Prison Town Selling Its Jails to Grow Cannabis to Save their Economy — And It’s Working

Posted on by
Reply

Screen-shot-2012-08-31-at-9.55.31-PM

By Justin Gardner

Source: Activist Post

A tiny California desert town is making a drastic change to reverse its downward spiral and embrace an enlightened future. For 24 years, Adelanto tried unsuccessfully to sustain its economy through prisons, but now it will be hosting a very different kind of business—cannabis cultivation.

The town became only the second city in California to permit commercial cultivation of medical cannabis, after a year of heated debate in the City Council. The persistence of John “Bug” Woodard, Jr. paid off in a 4-1 vote on Nov. 23 to allow cultivation.

“I had nothing to lose,” said Woodard. “The city could not get in any worse shape than it was. It was broke.”

Brooke Edwards Staggs of The Orange County Register describes Adelanto’s declining prison economy and the land rush that is now taking place after their decision to go to pot.

Its first prison was built in 1991, as the city braced itself for the closure of nearby George Air Force Base.

That didn’t stop Adelanto’s long slide into high unemployment and depressed property values. More than a third of the city’s nearly 33,000 residents now live below the poverty line. So it kept welcoming more prisons, banking on the promise of jobs and steady revenue in the form of an annual bed tax.

The town sold one of its four prisons to a private firm in 2010 for $28 million, and that cash is about to run out. Solar energy developers also had an interest in Adelanto, but only four projects have been constructed, producing a handful of jobs.

Now, a new kind of developer is flocking to the town.

Ky-Mani Marley, one of Bob Marley’s sons, has already signed on to license a strain of cannabis that will be grown there, according to Freddy Sayegh, the attorney on the project. Tommy Chong has also shown interest. So has B-Real of Cypress Hill fame, plus other high-profile musicians and professional athletes whose names are being kept under wraps.

One commercial real estate firm says they went from one call a week to five calls a day about purchasing land in Adelanto. Real estate prices have skyrocketed as “investors, cultivators, doctors, architects and record executives” fly across the country to see about getting in on the budding industry.

Twenty-seven companies have been permitted to set up grow operations in Adelanto, with two more pending. The first crop is expected to be produced by summer, and when it reaches full capacity, the town will be producing about 50,000 pounds of cannabis six times a year for the medical industry.

Since California approved medical cannabis use in 1996, it has finally gotten around to creating a licensing program for cannabis businesses under the Medical Marijuana Regulations and Safety Act. The state is expected to legalize recreational use this November, which will greatly increase demand for legitimate operations.

The trend of cities allowing commercial-scale cannabis cultivation is a relief for those concerned about the environmental impact of illegal grow operations. Last year we reported how many growers are carelessly polluting aquatic ecosystems with rat poison and other toxic chemicals, while drying up already stressed streams.

As more towns and cities in California permit large-scale cannabis cultivation, demand will shift to these responsible growers, which should begin to reduce the pressure on the state’s fragile aquatic ecosystems.

Adelanto, which means “progress” in Spanish, will indeed prove to be a model of progress as it transitions from a depressing economy of prisons to one that actually helps human and environmental health.

“Tomorrow, they’ll be on the correct side of history and be recognized as a city that actually embraced safety and embraced something that heals people,” said Randall Longwith, an attorney representing investors.

Not only will cannabis businesses be producing exclusive strains for distribution, but Adelanto will also serve as a hub of medical research for ailments such as pediatric epilepsy, brain tumors, and post-traumatic stress disorder. Cannabis is showing great promise in all of these areas.

As a bonus, the medical cannabis research company Ecologies Laboratories will be pushing out a merchant of death. General Atomics Aeronautical Systems, which makes the Predator drone, will have to give up its storage facility in Adelanto as the landlord has decided to lease it to Ecologies Laboratories instead.

Adelanto joins another California city, Desert Hot Springs, to become a new kind of western pioneer. It will save its economy by making millions in tax revenue and securing hundreds of jobs, and, more importantly, is embracing a future where cannabis will prove to be a medical wonder.

The US economy has not recovered and will not recover

Posted on by
6

6a00d83451d87169e2014e8c142d89970d

By Paul Craig Roberts

Source: Intrepid Report

The US economy died when middle class jobs were offshored and when the financial system was deregulated.

