Category Archives: Financial Crisis

Are Profit and Healthcare Incompatible?

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By Charles Hugh Smith

Source: Of Two Minds

The only way to systemically lower costs is to make prevention and transparency the top priorities.

As I have been noting for a decade, the broken U.S. healthcare system will bankrupt the nation all by itself. We all know the basic facts: the system delivers uneven results in terms of improving health and life expectancy while costing two or three times more per person compared to our advanced-economy global competitors.

U.S. Lifestyle + “Healthcare” = Bankruptcy (June 19, 2008)

Sickcare Will Bankrupt the Nation–And Soon (March 21, 2011)

How Healthcare Is Dooming the U.S. Economy (Three Charts) (May 2015)

You Want to Fix the Economy? Then First Fix Healthcare (September 29, 2016)

This chart says it all: the global outlier in low life expectancy and exorbitant cost is the U.S.

The profit motive is supposed to lower costs, not increase them. In the idealized model of a completely free market, the profit motive is supposed to lower costs as customers are free to choose the best product/service for the lowest price.

In U.S. healthcare, the profits are stupendous, yet the costs are even more stupendous. Rather than lower costs, the U.S. system of for-profit healthcare has sent costs spiraling into the stratosphere, to the point that the system’s costs are threatening to bankrupt the government and the nation.

Why is this so? Karl Marx provided the answer in the 19th century. In the idealized model of free-market capitalism, those who provide superior services for the lowest price reap more profit than their less agile/productive competitors.

But as Marx observed, in real-world capitalism, open competition drives profits to zero. Every attempt to gain a competitive advantage in price increases supply and further commoditizes the product/service. This dynamic pushes prices down to the point that nobody can make a profit until competitors are driven out of business and a cartel or monopoly secures the market and controls supply, price and profit.

The most profitable structures in real-world capitalism are monopolies or cartels– which is precisely what characterizes U.S. healthcare. The only way to maximize profits is to ruthlessly eliminate competition in the marketplace–which is exactly how the U.S. healthcare system operates: the pharmaceutical industry is a cartel, hospital chains are a cartel, insurance companies are a cartel, and so on.

In the real world of state-cartel-capitalism, competition is eliminated so cartels can maximize profits.

Do-gooders are always claiming that the system could be fixed by re-introducing competition– this was the core idea behind Obamacare’s insurance exchanges–but the do-gooders are blind to the core dynamic of state-cartel-capitalism, which is cartels own the machinery of governance via lobbying and campaign contributions. The state creates and protects the cartels, period.

In state-cartel-capitalism, there is no way to maintain real competition, as the cartels instruct the state to protect their monopolies/cartels. State reformers can try all sorts of complex reform schemes (ObamaCare) but they fail to lower costs because they all leave the cartel structure and cartel ownership of governance intact.

In the good old days of the 1950s and 1960s, U.S. healthcare was more localized, and the central state (federal government) wasn’t the Sugar Daddy for the cartels. Hospitals were community hospitals (what a quaint idea in today’s hyper-cartelized system) managed by physicians and administrators who saw their role as serving the community rather than arranging for $20 million annual salaries and millions of dollars in stock options.

This is why the cartels love Medicare For All proposals: the federal government–protector and funder of the cartels–will give the cartels a blank check not just for the 120 million people currently drawing benefits from Medicare/Medicaid but for all 325 million Americans.

Fast facts on Medicare and Medicaid (Center for Medicare and Medicaid Services)

Medicare Beneficiaries: 57.7 million
Medicaid Beneficiaries: 72.3 million
estimated dual Beneficiaries (drawing benefits from both programs): 10 million

Total Beneficiaries: 120 million

Medicare/Medicaid budget, 2015: $1.2 trillion

Total U.S. healthcare costs: $3.2 trillion, 18% of GDP

Department of Defense budget, 2015: $575 billion
source

Are profit and healthcare incompatible? In the real world of state-cartel-capitalism, the answer is yes: a profit-maximizing system fails to deliver prevention while pushing costs higher, eventually bankrupting the Sugar Daddy government and the nation.

Prevention, like a bag of carrots, is intrinsically low-profit. Illness, especially chronic illness, is highly profitable because the profits flow continuously from treatments, medications, procedures, tests, visits, hospitalization, home care, a constant churn of billing, etc.

The only way to systemically lower costs is to make prevention and transparency the top priorities. Prevention, community ownership of healthcare services, transparency and unfettered competition kill profits, period. Yet these are the only way to lower costs to be in line with our competitors.

You can reconfigure the system any way you want, but you have to eliminate cartels, cartel ownership of governance, opaque pricing, government blank checks and incentives for profiteering from chronic illness. If you don’t eliminate all these, you’ve fixed nothing.

 

Human Anxiety in Late-Stage Capitalism

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By Phil Rockstroh

Source: Consortium News

A number of recent press articles, including an over 8,000-word feature piece in The New York Times have asked, to quote the Times’ headline, “Why Are More American Teenagers Than Ever Suffering From Severe Anxiety?”

Although the question was proffered, the reporters and editors responsible for the articles remain resolutely obtuse to the obvious: The bughouse crazy environment of late-stage capitalist culture evokes classic fight-or-flight responses attendant to episodes of severe anxiety and panic attacks.

The word panic has its derivation in reference to Pan, the Greek god of wilderness and wildness, of the animal body encoded within human beings and its attendant animalistic imperatives. To wit, deracinate an animal from its natural habitat and it will evince, on an instinctual basis, a fight-or-flight response.

