Politics and Police Stop Terrorism 83% – Military Only 7% – of the Time

Top Military Advisor Predicted the Rise of the Islamic State 6 Years Ago

The Rand Corporation has been a top advisor to the U.S. military for 66 years.

We noted in 2008 that a Rand study found:

Terrorists should be perceived and described as criminals, not holy warriors, and our analysis suggests that there is no battlefield solution to terrorism.

Let’s look at the details of the study.  Rand points out:

The United States cannot conduct an effective counterterrorism campaign against al Qa’ida or other terrorist groups without understanding how such groups end.

***

This was the first systematic look at how terrorist groups end. The authors compiled and analyzed a data set of all terrorist groups between 1968 and 2006 ….

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As depicted in the figure, the authors found that most ended for one of two reasons: They were penetrated and eliminated by local police and intelligence agencies (40 percent), or they reached a peaceful political accommodation with their government (43 percent).

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In 10 percent of cases, terrorist groups ended because they achieved victory. Military force led to the end of terrorist groups in 7 percent of cases.

***

http://www.rand.org/content/dam/rand/www/external/pubs/research_briefs/RB9351/images/figure1.gif

The chart is a little difficult to read.  Here’s a new, easily-readable version based on Rand’s data, created by the nonpartisan Institute for Economics and Peace:

Rand’s 2008 summary continues:

Military force has not undermined al Qa’ida. As of 2008, al Qa’ida has remained a strong and competent organization. Its goal is intact: to establish a pan-Islamic caliphate in the Middle East by uniting Muslims to fight infidels and overthrow West-friendly regimes. It continues to employ terrorism and has been involved in more terrorist attacks around the world in the years since September 11, 2001, than in prior years …

Al Qa’ida’s resilience should trigger a fundamental rethinking of U.S. strategy. Its goal of a pan-Islamic caliphate leaves little room for a negotiated political settlement with governments in the Middle East. A more effective U.S. approach would involve a two-front strategy:

  • Make policing and intelligence the backbone of U.S. efforts. Al Qa’ida consists of a network of individuals who need to be tracked and arrested. This requires careful involvement of the Central Intelligence Agency and Federal Bureau of Investigation, as well as their cooperation with foreign police and intelligence agencies.
  • Minimize the use of U.S. military force. In most operations against al Qa’ida, local military forces frequently have more legitimacy to operate and a better understanding of the operating environment than U.S. forces have. This means a light U.S. military footprint or none at all.

Key to this strategy is replacing the war-on-terrorism orientation with the kind of counterterrorism approach that is employed by most governments facing significant terrorist threats today. Calling the efforts a war on terrorism raises public expectations — both in the United States and elsewhere — that there is a battlefield solution. It also tends to legitimize the terrorists’ view that they are conducting a jihad (holy war) against the United States and elevates them to the status of holy warriors. Terrorists should be perceived as criminals, not holy warriors.

How prescient the Rand report was!  In fact, the U.S. war on terror has increased terrorism.

And see this chart from the Institute for Economics and Peace:

https://www.emptywheel.net/wp-content/uploads/2014/11/timeline.jpg

Notice how terrorism had been declining since 9/11 … but then started increasing again when we invaded Iraq.

And our wars in Iraq and Syria created the Islamic State (and see this and this) … and gave them their caliphate.

Our entire military approach has made us less secure (more here and here) and increased terrorism.

Postscript:  Sadly, security and stopping terrorism may not be the main goals of the powers-that-be.

Posted in Politics / World News | 7 Comments

Meet Ukraine’s Master Mass-Murderer: Dmitriy Yarosh

Here Is the Man Who Organized and Ran Ukraine’s February 22nd Coup in Kiev, 

and the May 2nd Massacre of Its Opponents in Odessa, for Barack Obama

Eric Zuesse

Dmitriy Yarosh is the founder and head of one of Ukraine’s two racist-fascist, or nazi, parties, Right Sector. He is officially the #2 Ukrainian national-security official, working directly under Andreiy Paribuiy, who heads Ukraine’s other nazi party (the party that used to call itself Ukraine’s “Social Nationalist Party,” after Hitler’s National Socialist Party, but which the CIA renamed “Svoboda,” meaning “Freedom,” so as to make it more acceptable to Americans).

However, Yarosh has turned out to be Ukraine’s actual leader, despite his not being officially at the top. His nominal boss, Paribuiy, had been appointed by Arseniy Yatsenyuk, who was chosen on February 4th (18 days prior to the coup) to be Ukraine’s new leader, by Victoria Nuland, who was appointed by Hillary Clinton and John Kerry, who were appointed by Barack Obama (the actual ruler of the new Ukraine).

As Yarosh said this past March in an interview with Newsweek, he has “been training paramilitary troops for almost 25 years,” and his “divisions are constantly growing all over Ukraine, but over 10,000 people for sure.” More recently, in October, a pro-Government Ukrainian site interviewed Yarosh and he mentioned specifically a “DUC,” or Volunteer Ukrainian Corps of fighters. He was then asked “How many soldiers in DUC?” and he answered, “About seven thousand men.” These would be his real military force, by far the biggest private army in Ukraine. So, in his private files are everyone’s individual background and skill-level as a “paramilitary,” or far-right mercenary, and they all respect and obey him as the top man. He is the indispensable person in this new Ukraine.

Yarosh’s teams carry out the most violent operations for the CIA in Ukraine (including the coup). Since these are the people who actually specialize in this sort of political operation, Yarosh basically commands the country. Ukraine is now run on fear, and everyone fears Dmitriy Yarosh. Even Ukraine’s other leaders fear him. He is sometimes shockingly public with his threats against even the nation’s President. Yarosh is the only person who can afford to be.

Here you see Yarosh’s people do the coup in Kiev in February. Here you see them do the massacre in Odessa in May. Notice how similar these two operations are. Yarosh’s mind is actually on display in those operations. Yarosh is the person who gave the teams their instructions, and his followers carried these instructions out.

Here, in a news report, titled “Nazi NATO, but No War Crimes Tribunal? Why?” you can see photos, and can click onto youtube videos, of Dmitry Yarosh’s people executing his carefully planned atrocities (some in broad daylight), during the May 2nd massacre, and (via the links within a linked-to news report), also executing the February 22nd coup. You’ll additionally see there other such operations, carried out by Yarosh’s teams.

Yarosh hires only proud far-right mercenaries, who are paid by him from U.S. Government agencies (for example, see this), and from U.S. oligarchs such as George Soros (via his International Renaissance Fund) and Pierre Omidyar — people whose enormous wealth is matched by their intense hatred of Russians — and are also paid directly and indirectly by Ukrainian oligarchs, especially by the one who (along with Arsen Avakov) actually masterminded the May 2nd massacre of Russian-oriented Ukrainians: that’s the Obama White House’s friend, the Ukrainian billionaire Ihor Kolomoysky. (Kolomoysky offered $5,000 for every confirmed corpse produced at the May 2nd massacre.)

The May 2nd massacre was done specifically in order to get the residents in Ukraine’s pro-Russian southeast to fear this new Government so much as to refuse to be ruled by it. (Who wants to be ruled by people who are determined to kill you?) Until the massacre, those people didn’t want full independence from the new Government; but, after it, they did. It’s the reason for the massacre — to get them to demand full independence. Their refusal to be ruled by these people who had massacred so barbarically in Odessa people who were like themselves, made practically everyone in the southeast into “separatists.” This new Kiev Government could then call them “terrorists,” and (with acceptance from suckers in the U.S. and Europe) go to war to eliminate them — to make a free-fire zone of the entire area in which the people who had voted for the overthrown leader live. And that’s what it has been since: a free-fire zone, in which the UN and the West passively accept, when they do not outright endorse, their extermination.

Obama needed to eliminate the people in the areas of Ukraine who had voted around 90% for the man he overthrew on February 22nd. (That’s the area of the extermination.) Otherwise, Obama’s coup wouldn’t possess staying-power as a ‘democracy’; it would’t survive future nationwide Ukrainian elections if these areas of almost exclusively pro-Russian voters weren’t ruthlessly destroyed. Those Ukrainian voters thus needed to be eliminated. They were doomed by Obama’s coup-plan, and their doom was Obama’s follow-through on his coup.