Jobs offshoring benefitted Wall Street, corporate executives, and shareholders, because lower labor and compliance costs resulted in higher profits. These profits flowed through to shareholders in the form of capital gains and to executives in the form of “performance bonuses.” Wall Street benefitted from the bull market generated by higher profits.

However, jobs offshoring also offshored US GDP and consumer purchasing power. Despite promises of a “New Economy” and better jobs, the replacement jobs have been increasingly part-time, lowly-paid jobs in domestic services, such as retail clerks, waitresses and bartenders.

The offshoring of US manufacturing and professional service jobs to Asia stopped the growth of consumer demand in the US, decimated the middle class, and left insufficient employment for college graduates to be able to service their student loans. The ladders of upward mobility that had made the United States an “opportunity society” were taken down in the interest of higher short-term profits.

Without growth in consumer incomes to drive the economy, the Federal Reserve under Alan Greenspan substituted the growth in consumer debt to take the place of the missing growth in consumer income. Under the Greenspan regime, Americans’ stagnant and declining incomes were augmented with the ability to spend on credit. One source of this credit was the rise in housing prices that the Federal Reserve’s low interest rate policy made possible. Consumers could refinance their now higher-valued home at lower interest rates and take out the “equity” and spend it.

The debt expansion, tied heavily to housing mortgages, came to a halt when the fraud perpetrated by a deregulated financial system crashed the real estate and stock markets. The bailout of the guilty imposed further costs on the very people that the guilty had victimized.

Under Fed Chairman Bernanke, the economy was kept going with Quantitative Easing, a massive increase in the money supply in order to bail out the “banks too big to fail.” Liquidity supplied by the Federal Reserve found its way into stock and bond prices and made those invested in these financial instruments richer. Corporate executives helped to boost the stock market by using the companies’ profits and by taking out loans in order to buy back the companies’ stocks, thus further expanding debt.

Those few benefitting from inflated financial asset prices produced by Quantitative Easing and buy-backs are a much smaller percentage of the population than was affected by the Greenspan consumer credit expansion. A relatively few rich people are an insufficient number to drive the economy.

The Federal Reserve’s zero interest rate policy was designed to support the balance sheets of the mega-banks and denied Americans interest income on their savings. This policy decreased the incomes of retirees and forced the elderly to reduce their consumption and/or draw down their savings more rapidly, leaving no safety net for heirs.

Using the smoke and mirrors of under-reported inflation and unemployment, the US government kept alive the appearance of economic recovery. Foreigners fooled by the deception continue to support the US dollar by holding US financial instruments.

The official inflation measures were “reformed” during the Clinton era in order to dramatically understate inflation. The measures do this in two ways. One way is to discard from the weighted basket of goods that comprises the inflation index those goods whose price rises. In their place, inferior lower-priced goods are substituted.

For example, if the price of New York strip steak rises, round steak is substituted in its place. The former official inflation index measured the cost of a constant standard of living. The “reformed” index measures the cost of a falling standard of living.

The other way the “reformed” measure of inflation understates the cost of living is to discard price rises as “quality improvements.” It is true that quality improvements can result in higher prices. However, it is still a price rise for the consumer as the former product is no longer available. Moreover, not all price rises are quality improvements; yet many prices rises that are not can be misinterpreted as “quality improvements.”

These two “reforms” resulted in no reported inflation and a halt to cost-of-living adjustments for Social Security recipients. The fall in Social Security real incomes also negatively impacted aggregate consumer demand.

The rigged understatement of inflation deceived people into believing that the US economy was in recovery. The lower the measure of inflation, the higher is real GDP when nominal GDP is deflated by the inflation measure. By understating inflation, the US government has overstated GDP growth.

What I have written is easily ascertained and proven; yet the financial press does not question the propaganda that sustains the psychology that the US economy is sound. This carefully cultivated psychology keeps the rest of the world invested in dollars, thus sustaining the House of Cards.