If caged, the unfortunate creature will pace the confines of its imprisonment, chew and tear at its fur and flesh, become irritable, enervated, languish and even die from the deprivation of the environment it was born to inhabit. A caged animal, even if the unfortunate creature endures captivity, is not the entity nature conceived; the living being has been reduced to A Thing That Waits For Lunch.

Human beings, animals that we are, respond in a similar fashion. Experiencing anxiety is among the ways our innate animal spirits react to the capitalist cage. Inundate a teenager with the soul-defying criteria of the corporate/consumer state, with its overbearing, pre-careerist pressures, its paucity of communal eros, its demands, overt and implicit, to conform to a shallow, manic, nebulously defined yet oppressive societal order, and insist that those who cannot adapt, much less excel, are “losers” who are fated to become “basement dwellers” in their parents’ homes or, for those who lack the privilege, be cast into homelessness, then the minds of the young or old alike are apt to be inundated with feelings of angst and dread.

Worse, if teenagers are culturally conditioned to believe said feelings and responses are exclusively experienced by weaklings, parasites, and losers then their suffering might fester to the point of emotional paralysis and suicidal inclinations.

No Real Remedies

What does the capitalist state offer as remedy? Obscenely profitable, corporately manufactured and widely prescribed psychoactive medications. Treatment, which, at best, merely masks symptoms and bestows the illusion of recovery.

As R. D. Laing observed: “What we call ‘normal’ is a product of repression, denial, splitting, projection, introjection and other forms of destructive action on experience. It is radically estranged from the structure of being.”

In short, it is insanity to be expected to adapt to socially acceptable insanity. Yet we are pressured to adapt to, thus internalize odious, groupthink concepts and tenets. To cite one such groupthink example: homelessness is natural to the human condition and is a communally acceptable situation.

Closer to fact: The problem of homelessness is the result of a societal-wide perception problem — the phenomenon is the very emblem of the scrambling, twisting, dissociating, and displacing of perception that capitalist propagandists specialize in. Homelessness would be considered a relic of a barbaric past if this very simple principle was applied: Having access to permanent shelter is a human right and not a privilege.

What kind of a vile, vicious people would deny that simple proposition? Those conditioned by a lingering Puritan/Calvinist mindset to believe: Punishment for resisting the usurpation of the fleeting hours of one’s finite life must be severe. If the over-class can no longer get away with, as was once common practice in the Puritan/Calvinist tradition, public floggings to whip the labor force into line, then those who will not or cannot comply will be cast onto the cold, unforgiving concrete of a soulless cityscape.

It comes down to this, societies that are ridden with vast wealth inequity, due to the machinations of a rapacious over-class, create the obscenity known as homelessness. Moreover, the situation is only one of the numerous obscenities inherent to state capitalism. Obscenities that include, events that are dominating the present news cycle, e.g., the predations of a lecherous movie mogul, to the sub-cretinous doings and pronouncements of a Chief of State who is a bloated, bloviating, two-legged toxic waste dump.

Trump, No Aberration 

How is it then, liberals fail to grasp the fact that the Trump presidency is not an aberration; rather, his ascension to power should be regarded as being among the high probability variables of late-stage capitalism and empire building? The psychopathic, tangerine-tinged clown Trump is the embodiment of the Second Law of Thermodynamics, a development that is concomitant to over-expanded empires. Thus he will continue to flounce deeper into the quagmire of crash-engendering, economic legerdemain and perpetual war.

Empires are death cults, and death cults, on a subliminal basis, long for their own demise. Paradoxically, the collective mindset of imperium, even as it thrusts across the expanse of the world, renders itself insular, cut off from culturally enhancing novelty, as all the while, the homeland descends into a psychical swamp of churning madness.

A draining of the swamp of the collective mind cannot come to pass, for the swamp and citizenry are one. Withal, the likes of leaders such as Trump rise from and are made manifest by the morass of the culture itself. In a swamp, the gospel of rebirth and redemption is heard in the song of humus. New life rises from its compost.

In the presence of Trump’s debased mind and tombified carcass, one is privy to arias of rot. While Hillary Clinton’s monotonous tempo was the dirge of a taxidermist — cold, desiccated of heart, and devoid of life’s numinous spark — Trump’s voice carries the depraved cacophony of a Célinean fool’s parade … its trajectory trudging towards the end of empire.

As liberals new BFFL (Best Friend for Life) George W. Bush might ask, “Is our liberals learning.”

In a word, no. For example, the collective psyche of U.S. culture as been enflamed by the revelations that actresses were coerced into sexual encounters with a movie mogul whose power in the industry was only matched, even enhanced, by his sadistic nature. The staff of his company assisted, was complicit in, or remained silent about his lechery, as did the whole of the movie industry and the entertainment press. All as NFL athletes are being threatened with expulsion from the League if they kneel during the national anthem.

The Great Unspoken 

Yet the great unspoken remains: The enabling of and submission to the degradation, exploitation and tyranny, and the lack of resistance thereof share a common and singular factor: The careerism of all concerned. The cultural milieu concomitant to capitalism is at the rotten root and noxious blossoming of the situation.

Jean-Luc Godard’s 1967 cinematic barnburner “Two or Three Things I Know About Her” should be required viewing for those unaware or in denial of the acuity of the film’s theme i.e., becoming enmeshed within the psychical landscape of dominance, degradation, and submission inherent to and inseparable from capitalist/consumer culture will cause one to become party to societal sanctioned prostitution. When life is negotiated within a collective value system that devalues and deadens the individual’s inner life thus warps every human transaction, anomie descends, the worst among a people ascend to positions of power.

“Panic is the sudden realization that everything around you is alive.” — William S. Burroughs, from Ghost of Chance

When friends visited me in New York, where I lived for decades, I would take them on walking tours through the city. We would cross the Westside Highway and stroll the pedestrian walk along the Hudson River, or cross the East River by walking across the Brooklyn Bridge.