But, actually, both Right Sector and “Svoboda” had shared control over the ‘democratic’ “Maidan” demonstrations against the previous President, even prior to the coup that overthrew him. That person, Ukraine’s final President to be elected in a nationwide vote, Viktor Yanukovych, did not know that the U.S. would go so nazi as that. The U.S. had hired both of these nazi groups, from the get-go. As TIME reported, on 4 February 2014 (ironically on the very same day when Victoria Nuland chose Arseniy Yatsenyuk to lead the post-coup Government), “Yarosh and another militant faction [Paribuiy’s “Svoboda”], began a parallel set of negotiations over the weekend. On Monday, they claimed to be in direct talks with Ukraine’s police forces to secure the release of jailed protesters, including members of Pravy Sektor [the Ukrainian name for Right Sector]. Mainstream opposition leaders said they had not authorized any such talks. [They were just America’s suckers among the Maidan demonstrators, the people who thought that this was really about ‘joining Western democracy.’] At the same time, Yarosh has demanded a seat at the negotiating table with the President [Yanukovych]. Once again, he was flatly denied. His ideology, it seems, is just too toxic to let him in the room.” But it wasn’t “too toxic” for Obama to place Yarosh into control over the new Ukraine. (Of course, once the deed was done, this was the last time when one heard in the U.S. about the reality of whom these men were. The myth about ‘American democracy’ needed to be sustained, and so the U.S. ‘news’ media stopped covering that news, and instead focused only on pumping the U.S. Administration’s allegations against Russia, which is Obama’s real target here.)

Dmitriy Yarosh is the indispensable person for such a crucial political task as the elimination of Yanukovych’s voters — and that’s the reason why Yarosh now essentially rules Ukraine.

He says that the reason they need to be slaughtered is that they are “separatists” and “terrorists.” But Yarosh himself had fought alongside Chechen Moslems in Russia for Chechnia’s independence from Russia. He said that their battle is heroic. Bottom line on Yarosh is that what Jews were to Hitler, ethnic Russians, and all of Russia, are to him, and to the entire movement that he represents, which were Ukraine’s Hitler-supporting organizations during World War II. This anti-Russian form of nazism doesn’t go only back to the German Nazi Party; it’s indigenous to northwestern Ukraine, which is why Ukraine has two native nazi parties, not merely one.

Here are Yarosh’s people, marching.

Here they are as an elite battalion slaughtering people in the extermination-zone.

And here is Yarosh himself, the top person in Ukraine’s far-right, being interviewed on Ukrainian TV; in this, you meet Dmitriy Yarosh personally:

 

https://www.youtube.com/watch?v=AD4aH5AVAYE

 

As you can see there, he’s quite a charming fellow. Perhaps even more so than Barack Obama. (Republicans don’t have anyone who is even nearly so charming as Yarosh.)

U.S. politicians are lucky that Yarosh doesn’t speak English, and wasn’t born in America. He’d probably win the Republican Presidential nomination (though with rhetoric that’s even milder than what he sports in Ukraine), and go on to win the U.S. Presidency, if he were an American, rather than merely being paid by U.S. taxpayers (and by some of America’s and Ukraine’s oligarchs), such as he is now.

In today’s world, charming people can be like Adolf Hitler, or Benito Mussolini, or Emperor Hirohito, none of whom was charming. After all, America is now on the fascists’ side ideologically, except that it’s for rule by U.S. oligarchs, not by German, Italian, or Japanese ones. It’s for America’s oligarchy to be the masters of other nations’ oligarchies, rather than for other nations’ oligarchies to be the masters of ours. The shoe’s on the other foot, now, that’s all. Fascism, even nazism, finally won.

The era of Franklin Delano Roosevelt’s ideology (which was opposed to all oligarchies) has been replaced by the era of Ronald Reagan’s ideology (favoring oligarchy, “Svoboda,” or “the free market,” and thus favoring the international dominance of America’s oligarchs). Oligarchy has become the American way now, and we even call this ‘democracy.’

Hitler, the admirer of “the Big Lie,” would get a big chuckle out of such a posthumous ideological victory. Especially since the people whom Obama placed into power in Ukraine are Hitler’s passionate followers in their wanting to subordinate or else destroy all Russians, which had likewise been an aspiration of Adolf Hitler.

Obama, however, is more tactful. Here’s what he said, on 28 May 2014, to the graduating cadets at West Point: “The United States is and remains the one indispensable nation. That has been true for the century passed [he simply can’t spell ‘past’] and it will be true for the century to come. … America must always lead on the world stage. If we don’t, no one else will. The military that you have joined is and always will be the backbone of that leadership.”

It’s supremacism, but for a different group of oligarchs, that’s all — America’s.

———-

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010,  and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

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This Crisis Was Foreseeable … Thousands of Years Ago

Economists, Military Strategists and Others Warned Us … Long Ago

We’ve known for 5,000 years that mass spying on one’s own people is always aimed at grabbing power and crushing dissent, not protecting us from bad guys.

We’ve known for 4,000 years that debts need to be periodically written down, or the entire economy will collapse. And see this.

We’ve known for 2,500 years that prolonged war bankrupts an economy.

We’ve known for 2,000 years that wars are based on lies.

We’ve known for 1,900 years that runaway inequality destroys societies.

We’ve known for thousands of years that debasing currencies leads to economic collapse.

We’ve known for millennia that torture is a form of terrorism.

We’ve known for thousands of years that – when criminals are not punished – crime spreads.

We’ve known for hundreds of years that the failure to punish financial fraud destroys economies, as it destroys all trust in the financial system.

We’ve known for centuries that monopolies and the political influence which accompanies too much power in too few hands are dangerous for free markets.

We’ve known for hundreds of years that companies will try to pawn their debts off on governments, and that it is a huge mistake for governments to allow corporate debt to be backstopped by government.

We’ve known for centuries that powerful people – unless held to account – will get together and steal from everyone else.

We’ve known for hundreds of years that standing armies and warmongering harm Western civilization.

We’ve known for over 300 years that going into debt to pay for war ruins any nation.

We’ve known for 200 years that allowing private banks to control credit creation eventually destroys the nation’s prosperity.

We’ve known for two centuries that a fiat money system – where the money supply is not pegged to anything real – is harmful in the long-run.

We’ve known for 200 years that a two-party system quickly becomes corrupted.

We’ve known for over a century that torture produces false and useless information.

We’ve known since the 1930s Great Depression that separating depository banking from speculative investment banking is key to economic stability. See this, this, this and this.

We’ve known for 80 years that inflation is a hidden tax.

We’ve known for 79 years that war is a racket that benefits the elites but harms everyone else.

We’ve known since 1988 that quantitative easing doesn’t work to rescue an ailing economy.

We’ve known since 1993 that derivatives such as credit default swaps – if not reined in – could take down the economy. And see this.

We’ve known since 1998 that crony capitalism destroys even the strongest economies, and that economies that are capitalist in name only need major reforms to create accountability and competitive markets.

We’ve known since 2007 or earlier that lax oversight of hedge funds could blow up the economy.

And we knew before the 2008 financial crash and subsequent bailouts that:

  • The easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, and “the use of gimmicks and palliatives” by central banks hurt the economy
  • Anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”
  • Bailouts of big banks harm the economy
  • The Fed and other central banks were simply transferring risk from private banks to governments, which could lead to a sovereign debt crisis

Postscript:  Those who fail to learn from history are doomed to repeat it … and we’ve known that for a long time.

Posted in Business / Economics, Politics / World News | 22 Comments

Who Says Ferguson Can’t End Well

Just as a police officer in a heightened state of panic surrounded by the comfort of impunity will shoot an innocent person, the Governor of Missouri has declared a state of emergency preemptively, thus justifying violence in response to something that hasn’t happened. Bombing Iraq in response to nonexistent weapons and Libya in response to nonexistent threats worked out so well, we may as well try it domestically, the Governor is perhaps thinking. “There Is No Way That This Ends Well” is a headline I actually just read about Ferguson.

Well, why not? Who says it can’t end well? The police may want continued impunity. The justice system may be rigged against any sort of reconciliation. The government may want — or believe it rationally expects — violence. But all of those parties are capable of changing their behavior, and the people of Ferguson are capable of determining their own actions rather than following a script placed before them.

