Category Archives: Financial Crisis

Costs Are Spiraling Out of Control

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By Charles Hugh Smith

Source: Of Two Minds

And how do we pay for these spiraling out of control costs? By borrowing more, of course.

If we had to choose one “big picture” reason why the vast majority of households are losing ground, it would be: the costs of essentials are spiraling out of control. I’ve often covered the dynamics of stagnating income for the bottom 90%, and real-world inflation, i.e. a decline in purchasing power.

But neither of these dynamics fully describes the relentless upward spiral of the cost basis of our economy, that is, the cost of big-ticket essentials: housing, education and healthcare.

The costs of education are spiraling out of control, stripping households of income as an entire generation is transformed into debt-serfs by student loan debt. The soaring costs of healthcare are a core driver of higher costs in the education complex (and government in general), and to cover these higher costs, counties raise property taxes, which add additional cost burdens to households and enterprises as rents rise.

Rising rents push the cost structure of almost every enterprise and agency higher.

Then there’s the asset inflation created by central bank ZIRP (zero interest rate policy) which has inflated a second echo-bubble in housing that has pushed home ownership out of reach of many, adding demand for rental housing that has pushed rents into the stratosphere in Left and Right Coast cities.

The increasing dominance of monopolies and cartels has eliminated competition in sector after sector. Monopolies and cartels skim immense profits even as the value, quality and quantity of their products and services decline: The U.S. Only Pretends to Have Free Markets From plane tickets to cellphone bills, monopoly power costs American consumers billions of dollars a year.

Thanks to their political influence, monopolies and cartels have legalized looting, raising prices and evading anti-trust regulations because they can pay whatever it takes in our pay-to-play political system.

Let’s look at a few charts that illustrate the relentless rise in costs:

Do you reckon these two charts are connected–soaring costs and ballooning administrative payrolls?

Student loan debt is soaring above $1.5 trillion, guaranteeing profits to lenders and debt-serfdom to the students exiting with degrees that are in over-supply, i.e. possessing little scarcity value in an over-credentialed economy:

The echo housing bubbles in many locales exceed the nosebleed valuations of the previous bubble:

And how do we pay for these spiraling out of control costs? By borrowing more, of course:

Even at low rates of interest, the cost of servicing skyrocketing debt increases, leaving less net income to support additional borrowing.

What will it take to radically reduce the cost basis of our economy? A fundamental re-ordering that breaks up all the cartels and monopolies that push prices higher even as they deliver lower quality goods and services would be a good start.

Get Ready For An Economic Wake-Up Call This Holiday Season

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By Brandon Smith

Source: Alt-Market.com

If we are to measure the concept of “economic recovery” in real terms, then we would have to look at the fundamentals (not stock markets) and whether or not they’re improving. Unfortunately, not all economic data is presented to the public honestly. Very often it is mired and obscured in a fog of disinformation and false standards.

I would point out, though, that there is relatively accurate information out there in certain areas of the global economy, and it tells us our economic structure is destabilizing. Beyond that, even the rigged numbers are moving into negative territory. But what does all this mean for the holiday retail season, one of the mainstream’s favorite gauges of US financial health? And, if 2019’s holiday profits sink, what does this tell us is going to happen in 2020?

First, let’s start with what we know…

Since we live in a “globalized” economy where everything is supposedly “interdependent”, it helps to examine international export numbers. The US doesn’t manufacture and export much of anything anymore beyond agricultural products, but global markets do expect us to consume the goods of other nations. A decline in exports indicates a failing global economy, but in particular a failing US consumer economy.

The obvious example would be China, which has seen plunging export data at least the past three months, though many will argue that this is merely due to tariffs and the trade war. However, it’s not just China that is showing signs of collapse.

South Korea, another major manufacturing and export hub in Asia (5th largest in the world) has seen declining exports for 11 consecutive months. South Korean shipping is crumbling in November and the media is blaming the trade war, as some SK companies would be “hit indirectly” because they sell intermediate goods to China are are linked to US companies in China. But this makes little sense. Tariffs are highly targeted to specific companies and specific goods, and so far the US has not directed major tariff attention at South Korea beyond the auto market.  Also, the new KORUS deal between Trump and SK is different only cosmetically to original trade agreements, yet, South Korean exports continue to fall.

The same situation can be seen in Japan, with Japanese exports witnessing a 9.2% year-over-year drop in October, the largest decline in 3 years. Japan has seen three consecutive months of declines in exports.

And what about Europe? While Germany, the manufacturing powerhouse of the EU, finally saw a jump in exports to the US this past month, overall the European Union has seen consistently poor export performance for the past year, and Germany itself is hovering on the edge of recession with 0.1% official GDP growth. Many economist already consider Germany to be in recession, as official GDP numbers are constantly manipulated by governments to the upside.

But let’s not forget about the US. Remember how Trump promised that the trade war would result in a renaissance for US manufacturing and that millions of industrial jobs would be returning to our shores? Well, as I’ve warned consistently for the past couple years, there is NO WAY corporations will be bringing manufacturing jobs and factories back to the US without ample incentives. Trump already gave companies tax cuts without demanding anything in return, and the cost/benefit ratio of building new factories and paying American workers top dollar versus keeping existing factories in Asia and dealing with 10%-25% tariffs just doesn’t add up to a new US rust belt renaissance.

While manufacturing jobs have increased, US manufacturing activity has declined.  Meaning, there simply isn’t enough demand for the goods being produced.  US manufacturing ISM index just sank this month and has been sinking for the past four month into negative territory. While US PMI manufacturing data jumped this month, it is still well below the 10 year average and is also very low compared to past holiday seasons, which almost always see a spike in manufacturing.  US manufacturing remains at a historic low of 11% of US GDP and production output has decline steadily since January of this year.

The question is, will the vast decline in global manufacturing translate to a crash in consumer demand?  We know that US credit dependency has skyrocketed in the past few years, but will more debt result in more profits for retailers?  This is highly unlikely, as US retail sales growth, for example, has been in decline at the same time that consumer debt has been rising.  Why?  Credit delinquencies have been relatively stable (so far) this year, so my theory is that people in the US are paying off previous debts by taking on new debt. They are kicking the can on their insolvency.

We have seen this kind of destructive credit death cycle before – Right before the crash of 2008.

