PERSPECTIVE: Nationalise the banks + green means zero growth

The ills besetting the financial system are currently devouring the global economy on which it relies. When one bank collapses another buys it, ensuring that the state will have to rescue it because it is now too big to fail. All of a sudden, with a knife to their throats, taxpayers everywhere are paying thousands of billions of dollars to bail out the biggest financial institutions. No one knows how many toxic assets are still concealed in their innards or how much more will have to be paid to buy up the rising mountain of tainted loans – a clear consequence of financial deregulation.

Once upon a time, it seems bankers had a 
nice easy life. They subscribed to the US “3-6-3” principle: borrow at 3%, lend at 6% and off 
for a round of golf at 3 o’clock. It did not take a regiment of mathematicians armed with econometric models to master this simple exercise. Then in the 1980s, everything changed. Diversification, risk-taking, opening up and removing barriers: these were the new watchwords. In 1933 the Glass-Steagall Act was passed prohibiting US banks from dealing on the stock exchange. Such old-fashioned New Deal nonsense was abolished in the euphoria of the new economics. Modernity beckoned and banks no longer depended on the confidence of their savers.

Most of them rushed to invest in new products: “derivatives” consisting of packages of loans they themselves once “securitised”. The bankers themselves hardly know what is going on (a 150-page handbook would sometimes be needed for this sort of exercise) though they appreciated the cash all this innovation generated for them. Lending more and more, in the dark and with less and less equity, was certainly taking a chance. But these were the days of bubbles, endless expansion, financial pyramids and astronomical salaries, all encouraging a policy of more of the same (1).

At the end of 2007, some banks lent up to 30 times the amount they held in their vaults. Insurance companies like American International Group (AIG) stood by, covering this daring exhibition 
of tightrope walking.

But one day, the rope gave way. Some debtors, ruined and unable to borrow any more, stopped repaying their loans. The banks were in a weak position: if a tiny fraction of the loans they had agreed could not be repaid, they too would be bankrupt – and their insurers with them. With house prices in free fall, economic activity grinding to a halt, unemployment soaring, how are the financial institutions to recover? The answer is: the state will take care of them, the same state which has too often let some genius shuttling between banks take the helm.

It is time for the state to address the problem. In any case, the financial sector can no longer look to private shareholders for its salvation: they only spring to life when the government announces a fresh injection of funds. Nationalising the banks – anathema only yesterday when everyone (even the French socialists) was in favour of financial deregulation – is now such an obvious move and the disaster it would prevent so imminent that Republican members of Congress are recommending it in the US, and neo-liberal magazines like The Economist are, regretfully, advocating the same line (2).

It seems, however, that as soon as the banks have been redeemed with taxpayers’ money, they will be returned to their shareholders. In short, put the house in order and then give it back to the people who looted it. Why? Nationalised banking systems have funded decades of expansion. What have private banks done of similar value?

Ref: Le Monde

Peter Custers: green means zero growth
June 2009

With the world economy in disarray and military expenditure spiralling, what hopes are there of a genuinely Green New Deal? In this month’s podcast, George Miller talks to Peter Custers, an expert on the international arms trade, about his article “Towards zero growth ”, which argues that “an economy that refuses to grow” is exactly what the world economy must aim for.

He sees positive signs in Germany’s policy on renewable energy and offers his verdict on how green Barack Obama will turn out to be.

Listen to the podcast here

US war on the third world! (welcome to US neverendig doctrine!)

CIA Covert Operations and U.S. Interventions Since World War II.
What you didn’t learn in school and don’t hear on the mainstream media. This is a two-hour video compilation featuring the following ten segments: 1. Martin Luther King Jr. 2. John Stockwell, Ex-CIA Station Chief 3. Bill Moyers, “the Secret Government” 4. Coverup: Behind the Iran-Contra Affair 5. School of Assassins 6. Genocide by Sanctions 7. Amy Goodman, host of Democracy Now 8. The Panama Deception 9. Ramsy Clark, former U.S. Attorney General 10. S. Brian Wilson, Vietnam Veteran for Peace We encourage the copying and distribution of this video “What I’ve Learned About U.S.Foreign Policy” Re-edited as of March 2005 Dear Friend, “I’ve put together this 2-hour video called ‘What I’ve Learned About U.S. Foreign Policy’.

The basic message being that the CIA (Central Intelligence Agency), the military-industrial-complex, the Pentagon, the multinational corporations, the media and the Government of the United States are responsible for the deaths of millions of people in the third world, not to mention the poverty and oppression of millions more. We support, arm, and train dictators and militaries that do these evil actions to their own people. All of this is to insure that we control the natural resources of these countries and their market place, use the people for cheap labor and keep the business of war (which is our biggest business) ongoing.