We should understand that the violence in Ferguson is not new and is not limited to Ferguson. It did not begin with a particular shooting. It did not begin with any shooting. It began with a system of oppression that keeps people in misery amidst great wealth. Just as that injustice is inexcusable, so is any violence in response to it. But the outrage at an angry man knocking over a trashcan conspicuously exhibited by people who cheer for mass-murder in Iraq isn’t well thought-through or helpful. And the disproportionate focus on such small-scale violence misses more than the larger picture. It also misses the courageous, disciplined, principled, and truly loving actions of those resisting injustice creatively and constructively. Such actions are not always successful and not always well-planned to the satisfaction of scholars. But they have long been far more common than is acknowledged on the television or in the history books.

Back in 1919 in Lawrence, Massachusetts, some 30,000 textile workers went on strike for decent pay. The mill owners and the police sought to provoke them, infiltrate them, intimidate them, and brutalize them. The workers held strong. The police set up machine guns along the streets, toying with the model of domestic war now exhibited in Ferguson. Organizer A.J. Muste spoke to the workers on the morning that the machine guns appeared:

“When I began my talk by saying that the machine guns were an insult and a provocation and that we could not take this attack lying down, the cheers shook the frame building. Then I told them, in line with the strike committee’s decision, that to permit ourselves to be provoked into violence would mean defeating ourselves; that our real power was in our solidarity and in our capacity to endure suffering rather than give up the fight for the right to organize; that no one could ‘weave wool with machine guns’; that cheerfulness was better for morale than bitterness and that therefore we would smile as we passed the machine guns and the police on the way from the hall to the picket lines around the mills. I told the spies, who were sure to be in the audience, to go and tell the police and the mill management that this was our policy. At this point the cheers broke out again, louder and longer, and the crowds left, laughing and singing.”

And, they won. The powers that owned the mill and put the weapons of war on the streets of that town conceded defeat, and conceded it without the bitterness that would have come had the workers and their supporters somehow been able to defeat the machine guns with violence.

That type of incident is as common as water, but little recounted. It’s what organizers in Ferguson are calling for right now, and they are being preemptively ignored by the media. But it doesn’t come easy. And it doesn’t come without solidarity. If the people of the United States and the world chip in to support the people of Ferguson in their struggle for full justice, if we nonviolently and smilingly take on the forces of militarism and racism everywhere at once, and in Missouri in particular, we need not defeat the police or the Governor. We need only defeat cruelty, bigotry, and brutality. And that we can do. And that would be ending well.

Posted in General | 3 Comments

Why QE May Lead to DEFLATION In the Long Run

“If [They're] Right, Everything The Fed Has Been Doing To Try To Stimulate The Economy Isn’t Just Useless — It’s Backward”

Preface: Financial experts have been debating since the start of the 2008 financial crisis whether inflation or deflation is the bigger risk.   That debate is beyond the scope of this essay.  However, it might not be either/or. We might instead have “MixedFlation” … inflation is some asset classes and deflation in others.

Quantitative easing (QE) was supposed to stimulate the economy and pull us out of deflation.

But the third round of quantitative easing (“QE3″) in the U.S. failed to raise inflation expectations.

And QE hasn’t worked in Japan, either.  The Wall Street Journal noted in 2010:

Nearly a decade after Japan’s central bank first experimented with the policy, the country remains mired in deflation, a general decline in wages and prices that has crippled its economy.

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The BOJ began doing quantitative easing in 2001. It had become clear that pushing interest rates down near zero for an extended period had failed to get the economy moving. After five years of gradually expanding its bond purchases, the bank dropped the effort in 2006.

At first, it appeared the program had succeeded in stabilizing the economy and halting the slide in prices. But deflation returned with a vengeance over the past two years, putting the Bank of Japan back on the spot.

So why didn’t quantitative easing work in Japan? Critics say the Japanese central bank wasn’t aggressive enough in launching and expanding its bond-buying program—then dropped it too soon.

***

Others say Japan simply waited too long to resort to the policy.

But japan has since gone “all in” on staggering levels of quantitative easing … and yet is still mired in deflation.

The UK engaged in substantial QE. But inflation rates are falling there as well.

And China engaged in massive amounts of QE.  But it’s also falling into deflation.

Indeed, despite massive QE by the U.S., Japan and China, there is now a worldwide risk of deflation.

So why hasn’t it worked?

The Telegraph noted in June:

The question is why the world economy cannot seem to shake off this “lowflation” malaise, even after QE on unprecedented scale by the US, Britain, Japan and in its own way Switzerland.

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Narayana Kocherlakota, the Minneapolis Fed chief, suggested as far back as 2011 that zero rates and QE may perversely be the cause of deflation, not the cure that everybody thought. This caused consternation, and he quickly retreated.

Stephen Williamson, from the St Louis Fed, picked up the refrain last November in a paper entitled “Liquidity Premia and the Monetary Policy Trap”, arguing that that the Fed’s actions are pulling down the “liquidity premium” on government bonds (by buying so many). This in turn is pulling down inflation. The more the policy fails – he argues – the more the Fed doubles down, thinking it must do more. That too caused a storm.

The theme refuses to go away. India’s central bank chief, Raghuram Rajan, says QE is a beggar-thy-neighbour devaluation policy in thin disguise. The West’s QE caused a flood of hot capital into emerging markets hunting for yield, stoking destructive booms that these countries could not easily control. The result was an interest rate regime that was too lax for the world as a whole, leaving even more economies in a mess than before as they too have to cope with post-bubble hangovers.

The West ignored pleas for restraint at the time, then left these countries to fend for themselves. The lesson they have drawn is to tighten policy, hoard demand, hold down their currencies and keep building up foreign reserves as a safety buffer. The net effect is to perpetuate the “global savings glut” that has starved the world of demand, and that some say is the underlying of the cause of the long slump. “I fear that in a world with weak aggregate demand, we may be engaged in a futile competition for a greater share of it,” he said.

The Bank for International Settlements [the "central banks' central bank"] says the world is suffering from addiction to stimulus. “The result is expansionary in the short run but contractionary over the longer term. As policy-makers respond asymmetrically over successive financial cycles, hardly tightening or even easing during booms and easing aggressively and persistently during busts, they run out of ammunition and entrench instability. Low rates, paradoxically, validate themselves,” it said.

Claudio Borio, the BIS’s chief economist, says this refusal to let the business cycle run its course and to purge bad debts is corrosive. The habit of turning on the liquidity spigot at the first hint of trouble leads to “time inconsistency”. It steals growth and prosperity from the future, and pulls the interest rate structure far below its (Wicksellian) natural rate. “The risk is that the global economy may be in a deceptively stable disequilibrium,” he said.

Mr Borio worries what will happen when the next downturn hits. “So far, institutional set-ups have proved remarkably resilient to the huge shock of the Great Financial Crisis and its tumultuous aftermath. But could (they) withstand yet another shock?” he said.

“There are troubling signs that globalisation may be in retreat. There is a risk of yet another epoch-defining and disruptive seismic shift in the underlying economic regimes. This would usher in an era of financial and trade protectionism. It has happened before, and it could happen again,” he said.

The Economist reported last year:

Is QE deflationary? Yes, quite obviously so. Consider:

  • A central bank that is deploying QE is almost certainly at the zero lower bound.
  • QE will only help get an economy off the zero lower bound if paired with a commitment to higher future inflation.
  • If a central bank is deploying QE over a long period of time, that means it has not paired QE with a commitment to higher future inflation.
  • Prolonged QE is effectively a signal that the central bank is unwilling commit to higher inflation.
  • QE therefore reinforces expectations that economic activity will run below potential and demand shocks will not be completely offset.
  • QE will be associated with a general disinflationary trend.

Don’t believe me? Here is a chart of 5-year breakevens since September of 2012, when the Fed began QE3, the first asset-purchase plan with no set end date:

(The article then goes onto say that QE can be deflationary or inflationary depending on what else the central bank is doing.)

Michala Marcussen – global head of economics at Société Générale – believes that QE may be deflationary in the long run because:

Excess capacity is deflationary and the means to deal with it is to shut it down. Indeed, we expect China [which also engaged in massive QE] for now to exert deflationary pressure on the global economy.

***

Unproductive investment is by nature ultimately deflationary. This is a point also worth recalling when investing in paper assets fuelled by QE liquidity and not underpinned by sustainable economic growth.

Prominent economist John Cochrane thinks he knows why. As he explained last year:

Here I graphed an interest rate rise from 0 to 5% (blue dash)  and the possible equilibrium values for inflation (red). (I used κ=1 ρ=1 ).