John Maynard Keynes understood that the Great Depression was the product of an insufficiency of consumer demand to take off the shelves the goods produced by industry. The post-WW II macroeconomic policy focused on maintaining the adequacy of aggregate demand in order to avoid high unemployment. The supply-side policy of President Reagan successfully corrected a defect in Keynesian macroeconomic policy and kept the US economy functioning without the “stagflation” from worsening “Philips Curve” trade-offs between inflation and employment. In the 21st century, jobs offshoring has depleted consumer demand’s ability to maintain US full employment.

The unemployment measure that the presstitute press reports is meaningless as it counts no discouraged workers, and discouraged workers are a huge part of American unemployment. The reported unemployment rate is about 5%, which is the U-3 measure that does not count as unemployed workers who are too discouraged to continue searching for jobs.

The US government has a second official unemployment measure, U-6, that counts workers discouraged for less than one-year. This official rate of unemployment is 10%.

When long term (more than one year) discouraged workers are included in the measure of unemployment, as once was done, the US unemployment rate is 23%. (See John Williams, shadowstats.com)

Fiscal and monetary stimulus can pull the unemployed back to work if jobs for them still exist domestically. But if the jobs have been sent offshore, monetary and fiscal policy cannot work.

What jobs offshoring does is to give away US GDP to the countries to which US corporations move the jobs. In other words, with the jobs go American careers, consumer purchasing power and the tax base of state, local, and federal governments. There are only a few American winners, and they are the shareholders of the companies that offshored the jobs and the executives of the companies who receive multi-million dollar “performance bonuses” for raising profits by lowering labor costs. And, of course, the economists, who get grants, speaking engagements, and corporate board memberships for shilling for the offshoring policy that worsens the distribution of income and wealth. An economy run for a few only benefits the few, and the few, no matter how large their incomes, cannot consume enough to keep the economy growing.

In the 21st century US economic policy has destroyed the ability of real aggregate demand in the US to increase. Economists will deny this, because they are shills for globalism and jobs offshoring. They misrepresent jobs offshoring as free trade and, as in their ideology, free trade benefits everyone, claim that America is benefitting from jobs offshoring. Yet, they cannot show any evidence whatsoever of these alleged benefits. (See my book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West.)

As an economist, it is a mystery to me how any economist can think that a population that does not produce the larger part of the goods that it consumes can afford to purchase the goods that it consumes. Where does the income come from to pay for imports when imports are swollen by the products of offshored production?

We were told that the income would come from better-paid replacement jobs provided by the “New Economy,” but neither the payroll jobs reports nor the US Labor Department’s projections of future jobs show any sign of this mythical “New Economy.”

There is no “New Economy.” The “New Economy” is like the neoconservatives promise that the Iraq war would be a six-week “cake walk” paid for by Iraqi oil revenues, not a $3 trillion dollar expense to American taxpayers (according to Joseph Stiglitz and Linda Bilmes) and a war that has lasted the entirety of the 21st century to date, and is getting more dangerous.

The American “New Economy” is the American Third World economy in which the only jobs created are low productivity, low paid nontradable domestic service jobs incapable of producing export earnings with which to pay for the goods and services produced offshore for US consumption.

The massive debt arising from Washington’s endless wars for neoconservative hegemony now threaten Social Security and the entirety of the social safety net. The presstitute media are blaming not the policy that has devastated Americans, but, instead, the Americans who have been devastated by the policy.

Earlier this month I posted readers’ reports on the dismal job situation in Ohio, Southern Illinois, and Texas. In the March issue of Chronicles, Wayne Allensworth describes America’s declining rural towns and once great industrial cities as consequences of “globalizing capitalism.” A thin layer of very rich people rule over those “who have been left behind”—a shrinking middle class and a growing underclass. According to a poll last autumn, 53 percent of Americans say that they feel like strangers in their own country.

Most certainly these Americans have no political representation. As Republicans and Democrats work to raise the retirement age in order to reduce Social Security outlays, Princeton University experts report that the mortality rates for the white working class are rising. The US government will not be happy until no one lives long enough to collect Social Security.

The United States government has abandoned everyone except the rich.

In the opening sentence of this article, I said that the two murderers of the American economy were jobs offshoring and financial deregulation. Deregulation greatly enhanced the ability of the large banks to financialize the economy. Financialization is the diversion of income streams into debt service. When debt service absorbs a large amount of the available income, the economy experiences debt deflation. The service of debt leaves too little income for purchases of goods and services and prices fall.