The effect of these excursions on people was often profound … the combined elements of the elemental beauty of the rivers and vastness of the city’s architecture and scope, clamor, and the dense interweaving of traditional ethnic customs and ad hoc social codes of New Yorkers often would heighten the visitors’ senses and open them to larger, more intricate awareness of themselves and extant reality … the freeways of the contemporary mind (conditioned to be constantly engaged in manic motion, with one’s mind either frenzied by an obsession with performing (ultimately futile) maneuvers directed to saving time — or stalled at a frustration inducing standstill) were replaced by the exigencies of life at street level, i.e., novel situations that had to be apprehended and negotiated.

The possibilities of life seemed greater. The crimped eros of insular suburban thought became loosened before the city’s intricacies and expansiveness. Although: Not all, or even a scant few, New Yorkers can maintain the state of being. Few of us can live by Rilke’s resolve to “make every moment holy.” Life, in the city, becomes grotesquely distorted … High rents, inflicted by hyper-gentrification, in combination with the deification of success and its cult of careerism overwhelm one’s psyche … There is so far to fall.

Angst (the word originally can be traced to the ancient Greek deity Ananke, the immovable by prayer and offering bitch Goddess of Necessity and the root word of anxiety) clamps down one’s sense of awareness. Ananke dominates the lives of the non-privileged citizenry while Narcissus, Trump’s, the Clintons’, et.al. and their financial and cultural elitists’ patron God rules the day. The pantheon of possibility has been decimated, a cultural cleansing has been perpetrated, by the egoist caprice of the beneficiaries of the late capitalist dictatorship of money.

Hence, we arrive at the primal wisdom tacitly conveyed by anxiety-borne states of fight or flight. Due to the reality that capitalism, on both an individual and collective basis, drives individuals into madness, all as the system destroys forest and field, ocean and sea and the soul-scape of all who live under its rapacious dominion, our plight comes down to this: We either struggle and strive, by and any and all means, to end the system — or it will end us.

Saturday Matinee: 97% Owned

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From TopDocumentaryFilms.com

97% owned present serious research and verifiable evidence on our economic and financial system. This is the first documentary to tackle this issue from a UK-perspective and explains the inner workings of Central Banks and the Money creation process.

When money drives almost all activity on the planet, it’s essential that we understand it. Yet simple questions often get overlooked, questions like; where does money come from? Who creates it? Who decides how it gets used? And what does this mean for the millions of ordinary people who suffer when the monetary, and financial system, breaks down?

Political philosopher John Gray, commented, “We’re not moving to a world in which crises will never happen or will happen less and less. We are in a world in which they happen several times during a given human lifetime and I think that will continue to be the case.”

If you have decided that crisis as a result of the monetary system is not an event you want to keep revisiting in your life-time then this documentary will equip you with the knowledge you need, what you do with it is up to you.

Zucktown, USA

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Facebook, Amazon, and Google are reviving the ill-fated “company towns” of the Gilded Age

By Julianne Tveten

Source: The Baffler

EARLIER THIS YEAR IN SILICON VALLEY, a phalanx of six-figure-earning Facebook engineers confronted Mark Zuckerberg about subsidizing their extortionate rents. Meanwhile, the contract laborers who serve them bacon kimchi dogs and duck confit found themselves cordoned off from the affordable housing market—where salaries approaching $74,000 qualify—and began converting their garages into homes. Still, if these events point to a dire situation, they’re but the latest stirrings of the hulking leviathan that is the region’s housing crisis—an issue that has peppered the headlines of news outlets great and small for nearly a decade.

Thanks in part to this accretion of bad press, Zuckerberg and his fellow cyborgian billionaires have sprung into action as property developers. In July, Facebook announced plans to create “Willow Campus,” an aggressively rectilinear, Rem Koolhaas-designed rebrand of a Menlo Park office complex it purchased in 2015. The expansion of its headquarters will boast fifteen hundred units of housing, 15 percent of which it claims will be “offered at below-market rates.” If that isn’t sufficiently microcosmic, the company promises to dedicate 125,000 square feet to commercial space, promising a grocery store, pharmacy, and the cryptically worded “additional community-facing retail.”

Equally if not more responsible for crafting California’s bloodsucking geometric crapscape is Google, whose newfangled parent company Alphabet has vowed to provide temporary housing, in the form of modular dwellings, for three hundred of its employees in its home city of Mountain View. For years, Google has been seeking to wrest control of the city from its government; last year, it gained over 370,000 square feet of office space along with the right to develop 1.4 million square feet in the North Bayshore neighborhood after vying with LinkedIn to furnish the territory with a new police station, road improvements, and college scholarships. (The modular homes will be constructed on a former NASA air base, which the company signed an agreement to lease for sixty years.)

We’re witnessing, in these schemes, a revival of the company town. An oft-recurring feature of the Western capitalist imaginary, the company town’s American variety dates back to the nineteenth century; railroad industrialist George Pullman’s eponymous city in Illinois provides one of the more illustrative examples. Pullman characterized his town, completed in 1884, as a lucrative, pro-business utopia filled with satisfied participants, employee and investor alike. Its veneer was indeed shiny: the amenities it promised—yards, indoor plumbing, gas, trash removal—were rare for industrial workers of the time, and its ultra-formal gardens and shopping center, which equipped them with a barbershop, dentist’s offices, a bank, and a slew of overpriced retail, offered a vanguard capitalist’s dabbling in luxury.