As you can see, it’s perfectly possible, despite the price-stickiness of the new-Keynesian Phillips curve, to see the super-neutral result, inflation rises instantly.

***

Obviously this is not the last word. But, it’s interesting how easy it is to get positive inflation out of an interest rate rise in this simple new-Keynesian model with price stickiness.

So, to sum up, the world is different. Lessons learned in the past do not necessarily apply to the interest on ample excess reserves world to which we are (I hope!) headed. The mechanisms that prescribe a negative response of inflation to interest rate increases are a lot more tenuous than you might have thought. Given the downward drift in inflation, it’s an idea that’s worth playing with.

Bloomberg noted earlier this month:

Now, the Neo-Fisherites [including Minneapolis Fed President Narayana Kocherlakota] have been joined by a very heavy hitter — University of Chicago economist John Cochrane. In a new paper called “Monetary Policy with Interest on Reserves,” he explains a mechanism by which higher interest rates raise inflation. Unlike Williamson’s model, Cochrane’s model obtains a Neo-Fisherian result without appealing to fiscal policy. In fact, he finds that in some cases, raising interest rates can even stimulate the economy in the short term! He concludes succinctly:

The basic logic is pretty simple: raising nominal interest rates either raises inflation or raises real interest rates. If it raises real interest rates, it must raise consumption growth. The prediction is only counterintuitive because for so long we have persuaded ourselves of the opposite[.]

Cochrane has a simple explanation of the model’s key predictions on his blog. He hypothesizes that now that the Fed pays interest on the reserves that banks hold with the Fed, monetary policy will be even more Neo-Fisherian — i.e., even more perverse.

***

Cochrane’s arguments are based on simple equations that are at the heart of most modern macroeconomic models. If the Neo-Fisherites are right, then everything the Fed has been doing to try to stimulate the economy isn’t just useless — it’s backward.

Now, the overwhelming majority of empirical studies tell us that QE, and Fed easing in general, tends to raise inflation in the short term. But what if that’s at the cost of lower inflation in the long term? Japan has been holding interest rates at zero for many years, and its economy has been in and out of deflation. Massive QE has noticeably failed to make the U.S. hit its 2 percent inflation target. What if mainstream macroeconomics has it all upside down, and prolonged periods of low interest rates trap us in a kind of secular stagnation that is totally different from the kind Harvard economist Larry Summers talks about?

It’s a disquieting thought.

One of the main architects of Japan’s QE program – Richard Koo – Chief Economist at the Nomura Research Institute – explains that QE helps in the short-run … but hurts the economy in the long run (via Business Insider):

Initially, long-term interest rates fall much more than they would in a country without such a policy, which means the subsequent economic recovery comes sooner (t1). But as the economy picks up, long-term rates rise sharply as local bond market participants fear the central bank will have to mop up all the excess reserves by unloading its holdings of long-term bonds.

Demand then falls in interest rate sensitive sectors such as automobiles and housing, causing the economy to slow and forcing the central bank to relax its policy stance. The economy heads towards recovery again, but as market participants refocus on the possibility of the central bank absorbing excess reserves, long-term rates surge in a repetitive cycle I have dubbed the QE “trap.”

In countries that do not engage in quantitative easing, meanwhile, the decline in long-term rates is more gradual, which delays the start of the recovery (t2). But since there is no need for the central bank to mop up large quantities of funds, everybody is no more relaxed once the recovery starts, and the rise in long-term rates is far more gradual. Once the economy starts to turn around, the pace of recovery is actually faster because interest rates are lower. This is illustrated in Figure 2.

costs of qe Indeed, things which temporarily goose the economy in the short-run often kill it in the long-run … such as suppressing volatility.

Postscript:   Quantitative easing fails in many other ways, as well …

The original inventor of QE  – and the former long-term head of the Federal Reserve– say that QE has failed to help the economy.  Numerous academic studies confirm this.  And see this.

Economists also note that QE helps the rich … but hurts the little guy. QE is one of the main causes of inequality (and see this and this).    And economists now admit that runaway inequality cripples the economy.  So QE indirectly hurts the economy by fueling runaway inequality.

A high-level Federal Reserve official says QE is “the greatest backdoor Wall Street bailout of all time”.  And the “Godfather” of Japan’s monetary policy admits that it “is a Ponzi game”.

Posted in Business / Economics, Politics / World News | 4 Comments

No Anti-War Voices on TV — Well, Sort of

Here’s FAIR’s excellent report on pro-war bias in the corporate media, and here’s Peter Hart describing it well on Democracy Now:

I’d love to see a complete report of all the corporate media coverage for the whole lead-up to Iraq War III: This Time as Farce. Here I am getting a few minutes to oppose war on MSNBC two days after the period FAIR covered, on a program other than the ones FAIR covered:

 

 

I suspect there were lots of other exceptions. Did they come late? Were they evenly scattered across the programs so that each program could claim to have been “balanced,” or did any actually devote more than a few minutes to peace? Which ones never ever admitted peace into the discussion?

I don’t want to lose FAIR’s focus on the central point that pro-war pseudo-debate voices were so dominant and repetitive as to drill into people’s brains the idea that a mad idea was inevitable common sense. But I think the whole picture could be shown without doing that.

Whether the brighter spots, if any, could or should be encouraged, I don’t know. And I have no interest in singling out the worst of the worst in a way that implies the other media outlets are doing all right. But I’d like to see the whole picture and then decide what it means.

Therefore: Send FAIR money to use on longer reports!

 

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Watch Schooling the World, Stop Schooling the World

It’s becoming slightly more common in the Western industrialized world to propose radical cultural change away from consumerism and environmental destruction. It’s not hard to find people making the case that in fact nothing else can save us.

But we should have one eye on what our governments and billionaires are doing to educate the rest of the world with the way of thinking that we are beginning to question.

What if the United States were to radically reform and abandon its role as leading destroyer of the environment and leading maker of war in the world, and we were to discover that U.S.- and Western-funded institutions had in the mean time created billions of teenagers around the globe intent on each becoming Bill Gates?

The remarkable film Schooling the World brings this warning. It is not an overly simplistic or dreamy argument. It is not a rejection of the accomplishments of Western medicine or a pitch for adopting polytheistic beliefs. But the film documents that the same practice that “educated” thousands of young Native Americans into second-class U.S. citizens through forced boarding schools is running its course in India and around the world.

Young people are being educated out of kindness and cooperation, and into greed and consumerism, out of connections to family and culture and history, and into a deep sense of inferiority of the sort created in the U.S. by the separate-but-equal educational system of Jim Crow. People whose families lived happily and sustainably are being taken away from their villages to struggle in cities, the majority of them labeled as failures by the schools created to “help” them — many of them cruelly introduced to a modern invention called poverty.

Eliminated in the process are languages — referred to in the film as ecosystems of the mind — and all the wealth of knowledge they contain. Also eliminated: actual ecosystems, those that once included humans, and those simply damaged by heightened consumption rampaging around the globe. Young people are not taught to care for local resources as their parents and grandparents and great grandparents were.

And much of this is done with the best of intentions. Well-meaning Westerners, from philanthropic tourists to World Bank executives, believe that their culture — that of industrial extraction, competition, and consumption — is good and inevitable. Therefore they believe it helpful to impose an education in it on everyone on earth, most easily accomplished on young people.

But is a young person’s removal from a sustainable healthy life rich in community and tradition, and their arrival in a sweatshop in a crowded slum, as good for them as it looks in the economic statistics that quantify it as an increase in wealth?

And can we see our way out of this trap while screaming hysterically about the glories of “American exceptionalism”? Will we have to lose that stupid arrogance first? And by the time we’ve done that, will every African nation have its own Fox News?

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Americans Still Have NO CLUE About How Much Inequality We Have

Politicians, Media and Wall Street May Be Trying to Hide the Size of the Gap

Even years after the Occupy protests (love ‘em or hate ‘em, they focused everyone’s attention on inequality),  Americans are still clueless about how much inequality we really have in our country.

As we noted in 2011:

Dan Ariely of Duke University and Michael I. Norton of Harvard Business School demonstrateAmericans consistently underestimate the amount of inequality in our nation.

As William Alden wrote last September:

Americans vastly underestimate the degree of wealth inequality in America, and we believe that the distribution should be far more equitable than it actually is, according to a new study.