Michael Hudson, whom I recently wrote about, is the expert on financialization. His book, Killing the Host, which I recommended to you, tells the complete story. Briefly, financialization is the process by which creditors capitalize an economy’s economic surplus into interest payments to themselves. Perhaps an example would be a corporation that goes into debt in order to buy back its shares. The corporation achieves a temporary boost in its share prices at the cost of years of interest payments that drain the corporation of profits and deflate its share price.

Michael Hudson stresses the conversion of the rental value of real estate into mortgage payments. He emphasizes that classical economists wanted to base taxation not on production, but on economic rent. Economic rent is value due to location or to a monopoly position. For example, beachfront property has a higher price because of location. The difference in value between beachfront and non-beachfront property is economic rent, not a produced value. An unregulated monopoly can charge a price for a service that is higher than the price that would bring that service unto the market.

The proposal to tax economic rent does not mean taxing you on the rent that you pay your landlord or taxing your landlord on the rent that you pay him such that he ceases to provide the housing. By economic rent Hudson means, for example, the rise in land values due to public infrastructure projects such as roads and subway systems. The rise in the value of land opened by a new road and housing and in commercial space along a new subway line is not due to any action of the property owners. This rise in value could be taxed in order to pay for the project instead of taxing the income of the population in general. Instead, the rise in land values raises appraisals and the amount that creditors are willing to lend on the property. New purchasers and existing owners can borrow more on the property, and the larger mortgages divert the increased land valuation into interest payments to creditors. Lenders end up as the major beneficiaries of public projects that raise real estate prices.

Similarly, unless the economy is financialized to such an extent that mortgage debt can no longer be serviced, when central banks lower interest rates property values rise, and this rise can be capitalized into a larger mortgage.

Another example would be property tax reductions and legislation such as California’s Proposition 13 that freeze in whole or part the property tax base. The rise in real estate values that escape taxation are capitalized into larger mortgages. New buyers do not benefit. The beneficiaries are the lenders who capture the rise in real estate prices in interest payments.

Taxing economic rent would prevent the financial system from capitalizing the rent into debt instruments that pay interest to the financial sector. Considering the amount of rents available to be taxed, taxing rents would free production from income and sales taxation, thus lowering consumer prices and freeing labor and productive capital from taxation.

With so much of land rent already capitalized into debt instruments shifting the tax burden to economic rent would be challenging. Nevertheless, Hudson’s analysis shows that financialization, not wage suppression, is the main instrument of exploitation and takes place via the financial system’s conversion of income streams into interest payments on debt.

I remember when mortgage service was restricted to one-quarter of household income. Today mortgage service can eat up half of household income. This extraordinary growth crowds out the production of goods and services as less of household income is available for other purchases.

Michael Hudson and I bring a total indictment of the neoliberal economics profession, “junk economists” as Hudson calls them.

Markets Ignore Fundamentals And Chase Headlines Because They Are Dying

Posted on by
Reply

DIY_Preparedness_Normalcy_Bias_Head_In_Sand_2

By Brandon Smith

Source: Alt-Market.com

Normalcy bias is a rather horrifying thing. It is so frightening because it is so final; much like death, there is simply no coming back. Rather than a physical death, normalcy bias represents the death of reason and simple observation. It is the death of the mind and cognitive thought instead of the death of the body.

Ever since the derivatives collapse of 2008 the public has been regaled with wondrous stories of recovery in the mainstream to the point that such fantasies have become the “new normal”. These are grand tales of the daring heroics of central bankers who “saved us all” from impending collapse through gutsy monetary policy and no-holds-barred stimulus measures.

Alternative economists have not been so easy to dazzle. Most of us found that the recovery narrative lacked a certain something; namely hard data that took the wider picture into account. It seemed as though the mainstream media (MSM) as well as the establishment was attempting to cherry-pick certain numbers out of context while demanding we ignore all other factors as “unimportant.”

