Comptroller of the Currency, total derivative exposure of US banks has fallen insignificantly from the previous quarter to $227 trillion. The exposure of the 4 US banks accounts for almost of all of the exposure and is many multiples of their assets or of their risk capital.
The Derivatives Tsunami is the result of the handful of fools and corrupt public officials who deregulated the US financial system. Today merely four US banks have derivative exposure equal to 3.3 times world Gross Domestic Product. When I was a US Treasury official, such a possibility would have been considered beyond science fiction.
Hopefully, much of the derivative exposure somehow nets out so that the net exposure, while still larger than many countries’ GDPs, is not in the hundreds of trillions of dollars. Still, the situation is so worrying to the Federal Reserve that after announcing a third round of quantitative easing, that is, printing money to buy bonds–both US Treasuries and the banks’ bad assets–the Fed has just announced that it is doubling its QE 3 purchases.
In other words, the entire economic policy of the United States is dedicated to saving four banks that are too large to fail. The banks are too large to fail only because deregulation permitted financial concentration, as if the Anti-Trust Act did not exist.
The purpose of QE is to keep the prices of debt, which supports the banks’ bets, high. The Federal Reserve claims that the purpose of its massive monetization of debt is to help the economy with low interest rates and increased home sales. But the Fed’s policy is hurting the economy by depriving savers, especially the retired, of interest income, forcing them to draw down their savings. Real interest rates paid on CDs, money market funds, and bonds are lower than the rate of inflation.
Moreover, the money that the Fed is creating in order to bail out the four banks is making holders of dollars, both at home and abroad, nervous. If investors desert the dollar and its exchange value falls, the price of the financial instruments that the Fed’s purchases are supporting will also fall, and interest rates will rise. The only way the Fed could support the dollar would be to raise interest rates. In that event, bond holders would be wiped out, and the interest charges on the government’s debt would explode.
With such a catastrophe following the previous stock and real estate collapses, the remains of people’s wealth would be wiped out. Investors have been deserting equities for “safe” US Treasuries. This is why the Fed can keep bond prices so high that the real interest rate is negative.
The hyped threat of the fiscal cliff is immaterial compared to the threat of the derivatives overhang and the threat to the US dollar and bond market of the Federal Reserve’s commitment to save four US banks.
Once again, the media and its master, the US government, hide the real issues behind a fake one. The fiscal cliff has become the way for the Republicans to save the country from bankruptcy by destroying the social safety net put in place during the 1930s, supplemented by Lyndon Johnson’s “Great Society” in the mid-1960s.
Now that there are no jobs, now that real family incomes have been stagnant or declining for decades, and now that wealth and income have been concentrated in few hands is the time, Republicans say, to destroy the social safety net so that we don’t fall over the fiscal cliff.
In human history, such a policy usually produces revolt and revolution, which is what the US so desperately needs.
Perhaps our stupid and corrupt policymakers are doing us a favor after all.

Saturday, December 15, 2012


Dean Baker: The Biggest Myth in Obama-GOP Spending Showdown is the "Fiscal Cliff" Itself

Original Here

As negotiations continue between the White House and House Speaker John Boehner, leading economist Dean Baker joins us to discuss the myths about the so-called fiscal cliff. With little more than two weeks before the deadline, President Obama insists on an immediate increase in the top two income-tax rates as a condition for further negotiations on changes to spending and entitlement programs. But Boehner said Washington’s "spending problem" is the biggest roadblock to reaching a deal and has urged the White House to identify more spending cuts. "This idea that, somehow, if we don’t get a deal by the end of the year we’re going to see the economy collapse, go into a recession, really that’s just totally dishonest," says Baker, the co-director of the Center for Economic and Policy Research. "The basis for this is that we don’t have a deal all year. And the fact that you don’t have a deal December 31st does not mean you don’t get a deal by December 31st, 2013." [Original includes rush transcript]


Our Collapsing Economy and Currency

December 1, 2012 | Original Here

Is the “fiscal cliff” real or just another hoax? The answer is that the fiscal cliff is real, but it is a result, not a cause. The hoax is the way the fiscal cliff is being used.