Or, as the study’s authors put it: “All demographic groups — even those not usually associated with wealth redistribution such as Republicans and the wealthy — desired a more equal distribution of wealth than the status quo.”

The report … “Building a Better America — One Wealth Quintile At A Time” by Dan Ariely of Duke University and Michael I. Norton of Harvard Business School … shows that across ideological, economic and gender groups, Americans thought the richest 20 percent of our society controlled about 59 percent of the wealth, while the real number is closer to 84 percent.

(Indeed, even those who assume they’re educated about inequality may not realize that we’re at lord and serf levels.)

Ariely subsequently explained that both Republicans and Democrats are passionately opposed to the degree of inequality we have in the U.S. … but that politicians may be trying to make us think we’re more equal than we really are (The media and Wall Street are also trying to hide the size of the gap).

Les Leopold reports today on a new study which confirms how clueless Americans are about inequality:

A[n] important study (“How Much (More) Should CEOs Make? A Universal Desire for More Equal Pay”) by Sorapop Kiatpongsan and Michael I. Norton provides insight on why Americans aren’t more upset about rising inequality: It shows we are clueless about how bad it really is. Their analysis of a 2009 international survey of 55,187 people from 40 countries, found that when it comes to understanding the severity of inequality, we’re the most clueless of all.

Americans are virtually blind to the growing gap between CEO pay and the pay of the average worker. As the chart below shows that gap has increased dramatically. In 1965, for every dollar earned by the average worker, CEOs earned 20 dollars. By 2012, that gap mushroomed to 354 to one.

2014-11-15-aflwagegap.JPG

But, when asked in the survey, Americans grossly underestimated this gap. Instead of 354 to 1, the Americans in representative survey think it is only 30 to 1. When asked what the ideal pay gap should be, Americans say that a fair gap would be about 7 to 1.

More amazing still, the survey results, combined for all countries, show that the misconception of inequality doesn’t significantly vary by age, gender, income, political leanings or education.

To see if these finding also hold for the U.S., I waded into the database: Does political affiliation and education impact how the 1,581 Americans in the survey estimated the wage gap? (The data comes from the International Social Survey Programme: Social Inequality IV – ISSP 2009 on the website Gesis. )

2014-11-15-paygapbypartyandeducation.JPG

As the chart above shows, “Strong Democrats” estimated that the actual ratio between a CEO of a large corporation and an unskilled factory worker was about 36 to 1. “Strong Republicans” said it was 40 to 1. A difference without a distinction.

When it comes to offering opinions about what the wage gap should be, the Strong Democrats thought 5 to 1 was about right, while the Strong Republicans thought it should be about 12 to 1. The two political extremes obviously are much closer to each other than to the current reality of 354 to 1.

***

When it comes to our ignorance of the pay gap, there are no blue states, no red states — only misinformed states of mind. We’re the Know-Nothings of inequality.

Why are we so blind to inequality?
Most of us have no idea that our golden land of opportunity is the runaway leader among developed nations when it comes to inequality, (see chart below.) This dubious distinction runs counter to American Dream that we’ve been indoctrinated with since birth. As a result, we reflexively think that America is epitome of democracy — the fairest most just and most upwardly mobile country in history. That makes it hard for us to account for why we are more unequal than all these other countries. So, I suspect many of us just tune out the data. It’s too jarring to the deep-seated doctrines that comprise our national identity.

***

We may still be living with this cultural hangover and operating from a societal self-image from yesteryear. We are likely to cling to it for quite awhile, in part, because it’s comforting as new economic insecurities take hold. As workers from other nations pass us by, we look in the mirror and still hope we are the fairest of them all.

And see this.

Posted in Business / Economics, Politics / World News | 15 Comments

Afghan Opium All Time High

We’ve repeatedly noted that – under American occupation – opium production is at an all-time high in Afghanistan.

Still rising

Posted in Politics / World News | 2 Comments

Relentless US Journalist who has Seen and Felt the Boot of Israeli Fascism is Returning to Palestine for More

Zebula Hebert

Journalist Zebula “Sha” Hebert has been “shot at, stabbed, pepper sprayed, maced, tear-gassed, tased, arrested, detained, beaten, and interrogated” while conducting his work.  He knows what repression feels like, which is why he is undertaking a highly ambitious project: in the wake of the recent US-backed Israeli assault, Hebert will return to Palestine and spend a year in Gaza.  He will conduct interviews with Gazans, publish reports, and ultimately write a book about his findings and experiences, all to help amplify the voices of a trapped refugee population being brutalized by the world’s most powerful aggressors.

Hebert conducted an interview with Robert Barsocchini for Washington’s Blog, to elucidate and spread the word about his upcoming journalistic endeavor:

RB: What personally motivates you to continue covering this topic?

ZH: The current global economic/military dynamic reduces entire nations, cultures, and peoples to prisoners and slaves in their own homes. Nowhere in the world is this more evident than in Palestine, though certainly it is happening and has happened many other places as well, including within the US. It takes only a small understanding of honest scholarship to see that the US was founded on the principals of ethnic cleansing, slavery, and genocide. The US is now supporting this same behavior in Israel (among other places). I believe that people who are conscious of the consequences of our own historical and contemporary atrocities ought to take a stand against their continuation. Having access to accurate information is a critical element.

RB: Why do you want to write this book now?  I imagine the latest assault on Gaza plays a role.

ZH: I have travelled to Palestine twice over the past ten years. While the latest assault on Gaza has been a highly visible abomination perpetrated by Israel against Palestinians, it is no greater a crime than the occupation itself, which has taken, broken, trapped, and ended countless lives and families since the Nakba [initial Israeli campaign of ethnic cleansing of Palestine, in 1948].

Gaza is an open air prison. The West Bank is not in much better shape. The timing does not have a correlation with the latest assault on Gaza. This is a standing issue.

Israel’s policy is now and always has been (despite their vigorous and effective PR campaigns and “peace talks”) not to ever make peace but to make life so miserable and traumatic that Palestinians will eventually just leave or die. I should state emphatically here that not all Israelis agree with their government’s policies; many of them actively fight to subvert Israeli policies. Nonetheless, they are annexing the West Bank with illegal settlements as we speak, killing and imprisoning at will. Despite their rhetoric we have to look at what they do, not what they say. And what they do and have always done suggests ethnic cleansing, not peace. When I look at it, I see the United States’ genocide against American Indians. Gaza and the West Bank are two big reservations and Palestinians who have Israeli “citizenship” within Israel are second class citizens.

RB: What will you encounter when you get to Gaza?

ZH: A people fighting for their very survival. A people pushed to absurd extremes economically, culturally, spiritually and physically, with the same unbreakable spirit so endemic to humanity.

RB: What are you going to do in Gaza?  Who are you going to talk to?  Where are you going to stay?  How long?

ZH: I will talk to anybody who wants to talk. Ordinary people, officials, mothers, fathers, the goldfish… whomever wants a voice. I will stay with friends and colleagues and anywhere I can. I will follow wherever the stories and interviews take me. Palestinians are some of the most hospitable people I’ve ever met; I will not have trouble finding places to stay while I work. I will respond to leads, seek and find newsworthy stories and publish them on PNN [Palestinian News Network]. I will also work on my book. I will stay for as long as I can. My goal is at least one year.

RB: What resistance have you experienced previously while covering this and other topics?

ZH: In the course of covering and/or protesting state violence, I have been shot at, stabbed, pepper sprayed, maced, tear-gassed, tased, arrested, detained, beaten, and interrogated. I hate what violence does to the victim and the aggressor. I hate violence towards anyone, in any form, may it be economic, psychological, or physical. Still I believe, in spite of my hatred for violence, that people subjected to state violence have a right to defend themselves, by whatever means they have available.

RB: What do you think of mainstream US coverage of this topic?

ZH: I am constantly reminded how media in the US (which enjoys a “free press”) is actually just an advertisement for this or that idea, this or that policy, this or that politician. It isn’t news, its cheerleading. One need only research US reports through any major news outlet concerning the conflict (or any other conflict for that matter) to find a mind boggling absence of actual journalism. There is a terrifying lack of critical analysis within our national media apparatus which enables the status quo to continue.

RB: What do you hope to accomplish with this project?  What do you see as the viable end goal?

ZH: The viable end goal is to contribute to honest information dissemination concerning the occupation. I simply want to be a small part of the effort to end the travesty that is occurring daily.