We just haven’t been buying into the magic show of the so called “professional economists” and the academics, and now that the real and very unstable fiscal reality of the world is bubbling to the surface, the general public will begin to see why we have been right all these years and the MSM has been utterly wrong.

Mainstream economists have done absolutely nothing in the way of investigative journalism and have instead joined a chorus cheerleading for the false narrative, singing a siren’s song of misinterpreted statistics and outright lies drawing the masses ever nearer to the deadly shoals of financial crisis.

Why do they do this? Are they part of some vast conspiracy to mislead the public?

Not necessarily. While central banks and governments have indeed been proven time and again to collude in efforts to cover up financial dangers, most economists in the media are simply greedy and ignorant. You have to remember, they have a considerable stake in this game.

Many mainstream economists tend to have sizable investment portfolios and they base their careers partly on the successes they garner in the annual profits they accumulate playing the equities roulette. They also have invested so much of their public image into their pro-market and recovery arguments that there is no going back. That is to say, they have a personal interest in using their positions in the media to engineer positive market psychology (if they are able) so that their portfolios remain profitable. Not to mention, their professional image is at stake if they ever acknowledge that they were wrong for so long about the underlying health of the real economy.

This atmosphere of deluded self interest also generates a cult-like collectivist attitude. There is a lot of mutual back scratching and mutual ego stroking in the MSM; a kind of inbred conduit of regurgitated arguments and unoriginal talking points, and people in the club rarely step out of line because they not only hurt their own investment future and career, they also hurt everyone in their professional circles.  Meaning, no more cocktail party invitations to the Forbes rumpus room…

This is not to say that I am excusing their self interested lies and disinformation. I think that many of these people should be tarred and feathered in a public square for attempting to dissuade the public from preparing in a practical way for severe economic instability. I do not think they see themselves as being responsible to the people who actually take their nonsense seriously and their attitude needs adjustment. I am only explaining how it is possible for an entire profession of supposed “experts” to be so wrong so often. Mainstream financial analysts WANT to believe their own lies as much as many in the public want to believe them.

Like I said, normalcy bias is a rather horrifying thing.

One of the root pieces of disinformation in the mainstream that feeds all other lies is the disinformation surrounding falling global demand. MSM pundits cannot and will never fully admit to the cold hard reality of collapsing demand within the global economy. If they are forced to admit to falling demand, then the facade of a steady or recovering U.S. economy crumbles.

I covered the facts behind falling global demand for raw goods and consumer goods last year in part one of my six-part article series, ‘One Last Look At The Real Economy Before It Implodes.’ The hard evidence and numbers I presented have only become more important in recent months.

For example, U.S. inventories are building and freight shipments are declining in the U.S. as retailers cite falling demand for goods as the primary culprit. Official retail sales numbers for the holiday season of 2015 have come in flat. When one takes into account real inflation in prices, consumer sales are actually far in the negative. According to the more accurate methods the U.S. government used to use in their calculations of CPI in the 1980’s, we are looking at annual price inflation rate of around 7%. Price inflation does not necessarily equal improved sales.

Energy usage has been crushed since 2008. Despite a growing population and supposedly a growing economic system, oil consumption in 2014 according to the World Economic Forum dropped to levels not seen since 1997.

This is the exact opposite of what should be happening and it is the opposite of mainstream projections for oil consumption made back in 2003. This is why inventories and storage for oil across the globe are reaching capacity in a manner never seen before. American demand for oil is not growing exponentially as expected because Americans cannot afford to support such growth anymore. Falling energy demand at these extreme levels is an undeniable indicator of a failing economic system.

Of course, mainstream economists in their desperation to keep market psychology rolling forward and the equities casino producing profits seek to spin this problem as an “oversupply” issue rather than a demand issue. And this is where the disparity in their arguments begins to bleed through.

Here is the problem presented in the mainstream; what came first, the chicken or the egg? Did falling demand lead to oversupply and thus a fall in prices? Or, is demand remaining steady and is overproduction the cause of falling prices?  Yes, let’s confuse the issue instead of looking at the obvious.