So what does all this mean? And why is the media portraying the trade war with China as the cause of the global export and shipping crisis when clearly most of the world is not directly or even indirectly tied to the tariffs?

As noted above, the narrative that is being pushed is that we live in an “interdependent” and globalized world, and that nations cannot function economically without cooperation. The trade war, I believe, is a smokescreen designed by the globalist establishment to do two things specifically:

1) It is being created to hide a crash in the greater economy. Notice that almost no one in the mainstream is talking about a collapse in global production and multiple fundamentals due to DEMAND; instead they constantly talk about the trade war and exports. The trade war is becoming the scapegoat for the implosion of the market bubble engineered by globalists and central banks through a decade of stimulus measures.

The collapse of the economic bubble is being caused in part by massive debt and a lack of consumer demand due to lack of consumer savings and cash flow. The trade war has little to do with it, and I suspect we would be seeing sharp declines in the US economy in particular even without the trade war.

2) The trade war creates a false dichotomy in which many Americans will be lured into blaming China and other nations for their economic ills, and China and the rest of the world will be lured into blaming America. It also reasserts the globalist propaganda argument that when nations and economies “go rogue”, they hurt everyone; therefore, more global controls and centralization will have to be established in order to prevent nationalism from harming the rest of the world.

And what does this all have to do with the Christmas shopping season? Like the end of last year, I think we are in for another ugly holiday retail event – Perhaps far worse than before. All the manufacturing and export data indicates that this will be the case. If so, then the mainstream narrative of recovery, long perpetuated as fact by the media and the Federal Reserve for the past several years, will finally die.

The only thing that might elevate holiday numbers would be increased price inflation in goods, but I predict that even inflation misrepresented as “profits” will not save Christmas stats this year.  Some skeptics of the ongoing crash will argue that Black Friday numbers this year were the best since 2013, therefore the holiday season will be a good one.  These people don’t know their economic history.  In most cases, holiday seasons that start off with a high traffic Black Friday end with poor overall sales data, including 2013.  This is because consumers that are cash strapped are more likely to buy early during Black Friday sales and spend far less over the rest of the season.

In the mind of the average American consumer, holiday retail sales are a primary indicator of the health of the economy. A dramatic crash in Christmas retail will end the delusion of a stable US system and cause the public to start asking questions. Economics is 50% math and 50% psychology. The math in the US economy says we are in the middle of a crash. The psychological orientation of the public has been on the opposite end of spectrum, but is now slowly moving to meet with reality. When the psychological delusion ends, the game is over. And, for the globalists a new game begins.

Order out of chaos is their motto for a reason…

The global “reset” as they sometimes refer to it, has already been triggered. Going into 2020, the question is will the fantasy fall completely away to reveal the grotesque economic swamp our foundation has been built on top of? Or, will the delusion drag on for at least one more year? Given the current data, I suspect the party is over. But it is difficult to predict how the public will react to a financial crash. Sometimes people have no choice but to acknowledge the danger in front of them, but sometimes they simply bury their heads in the sand deeper and hope that by dragging out the inevitable the inevitable will become forgettable.

This holiday season, American workers have little to celebrate

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By Danny Haiphong

Source: Intrepid Report

Every year, much of the U.S. population celebrates Thanksgiving and Christmas to show appreciation for their families and friends. Thanksgiving normalizes the colonial origins of the United States and erases the brutality of the English settlers who massacred indigenous people to prepare the land for capitalist accumulation. Christmas is the annual holiday of big business. On no other day are workers more encouraged to spend their wages on the latest consumer product to gift to their loved ones. The holidays bring with them a deep pressure to be merry. Yet on this holiday season, workers have little to celebrate.

A new study by Brookings Institution provides a snapshot into the devastation wrought on the working class by American capitalism. Forty-four percent of all workers between the ages of 18-64 are employed in low-wage sectors and earn an average of $16 or less per hour. The study excluded workers who logged over 98 hours per week over the last year as well as certain sections of the college-educated population such as those living in dormitories and attending graduate school. Had these groups of workers been counted, the percentage of low-wage workers out of the total population would likely be even higher. This verifies prior datasets which proved that around half of the U.S. population makes less $30,000 per year.

The growing poverty of the American worker is a major contributor to the growth of toxic stress and mental illness. Half of all U.S. adults will develop a mental illness over the course of their life. Serious mental health conditions afflict nearly ten million people in the United States and over a quarter of these individuals live below the official poverty line. Suicide rates are at a thirty-year high. An obvious connection exists between rising poverty and the worsening mental health of the American worker.

Workers in the United States see no future under the current stage of capitalism. They struggle to afford rent in a nation where the federal minimum wage cannot pay for a two-bedroom apartment anywhere in the country. They indebt themselves in the trillions to attend college and obtain healthcare. They work in redundant, service sector jobs where hours are long and mistreatment, abuse, and injury are all too common. The American worker is increasingly alienated from themselves and each other. Union density rates in the U.S. have fallen to just ten percent of all workers since World War II.

The shrinking labor movement has followed a larger trend in U.S. society. Privatization has decimated the public sector. Workers have few places to socially convene independent of the machinations of consumer capitalism. Workers are competing for fewer jobs, most of which are not worth competing for at all. Homelessness, mass incarceration, and endless war remind workers that they can easily be turned into cannon fodder if they step out of line. In such an environment, addiction and self-destruction is encouraged while organizing for justice is discouraged.

Economic insecurity and alienation place more pressure on families to make up for stagnant wages and exorbitant amounts of debt. More young workers are living with their parents than at any other time in the last one hundred years. Older workers are not only forestalling retirement but also finding themselves without family or community support as siblings and adult children chase the highest paying jobs and the lowest rents and property values. Couples feel compelled to remain in toxic relationships for economic reasons. A strong link exists between domestic violence and poverty.

Contrary to the messages in Hallmark cards or the corporate media, the holidays are far from a time of celebration. Many workers view the holiday season as a harsh reminder of the loss, alienation, and despair that they’ve experienced over the course of their lives. Holidays place added pressure on workers to dismiss the ills of capitalism and the personal stressors associated with them. It should come as no surprise that most workers already struggling with mental health conditions report that the holidays only worsen their symptoms. Instead of embracing humanity, the holidays encourage workers to embrace rampant commercialism and the nuclear family.