What is happening now in the Middle East (Iraq, Afghanistan, US support of Israel) is nothing new. It began with genocide against the indigenous of North America as well as economic and military domination throughout Latin America, then spread globally in many different forms. The result is always the same, millions upon millions suffer and die needlessly while Americans (well, some of us) thrive. If people can wake up to this and take responsibility for it, we can end the madness that we have birthed and start to build something better.

Critically, the people of Gaza must be heard in the one country that makes their subjugation possible and ensures its continuation: the United States.

To end the repression, US citizens need to learn about and care for Palestinians, and then pressure the US government to end its massive support for Israel until Israel decolonizes Palestine and ceases its human rights violations.   

To help achieve these very attainable goals, become part of Mr. Hebert’s effort to humanize Palestinians and bring more of their voices and stories to the United States and world. Mr. Hebert will carry out this mission on a shoestring budget of $8,000 dollars, and has created a Kickstarter project so anyone can contribute towards raising these funds.  Let’s continue to show Gazans, all Palestinians, and the US government that we are against what is being done, and will continue to intensify our resistance until it stops.

Thank you, Mr. Hebert, for taking the time to talk to Washington’s Blog, and best of luck with your admirable undertaking.

Zebula Hebert studied Political Science at the University of Oregon and was a wild land firefighter for many years.  He has lived in Japan and Egypt, and has traveled extensively throughout the Middle East and Northern Africa.

Robert Barsocchini is a researcher focusing on global force dynamics.  He also writes professionally for the film industry.  Here is his blog.  Also see his free e-book, Whatever it Takes – Hillary Clinton’s Record of Support for War and other Depravities.  Click here to follow Robert and his UK-based colleague, Dean Robinson, on Twitter.

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The Cruel Injustice of the Fed’s Bubbles in Housing

As the generational war heats up, we should all remember the source of all the bubbles and all the policies that could only result in generational poverty: the Federal Reserve.

Federal Reserve chair Janet Yellen recently treated the nation to an astonishing lecture on the solution to rising wealth inequality–according to Yellen, low-income households should save capital and buy assets such as stocks and housing.

It’s difficult to know which is more insulting: her oily sanctimony or her callous disregard for facts. What Yellen and the rest of the Fed Mafia have done is inflate bubbles in credit and assets that have made housing unaffordable to all but the wealthiest households.

Fed policy has been especially destructive to young households: not only is it difficult to save capital when your income is declining in real terms, housing has soared out of reach as the direct consequence of Fed policies.

Two charts reflect this reality. The first is of median household income, the second is the Case-Shiller Index of housing prices for the San Francisco Bay Area.

I have marked the wage chart with the actual price of a modest 900 square foot suburban house in the S.F. Bay Area whose price history mirrors the Case-Shiller Index, with one difference: this house (and many others) are actually worth more now than they were at the top of the national bubble in 2006-7.

But that is a mere quibble. The main point is that housing exploded from 3 times median income to 12 times median income as a direct result of Fed policies.Lowering interest rates doesn’t make assets any more affordable–it pushes them higher.

The only winners in the housing bubble are those who bought in 1998 or earlier.The extraordinary gains reaped since the late 1990s have not been available to younger households. The popping of the housing bubble did lower prices from nosebleed heights, but in most locales price did not return to 1996 levels.

As a multiple of real (inflation-adjusted) income, in many areas housing is more expensive than it was at the top of the 2006 bubble.

While Yellen and the rest of the Fed Mafia have been enormously successful in blowing bubbles that crash with devastating consequences, they failed to move the needle on household income. Median income has actually declined since 2000.

Inflating asset bubbles shovels unearned gains into the pockets of those who own assets prior to the bubble, but it inflates those assets out of reach of those who don’t own assets–for example, people who were too young to buy assets at pre-bubble prices.

Inflating housing out of reach of young households as a matter of Fed policy isn’t simply unjust–it’s cruel. Fed policies designed to goose asset valuations as a theater-of-the-absurd measure of “prosperity” overlooked that it is only the older generations who bought all these assets at pre-bubble prices who have gained.

In the good old days, a 20% down payment was standard. How long will it take a young family to save $130,000 for a $650,000 house? How much of their income will be squandered in interest and property taxes for the privilege of owning a bubblicious-priced house?

If we scrape away the toxic sludge of sanctimony and misrepresentation from Yellen’s absurd lecture, we divine her true message: if you want a house, make sure you’re born to rich parents who bought at pre-bubble prices.

As the generational war heats up, we should all remember the source of all the bubbles and all the policies that could only result in generational poverty: the Federal Reserve.


How to forge a career in a lousy economy:
Get a Job, Build a Real Career and Defy a Bewildering Economy
,
a mere $9.95 for the Kindle ebook edition and $15.47 for the print edition.

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Second Ebola Patient Dies In U.S.

 

The Washington Times reports:

A surgeon who contracted Ebola while working in his native Sierra Leone died Monday while being treated in a biocontainment unit at a Nebraska hospital, the facility said.

***

Salia, a Sierra Leone citizen who lives in Maryland, first showed Ebola symptoms on Nov. 6 but tested negative for the virus. He eventually tested positive on Nov. 10.

Posted in Science / Technology | 1 Comment

Okinawa Elects All Anti-U.S.-Bases Candidates

Some news of more resistance in Okinawa from Hiroshi Taka:

“I am writing this email to all the friends who have sent warm messages of solidarity to the people of Okinawa, who fought for a military base-free, peaceful Okinawa in the last weekend through the simultaneous elections at four levels: Governor of Okinawa, Mayor of Naha, three Prefectural Assembly members from Naha, Nago, and Okinawa City, and a member of Naha City assembly.  They won the governor election, the mayoral election, the prefectural assembly elections in Naha and Nago. The result demonstrates that the Okinawans are undaunted, that the close-down of the Futemma Base and non-construction of a new base in Nago are an actual consensus of the whole prefecture.

“On Thursday last week, with your messages and Japanese translation, I went to Okinawa, held a press conference, visited the election campaign headquarters of Takeshi Onaga, the then candidate for the governor, and the election campaign headquarters of Ms. Shiroma, the then candidate for the mayor of Naha.  I handed over your messages to Takeshi Onaga personally, at the midst of campaign when all those candidates were preparing to make speeches in the center of Naha City.

“Your messages were taken up by a major local paper Okinawa Times on Friday, Nov. 14 issue, and a number of other media.  At the campaign headquarters of Onaga, the top leaders of the campaign kindly took time to listen to my presentation of the messages.  At the campaign office of Shiroma, all campaign staff there stood up and with big applause, listened to my presentation.  And at the speech rally of Onaga, Shiroma, and the other candidates standing against the Bases, most speakers, including Susumu Inamine, the mayor of Nago, referred to your messages, saying that the whole world was with them.

“Through these visits, I felt first-hand how powerfully and greatly your messages encouraged those who deserved your encouragement.

“Great though their successes are, the struggle for a bases-free Okinawa and peace in the region and the world continues.  I hope you will continue to support their struggle, as we living in the mainland Japan will.

Hiroshi Taka

Data: (* = elected)

   For the Governor

     * ONAGA Takeshi (Anti-base)      360,820

       NAKAIMA Hirokazu (former Governor)  261,076

 

   For the Mayor of Naha, prefectural capital

      * SHIROMA Mikiko (Anti-base)    101,052

       YONEDA Kanetosh (supported by LDP-Komeito)   57,768

 

   For the Prefectural Assembly member from Naha

       * HIGA Mizuki (Anti-base)  74,427

        YAMAKAWA Noriji (LDP)  61,940

 

  For the Prefectural Assembly member from Nago

        *GUSHIKEN Toru (Anti-base)    15,374

         SIEMATSI Bunshinmatsu Bunshin (LDP)     14,281″

 

____________

 

I should note that the Mayor of Okinawa is already anti-base and recently came to Washington, D.C. with that message. I wrote this prior to his visit:

Imagine if China were stationing large numbers of troops in the United States.  Imagine that most of them were based in a small rural county in Mississippi.  Imagine — this shouldn’t be hard — that their presence was problematic, that nations they threatened in Latin America resented the United States’ hospitality, and that the communities around the bases resented the noise and pollution and drinking and raping of local girls.