As already linked above, it was falling demand which came first in 2008, and demand which continues to fall in relation to past trends. Have producers failed to reduce oil production to match falling demand? Yes. But this does not change the fact that oil demand today is well below levels needed to sustain the kind of economic growth markets have come to expect. Mainstream economists attempt to distract by hyper-focusing on supply, or twisting the discussion into an either/or scenario. Either it is a supply problem, or it is a demand problem, and they assert it is only a supply problem. This is not reality.

In fact, both can and often do exist at the same time, though one problem usually feeds the other. Falling demand does tend to result in oversupply in any particular sector of the economy. The bottom line, however, is that in our current crisis demand is the driving force and supply is a secondary issue. Supply is NOT the driving force behind the volatility in oil markets. Period.

This same chicken and egg distraction rears its ugly head in discussions on shipping markets as well.

The mainstream claim that the historic implosion of the Baltic Dry Index is nothing more than a problem of “too many ships” operating in the cargo market has been throttled, dissected and debunked so many times that you would think that it is surely dead. But the lie just will not die.

Mainstream propaganda houses like The Economist and Forbes continue to produce articles on a regular basis which deny the issue of falling demand for raw goods and claim that oversupply of vessels is the root cause of the BDI losing around 98 percent of its value since its highs in 2008.

I haven’t seen any of these articles offer actual stats or evidence to back their claims that oversupply of ships is the culprit and that demand is not a legitimate issue. But beyond that, why does the mainstream seem so hell bent on dismissing the BDI as a reliable economic indicator? Well, because shipping rates fall when demand falls, thus, when the BDI falls, it signals a lack of global demand. This is a fact they refuse to accept. When the BDI falls by 98 percent since the 2008 highs preceding the derivatives crisis, this signals a disaster in the making.

So, let’s stamp out the “too many ships came first” disinformation once and for all, shall we?

Shipping companies like Maersk Lines have already publicly admitted that falling global demand is the core problem behind falling rates and that supply is a secondary driver. They view the current financial crisis to be “worse than 2008”.

The fact that the largest shipping company in the world is warning of falling demand does not seem to be having any effect on the mainstream talking heads, though.

So, what do major shipping companies do when demand is falling and too many ships are operating on the market? Do they field those ships anyway and drive rates down even further? No, that makes no sense.

What companies do is either leave ships idle in port or scrap them. According to BIMCO (Baltic And International Maritime Council), 2015 was the busiest year since 2012 for the scrapping of older ships to make way for new arrivals. This process of scrapping ships or storing them idle destroys the argument that too many ships are driving falling rates in the BDI. In fact, as chief shipping analyst Peter Sand of BIMCO stated last year:

“The increase in Capesize scrapping comes at a much needed time for the market. Looking at the development so far this year the fleet growth has actually been negative, with a reduction of 0.8 %.”

I hope the garbage peddlers at Forbes and The Economist caught that — NEGATIVE growth of ship supply, not massive over-growth of ship supply. The scrapping increase was also across the board for other models of ships, not just the Capsize, and the increase of cargo capacity by new ships has been negligible.  Yet, shipping rates continue to plummet to historical lows.  Only falling demand, as Maersk Lines admits, explains the crash of the BDI in light of this information.

China in particular has been offering considerable incentives to those companies that do scrap older ships, to the point that some are even scrapping semi-new ships in order to cash in.

Now, this is not to say there is not an “oversupply” of ships. There are indeed many ships within cargo fleets that are not in operation. But again, this is because demand has declined so completely that even with increased scrapping and idling, shipping companies cannot keep up.  Falling demand OCCURRED FIRST, and oversupply is nothing more than a symptom of this root problem.

So, mainstream hacks, can we please put the “too many ships” nonsense to rest and get on with a real discussion on obvious issues of demand?  Stop focusing on the symptoms and examine the cause for once.

These are just a few of the hundreds of fundamental problems plaguing the global economy today, and they are all problems that the mainstream continues to ignore or dismiss out of hand. Which brings us to the now accelerating volatility in stock markets.

Stock markets are crashing, there is no other way to paint it. They are crashing incrementally, but crashing nonetheless. When you have violent swings in equities and commodities between 5 percent and 10 percent a day, then something is very wrong with your economy and has been wrong for some time. If global consumption and demand were really steady or growing, then you would not see the kind of systemic backlash in the financial system that we are now seeing.  If companies listed on the Dow were making legitimate profits due to a healthy consumer base and enjoying solid expansion, stocks would not be increasingly volatile.  If investors and mainstream analysts actually looked at the real numbers in demand (among other things), then the strange behavior in markets would be easy for them to understand. They will not look at such numbers until it is too late.