To break from a culture steeped in the profit motive, workers will need to create their own traditions based upon solidarity and social transformation. Not everything about the holidays needs to be thrown out in the process. Spending time with family and friends during a day off from work can and should be rewarding to the psyche and to society. The conditions of capitalism prevent the holidays from serving a social purpose. Holidays under capitalism breed despair but brand themselves as moments of pure joy.

While workers may have little to celebrate this holiday season, there are reasons for the working class to be optimistic in the years to come. Teachers in cities such as Chicago and Los Angeles have won key gains in 2019 by using the most powerful weapon at the disposal of organized labor: the strike. At the beginning of the year, the Los Angeles Teachers won smaller class sizes and more support staff. The Chicago Teachers Union massively increased the number of nurses in the school district by forcing the city to hire nurses rather than continue the inefficient and harmful practice of hiring private contractors. The UAW’s strike of General Motors (GM) earlier this Fall made global headlines even if it was unable to win every demand that the workers put forth. These strikes reflect a growth of class consciousness in the United States. The continued growth of class consciousness will be critical toward building the kind of struggle capable of bringing about massive political and economic change for the working class.

Furthermore, workers around the world are leading the way in the struggle against class inequality and foreign-sponsored wars. Massive protests in Haiti, Chile, Honduras, and Algeria are just a few of many occurring around the globe. The protests have mainly targeted repressive U.S.-backed governments and their neoliberal economic agenda. China is leading the world in poverty reduction. Cuba is the most sustainably developed nation in the world. A vast majority of workers around the world want to see an end of the miseries imposed by global capital and are actively fighting to make their demands a reality.

The question is whether workers in the United States can decisively break from the despair, the racism, and the extreme alienation shaping their current condition. Being determines consciousness. At this moment, the neoliberal race to the bottom has rendered most workers too fearful, disorganized, and full of self-blame to fight back. However, millions of workers have rallied behind the political campaign of Bernie Sanders. Labor unrest is likely to continue as neither political party appears interested in implementing Bernie Sanders’ social democratic agenda. Workers in the United States are in desperate need of a revived labor movement to quench their thirst for a better life. Putting our energies into building this movement will go a long way toward shaking the Holiday Blues and giving workers something to really celebrate: a society run by workers, in the interests of workers.

Corporate America Is an Anti-Social Black Plague: Negative Network Effects Run Amok

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By Charles Hugh Smith

Source: Of Two Minds

The anti-social carnage unleashed by Corporate America’s “lock-in” / negative network effects has no real limits.

Here’s the U.S.economy in a nutshell: Corporate America is an anti-social Black Plague, gorging on cartel-monopoly profits reaped from negative network effects running amok, enriching the few at the expense of the many and concentrating political power in the hands of the most rapacious, anti-democratic corporate sociopaths.

Let’s start with network effects: the conventional definition is “When a network effect is present, the value of a product or service increases according to the number of others using it.”

So for example, when telephone service was only available to a few users, its value was limited. As more people obtained telephone service, the value of the network increased to both its owners and to users, who could reach more people and conduct commerce more easily as a result of having telephone service.

In the conventional analysis, negative network effects occur from “congestion,” i.e. the network is adding new users so quickly that “more users make a product less valuable.”

But this superficial analysis misses the fatally anti-social consequences of corporate negative network effects, a dynamic described by analyst Simons Chase in this essay. Here is an excerpt:

Even the most imaginative and far-reaching narratives about non-obvious economic fragility and off balance sheet risks are mere rants without constructive ideas about causes and solutions.

Consider network effects, the popular economic construct applied to market concentration and increasing returns for strategies pursued by some leading tech companies. This dynamic economic agent is also known as demand side economies of scale.

W. Brian Arthur, the economist credited with first developing the theory, described the condition of increasing returns as a game of strategic positioning and building up a user base to the point where ‘lock in’ of dominant players occurs. Companies able to tap network effects have been rewarded with huge valuations and highly defensible businesses.

But what about negative network effects? What if the same dynamic applies to the U.S.’s pay-to-play political industry where the government promotes or approves of something through a policy, subsidy or financial guarantee due to private sector influence.

Benefits accrue only to the purchaser of the network effects, and consumers, induced by the false signal of large network size, ultimately suffer from asymmetric risk and experience what I’m calling a loss of intangible net worth for each additional member after the ‘bandwagon’ wares off.

If this were the case, then you would see companies experience rapid revenue growth (out of line with traditional asset leverage models), executives accumulating huge fortunes and political campaign coffers swelling.

But the most striking feature would be the anti-social outcomes, the ones not available without the instant critical mass of government-supported network effects, the ones that, at scale, monetize a society’s intangible net worth.

Some products tied to these metrics include: prescriptions drugs, junk food targeting children, mortgages, diplomas, and social media. The list of industries that are likely to have gained through the purchasing of network effects in D.C. maps closely to the decay that is visible in U.S. society.

The loss of intangible capital and other manifestations of non-obvious economic fragility (to use Simons’ apt phrase) is the subject of my latest book, Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World, in which I catalog the anti-social consequences of negative network effects and other forces eroding our nation’s intangible capital.

Consider Facebook, a classic case of negative network effects running amok, creating immensely anti-social consequences while reaping billions in profits: Facebook isn’t free speech, it’s algorithmic amplification optimized for outrage (TechCrunch.com).

The full social cost of social media’s negative network effects are difficult to tally, but studies have found that loneliness and alienation are correlated to how many hours a day individuals spend on social media. (An Internet search brings up dozens of reports such as NPR’s Feeling Lonely? Too Much Time On Social Media May Be Why.)

Facebook is trying to leverage its social media “lock-in” to issue its own global currency and both Facebook and Google are trying to offer banking services without any of the pesky regulations imposed on legitimate banks. (Will $10 million in lobbying do the trick? How about $100 million? We’ve got billions to “invest” in corrupting and controlling public agencies and political power.)

Once Corporate America locks in cartel-monopoly power, i.e. you have to use our services and products, the corporate sociopaths use their billions in market cap and profits to buy the sociopaths in government. Pay-to-play is the real political machinery; “democracy” is the PR fig-leaf to mask the private sector “lock-in” (monopoly) and the public-sector “lock-in” (regulatory influence, anti-competitive barriers to entry, the legalization of corporate fraud, cooking the books, embezzlement, etc.)