There was a catch: paternalistic and omnipresent capitalism. Immaculately manicured trees were merely curtains obscuring a panopticon, one that kept workers behaviorally economized. (White workers, that is—the town expressly excluded black people.) “[Pullman] wanted to create a company town where everybody would be . . . content with their place in the capitalist system,” Jane Eva Baxter explained to Paleofuture. Workers were forced to rent—with no option to buy—the uniform row houses that corralled them, and from which they worried over persistent inspection and imminent eviction. Their employers likewise controlled which books filled their libraries and which performances took place in their theaters, and a ban precluded them from congregating at saloons or holding town meetings unless sanctioned by the Pullman Company, lest they entertain the notion of unionizing.

The forced exchange not just of labor, but of personal autonomy, for the tenuous ability to buy bread or light one’s stove is, in a word, inhumane, and in three, cause for revolt. Pullman workers had organized several strikes throughout the 1880s, but none were so monumental as the one in 1894. In response to the prior year’s economic depression, Pullman opted to slash workers’ wages; rents, however, remained steadfastly fixed, enriching the company’s reported worth of $62 million while leaving workers with as little as two cents (after paying for housing costs). In partnership with the American Railway Union, four thousand Pullman workers, galvanized and desperate, withheld their labor, and legions of workers throughout the nation would soon join them. Yet the strike collapsed when the Cleveland administration, in a violent display of authoritarianism, deployed federal troops and imprisoned labor leaders. Not long after, by Illinois Supreme Court order, the town was forced to sell everything not used expressly for “industry.”

Still, Pullman’s fiasco didn’t discourage other magnates. In 1900, chocolatier Milton Hershey began construction on a factory complex near a collection of dairy farms in rural Pennsylvania, where he declared there’d be “no poverty, no nuisances, no evil”—a Delphic precursor to Google’s now infamous and defunct slogan, “Don’t be evil.” To attract workers, Hershey reclaimed many of Pullman’s gilded comforts: indoor plumbing, pristine lawns, central heating, garbage pickup, and eventually, the theaters and sports venues any company town worth its salt would host.

What was designed as a wholesome advertisement for the company quickly morphed into a miserly surveillance state. Hershey, who served as the town’s mayor, constable, and fire chief, patrolled neighborhoods to survey the maintenance of houses and hired private detectives to monitor employees’ after-hours alcohol consumption. While the town managed to stage a sort of idyllic capitalist performance for onlookers, by the 1930s its employees resented their binding environs and the Depression-era layoffs they endured from a company earning ten times its annual payroll in after-tax profits. A crippled attempt to unionize with the Congress of Industrial Organizations (CIO) bred a 1937 sit-down strike; days later, farmers and company cheerleaders armed with rocks and pitchforks bloodied and ejected the dissidents, destabilizing for good another corporate-civic lark. Hershey’s vast estate, however, remains unscathed to this day.

If Facebook and Google have begun to revive the company town, Amazon has already given it a futuristic luster. California’s inchoate company towns pale in comparison to their northern counterpart, which occupies 19 percent of Seattle’s office space and a farcical 8.1 million square feet. (Its CEO and founder, Jeff Bezos, has vowed to acquire four million more over the next five years, a muscular move meant to complement his midlife-crisis physique.) Touting its sponsorship of local engineering and sustainability programs, Amazon crows about such “investments” as its dog park, playing fields, art installations, and Buckyball-reminiscent domical gardens. Of course, with Bezos’s colonizing aspirations comes yet another bellicose rental market—the very conditions Facebook and Google claim to be combatting. When considered alongside its recent purchase of Whole Foods, Amazon’s dream of tethering its employees to their jobs—by way of homogenized cubes for rent and lightly discounted quinoa chips—is fast becoming a reality.

Like George Pullman and Milton Hershey, the tech industry’s elites take all prisoners in their respective campaigns to expand, absorb, and dominate. The tech company town, that most contemporary of neofeudalist wangles, is the next step in West Coast corporate behemoths’ quest to lure employees into a twenty-four-hour working existence—the totalizing successor to bottomless Indian food spreads, on-site bike-repair shops, and Frank Gehrized habitats. Its premise deviates not at all from that of its antecedents: a genial, painstakingly aestheticized service to workers, where beneficent corporate hands take the reins of the public good  for the well-being of the community. This time around, though, that community will be bridled with union–busting and data-harvesting apparatuses sure to make even the most paranoid techno-tyrant salivate.

Certainly, the megalomaniacs who aim to populate municipal fixtures with registered-trademark logos will expect cities to genuflect at every turn. Bezos has exemplified this in Seattle, whose recent measure to “tax the rich” drove him to seek another location in which to build Amazon’s second headquarters. While residents of its hometown grapple with a commandeering leech that “suck[s] up our resources and refus[es] to participate in daily upkeep,” Amazon will soon attempt to prime another city to be sapped. Meanwhile, the smooth-faced metallic vampires of California have just begun to cosplay as frontiersmen, raring to follow Bezos’s lead. Drunk on glib TED Talk propagandizing, and accustomed to dismissing the civic inconveniences of corporate regulations and poor neighborhoods, our technosettlers feel little need to heed the lessons of the past when their chief interest is to monopolize the future. Taxing the techie billionaires is a start, but only when cities refuse to be their hosts will they cease to be their parasites.

 

Julianne Tveten writes about the technology industry’s relationship with socioeconomics and culture. Her work has appeared in Current Affairs, Hazlitt, In These Times, The Outline, and elsewhere.

This Chart Defines the 21st Century Economy

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By Charles Hugh Smith

Source: Of Two Minds

There is nothing inevitable about such vast, fast-rising income-wealth inequality; it is the only possible output of our financial and pay-to-play political system.