Now imagine a proposal by the Chinese government, with support from the federal government in Washington, to build another big new base in that same corner of Mississippi.  Imagine the governor of Mississippi supported the base, but just before his reelection pretended to oppose it, and after being reelected went back to supporting it.  Imagine that the mayor of the town where the base would be built made opposition to it the entire focus of his reelection campaign and won, with exit polls showing that voters overwhelmingly agreed with him.  And imagine that the mayor meant it.

Where would your sympathies lie? Would you want anyone in China to hear what that mayor had to say?

Sometimes in the United States we forget that there are heavily armed employees of our government permanently stationed in most nations on earth.  Sometimes when we remember, we imagine that the other nations must appreciate it.  We turn away from the public uproar in the Philippines as the U.S. military tries to return troops to those islands from which they were driven by public pressure.  We avoid knowing what anti-U.S. terrorists say motivates them, as if by merely knowing what they say we would be approving of their violence.  We manage not to know of the heroic nonviolent struggle underway on Jeju Island, South Korea, as residents try to stop the construction of a new base for the U.S. Navy. We live on oblivious to the massive nonviolent resistance of the people of Vicenza, Italy, who for years voted and demonstrated and lobbied and protested a huge new U.S. Army base that has gone right ahead regardless.

Mayor Susumu Inamine of Nago City, Okinawa, (population 61,000) is headed to the United States, where he may have to do a bit of afflicting the comfortable as he tries to comfort the afflicted back home.  Okinawa Prefecture has hosted major U.S. military bases for 68 years.  Over 73% of the U.S. troop presence in Japan is concentrated in Okinawa, which makes up a mere 0.6% of the Japanese land area.  As a result of public protest, one base is being closed — the Marine Corps Air Station Futenma.  The U.S. government wants a new Marine base in Nago City.  The people of Nago City do not.

Inamine was first elected as mayor of Nago City in January 2010 promising to block the new base.  He was reelected this past January 19th still promising to block the base.  The Japanese government had worked hard to defeat him, but exit polls showed 68% of voters opposing the base, and 27% in favor of it.  In February U.S. Ambassador Caroline Kennedy visited Okinawa, where she met with the Governor but declined to meet with the mayor.

That’s all right. The Mayor can meet with the State Department, the White House, the Pentagon, and the Congress.  He’ll be in Washington, D.C. in mid-May, where he hopes to appeal directly to the U.S. government and the U.S. public.  He’ll speak at an open, public event at Busboys and Poets restaurant at 14th and V Streets at 6:00 p.m. on May 20th.

A great summary of the situation in Okinawa can be found in this statement: “International Scholars, Peace Advocates and Artists Condemn Agreement To Build New U.S. Marine Base in Okinawa.”  An excerpt:

“Not unlike the 20th century U.S. Civil Rights struggle, Okinawans have non-violently pressed for the end to their military colonization. They tried to stop live-fire military drills that threatened their lives by entering the exercise zone in protest; they formed human chains around military bases to express their opposition; and about a hundred thousand people, one tenth of the population have turned out periodically for massive demonstrations. Octogenarians initiated the campaign to prevent the construction of the Henoko base with a sit-in that has been continuing for years. The prefectural assembly passed resolutions to oppose the Henoko base plan. In January 2013, leaders of all the 41 municipalities of Okinawa signed the petition to the government to remove the newly deployed MV-22 Osprey from Futenma base and to give up the plan to build a replacement base in Okinawa.”

Here’s background on the Governor of Okinawa.

Here’s an organization working to support the will of the public of Okinawa on this issue.

And here’s a video worth watching:
http://www.youtube.com/watch?v=rzAw-jOQwME#t=0

______________

And here’s a video of the Mayor’s visit to DC:

https://www.youtube.com/watch?v=UlYMyoWW7eg

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WHAT THE FED HAS WROUGHT

The chart below might be the most powerful indictment of the Federal Reserve and our corporate fascist empire of debt ever created. Some people don’t get charts. Charts tell a story. This chart tells the story of elitist bankers supporting the agenda of a corporate fascist state, resulting in the gutting of the middle class. Anyone who views this chart in a positive manner is either a Federal Reserve banker or their paycheck is dependent upon the continuation of the pillaging of the working class. Corporate profits are at all-time highs. Profit margins have always reverted to the mean throughout modern history. If they remain at all-time highs then something is terribly wrong.

“Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system and it is not functioning properly.” – Jeremy Grantham, Barron’s

Here is the story I see in that chart. Corporate profits as a percentage of GNP have averaged 6.5% over the last 67 years. As you can see, it is a volatile figure. Corporate profits rise during expansions and fall during recessions. That has been a given over time. The reason corporate profits have always reverted to the mean was due to the basic tenets of free market capitalism. When a company is generating outsized profits, that industry will then attract new competitors, resulting in price competition and lower profits. From 1950 through 1971, corporate profits as a percentage of GNP fluctuated in a narrow range between 5% and 7%. This was a reflection of a market driven by competition, a non-interventionist Federal Reserve, and a government not captured by corporate interests.

It is no coincidence since Nixon closed the gold window in 1971 and unleashed greedy bankers, feckless politicians, and self serving corporate executives to utilize easy money and prodigious amounts of debt to financialize our economic system and deform capitalism, corporate profits have boomed and busted. The Fed created booms and busts are clearly evident on the chart. Nixon toady Arthur Burns created an inflationary boom in corporate profits to 8% of GNP in the late 70′s followed by the collapse to 3% caused by Volcker having to raise rates to extreme levels to crush the Burns created runaway inflation.

You can see exactly when the Maestro assumed command at the Fed and proceeded to introduce the Greenspan Put, encouraging speculation, borrowing and mal-investment. His easy money boom led to the dot com bubble that doubled corporate profits from their 1987 low. Of course the profits vaporized in an instant and plunged to 4% of GNP in 2001. Greenspan and then Bernanke proceeded to drive interest rates to record lows creating a prodigious housing bubble resulting in the greatest level of mal-investment and financial fraud in world history. Corporate profits as a percentage of GNP skyrocketed from 4% to 10% in the space of six years. The banking cabal had captured the system.

The Fed orchestra kept the music playing and Wall Street kept dancing the rumba with their corporate CEO dates. The Keynesian acolytes were ecstatic. The Austrians warned of the impending bust. No one listened. The collapse of the worldwide financial system was portrayed by the corporate mainstream media, bankers like Dimon, corporate CEOs like Immelt, billionaires like Buffet, captured government bureaucrats like Paulson, and politicians like McCain and Obama, as a systematic risk that required a taxpayer rescue of criminals.

The $800 billion gift to bankers and mega-corporations by the Washington DC Party of captured politicians was chicken feed compared to the $3.5 trillion of newly printed fiat handed to Wall Street and corporate America by Bernanke and Yellen. Five years of 0% interest rates have impoverished senior citizens and savers, but they have done wonders for Wall Street and mega-corporation profits, along with executive bonuses. Corporate profits soared from 4.5% of GNP to an all-time high of 10.5% in the space of three years and have remained at this elevated level.

Who Needs Wage Earners Anyway?

Is it a coincidence that corporate profits as a percentage of GNP are at record highs while employee compensation as a percentage of GNP is at record lows? Is it a coincidence that employee compensation as a percentage of GNP peaked at 51% in 1971? That year certainly seems to be a turning point in U.S. economic history. Gold’s purpose as a check on statists, Keynesians, politicians, bankers, and the military industrial complex couldn’t be any clearer. The decline has multiple causes, but the storyline about technology being the major cause is patently false. My observations are as follows:

  • From the end of World War II until the mid-1970s employee compensation as a percentage of GNP was consistently between 49% and 51%. The middle class saw their standard of living rise as wages outpaced inflation, savings rates were high and led to capital investment, debt was used for long term purchases like a home or automobile, and bankers accepted deposits and made safe loans. Technological progress over the thirty years was constant, but did not result in declining wages.
  • From the moment Nixon closed the gold window, employee compensation as percentage of GNP relentlessly declined for the next quarter of a century from 51% to 44%. Over this time frame our economy deformed from a goods producing system driven by savings and capital investment into a service/financial economy built upon consumer debt, conspicuous consumption and market gambling. Our iconic mega-corporations fired Americans and hired Chinese slave laborers, lobbied for tax breaks, invested in their own stock, kept wage increases below the level of true inflation, and paid extravagant compensation packages to their Harvard MBA executives.
  • The brief upturn created by Greenspan’s irrational exuberance 90′s boom was short lived. The relentless decline resumed after the dot com collapse, even as Greenspan and Bernanke blew their epic bubble. Their financial engineering machinations on behalf of Wall Street did nothing for the average worker on Main Street. Employee compensation as a percentage of GNP declined from 47% to 44% BEFORE the financial collapse.
  • Unequivocal proof that Bernanke’s sole purpose of QE and ZIRP was to benefit his Wall Street owners can be seen in the continued decline from 44% to 42% since 2008. There has been no recovery for the average American. Wall Street is rolling in dough. Corporate America is rolling in dough. Politicians are rolling in dough. The average American worker is rolling in dog shit.