Consider Boeing, an effective monopoly which used $12 billion in profits to buy back its own shares and “invested” millions in buying political influence so it could minimize public-sector oversight.

Rather than spend the $12 billion designing a new safe aircraft, Boeing cobbled together a fatally flawed design dependent on software, as described in The Case Against Boeing (The New Yorker) to maximize the profitability of its “lock-in”.

Google is running amok on so many levels, it’s difficult to keep track of its anti-social “let’s be evil, it’s so incredibly profitable” agenda: Google’s Secret ‘Project Nightingale’ Gathers Personal Health Data on Millions of Americans (Wall Street Journal). The goal, of course, is to reap more billions in profits for insiders and corporate sociopaths.

The anti-social carnage unleashed by Corporate America’s “lock-in” / negative network effects has no real limits. Consider the essentially limitless private and social damage caused by Big Tech: Child Abusers Run Rampant as Tech Companies Look the Other Way (New York Times).

Then there’s the opioid epidemic, whose casualties run into the hundreds of thousands, an epidemic that was entirely a creature of Corporate America seeking to maximize “lock-in” profits by buying regulatory approval and pushing false claims that the corporate products were safe and non-addictive.

Note the media sources of these reports: these are the top tier of American journalism, not some easily dismissed alt-media source.

What does this tell us? It tells us the anti-social consequences are now so extreme and so apparent that the corporate media cannot ignore them. Once Corporate America locks-in market, financial and political power, it acts as a virulent Black Plague on the social order, legitimate democracy, and an entire spectrum of intangible social capital including the rule of law.

As Simons put it: “The ethical dimension underpinning the whole system is this: what’s moral is what’s legal and what’s legal is for sale.” Where does this Black Plague pathology take us? To a collapse of the status quo which enabled it, cheered it, and so richly rewarded it.

Political Collapse: The Center Cannot Hold

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By Kirkpatrick Sale

Source: CounterPunch

Have you noticed? From Hong Kong to Baghdad, Paris to Tehran, 2019 is shaping up to be, as the New York Times dubbed it, “the year of the protest.” Violent—and often deadly—anti-government protests are breaking out throughout the world in an unprecedented fashion, in rich countries as well as poor, as people everywhere are expressing their anger at corrupt, inefficient, brutal, and unresponsive regimes.

But what isn’t so much in the news is worse—worse enough that they don’t want to tell you. At the moment, there are no less than 65 countries are now fighting wars—there are only 193 countries recognized by the United Nations, so that’s a third of the world. These are wars with modern weapons, organized troops, and serious casualties—five of them, like Afghanistan, Libya, Syria, Somalia, and Yemen, with 10,000 or more deaths a year, another 15 with more than 1,000 a year—all of them causing disruptions and disintegrations of all normal political and economic systems, leaving no attacked nation in a condition to protect and provide for its citizens. From 2015 to 2019 more state-based conflicts were engaged in than at any time since World War II, with an estimated 1 million deaths in all.

In addition, there are at least 638 other conflicts between various insurgent and separatist militias, armed drug bands, and terrorist organizations, increasing each year as states fail or collapse completely.

What has made the wars and internal disputes even more egregious as the years go on is that chaotic weather has a direct effect on how societies function. Agriculture, of course, is impacted by higher temperatures, lack of rain, droughts, and wildfires, and crops have failed in many places over the last five years, including North and Central Africa, the Middle East, India, Pakistan, northern China, northern Europe, Argentina, Brazil, Central America, and even parts of North America. The collapse of Syria, for example, and subsequent civil wars were made more devastating if not directly caused by the drought of 2006-2011, in which 75 per cent of the farms failed and 85 per cent of the livestock died. And an official United Nations report in 2019, by 100 experts from 52 countries, warned that things will only get worse, with the world’s land and water resources exploited at “unprecedented rates,” threatening “the ability of humanity to feed itself.”

One obvious consequence, beyond death, famine, disease and starvation, is, as the U.N. report’s lead author says, “a massive pressure for migration,” a desperate attempt to find some refuge and relief when homes have been destroyed and families are uprooted. According to the United Nations, in what I regard as a certain undercount, in 2019 there were 272 million migrants worldwide, up from 258 million in 2017, with the weather in 2019 causing more refugees even than warfare. (The unprecedented crisis at the U.S. southern border in 2019 is only one manifestation of the porous and chaotic collapse of boundaries across the Americas, Africa, and most of Asia.) And meanwhile, the International Committee of the Red Cross in 2018 estimated that more than 100,000 people are simply “missing,” a figure it admits “represents only a fraction” of those who are unaccounted for by any government or organization.

Given the turmoil over wars and immigration threats, it is not surprising that half the world is without coherent government.

Organizations that track these things say that of the 174 covered nations, 76 are in various stages of collapse—that would be 43 per cent—and that excludes a dozen smaller nations that are locked into autocracy and poverty. These include seven completely failed states—Congo-Brazzaville, Central African Republic, Syria, Yemen, Somalia, South Sudan, and Venezuela—and another seven that are on the edge—Guinea, Haiti, Iraq, Zimbabwe, Afghanistan, Chad, and the Sudan—plus 19 that are in an “alert” category, meaning that some but not all government functions have failed, 15 in Africa and 4 in Asia.

In other words, many political systems in the world have effectively collapsed, people are dispossessed and without governments, and almost everywhere else, including the U.S. and Europe, governments are severely strained and political rifts abound. The vote for Brexit in the U.K., the election of Donald Trump (and the subsequent attempts to overturn it), the turmoil that erupted in December 2018 in France and Belgium, the continued protests in Poland were all examples of the population of developed nations coming to see that the attempt to establish capitalist-led democracies in an internationalist arrangement of benefit to corporate and banking interests just was not working, and a rising segment of what were called “deplorables” in America did not want any longer to be powerless, manipulated, and disdained. These turmoils also demonstrated that the established powers in these countries, especially the U.S. and Britain, resisted all of these attempts to change the status quo and in effect ignored or tried to thwart the popular will (cf. the “impeachment” farce)—the developed world’s form of the failed state. Those fissures have widened as the years have worn on, and as one astute observer, James Kunstler, put it in 2019, “The West is enduring paroxysms of political uproar and disenchantment.”