One chart defines the 21st century economy and thus its socio-political system: the chart of soaring wealth/income inequality. This chart doesn’t show a modest widening in the gap between the super-wealthy (top 1/10th of 1%) and everyone else: there is a veritable Grand Canyon between the super-wealthy and everyone else, a gap that is recent in origin.

Notice that the majority of all income growth now accrues to the the very apex of the wealth-power pyramid. This is not mere chance, it is the only possible output of our financial system. This is stunning indictment of our socio-political system, for this sort of fast-increasing concentration of income, wealth and power in the hands of the very few at the top can only occur in a financial-political system which is optimized to concentrate income, wealth and power at the top of the apex.

Well-meaning conventional economists have identified a number of structural causes of rising wealth/income inequality, dynamics that I’ve often discussed here over the past decade:

1. Global wage arbitrage resulting from the commodification of labor, a.k.a. globalization

2. A winner-takes-most power law distribution of the gains reaped from new technologies and markets

3. A widening mismatch between the skills of the workforce and the needs of a rapidly changing economy

4. The concentration of capital gains in assets such as high-end real estate, stocks and bonds that are owned almost exclusively by the top 10% of households

5. The long-term stagnation productivity

6. The secular decline in the percentage of the economy that flows to wages and salaries

While each of these is real, the elephant in the room few are willing to mention much less discuss is financialization, the siphoning off of most of the economy’s gains by those few with the power to borrow and leverage vast sums of capital to buy income streams–a dynamic that greatly enriches the rentier class which has unique access to central bank and private-sector bank credit and leverage.

Apologists seek to explain away this soaring concentration of wealth as the inevitable result of some secular trend that we’re powerless to rein in, as if the process that drives this concentration of wealth and power wasn’t political and financial.

There is nothing inevitable about such vast, fast-rising income-wealth inequality; it is the only possible output of our financial and pay-to-play political system.

Policy tweaks such as tax reform are mere public relations ploys. The cancer eating away at our economy and society arises from the Federal Reserve and the structure of our financial system, and the the degradation of our representative democracy into a pay-to-play auction to the highest bidder.

Demise Of The Petrodollar Has The Potential To Reshape The Geopolitical World

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By James ONeill

Source: New Eastern Outlook

In the early 1970s President Richard Nixon instigated two changes that had profound effects. The first of these was taking United States off the gold standard; i.e. henceforth US dollars would no longer be convertible to Gold. Ordinarily this might have been expected to have significant ramifications for the value of the US dollar.

Deleterious effects however, were avoided by another equally profound change. Nixon’s National Security Adviser Henry Kissinger negotiated an agreement with Saudi Arabia that henceforth all oil(initially from Saudi Arabia but rapidly extended to all OPEC) countries would be traded only in US dollars, the birth of the so called petrodollar.

It was a classic mafia style arrangement. In exchange for Saudi Arabia’s agreement to the sole use of the dollar for oil transactions, the US underwrote Saudi Arabia’s security thereby ensuring the continuity of one of the world’s most corrupt and repressive regimes.

Also unknown at the time, the US and Saudi Arabia entered an arrangement whereby Islamist terrorist groups (as long as they were Sunni) would be financed by Saudi Arabia and armed by the Americans and then used in pursuit of US geopolitical goals. Operation Cyclone, begun under the Carter administration in the 1970s was an early forerunner of this tactic, but it has been refined and utilized in different formats in a wide number of countries ever since.

The objective was always fundamentally the same: to undermine and if necessary replace governments that were insufficiently compliant with US geopolitical aims. As and when necessary, US troops and their “coalition” allies would be inserted into the target countries. The destruction of Afghanistan (2001 and continuing) Iraq (2003 and continuing) Libya (2011 and continuing) are only three of the better-known examples.

The huge financial cost of these military and geopolitical ventures did not impose a proper price upon the US because of the hegemonic role of the US dollar. The US, in effect, had their multiple wars of choice paid for by other countries as the dollar’s role in world trade created a constant demand for US Treasury bonds.

The role of the US dollar also permitted the US to impose sanctions on recalcitrant countries. The selective nature of the sanctions, always directed toward a US geopolitical or commercial advantage, were clearly an instrument of repressive power. Notwithstanding claims that they were to “punish” the alleged misconduct of the specified country, their actually use betrayed their geopolitical purpose.

Sanctions against Russia for its” invasion” of Ukraine “annexation” of Crimea, and against Iran for its “nuclear program” are two of the better known illustrations of sanctions being justified on spurious grounds..

The use and abuse of the dollar’s power is clearly unacceptable, but the capacity to invoke countermeasures was until quite recently severely limited. The single most important countervailing force is the rise of China as the economic powerhouse of the world, and importantly, the creation of alternative structures in trade, finance and security, that translate China’s economic power into a force for major change.

That change is assisted by the number of collateral developments. In 1990, the G7 nations (Canada, France, Germany, Italy, Japan, the US and UK) had a combined GDP approximately six times greater then the seven economically most important emerging nations (Brazil, China, India, Indonesia, Mexico, Russia and South Korea).

By 2013 the “emerging seven” had surpassed the G7’s GDP total and according to the IMF’s estimates for 2017, the GDP of the two groups will be $47 .5 trillion and $37.8 trillion for the emerging seven and the G7 respectively. Turkey, which is growing at 5% per annum, has replaced Mexico in the top emerging seven.

BRICS, which contains four of the emerging seven nations and the Shanghai Corporation Organisation (SCO), which includes China, India and Russia, are working together on the architecture of a monetary alternative to the dollar. The SCO alone contains 42% of the world’s population.