The mouthpieces for the Deep State insist corporate profits have reached a permanently high plateau. It’s another new paradigm. Just like 1929, 1999, and 2007. Jeremy Grantham is right. The system is broken. The inmates are running the asylum. But financial engineering will not work permanently. Baijnath Ramraika and Prashant Trivedi in their outstanding article Why Jeremy Grantham is Right about Corporate Profit Margins prove that corporate gross margins have not grown, technological advancement has not been a major factor, innovation and capital investment are non-existent, and corporate CEOs have utilized one time schemes to boost profits.

There are a few major reasons for record corporate profits. The Fed’s gift to banks and mega-corporations of zero interest rates have allowed S&P 500 corporations to refinance their existing debt and take on new debt at below market interest rates. The average interest rate paid by S&P 500 companies is now at all-time lows. Any normalization of interest rates would crush corporate profits.

Even though you hear constant propaganda from the corporate MSM, corporate CEOs, and captured politicians about the dreadful level of corporate taxes, the truth is that mega-corporations are paying record low levels of actual taxes. When profits are at record highs and tax payments at record lows you know they have captured the system. “Creative” tax avoidance and the FASB allowing banks to mark their assets to fantasy have played an enormous role in record profits.

The short term oriented casino mentality of corporate CEOs can be plainly seen in the fact depreciation expense as a percentage of revenue is at 25 year lows, resulting in short term profits but long-term decline. Instead of investing in capital to increase efficiency or expand their business, greedy myopic CEOs have chosen to buy back their own stock at all-time high prices. They did the same thing in 2005 – 2007. Driving up quarterly earnings per share to boost their own stock option compensation is how it rolls in corporate America today. Investing in their workers through higher wages isn’t even a consideration. They don’t teach that in Ivy League MBA programs. SG&A expenses as a percentage of revenue have been driven to all time lows, as outsourcing, downsizing, and working people to death have done wonders for corporate profits.

Ramraika and Trivedi reach damning conclusions of corporate America, based on their detailed unbiased research:

As the world moved increasingly towards the idea of shareholder-value maximization, time horizons for management and the shareholders have shortened. As Montier shows, the average lifespan of a company in the S&P 500 in the 1970s was about 27 years and is down to about 15 years now. In tandem, the average tenure of CEOs is down from about 10 years in the 1970s to about 6 years now. Combine this with the incentive systems prevalent today (think stock options), and it is only logical that a CEO who is going to be around for as few as six years and is going to get a large chunk of her rewards in stock options will want to see higher stock prices.

Cutting SGA expenses and postponing capital investments — actions that carry positive short-term earnings impact at the expense of a business’ competitiveness in the long-term — look promising to managers whose payoffs depend on stock prices in the short-term. Not surprisingly, the renters (there are hardly any owners any more) clamor for just such actions. The problem with this thinking is that the long-term eventually shows up. And when it does, profit margins will have no choice but to remember their long forgotten tendency to revert to mean.

Are interest rates going to be driven lower for corporations? Are taxes going to be driven lower? How many more people can corporations fire? Have economic downturns been eliminated by the Federal Reserve? Will record profits not result in increased competition and price wars? Can wages be driven even lower?

The financial, economic and political system has been captured by corporate fascist psychopaths. The Federal Reserve has aided and abetted this takeover. Their monetary manipulations have resulted in this deformity. Psychopaths always go too far. The American middle class has been murdered. Decades of declining real wages have left them virtually penniless, in debt up to their eyeballs, angry, frustrated, and unable to jump start our moribund economy by buying more Chinese produced crap. Yellen, her Wall Street puppeteers, and the corporate titans should enjoy those record profits and record stock market highs. It won’t last. Short-term profits will be wiped out, as long-term consequences always arrive when you least expect it. The artificial boom will lead to a real depression. Luckily for the oligarchs, most middle class Americans are already experiencing a depression and won’t notice the difference.

“True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.” - Ludwig von Mises

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Crops Are Drenched with Roundup Pesticide Right Before Harvest

Roundup Is Dumped On Crops Right BEFORE Harvest … to Save a Buck

Monsanto’s Roundup herbicide (technically known as “glyphosate”) has been linked to many diseases.

However, farmers appear to be dumping it on crops right before harvest.

Specifically, Monsanto International published a paper in 2010 touting the application of Roundup to kill crops right before harvest, in order to dry out the crops in advance and produce a more uniform and earlier harvest (starting on page 28):

Benefits of using glyphosate:

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Uneven maturity and green tissue delays harvest. Spraying glyphosate desiccates green foliage & stems. The photograph (below left) shows the uniform dessication of sunflower by the use of glyphosate(Roundup Bioaktiv) applied by helicopter in Hungary (Czepó, 2009a). The photograph (below right) shows complete foliar desiccation of grain maize on the right side 14 days after application of glyphosate (Roundup Bioaktiv) at 0.54kg ae/ ha in 7 0L/ ha applied by helicopter using Reglojet nozzles and including Bandrift Plus at 0.1 % at 34% grain moisture in Hungary, with the untreated visible on the left-hand side.

Lower drying costs

Monsanto trials in Hungary on grain maize and sunflower clearly show the effect of the use of glyphosate on % grain moisture ….

At harvest glyphosate treated maize had moisture content some 4% lower than untreated maize. Glyphosate treated sunflower seed moisture was 10+°/0 lower than untreated sunflower. Treated grain was at 19 and 7% respectively in these trials.

The requirement to further dry the seed/ grain to 14-16% for stable storage of maize, or 8-10% for sunflower, was thus either reduced or eliminated.

***

Earlier harvest to get higher price

Harvest management is an important management technique enabling earlier harvest, particularly important for the ‘stay-green’ hybrids. Increased levels of ‘stay-green’ trait may result in such desiccation practice becoming ever more common in sunflowers (Larson et al, 2008). Some commercial trials on grain maize in Hungary, as above, commented on earlier harvest bringing a higher price. Work on sunflower in by North Dakota State University department of Plant Science show that glyphosate brought harvest earlier by 5-10 days (Howatt, 2007). Sunflower harvest was brought forward 2-3 weeks by glyphosate treatment in Hungary (Monsanto, 2009a).

***

By bringing harvest date forward 2-3 weeks growers can more often meet the optimum planting date for winter wheat establishment so maximising yield (Czepó, 2009b).

(Given that enough Roundup is applied to full-grown plants to completely kill them, much higher quantities of Roundup are obviously being applied than would be required simply to keep away weeds (while keeping the plants alive).

Similarly, the plants don’t have time to metabolize or otherwise get rid of the Roundup, and there is not time for rains to wash away the Roundup before harvest. Instead, Roundup is dumped on the plants to dry them out, and then they are quickly harvested … with high levels of Roundup still present.

Similarly, Monsanto literature regarding Roundup encourages Canadian farmers to apply dump Roundup applications on many crops – including wheat, feed barley, oats, canola, flax, peas, lentils, and dry beans – right before harvest:

Preharvest is the best time for controlling Canada thistle, quackgrass, perennial sowthistle, dandelion, toadflax, and milkweed. A preharvest weed control application is an excellent management strategy to not only control perennial weeds, but to facilitate harvest management and get a head start on next year’s crop.

And Manitoba Pulse Growers Association reports:

Desiccants (or harvest management tools) are used
worldwide by growers who are producing crops that
require “drying down” to create uniformity of plant
material at harvest. These products may also assist in
pre-harvest weed control. In Canada, products such
as diquat (Reglone) and glyphosate (Roundup) have
been used as desiccants in pulse crops in the past …

Big agribusiness may save a buck … but we may all be paying with our health.

H/t Dr. Stephanie Seneff.

Posted in Energy / Environment, Politics / World News, Science / Technology | 20 Comments