And here’s something weird that sums it all up. It is the opinion of two recent political scientists that “the state system seems to be failing all over the world,” and they have proposed a new study called “archy” to examine how to grow, maintain, and fund states so as to avert their collapse. No better evidence of the seriousness of the world’s “uproar and disenchantment” can there be when academics need to create a discipline to overcome it.

Yeats summed it up some years ago: “The center cannot hold. Mere anarchy is loosed upon the world.”

 

Kirkpatrick Sale’s new book The Collapse of 2020 will be published in January.

Establishment media’s mass deception

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By Stephen Lendman

Source: Intrepid Report

On major geopolitical and other issues, mass deception overrides truth and full disclosure in establishment media print editions and daily broadcasts—wealth, power and privileged interests served over peace, equity and justice.

The NYT is Exhibit A. Its Friday edition featured Iran-bashing disinformation, saying the following: “Iran has used the continuing chaos in Iraq to build up a hidden arsenal of short-range ballistic missiles in Iraq [sic], part of a widening effort to try to intimidate the Middle East and assert its power [sic]”—citing unnamed US intelligence and Pentagon officials,” adding that the US built up “its military presence in the Middle East to counter emerging threats to American interests [sic], including attacks on oil tankers and facilities that intelligence officials have blamed on Iran [sic].”

Iranian missiles “pose a threat to American allies and partners in the region, including Israel and Saudi Arabia, and could endanger American troops…”

Fact: Iranian Foreign Ministry Spokesman Bahram Qassemi debunk phony claims about IRGC missiles in Iraq, saying that the accusations are “false, meaningless and ludicrous. What has been raised and published by some infamous cells and certain media about the transfer of Iranian missiles to Iraq is a nonsensical statement and sheer lie.”

They’re all about maliciously vilifying Iran to create a nonexistent threat, wanting its Iranian relations with neighboring countries undermined.

Iranian military advisors are in Iraq and Syria at the behest of their governments, Tehran’s Supreme National Security Council Secretary Ali Shamkhani earlier explained—adding that they’re there to help combat US-supported terrorism.

The US and its key allies are “the main creators and sponsors of takfiri terrorists,” he earlier stressed.

Fact: Iran was falsely blamed earlier for attacks on regional oil tankers and facilities it had nothing to do with—no evidence suggesting otherwise. The incidents were false flags staged to wrongfully blame Iran for what happened.

Fact: Iran threatens no other countries. Claims otherwise are bald-faced Big Lies, part of establishment media supported US propaganda.

Fact: The US and its imperial allies threaten humanity. Needing enemies to unjustifiably justify its imperial agenda, they’re invented because no real ones exist—none since WW II ended.

Fact: Iran’s nuclear program has no military component, never did in a nation abhorring these weapons, wanting them eliminated everywhere.

Fact: Iranian defense spending is solely for self-defense, its legal right under international law. It’s ruling authorities haven’t attacked another nation in centuries—what US-dominated NATO and Israel do repeatedly, their hostile actions supported by the Times and other establishment media.

Instead of reporting “all the news that’s fit to print,” Times’ editions feature managed news misinformation and disinformation.

Times and other establishment media columnists are what famed journalist George Seldes (1890 – 1995) called “prostitutes of the press.”

They’re propagandists, scam artists and charlatans—paid to lie, distort, misinform, and blame victims for US high crimes committed against them, while supporting monied interests over popular ones.

In his latest disinformation piece, Times columnist David Brooks “cheer[ed] (predatory) capitalism, now and forever,” adding, “I came to realize that capitalism is really good at doing the one thing socialism is really bad at: creating a learning process to help people figure stuff out… It has a competitive profit-driven process to motivate you to learn and innovate, every single day.”

Fact: Diogenes called education “the foundation of every state.” Horace Mann said: “The common [public] school (socialized education) is the greatest discovery ever made by man”—calling it the “great equalizer” that was “common” to all.

In 1862, the Morrill Act established land-grant public colleges and universities on a tuition-free basis.

For the next century, many US state and other public colleges and universities charged no or nominal tuition and other fees to attend—socialized higher education, affordable to millions that worked as intended.

Attending today entraps millions of students into debt bondage because of exorbitantly higher education costs—at a time when career opportunities are a shadow of what they were post-WW II

Fact: New Deal, Fair Deal, and Great Society program helped millions of Americans avoid poverty—social programs that worked, eroding and disappearing today.

FDR’s Great Depression social programs built or renovated 700,000 miles of roads, 7,800 bridges, 45,000 schools, 2,500 hospitals, 13,000 parks and playgrounds, 1,000 airfields, and other infrastructure projects—including much of Chicago’s lakefront.

Fact: The post-WW II (GI Bill) Servicemen’s Readjustment Act provided college or vocational education for 7.8 million returning vets.

Fact: Another 2.4 million got VA-backed low-interest, no down payment home loans at a time when their average cost was under $5,000—letting millions of families afford them.

Studies later showed the GI Bill was one of America’s soundest investments. It paid for itself seven times over. It also helped millions readjust successfully to civilian life.

The State University of New York (SUNY) system, the nation’s largest, was tuition-free until 1963. The University of California system had free tuition until the 1980s.

Today, SUNY tuition, room, board and fees are around $14,000 annually. At UCLA, it’s around $34,000 annually for state residents, at UC Berkeley over $36,000, for non-state residents about $63,000 annually.

Facilitating free or low-cost higher education and home ownership in the US post-WW II with VA-backed low-interest loans helped created post-war prosperity.

In the 1940s and 50s, strong unions and well-paid factory jobs elevated millions of Americans to middle-class status, what’s fast eroding today.

The economy then grew annually at around 3.5%. By 1960, blue-collar workers were the biggest buyers of many luxury goods and services, including homes and autos.

Socialism works as intended when unobstructed by foreign interference. Under Hugo Chavez, Venezuela was Latin America’s fastest growing economy.

The country prospered until devastated by US economic terrorism, harming the nation and its people.

According to the Times’ resident neocon Bret Stephens, “NATO is full of freeloaders [sic],” falsely adding the alliance is “how we defend the free world. Europe without American protection is a continental disaster waiting to happen.”

Fact: US-dominated NATO threatens world peace and humanity’s survival. After Soviet Russia dissolved in December 1991, NATO became an alliance for aggression, not deterrence, its current US-controlled mission.