India’s role in BRICS and the SCO is one reason it is being assiduously cultivated by Australia, Japan and the United States in an attempt to set up a “quadrilateral four” to slow and undermine the role of China and Russia in creating an alternative to longstanding western domination and exploitation.

It was in this context that Russia’s President Putin at the recent BRICS meeting in Xiamen, China said that

“Russia shares the BRICS countries concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies.”

This speech developed a theme that Putin had developed in an article published prior to the BRICS meeting. Putin bluntly vowed to destroy the US led financial system, aiming to reform a system that gives excessive domination to a limited number of reserve (i.e. predominantly western) currencies.

China has developed a new Cross Border Interbank Payments System (CIPS) to replace the US dominated SWIFT system, itself used as a tool for financial bullying by the US. Russia has also taken steps to insulate itself from the ill effects of being excluded from SWIFT.

Other major changes are also occurring. Venezuela, with the world’s largest known oil reserves, has ceased accepting payment in US dollars. In the past US retaliation through regime change would have been immediate as happened to Libya’s Gaddafi (confirmed by Clinton’s leaked emails) and the Iraq’s Saddam Hussein who had announced that he would henceforth accept payment in euros and not dollars.

China and Qatar recently concluded a $50 billion deal denominated in Yuan. There were immediate threats and absurd demands from Saudi Arabia, undoubtedly acting as the voice of the US administration, but nothing more serious. The lack of military intervention or attempted regime change was probably attributable to Turkey’s military intervention, a series of agreements with Iran, and the probable implied threat of Chinese intervention should the Saudis further demonstrate their military incompetence (as in Yemen) by anything as rash as direct military moves against Qatar.

Saudi Arabia is rapidly reaching a crunch point in its relationship with China, a huge purchaser of Saudi Arabia’s oil. It is widely known that China wants future oil contracts denominated in Yuan. The attraction for Saudi Arabia is that the Chinese guarantee their Yuan with gold traded on the Hong Kong and Shanghai exchanges. Ironically, this puts China in the same position as the United States prior to Nixon’s withdrawal from the gold backed dollar.

The dilemma for the Saudis is that if they comply with the Chinese demands they risk losing the Americans underwriting their security. US instigated regime change in Saudi Arabia is a very real possibility and the recent maneuverings by Mohammad bin Salman to consolidate his power can be interpreted as a response to that possibility.

Typically, the western media focused on relative trivialities, such as women being able to drive motor vehicles from 2018 (in limited circumstances), rather than examining the underlying geopolitical power struggle.

The other major development worth mentioning in this context is the rapid increase in the number of countries doing deals with China using the Yuan or their own national currencies as the medium of exchange. China’s Belt and Road Initiative, currently involving 65 nations, will undoubtedly accelerate this trend. Russia and China are already each other’s critically important trading partners and all agreements between them are being denominated in either Yuan or Rubles.

It would be naïve to assume that this is all going to occur without a massive rearguard action by the Americans who know full well that their ability to defy economic logic is only possible because of the dollar’s unique role, allowing in turn military interventions to prop up their now rapidly declining power.

The United States’ aggressive and provocative actions in the South China Sea, North Korea, Ukraine, Syria and elsewhere our best interpreted as the flailing’s of a declining empire. The real question is will the United States accept the disappearance of the unique power that it has wielded since the Bretton Woods agreement of 1944 and adjust its policies accordingly, or destroy us all in their attempts to recapture a lost world.

Why We’re Doomed: Our Economy’s Toxic Inequality

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By Charles Hugh Smith

Source: Of Two Minds

Anyone who thinks our toxic financial system is stable is delusional.

Why are we doomed? Those consuming over-amped “news” feeds may be tempted to answer the culture wars, nuclear war with North Korea or the Trump Presidency.

The one guaranteed source of doom is our broken financial system, which is visible in this chart of income inequality from the New York Times: Our Broken Economy, in One Simple Chart.

While the essay’s title is our broken economy, the source of this toxic concentration of income, wealth and power in the top 1/10th of 1% is more specifically our broken financial system.

What few observers understand is rapidly accelerating inequality is the only possible output of a fully financialized economy. Various do-gooders on the left and right propose schemes to cap this extraordinary rise in the concentration of income, wealth and power, for example, increasing taxes on the super-rich and lowering taxes on the working poor and middle class, but these are band-aids applied to a metastasizing tumor: financialization, which commoditizes labor, goods, services and financial instruments and funnels the income and wealth to the very apex of the wealth-power pyramid.

Take a moment to ponder what this chart is telling us about our financial system and economy. 35+ years ago, lower income households enjoyed the highest rates of income growth; the higher the income, the lower the rate of income growth.

This trend hasn’t just reversed; virtually all the income gains are now concentrated in the top 1/100th of 1%, which has pulled away from the top 1%, the top 5% and the top 10%, as well as from the bottom 90%.

The fundamental driver of this profoundly destabilizing dynamic is the disconnect of finance from the real-world economy.

The roots of this disconnect are debt: when we borrow from future earnings and energy production to fund consumption today, we are using finance to ramp up our consumption of real-world goods and services.

In small doses, this use of finance to increase consumption of real-world goods and services is beneficial: economies with access to credit can rapidly boost expansion in ways that economies with little credit cannot.

But the process of financialization is not benign. Financialization turns everything into a commodity that can be traded and leveraged as a financial entity that is no longer firmly connected to the real world.

The process of financialization requires expertise in the financial game, and it places a premium on immense flows of capital and opaque processes: for example, the bundling of debt such as mortgages or student loans into instruments that can be sold and traded.

These instruments can then become the foundation of an entirely new layer of instruments that can be sold and traded. This pyramiding of debt-based “assets” spreads risk throughout the economy while aggregating the gains into the hands of the very few with access to the capital and expertise needed to pass the risk and assets off onto others while keeping the gains.