The fiscal cliff is the result of the inability to close the federal budget deficit. The budget deficit cannot be closed because large numbers of US middle class jobs and the GDP and tax base associated with them have been moved offshore, thus reducing federal revenues. The fiscal cliff cannot be closed because of the unfunded liabilities of eleven years of US-initiated wars against a half dozen Muslim countries–wars that have benefitted only the profits of the military/security complex and the territorial ambitions of Israel. The budget deficit cannot be closed, because economic policy is focused only on saving banks that wrongful financial deregulation allowed to speculate, to merge, and to become too big to fail, thus requiring public subsidies that vastly dwarf the totality of US welfare spending.

The hoax is the propaganda that the fiscal cliff can be avoided by reneging on promised Social Security and Medicare benefits that people have paid for with the payroll tax and by cutting back all aspects of the social safety net from food stamps to unemployment benefits to Medicaid, to housing subsidies. The right-wing has been trying to get rid of the social safety net ever since Franklin D. Roosevelt constructed it, out of fear or compassion or both, during the Great Depression.

Washington’s response to the fiscal cliff is austerity: spending cuts and tax increases. The Republicans say they will vote for the Democrats’ tax increases if the Democrats vote for the Republican’s assault on the social safety net. What bipartisan compromise means is a double-barreled dose of austerity.

Ever since John Maynard Keynes, economists have understood that tax increases and spending cuts suppress, not stimulate, economic activity. This is especially the case in an economy such as the American one, which is driven by consumer spending. When spending declines, so does the economy. When the economy declines, the budget deficit rises.

This is especially the case when an economy is weak and already in decline. A declining economy means less sales, less employment, less tax revenues. This works against the effort to close the federal budget deficit with austerity measures. Instead of strengthening the economy, the austerity measures weaken it further. To cut unemployment benefits and food stamps when unemployment is high or rising would be to provoke social and political instability.

Some economists, such as Robert Barro at Harvard University, claim that stimulative measures, the opposite of austerity, don’t work, because consumers anticipate the higher taxes that will be needed to cover the budget deficit and, therefore, reduce their spending and increase their saving in order to be able to pay the anticipated higher taxes.

In other words, the Keynesian effort to stimulate spending causes consumers to reduce their spending. I don’t know of any empirical evidence for this claim.

Regardless, the situation on the ground at the present time is that for the majority of people, incomes are stretched to the limit and beyond. Many cannot pay their bills, their mortgages, their car payments, their student loans. They are drowning in debt, and there is nothing that they can cut back in order to save money with which to pay higher taxes.

Many commentators are complaining that Congress will refuse to face the difficult issues and kick the can down the road, leaving the fiscal cliff looming. This would probably be the best outcome. As the fiscal cliff is a result, not a cause, to focus on the fiscal cliff is to focus on the symptoms rather than the disease.

The US economy has two serious diseases, and neither one is too much welfare spending.
One disease is the offshoring of US middle class jobs, both manufacturing jobs and professional service jobs such as engineering, research, design, and information technology, jobs that formerly were filled by US university graduates, but which today are sent abroad or are filled by foreigners brought in on H-1B work visas at two-thirds of the salary.

The other disease is the deregulation, especially the financial deregulation, that caused the ongoing financial crisis and created banks too big to fail, which has prevented capitalism from working and closing down insolvent corporations.

The Federal Reserve’s policy is focused on saving the banks, not on saving the economy. The Federal Reserve is purchasing not only new Treasury bonds issued to finance the more than one trillion dollar annual federal deficit but also the banks’ underwater financial instruments, taking them off the banks’ books and putting them on the Federal Reserve’s books.

Normally, debt monetization of this amount results in rising inflation, but the money that the Federal Reserve is creating in its attempt to manage the public debt and the banks’ private debt is hung up in the banking system as excess reserves and is not finding its way into the economy. The banks are too busted to lend, and consumers are too indebted to borrow.

However, the debt monetization poses a second threat that is capable of biting the US economy and consumer living standards very hard. Foreign central banks, foreign investors in US stocks and financial instruments, and Americans themselves observing the Federal Reserve’s continuous monetization of US debt cannot avoid concern about the dollar’s value as the supply of ever more dollars continues to pour out of the Federal Reserve.

Already there is evidence of central banks and individuals moving out of dollars into gold and silver bullion and into other currencies of countries that are not hemorrhaging debt and money. According to John Williams of, the US dollar as a percentage of global holdings of reserve assets has declined from 36.6% in 2006 to 28.7% in 2012. Gold has increased from 10.5% to 12.8% and other foreign currencies except the euro increased from 38.4% to 44.4%.