As long as NATO exists, endless US-led wars will continue, world peace and stability remaining unattainable—the ominous threat of nuclear war by accident or design possible.

The Need for a Greater Vision: Recognizing Reality

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By Jennifer Ladd

Source: Resilience

Question Beliefs

We live in a culture that is embedded in unquestioned beliefs passing as truth. These beliefs are the source of our current crisis. We attempt to solve the problems of degradation of our environment and climate disruption, but we do not look at these core beliefs. We hold on to the idea that capitalism is the only right way to organize an economy, that democracy is essential to our freedom, that freedom itself is a core ingredient to our happiness. We believe corporate slogans such as “Progress is our most important product” (General Electric), and subscribe to the belief that technology will solve whatever problems we have, even the ones caused by technology.

Grasp the Scope of the Crisis

Most of us are unable to back away far enough to grasp the whole picture. We are like a tourist with a flashlight trying to get a view of a huge mural that covers a block-long wall. The news media can only focus our attention on a tiny fraction of the image at any one time. We read daily reports of record temperatures in the arctic, of ice sheets melting in the Antarctic, of floods, forest fires all over the world, political gridlock, and recession fears. We are deluged with information. Most of us have been touched directly by at least one aspect of the crisis. Today I am breathing the smoke of fires in British Columbia and Alaska hundreds of miles away. These are direct experiences, yet there are still those who deny that climate change is real or that it is a problem. And worse yet we do not have the political will or mechanism to respond. Many scientists clam we are beyond the tipping point. They say the damage done to the ecosystem is so great that further decline is assured, even if we drastically reduce our impact in the next 5 years.

We are confronting a confluence of issues – environmental degradation, climate disruption, political tension and economic instability – that create an unprecedented risk to future generations. Climate disruption is getting all the headlines, but talk to a fisherman anywhere on the coast and he will point to depleted fish stocks making it impossible to earn a living fishing. Some of that is due to climate, but over-fishing, water pollution and destruction of spawning grounds also play major roles. Agricultural runoff is creating large dead zones at the mouths of rivers, areas that used to be some of the most productive.

Insect populations are plummeting with some reports of 75% loss in the last 50 years1.Insects are the base of the food chain for many creatures. If they die off then we will all go. The cause is not simple but insecticides on farm land and habitat destruction are major factors.

Fresh water is another resource in critical decline. We have been pumping water from aquifers at rates that far exceed the rate of recharge. Worldwide, 40% of our food grown on irrigated land.2 Without irrigation we will face severe food shortages. In addition, much of the remaining irrigated land is dependent on snowpack that feeds reservoirs in the mountains. As the climate warms there is less snow and it melts sooner, reducing the amount of stored water available.

If we listen to the economic news we cannot help but be aware of the rapid increase in the US national debt. Politicians seem incapable of holding the debt in check, especially the Trump administration that established policies and tax cuts that have dramatically increased the debt at a time when the economy is doing relatively well and we should be reducing the debt. Despite the ignorance of some lawmakers, debt cannot continue to rise indefinitely. Many countries have tried that. In the end it leads to hyper inflation, and in extreme cases, a collapse of the government.

A more subtle and less talked about issue is that of resource depletion. True, Malthus warned the world of this 200 years ago during a time when energy resources in the form of wood were being depleted.Then we discovered coal, then oil, and the industrial revolution sparked a new level of development and environmental destruction on a level Malthus could never have foreseen. The issue is that while technology has kept the price of raw materials from increasing dramatically, metals like copper, and energy sources like oil and gas are finite. The deeper we have to mine or drill and the more complex the extraction process, the smaller the final product derived from the energy expended to get the material. When oil was first discovered it took roughly one barrel of oil’s worth of energy to extract 100 barrels. Now that one barrel might get us 10 barrels. The costs are multiplied throughout the system. In other words if it now takes 3 times as much energy to mine a ton of copper as it did 50 years ago, because the high quality and easily extracted ore are gone, and that energy is derived from oil which itself requires 10 times more energy to extract, then the two factors multiply the real cost of the copper. In our example it now “costs” the equivalent of 30 times more oil to produce a ton of copper. Again, we run into limits.

I am proposing that the solution is a radical redesign of our civilization based on a more sustainable model. To do that we need to examine the core beliefs of our society to see which ones are compatible with a new vision and which ones need to be abandoned. This requires that we face our fear of change, grieve for the losses, clear our nervous systems of intergenerational trauma that blinds us to seeing the reality of our time and open our hearts to living in connection. This cannot come about by any rational decision by a governing body. Those in power have a vested interest in keeping the current system alive as long as possible. Call it a form of corruption, but it is also simply a matter of self preservation. We can, however, make changes on a personal and local level. We can have working models established on a small scale that can replace systems on a national level as they fail. We either cling to the existing paradigm as it implodes, or we can place our attention and focus our energy on creating new systems that support life in harmony on the planet.

Look Below the Symptoms

A partial list of these beliefs was mentioned already – that our prosperity depends on capitalism, democracy, and progress through technology. Let’s go deeper to see how these structures of society evolved, and how they affect us today. The core belief that underlies our current civilization is the idea that we are separate from nature and superior to other creatures and even other races of human beings. It leads to a distrust of nature which shows up even in the fables we tell our children, which are filled with images of the dark and dangerous forest and the merciless ocean depths.

Another belief is that security consists of having enough food or money stored away to last through hard times. In itself the belief is true, but it becomes dysfunctional in a world of finite resources when each person is focused on maximizing their own resources without consideration for the whole. To justify our actions we convince ourselves that there are no limits, we can have it all and, through technology, everyone can be raised up to the lifestyle we enjoy in the USA.

We are embedded in the psychology of capitalism, and we live in a world shrouded in fear. The combination is lethal. Fear leads to contraction and thinking only of one’s own survival. Capitalism promotes the value of gathering resources for our own use and enjoyment. When capitalism is combined with the Puritan work ethic, it allows us to justify income inequality because of the unspoken belief that if we have more than our neighbor it is because we worked harder or smarter and therefore deserve the rewards. We may feel no obligation to share our good fortune because those who are less well off obviously did not work hard enough. The result is a society that is fundamentally adversarial, pitting the wealthy against the poor, those in power against those who would like to be in control.