Instead, markets have chosen to chase headlines, and here is where the ugly circle of normalcy bias and cognitive dissonance completes itself. There are no positive indicators within the fundamentals today to energize market faith or market investment. So, investors and algorithmic trading computers track news headlines instead. The MSM hacks now have the power (along with central banks and governments) to create massive stock rallies with one or two carefully placed news tags, such as “Russia To Discuss Oil Production Cuts With OPEC.”

Market speculators and trading computers jump on these headlines without verifying if they are true. In most cases, they end up being false or just hearsay from an “unnamed source.” And so, the markets then crash further down into the abyss, waiting for the next headline to bolster activity even for a day.

The sad truth is, if any of these headlines turned out to be legitimate, their effect would still be meaningless in the long run as the overwhelming weight of the fundamentals continues to topple poorly placed optimism. Now that the investment world no longer has the certainty of central bank intervention as a useful tool, they don’t know if bad news is good news or if good news is bad news. The fact that the system is moving into a death spiral without the psychological crutch of central bank stimulus measures should tell you all you need to know about the supposed recovery since 2008.

No society wants to admit economic failure or economic sabotage, and this is why the con-game is able to continue in the face of so much concrete truth. Ultimately, the market trends and economic trends will flow into the negative. In the meantime, expect massive market rallies, rallies which will then disintegrate in a matter of days. And, whatever happens, never take what mainstream economists say very seriously. They have failed the public for long enough.

From Shanghai to San Francisco, the rent is too damn high

Posted on by
2

homeless-read-tweets

By Jerome Roos

Source: RoarMag.org

Capitalism is a strange beast. Though incredibly resilient in the face of systemic crises and remarkably adaptive to ever-changing conditions, it never truly overcomes its structural contradictions. As the Marxist geographer David Harvey often points out, it merely displaces them in space and time.

The global financial crisis of 2008-’09 has been no exception in this regard. In fact, the very response to that calamity has already laid the foundations for the next big crisis. And just like its immediate predecessor, it looks like this one will be centered, at least in part, on a massive speculative housing bubble.

Officials and investors may still be turning a blind eye, but the warning signs are flashing red everywhere. From Shanghai to San Francisco, from London to L.A., a wave of real-estate speculation is washing over the world, gentrifying popular neighborhoods, pushing housing prices and rents to historically unprecedented highs, and forcing low-income tenants out of their increasingly unaffordable homes. The result is widespread social displacement and deepening discontent.

Unlike the subprime mortgage crisis of 2007-’08, which was centered on the complex packaging of risky loans to low-income households across the U.S., the new housing crisis is a product of real-estate speculation in the world’s major metropolitan areas. Take London, which according to the Financial Times finds itself confronted with “its biggest housing challenge since the Victorian era.” Residential property prices in the British capital have risen 44 percent since 2008, and are now well above their pre-crisis highs.

According to an analysis by the UK charity Shelter, there are currently only 43 homes in Greater London that could still be considered affordable to the average first-time buyer, pushing everyone but the richest of the rich into the rental market, where landlords are known to exact more than a pound of flesh in return for a roof and running water. In the majority of London boroughs, the median rent for a one-bedroom apartment is now over £1,000 per month. On average, Londoners spend about 60 percent of their income on rent.

A similar picture has emerged in New York, where property prices — in the words of the BBC — “have gone turbo-ballistic, as global capital in search of a safe haven has rocketed in.” The average monthly rent in Manhattan now exceeds $3,800, even as half of New York’s urban population lives near or below the poverty line. As a gubernatorial candidate for New York once aptly pointed out, “the rent is too damn high.”

Again, the unsurprising result has been widespread social displacement. Al Jazeera recently reported that “evictions [in New York] have reached epidemic proportions and created a new homeless crisis born out of an affordable housing shortage.” Other major cities like Boston and Los Angeles are not doing much better, as gentrification proceeds apace from coast to coast. Today, even the downtown area of derelict Detroit is rapidly gentrifying, while much of the city still languishes in a state of post-industrial decline.