Russia, China, Brazil, India, and South Africa intend to conduct trade among themselves in their own currencies without use of the dollar as reserve currency. The EU countries conduct their trade with one another in euros, and although not reported in the US media, Asian countries are discussing a new common currency for trade among themselves.

The world is abandoning the use of the dollar to settle international accounts, and the demand for dollars is falling as the Federal Reserve increases the supply of dollars.
This means that the price of the dollar is threatened.

Concern over the dollar means concern over dollar-denominated financial instruments such as stocks and bonds. The Chinese hold some $2 trillion in US financial instruments. The Japanese hold about $1 trillion in US Treasuries. The Saudis and the oil emirates also hold large quantities of US dollar financial instruments. At some point the move away from the dollar also means a move away from US financial instruments. The dumping of US stocks and bonds would destabilize US financial markets and wipe out the remainder of US wealth.

As I have previously written, the Federal Reserve can create new money with which to purchase the dumped financial instruments, thus maintaining their prices. But the Federal Reserve cannot print gold or foreign currencies with which to buy up the dollars that foreigners are paid for their US stocks and bonds. When the dollars in turn are dumped, the exchange value of the dollar will collapse, and US inflation will explode.

The onset of hyperinflation can be as sudden as the collapse of a currency’s exchange value.

The real crisis facing the US is the impending collapse of the US dollar’s foreign exchange value. The US dollar’s value in relation to silver and gold has already collapsed. In the past ten years, gold’s price in US dollars has increased from $250 per ounce to $1,750 per ounce, an increase of $1,500. Silver’s price has risen from $4 per ounce to $34 per ounce. These price rises are not due to a sudden scarcity of gold and silver, but to a flight from the dollar into the two forms of historical money that cannot be created with the printing press.

The price of oil has risen from $20 a barrel ten years ago to as high as $120 per barrel earlier this year and currently $90 a barrel. This price rise has come about despite a weak world economy and without any supply restrictions other than those caused by the attempted US occupation of Iraq, the Western assault on Libya, and the self-harming Western sanctions on Iran, impacts most likely offset by the Saudis, still Washington’s faithful puppet, a country that pumps out its precious life fluid in order to save the West from its own mistakes. The moronic neoconservatives wish to overthrow the Saudi Arabian government, but what more faithful servant has Washington ever had than the Saudi royal house?

What can be done? For a number of years I have pointed out that the problem is the loss of US employment, consumer income, GDP, and tax base to offshoring. The solution is to reverse the outward flow of jobs and to bring them back to the US. This can be done, as Ralph Gomory has made clear, by taxing corporations according to where they add value to their product. If the value is added abroad, corporations would have a high tax rate. If they add value domestically with US labor, they would face a low tax rate. The difference in tax rates can be calculated to offset the benefit of the lower cost of foreign labor.

As all offshored production that is brought to the US to be marketed to Americans counts as imports, relocating the production in the US would decrease the trade deficit, thus strengthening belief in the dollar. The increase in US consumer incomes would raise tax revenues, thus lowering the budget deficit. It is a win-win solution.

The second part to the solution is to end the expensive unfunded wars that have ruined the federal budget for the past 11 years as well as future budgets due to the cost of veterans’ hospital care and benefits. According to ABC World News, “In the decade since the Sept. 11, 2001 terrorist attacks on the World Trade Center, 2,333,972 American military personnel have been deployed to Iraq, Afghanistan or both, as of Aug. 30, 2011 [more than a year ago].” These 2.3 million veterans have rights to various unfunded benefits including life-long health care. Already, according to ABC, 711,986 have used Veterans Administration health care between fiscal year 2002 and the third-quarter of fiscal year 2011.

The Republicans are determined to continue the gratuitous wars and to make the 99 percent pay for the neoconservatives’ Wars of Hegemony while protecting the 1 percent from tax increases.
The Democrats are little different.

No one in the White House and no more than one dozen members of the 535 member US Congress represents the American people. This is the reason that despite obvious remedies nothing can be done. America is going to crash big time.

And the rest of the world will be thankful. America along with Israel is the world’s most hated country. Don’t expect any foreign bailouts of the failed “superpower.”