That leads to us versus them thinking that pervades our culture and shows up on all levels, particularly in public arenas like politics. The two party system has devolved into two conflicting ideologies that feel irreconcilable. Each party has become more isolated and rigid in their doctrine to the point that many people only listen to information that supports their point of view or their party’s view. Where is the middle ground that allows for a cooperative solution? Problems that require dramatic solutions like climate disruption cannot be effectively addressed.

Capitalism has been the driving force behind the industrial age. It has brought us technology that was unimaginable 200 years ago.  The problem is that it is fundamentally incompatible with a sustainable world. The core precepts – private ownership of goods and land, a competitive market for labor and materials, emphasis on capital accumulation – lead to a society that is made up of a few wealthy “owners” and a large number of “workers”. The system is dependent on keeping the wages paid to labor low enough that the owners can produce products that are competitive in the market place. When labor unions were strong there was a balance of power, but the advent of free trade and multinational corporations has robbed labor unions of their bargaining power because of the availability of cheap labor in the developing world. The result is an ever increasing disparity of wealth between the owners and the workers, and an ever increasing number of workers at the lowest level of the economy. Until the last 10 years, this has been partly disguised by an overall improvement in living standards through technology, but when one compares the hours worked in 1950 to support a family, when one person’s income was adequate, compared to the present when both adults of the family have to work, it’s clear that the average working family has to work harder simply to pay for the necessities of life. Free time to enjoy life has evaporated. We do not account for that in the statistics of progress like GDP.

To facilitate the transactions of a capitalistic economy we invented money and a banking system to manage the creation of money. In our system, money is created by the banks in an equal amount to the loans they make. In other words the creation of money is dependent on the creation of debt. Debt, however, once created, tends to grow faster than the money supply because of the effect of compounding interest. Debt will tend to accumulate with those members of society that are unable to pay it off, and capital will accumulate to those who have wealth already and are free from debt. At first it works well, but as debt accumulates to the workers, they have less money to buy the goods produced by the owners and the economy goes into recession. Debt is reduced through bankruptcies and foreclosures. Capital is reduced by the downsizing and failure of businesses. Eventually a new cycle begins. Historically, the cycle often becomes extreme and outcome is revolution as the tension between the wealthy and the poor becomes intolerable.

Capitalism is a natural outgrowth of our survival instinct in disconnected world. If we do not feel supported by our fellow humans, by the natural world, and by a greater presence, then there is a level of insecurity that we continually try to appease by building protective shells around us. In modern times this translates into ownership of land, house, and enough money and other resources to allow us to feel secure. Unfortunately in the rush to acquire these items we have sold our soul to the banks which in effect own our homes and often our cars. We end up feeling even less secure because we now have even more to lose if the economy turns down and we lose our job. We crave a sense of control over our lives, but we can no longer hunt for our food or harvest it directly from the earth so even to eat we are dependent on a complex web of corporate-run systems of transportation and production that we do not control or even understand.

Healing the Wound Of Separation

In order to live in harmony with each other and with the earth we need to heal the core wound of separation from a close community, separation from the earth and the natural world, and separation from the spiritual ground from which all of this manifested world arises. Without resolving all three levels of separation we will continue to live in fear and grief, maybe depression. It is that core sense of not enough that drives the Euro-American addiction to doing, to trying to get somewhere or get something that we think will cure that sense of not enough. We invent better technology, more powerful machines to get us there faster, but the result is that we find out ever sooner that the goal we had set is not going to satisfy the sense of lack. We may accumulate more wealth at the expense of the community around us and defend that wealth with all our strength, but it does not bring us the security we seek.

In order to heal, let us acknowledge the true state of our own life and of the world. Let us fully feel the grief of the separation and fully feel the rage that lies hidden. We may have a sense of being betrayed by the society that we were taught to trust as a child. We accepted the promise of perpetual progress and came to expect that we should have a better life than our parents.

On a global level, can we feel the pain and destruction this has caused to the earth? Can we acknowledge and feel the horrors of genocide against the native population of this country and other colonized places in the world? Can we feel the full impact of enslaving millions of African natives to work our fields? The grief is immense. We have kept it suppressed for centuries, but it must be felt. Let us clear the intergenerational trauma so we can come into our hearts and truly feel the connection with the earth and with each other.

Only then, free from clinging to a failing system, in the hope of preserving the status quo, can we reconnect with source and make the leap to a new way of living. We do not have to invent better ways of living on this planet. There are models of aboriginal societies that have lived here for more than 10,000 years without destroying their environment or collapsing from internal dysfunction. They have evolved sophisticated systems of government and economic systems that allowed the wealth that was accumulated to be redistributed to those in need. They held their land in common for the benefit of the whole tribe. We have much to learn from their societies.

1. In 2017, scientists reported a decline of more than 75 percent in insect biomass across 63 nature areas in Germany between 1989 and 2016. https://www.scientificamerican.com/article/as-insect-populations-decline-scientists-are-trying-to-understand-why/

2 .http://www.fao.org/nr/water/aquastat/infographics/Irrigated_eng.pdf

Now That We’ve Incentivized Sociopaths–Guess What Happens Next

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By Charles Hugh Smith

Source: Of Two Minds

As long as central banks create and distribute trillions in conscience-free credit to conscience-free financiers and corporations, the incentives for sociopathy only increase.

“Sociopath” is a word we now encounter regularly in the mainstream media, but what does it mean? Here is a list of 16 traits, many of which are visible in lionized corporate and political leaders and entrepreneurs.

One key trait is a lack of moral responsibility or conscience; the sociopath feels no remorse if he/she takes advantage of people or exploits them.

Sociopaths are masters of superficial charm, intelligence and confidence, and adept at massaging or misrepresenting reality up to and including outright lying to persuade others or get their way.

Like all psychological syndromes (manic depression, autism, bipolar disorder, etc.), there is a wide spectrum of sociopathological traits, some of which may offer some adaptive benefits (and hence their continued presence in the human genome). In other words, an individual can have a few of the traits in greater or lesser proportions.

Thus the modern BBC Sherlock Holmes (played by Benedict Cumberbatch) describes himself as a “high-functioning sociopath” (though many contest this diagnosis of the original Holmes in Arthur Conan Doyle’s stories).