The CIA has also done business with international drug dealers, allowing heroin and cocaine to enter the U.S., using the enormous profits to fund more covert operations. Since WWII the US has bombed Korea, Vietnam, Cambodia, Laos, Guatemala, El Salvador, Panama, Iraq, Somalia, Yugoslavia, Afghanistan, and now currently Iraq, once again killing millions of innocent people!

The mainstream media, or corporate media (as some refer to it), will not tell these truths because it is owned by the very corporations who benefit from all of this. When it comes to foreign policy, the mainstream media gets its stories straight from the Pentagon and the CIA. We have been taught all our lives that the US fights for freedom and democracy, that we are the good guys. And since so many people in America are doing well, do have freedom, opportunity and wealth, or are just trying to get by, there is very little motivation to look into the things being said on this tape.

I believe that Americans are living in a state of mass denial, kind of a mass hypnosis. It is the BIG LIE! If Dan Rather, Peter Jennings, Tom Brokaw, and Ted Koppel aren’t telling us these things, then they cannot be true, which is what most people believe. And that is how it works. The people who are attempting to get this message out are labeled as crackpots, radicals, subversives, or worse, and are not given the opportunity to be heard on the mainstream media. If you’re interested in knowing this other truth, horrible as it is, then I suggest you watch this video.

These atrocities, supported by our system, with our tax dollars, will continue until the American people wake up and put a stop to this evil. The first step is to understand that this is really happening. We have been lied to! I believe the people on this video are telling the truth and it’s absolutely frightening.” In Peace and Solidarity, Frank Dorrel «

Understanding the Beijing Consensus

The decades of the Washington Consensus and its imposition of a liberal model of world trade and financial good behaviour are over. What will replace it and which states will be the power-brokers?

Some revealing news items appeared this year even before the financial hurricane. There are now more internet users in China than in the US, and the US accounts for only 25% of global traffic on the web, compared with more than 50% a decade ago; attempts to revive the Doha round of international trade talks failed, mostly because India and China refused to sacrifice their impoverished farmers to free trade; in the war with Georgia, Russia defied the US’s half-hearted protestations and defended its national interests in the Caucasus.

These diverse facts indicate dramatic changes in international relations — chiefly the end of the absolute domination that the West has enjoyed since the first half of the 19th century. The current collapse of the financial system can only weaken it further. “The end of arrogance” was the headline in the German weekly Der Spiegel on 30 September, with the subtitle: “America is losing its dominant economic role.” It is one of the ironies of history that this follows less than 20 years after the collapse of the camp led by the Soviet Union, and the apparent triumph of liberal economic policies.

It is always dangerous to make prophecies. In 1983, two years before Mikhail Gorbachev came to power in the Kremlin, the French intellectual Jean-François Revel predicted that democracies would crumble in the face of “the most dangerous of its external enemies, communism, the current and complete model of totalitarianism” (1). A few years later, Francis Fukuyama announced the “end of history” with the supreme triumph of the Western model. After the first Gulf War (1990-91) many observers thought they saw the dawning of the American 21st century. Fifteen years later, another consensus is emerging, closer to reality: we are entering a “post American world” (2). As the White Paper on defence and national security adopted by the French government in June 2008 acknowledges: “Economic and strategic initiatives are no longer the sole preserve of the western world (essentially, Europe and America) in the way they were as recently as 1994” (3).

Will the world become multipolar? Without doubt the US will remain the dominant power for many years, and not just militarily. But it will have to take account of emerging centres of power in Beijing, Delhi, Brasilia and Moscow. The lack of progress in the WTO talks, the impasse in the Iranian nuclear crisis, and the complex negotiations with North Korea, all underline how the US, even allied to the European Union, is no longer able to impose its point of view, and needs other partners to resolve crises. Richard Haas, a former senior official in the administration of President George Bush senior, and then in the State Department, and now the president of the Council on Foreign Relations in New York, lists other powerful players in his description of a “non-polar world” (4): the International Energy Agency, the Shanghai Cooperation Organisation (5), the World Health Organisation and its regional bodies, Shanghai and Sao Paolo, Al-Jazeera and CNN, militias from Hizbullah to the Taliban, drug cartels, and NGOs. “Today’s world is increasingly one of distributed, rather than concentrated power,” he concludes.