Profit flows to what’s scarce, and in a financialized economy, goods and services have become commodities, i.e. they are rarely scarce, because somewhere in the global economy new supplies can be brought online.

What’s scarce in a financialized economy is specialized knowledge of financial games such as tax avoidance, arbitrage, packaging collateralized debt obligations and so on.

Though the billionaires who have actually launched real-world businesses get the media attention–Bill Gates, Jeff Bezos, Steve Jobs, et al.–relatively few of the top 1/10th of 1% actually created a real-world business; most are owners of capital with annual incomes of $10 million to $100 million that are finance-generated.

This is only possible in a financialized economy in which finance has become increasingly detached from the real-world economy.

Those with the capital and skills to reap billions in profits from servicing and packaging student loan debt have no interest in whether the education being purchased with the loans has any utility to the indebted students, as their profits flow not from the real world but from the debt itself.

This is how we’ve ended up with an economy characterized by profound dysfunction in the real world of higher education, healthcare, etc., and immense fortunes being earned by a few at the top of the pyramid from the financialized games that have little to no connection to the real-world economy.

Anyone who thinks our toxic financial system is stable is delusional. If history is any guide (and recall that Human Nature hasn’t changed in the 5,000 uears of recorded history), this sort of accelerating income/wealth/ power inequality is profoundly destabilizing–economically, politically and socially.

All the domestic headline crises–culture wars, opioid epidemic, etc.–are not causes of discord: they are symptoms of the inevitable consequences of a toxic financial system that has broken our economy, our system of governance and our society.

Perpetual Prosperity And The ‘Strategy of Tension’

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By Graham Vanbergen

Source: TruePublica

Marco Rubio, the American politician, attorney and former Speaker of the Florida House of Representatives once said; “Every nation on the Earth that embraces market economics and the free enterprise system is pulling millions of its people out of poverty. The free enterprise system creates prosperity, not denies it.”

Statements such as these are common amongst politicians, especially wealthy ones who hold wealth driven values. But one man’s prosperity is another man’s misery in a world blighted by an economic model that demands eternal growth.

The only one constant that sits well with this model is that world population continues to increase, but even that is tailing off. Global population currently sits at 7.5 billion and rising at a rate of 80 million per year. The rate of population increase was 2.19 percent at its peak in 1963, which has now halved.

Concerns of the Fourth Industrial Revolution fusing the physical, digital and biological worlds, and impacting all disciplines, economies and industries emanate from the corporations who now see their future declining revenue potential being rescued through reduced reliance on human labour.

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To keep prosperity on a perpetual upward trajectory in the backdrop of a continually shrinking and less well off consumer base, the most politically influential now work in concert with the corporate behemoths – the new rulers of the world.

The strategies adopted to keep the ball rolling over the last few decades centre around a financial architecture that requires drastic anti-democratic political support. As Noam Chomsky warns “The very design of neoliberal principles is a direct attack on democracy.”

One does not have to look far to see these principles at work. Trillions of desperately needed taxes to support a decaying system of civil society are illegally offshored by household named corporations and individuals. Unfortunately, this form of extreme neoliberalism still isn’t enough to keep the ball rolling.

Naomi Klein’s 2007 book ‘Shock Doctrine, the rise of Disaster Capitalism’ exploded the myth that the global free market triumphed democratically. Klein highlights how the “puppet strings behind the world-changing crises and wars of the last four decades is the real story of how America’s “free market” policies came to dominate the world, through the exploitation of disaster-shocked people and countries.”

Then, one year later, Klein’s prognosis saw the 2008 financial crisis offering up more disaster shocked peoples at the global level as neoliberalism wriggled free from the remnants of regulation to reach a new pinnacle for the few and a created an even greater crisis of daily life for the hundreds of millions left behind.

This erroneous ideology delivered little more than world economic stagnation, crippling austerity, peak inequality, a global environmental crisis, the slowest economic recovery in history and monumental debt of every country it infected. This was no mistake, no unforeseen event, that we were told stunned our leaders and their captains.

The problem always existed that extreme wealth was never going to come from a global post-war peace through globalisation – so a ‘strategy of tension’, an Anglo/American innovation, was invented to keep the exploitation model alive.

The actual definition of this strategy is that “Western governments during the Cold War used tactics that aimed to divide, manipulate and control public opinion using fear, propaganda, disinformation, psychological warfare, agents provocateurs, and terrorist actions in order to achieve their strategic aims.”

Amongst many, one of those aims was financial domination.

During the closing days of the Cold War, the UK, US and other western governments along with the secret services colluded to engineer terrorist attacks inside Western Europe, to be blamed on Russia. This is now so well documented it needs no elaboration here (1).

However, the objective was always clear. By mobilising public opinion against left-wing parties (and their policies) and legitimising war, capitalism was to be forever invigorated. Ultimately though, this required the denying of national independence movements, mainly in the third world, to fund new forms of Western wealth.

The Cold War, stoked and fuelled by a deliberate strategy of tension gave us ‘Red Russia’ and the potential for nuclear Armageddon. When that ran its course, imaginary foes such as Saddam Hussein and Gaddafi were invented. The war on terror was used as a means to an end. Today, Red Russia is back on the agenda once again.

Dr Nafeez Ahmed, the award winning investigative journalist wrote about this Strategy of Tension:

“The immense fear and chaos generated by the impact of this phenomenon throughout Western Europe was instrumental in legitimising the interventionist policies of the Anglo-American alliance throughout the Cold War period. The number of people killed across the third world as a consequence of this militarisation process is shocking, its implications genuinely difficult to absorb.” (2)

Ahmed goes on to say that 12 to 15 million people since WW2 have been sacrificed for this strategy with many millions more suffering as their economies were destroyed and denied the right to restructure whilst Western corporations made fortunes at their ultimate expense.