Anyone who has read Walter Isaacson’s biography of Steve Jobs can readily see manifestations of sociopathy in Jobs: his famous “reality distortion field,” his refusal to accept that he’d fathered a daughter, his lack of empathy, his wild emotional swings (from verbal abuse to weeping), his dietary extremes, his charm, so quickly turned on or off, his uneven parenting, and so on. His obsessive-compulsive behavior was also on full display. Yet Jobs is lauded and even worshiped as a genius and unparalleled entrepreneur. Was this the result of his sociopathological traits, or something that arose despite them?

The ledger of costs and benefits of Jobs’ output is weighted by the global benefits of the products he shepherded to market and the hundreds of billions of dollars in sales and net worth he generated for investors while the head of Apple. Though narcissistic in many ways (with the resulting negative effects on many of his intimates), Jobs was clearly focused on creating “insanely great” products that would benefit customers and users. Despite his sociopathological traits, there is no evidence he set out to deceive anyone with the objective of exploiting their good will or belief in his vision to skim billions of dollars from unwary investors.

But the ledgers of others manifesting sociopathy are far less beneficial, as the billions of dollars they generated were in essence a form of fraud.

The rise and fall of WeWork is a recent textbook example of sociopathy reaping enormous financial gains for the sociopaths without creating any actual value. There are plenty of media accounts of the founders’ excesses (including the goal of becoming the world’s first trillionaire), some of which we might have expected to raise flags in venture capitalists, board members, etc., but these traits were overlooked in the rush for all involved to garner billions of dollars in fees and net worth when WeWork went public.

This example (among many) illustrates that sociopathy is incentivized in our socio-political-economic system, and sociopathic “winners” are lionized as epitomes of ambitious success. (The entire charade of the stock market rising due to Federal Reserve-enabled stock buybacks is an institutionalized example of sociopathy.)

Correspondent Tom D. recently summarized the core dynamic and consequence of this systemic incentivization of sociopathy:

I’ve been a successful business owner, but I’m not a sociopath–I deliver value to my customers, my investors, and I don’t move forward if I see anyone being substantially hurt by my actions.

My peers and I look at organizations such as WeWorks, see the rewards reaped by the sociopathic leaders, and realize we are at a constitutional disadvantage working within such a system.

I could never conceive of taking a $700-900m payday at the expense of investors for whom I’ve generated no value whatsoever.

I simply could not do it.

If ‘out-sociopathing’ the sociopaths is what it takes to ‘succeed’ in todays business climate– I’ll fail.

So I don’t try.

From the sociopath’s standpoint, that’s probably a feature not a bug–one that helps keep effective competition out of the marketplace.

I wonder how much of civilizational decline is simply due to good people accepting their lot and opting out.

If the system incentivizes conscience-free sociopaths more than it incentivizes those creating real value, the system will eventually fall into the equivalent of Gresham’s law (“bad money drives out good money”): the con-men and fraudsters will drive out entrepreneurs with a conscience who create real value for customers, investors and society at large.

If we look at recent IPOs and compare them to the Apple IPO, it seems we’ve already reached that point. Apple went public as a highly profitable company. Uber, Lyft, Beyond Meat and WeWork (if their IPO fraud hadn’t been revealed) are all unprofitable, in some cases losing billions of dollars with little prospect for eventual profits.

Venture capital folks explain this by noting that the flood of central bank credit-money-creation has generated trillions of dollars of liquid capital seeking “the next big thing” that will “disrupt” existing models and therefore generate billions in profits.

This pinpoints one key source of the incentivization of sociopaths: central banks’ creation of trillions of dollars of conscience-free capital seeking a quick profit anywhere on the planet, by any means available.

Conscience-free capital is an easy mark for a conscience-free sociopath. It’s a marriage made in heaven, a perfect match.

Those with a conscience are essentially squeezed out of the system. The choice is binary: either play and lose or opt out.

I’ve written about “opting out” since 2009, since it was one of the few options available to commoners in the final decline of the Western Roman Empire. If we feel we’re at a systemic disadvantage, i.e. the system is rigged against us, opting out makes much more sense than sacrificing oneself in a fruitless battle to stay alive in a system that incentivizes amoral sociopaths.

If we consider what generates outsized success in our rapidly changing economy, we find a variety of factors supporting “winner take most” asymmetric gains. As economist Michael Spence has observed, those who develop new business models earn outsized gains because new forms of capital and labor that are scarce create the most value.

Many of these new business models disintermediate existing models, obsoleting entire layers of middlemen and management.

Netflix is a good example: the move from mailing CDs to streaming content obsoleted cable companies. Now Disney is disrupting Netflix by launching its own streaming service at $6.99 a month, offering content that cable subscribers had to pay $60+ a month to access via a “premium” cable add-on, most of which they didn’t even use.

In contrast, WeWork sold itself as a “tech innovator” when in fact it was simply a commercial real estate packager, leasing large spaces and chopping them up into small spaces with common areas and a few services.

How does our system incentivize sociopathy? By focusing exclusively on short-term gains reaped from IPOs (initial public offerings) and by blindly seeking “the next disruptor that will generate billions,” the system is easy prey for charming sociopaths who can tell a good (if not quite truthful) story.

The amoral sociopath with the story attracts amoral sociopaths in venture capital, banking and politics, as these fields are all focused on short-term, outsized, quickly skimmed gains, regardless of the consequences to investors or society at large.

What would change this incentivization of sociopathy? Ending the Federal Reserve’s delivery of trillions of dollars in conscience-free capital to sociopaths and limiting the VC-IPO flim-flam machine would be a start, but given Wall Street’s dependence on these profits and the millions the Street gives to political campaigns, this is politically unfeasible. Any such regulation that reaches Congress will be watered down or larded with loopholes.

There may be no way to excise the incentives for sociopathy, because the incentives all favor the sociopaths’ most fertile ground: the Federal Reserve’s money spigot of nearly free money for the most sociopathological financiers and corporations; amoral, conscience-free greed; the worship of short-term gains, regardless of consequences, and the extreme profitability of rigged games and The Big Con PR (“we’re only evil when it’s profitable, which is, well, all the time”.)

As long as central banks create and distribute trillions in conscience-free credit to conscience-free financiers and corporations, the incentives for sociopathy only increase, and the incentives for everyone else to opt out increase proportionately.

What happens next? The dead wood of sociopathy is ignited by a random lightning strike, and the entire financial system (and the economy it feeds) burns to the ground in an uncontrollable conflagration of blowback, consequence and karma.