States, which have, despite predictions, survived the onslaught of globalisation, all want their place in the sun. China, India, Russia and Brazil assert their global ambitions and reject an international order that marginalises them. Other countries, from Iran to South Africa, Israel, Mexico and Indonesia, have more limited ambitions, but still defend their interests. None of these is driven by a global ideology, as the Soviet Union was, and none is setting itself up as an alternative model. They have all, more or less, accepted the market economy. But none would consider compromising its national interests. Their main struggle is to control their rare and expensive resources, primarily oil and gas; and their agricultural products to be able to feed their populations when agricultural production, already falling, is threatened by global warming. Their second priority is to protect their strategic interests, based on their political vision and history: Taiwan and Tibet for China, Kashmir for India and Pakistan, Kosovo for Serbia, and Kurdistan for Turkey. These conflicts have not dissolved in the harmonious global village, but involve more people than before, and are no closer to being resolved.

A brief glance at a map of the world shows that the majority of these tensions are based around an “arc of crisis”, which, according to the White Paper, stretches from the Atlantic to the Indian Ocean. Its writers warn that “a new risk is emerging of the conflicts within the Middle East, Pakistan and Afghanistan connecting up. The existence of (usually clandestine) nuclear, chemical and biological weapons programmes increases the danger. The countries of these regions are acquiring, whether openly or not, large military capacities based on missiles and missile carriers. The destabilisation of Iraq, divided into rival communities, risks spreading throughout the Middle East. Instability in this geographical arc could directly or indirectly affect our interests. European countries have a military presence in Chad, Palestine, Lebanon, Iraq and Afghanistan. Europe and France will probably be called upon to intervene in this region even more in the future, to help prevent and manage crises” (6). This analysis is closely akin to that of most US strategists, and the senior US State Department official William Burns summed it up: “Ten years ago Europe was the epicentre of American foreign policy… But now everything has changed… The Middle East in particular is now… the place that Europe once was for the administrations of the 20th century” (7). That this region holds most of the world’s oil reserves, at a time when the price per barrel remains high, adds to the strategic importance of the “Greater Middle East”.

That explains why the largest number of western troops since the end of the second world war is in this region, from Iraq to Chad, Afghanistan to Lebanon. By incorporating all these conflicts into its war on terror, the US has helped create an international resistance united only in its opposition to US hegemony. This resistance can also be seen in the crucial realm of the economy. Unlike past crises (Asian, Russian), the current financial storm has confirmed the marginalisation of international organisations such as the International Monetary Fund (IMF) and the World Bank. Soon after 2000, Russia, Thailand, Argentina, Brazil, Bolivia, Serbia and Indonesia decided to pay back their IMF debts early (8), to be free of the rules imposed by these international bodies.

Will the “Washington Consensus” (9) be replaced by the “Beijing Consensus” (10)? The man who came up with this phrase, the economist Joshua Cooper Ramo, believes a country from the South can take its place on the global chessboard through a willingness to innovate; or by taking account of quality of life as well as economic growth, and providing enough equality to avoid unrest; and by valuing independence and self-determination and refusing to let other (western) powers impose their will.

This viewpoint has aroused much debate (11) – does China really offer a new model, when inequality there is growing, and it has willingly subscribed to the globalised economy? The analysis does explain how, for the first time since decolonisation, the countries of the South are able to follow their own political direction, and find partners, states as well as businesses, not aligned with the US vision. New relationships are being forged, as demonstrated by the China-Africa summit, or the BRIC (Brazil, Russia, India and China) foreign ministers’ meeting in New York on 26 September. Countries can plan their own development without having to accept the unfavourable terms of the old “Washington Consensus”.

There is another major change affecting the geopolitical architecture. On 17 April 2007 the UN Security Council held, for the first time, a meeting dedicated to the political and security implications of global warming. This is now being taken into account in strategic planning, by the US, France and Australia (12). Extreme climate conditions will affect food crops and contribute to epidemics. The rise in sea level will not only create millions of environmental refugees – 150 million by 2050, according to estimates – but will also revive disputes over territorial boundaries, as the disappearance of atolls and islands affects exclusive economic zones (13). The soaring price of food already threatens stability in many parts of the world.

With multipolarity and so many different development models, it is no longer just the West’s economic domination that is being challenged, but also its right to define right and wrong, to lay down international law, and to interfere in other countries’ affairs on moral or humanitarian grounds. The former French foreign minister, Hubert Védrine, said the West has lost its monopoly on history, on “the big story”. World history, as invented two centuries ago, is the story of the rise and dominance of Europe. The movement towards a multipolar world may be seen as an opportunity to progress towards a genuine universalism. But it can also bring out deep fears in the West – that the world is becoming more threatening, that values are under attack from China, Russia, Islam – and that the West must embark on a Nato-led crusade against the barbarians who want to destroy it. If we are not careful, this vision could become a self-fulfilling prophecy.

Ref: Le Monde

Zeitgeist – The Movie: Federal Reserve (a MUST see!)