Dr Daniele Ganser, a Swiss historian who specialises in contemporary history, international politics, covert warfare, resource wars and geo-strategy confirms that this strategy is very much alive and in use to this day.

“What you may have, if you translate our experience from the Cold War to the current day situation, is that a strategy of tension is still being implemented, but this time against Muslims,” Ganser says. “We all know that the west is dependent upon oil, and a pretext is needed to develop more operations in Iran, Iraq etc. We can’t just go there and invade them, so we have to have this idea that they’re trying to kill us, then it’s possible, or at least imaginable that a strategy of tension in which the Muslims are playing the role that the communists played in the Cold War, is happening.”

The result is that the world is facing a new desperate multi-faceted game of thrones – as it morphs into something even more destructive.

Conflict and change is now the new norm. Global peace and domestic security is fading as the world order spirals out of control. This engineered spiral is going to prove to be a disaster for everyone, in what looks a lot like a coming global collapse on every front.

Civil society is now shrouded in a cycle of fear, terrorism, surveillance and experiencing a perpetual loss of rights and liberties as the world order disintegrates.

Today, we are now unable to make reasonable predictions of our near future as war, lawlessness, terrorism and now threats of nuclear annihilation become ever more real.

Even hope is diminishing. People of the West are now so afraid they want to stop perceived threats from foreigners, they want them expelled. Manufactured geo-political tensions have created a migration of people in the 21st century even greater than mankind’s greatest tragedy – the last world war. This is no mistake, no unforeseen event either.

China was once the greatest economic power on earth, followed by India, Britain and then America. Not once has the continent of Africa produced a global GDP exceeding 5% in its history, with 16% of the world’s population.

Having deprived this entire continent any possible chance of progression, a migrant surge is now destabilising the very regions responsible for pillaging it.

Alongside all of these pressures, environmental collapse seems inevitable when extreme capitalism sees natural catastrophic events such as the oil industry viewing melting ice caps as nothing more than an investment opportunity.

America is still fighting wars in the Middle East, threatening China, Iran, Korea, India, and even the European Union. The EU is breaking down into four distinct regions as the fifty-year unity project is visibly disintegrating. Is this just a fight for dwindling resources or something else?

Total global debt is now $227 trillion – or 327 percent of global GDP and something like 45 percent higher than the 2008 apex of the financial meltdown.

The Bank of International Settlements urged just two months ago that policymakers need to press on with rate rises notwithstanding the financial market turbulence it will cause.

The world’s six largest pension saving systems – the US, UK, Japan, Netherlands, Canada and Australia – are expected to reach a $224 trillion gap by 2050, a new study by the World Economic Forum shows. Implosion is its only obvious trajectory as there is nowhere near than amount of money anywhere in the world to plug such a gap as that (3).

Total US household debt surged by $460 billion last year, the sharpest one-year rise ever, with an eye-watering $13 trillion outstanding (4). Britain’s household debt is rising at 10 percent per year, five times the rate of earnings growth and has just surpassed the 2008 level of debt as households struggle to keep afloat (5).

The World Economic Forum has also determined that unemployment, an energy price shock, fiscal crisis, failure of national governance and profound social instability makes up the top five global risks to economic performance (6).

To rid the world of its debt’s, kick-start the world economy and take advantage of the shifting global chess board, some believe conflict is the only consequential route left. NATO’s threats to Russia supported by mass media hysteria only adds to the WEF global risks list.

We have a lot to be fearful of. The fact that any combination of the risk list could happen at the same time in today’s world is no longer the conspiratorial thinking of doom-mongers but the architecture of a strategy that the world has seen before.

Public intellectual Tariq Ali wrote a warning in his 2010 book “The Obama Syndrome: Surrender at Home, War Abroad:

“This is the permanent tension that lies at the heart of a capitalist democracy and is exacerbated in times of crisis. In order to ensure the survival of the richest, it is democracy that has to be heavily regulated rather than capitalism.”

Seven years after Ali’s book we are experiencing a never-ending relay of crisis after crisis; democracy under threat, capitalism out of control and the very real threat of facing another human catastrophe.

In his sobering analysis, Professor Ugo Bardi, a professor in Physical Chemistry at the University of Florence and president of the Association for the Study of Peak Oil (ASPO), dissects historical statistics on war to unpick the patterns of the violence of the past. He warns that statistical data suggests we are on the brink of heading into another round of major wars resulting, potentially, in mass deaths on a scale that could rival what we have seen in the early 20th century. This is confirmation indeed that a ‘Strategy of Tension’, controlled or not, is heading towards its ultimate apogee. At this juncture, it is reasonable to conclude we are all in trouble.

 

(1) Operation Gladio (see Post war creation) https://en.wikipedia.org/wiki/Operation_Gladio

(2) Nafeez Ahmed – Strategy of Tension: http://www.nafeezahmed.com/2007/05/strategy-of-tension.html

( 3 ) Global pension funding gap: https://www.weforum.org/press/2017/05/global-pension-timebomb-funding-gap-set-to-dwarf-world-gdp/

(4) US household debt: https://www.wsws.org/en/articles/2017/02/20/debt-f20.html

(5) UK household debt: http://www.telegraph.co.uk/business/2017/07/31/growing-risk-uk-household-debts-warns-moodys-amid-lending-boom/

(6) World Economic Forum – Global Risks: http://reports.weforum.org/global-risks-2017/global-risks-of-highest-concern-for-doing-business-2017/