IMF sounds ‘meltdown’ warning

The International Monetary Fund has said that the world’s financial system is near meltdown.

The warning came hours before European leaders began a meeting in the French capital to tackle the deepening financial crisis.

“Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown,” Dominique Strauss-Kahn, the IMF chief, said on Sunday.

Spreading crisis

Strauss-Kahn expressed hope that government actions would prove powerful enough to persuade banks to resume lending and bring an end to a spreading credit crunch.

IN DEPTH

How the financial bubble burst

Q&A: The US financial meltdown

Reacting to the financial crisis

Russian markets feel the chill

“In the coming days … what I expect is that the reaction by the different institutions will be positive enough to unfreeze the different markets and to restore the necessary funding,” he said.

Earlier, Australia announced that it would guarantee all bank deposits for three years and guarantee wholesale funding to Australian banks in an attempt to combat the credit crisis.

Australia would make $2.6bn available for mortgage-backed securities to help maintain liquidity for non-bank lenders, Kevin Rudd, the prime minister, said.

Amid the financial turmoil, markets in the Middle East continued to spiral downward on Sunday, the first day of the business week for most countries in the region.

The IMF said it backed a plan by the G7 most industrialised nations to try to stabilise markets and urged “exceptional vigilance, co-ordination and readiness to take bold action” to contain a firestorm that pushed global stocks to five-year lows on Friday.

Beyond talk

Christine Lagarde, France’s economy minister, said that the gathering would go beyond talking about remedies to “put meat, muscles on the bones of that skeleton and to develop, follow up and execute upon it”.

The US appealed for patience but the IMF said time was short after the G7 nations – which include the US, Britain, France, Germany, Italy, Japan and Canada – failed to agree on concrete measures to end the crisis at a meeting on Friday.

George Bush, the US president, met G7 economic chiefs and officials from the IMF and World Bank and said top industrial nations would work together to solve the crisis.

“I’m confident that the world’s major economies can overcome the challenges we face,” he said.

Ref: Al Jazeera

The Trap (MUST SEE)

Fuck Your Buddy!

The Lonely Robot

Inside USA – US interference in Bolivia + Bolivia: a Coup in the Making?

 

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Yesterday, in Bolivia, Minister of Government, Alfredo Rada, accused the right-wing autonomist leader Branko Marinkovic, and Santa Cruz prefect, Rubén Costas, of orchestrating a wave of violence as part of a “civic governors’ coup d’état.” Rada accused Marinkovic of having just returned from the United States where he allegedly received instructions for fomenting the coup attempt.

“Bolivia on the Brink,” is a phrase too often uttered by passing journalists unaccustomed to the country’s regular politics of the streets. But events of the last two weeks cannot be passed off as the ordinary business of protest. Rather, a right-wing coup attempt is in the offing in the five departments (states) governed by the right-wing opposition to President Evo Morales, of the Movement Towards Socialism (MAS) party. The critical “media luna” departments of the eastern lowlands – Santa Cruz, Tarija, Beni, and Pando – have been joined in part by far-right elements in the government of the department of Chuquisaca. Thus far, these right-wing autonomists have not achieved critical support within the military, but the passivity of the Morales government in the face of ferocious racism, violence, and the takeover of state institutions and airports on an unprecedented scale, does not bode well for the future of Bolivia.

One indication of the seriousness of the situation is that Morales just announced that US ambassador Philip Goldberg is no longer welcome in Bolivia and will be asked officially to leave the country in the coming hours. Morales accused Goldberg of meeting with the oppositional prefects (governors) of the five departments in rebellion, to help coordinate what has become a full-scale destabilization campaign.

The campaign is being led by the Consejo Nacional Democrático (National Democratic Council, CONALDE), which brings together the prefectures and civic committees of Santa Cruz, Beni, Pando, Tarija, and Sucre, under the banner of “departmental autonomy.” These prefectures and civic committees in turn represent the agro-industrial, petroleum, and financial elite of these departments. While they are led by the bourgeoisie, the autonomists have won over substantial sectors of the popular classes by manipulating real democratic desires for decentralized “autonomous” self-governance, as opposed to alienating central state control. If the civic committees and prefects are the pretty face of autonomism, a growing network of proto-fascist youth groups linked to them are the clenched fist in the streets.

The immediate objective of the autonomist right is to destabilize the Morales government and to weaken left-indigenous forces throughout the country. One longer term goal is to reaffirm and consolidate private elite control over the natural gas and agricultural wealth of the country that is currently under threat due to widespread popular sentiment in favour of expropriation, nationalization, redistribution, and the establishment of social control over Bolivia’s riches. A related long-term objective of the autonomist right is to re-conquer state power at the national level.

Read the whole artical here

Ref: Counterpunch