It is San Francisco, however, that has emerged in recent years as the most paradigmatic case of unbridled gentrification. With median monthly rent hitting $3,530, the city has become the most expensive in the U.S. Desperate to get rid of old tenants who still enjoy rent controls and attract high-income professionals from the tech industry in their place, landlords have gone on an eviction spree: in the past five years, the eviction rate has soared more than 50 percent. Immigrant and working class neighborhoods like the Mission have been reduced to multi-million dollar playgrounds for the “bohemian bourgeois”, complete with snazzy coffee places and expensive vegan restaurants.

The urban sociologist Saskia Sassen has encapsulated the nature of this violent process in strikingly succinct terms: the social reality of financialized capitalism, she argues in her book Expulsions, is all about “systemic complexity producing simple brutality.” And as usual, those feeling the brunt of this brutality are the urban poor and marginalized communities, especially immigrants and people of color, who — along with artists and precarious youths — are increasingly being displaced from city centers towards the periphery.

It is not just cities in the advanced capitalist countries that have been undergoing this turbulent process of urban stratification: the major metropolitan areas of the Global South are firing on all cylinders as well — with the notable difference being that the bubble in emerging markets already appears to be in the process of popping, raising fears of a new international financial crisis centered on China, Brazil and Turkey, among others.

In China’s biggest cities, property prices shot up 60 percent between 2008 and 2014, with residential prices in Shanghai and Beijing rapidly closing in on those of London, Paris and New York. According the consultancy firm McKinsey, some$9 trillion — almost half of China’s total debt, excluding financial sector debt — “is directly or indirectly tied to real estate.” Price increases have exceeded the rise in income by 30 percent in Shanghai and by 80 percent in Beijing.

Other major cities that have been experiencing similar real-estate booms include São Paulo and Rio de Janeiro in Brazil, where residential property prices in the most-desired neighborhoods doubled between 2008 and 2013, and Istanbul, along with the other big cities of Turkey, where a credit-fueled construction boom has accounted for 30 percent of GDP in the period since Erdogan’s AKP came to power on the heels of a previous financial crisis in 2002. Since 2007, property prices in Turkey have shot up 36 percent.

To be sure, the local specificities vary from place to place. In London, the housing crisis has been fueled at least in part by massive capital inflows from wealthy elites in countries like China, Saudi Arabia and the Gulf States, as well as the municipality’s failure to build adequate housing for the large influx of new inhabitants. In Barcelona, by contrast, it has been driven primarily by the tourism industry, while in San Francisco it is largely driven by the tech industry. In Rio, the process has been intensified by preparations for the FIFA World Cup and the Olympic Games, while widespread cronyism and corruption have been an important catalyst for the construction boom in Istanbul.

Yet for all differences between them, the gentrification processes and housing crises in each of these global cities share two crucial commonalities: first in their causes, and second in their consequences.

In terms of the underlying causes, the new housing crisis should be seen as a direct outcome of the response to the previous crisis, which was based on massive bank bailouts and central banks opening the floodgates of cheap credit. With the notable exception of the ECB, which only embarked on quantitative easing earlier this year, the world’s largest central banks dropped interest rates to historic lows, kept them there for years on end, and pumped trillions of dollars of fresh liquidity into the global financial system, effectively subsidizing private investors out of bankruptcy.

This unlimited flow of free money (for the 1% only, of course) produced a tide of surplus capital that had to be absorbed somewhere. With “secular stagnation” taking hold across the developed world, investors were still wary to direct this surplus towards the productive economy, where profit margins remained relatively low. And so, in their insatiable quest for yield, they turned to speculative investment in various asset classes instead: stocks, bonds — and, once again, real-estate. The profits were phenomenal. By 2012-’13, the resulting speculative boom had led U.S. corporate profits back to a new all-time high.

But now that the first signs of overheating have become apparent, we can already begin to identify the second crucial commonality between today’s urban housing crises; a commonality that sets the current crisis apart from the last one: in almost all of the major world cities today, ordinary citizens are already actively mobilizing and fighting back against processes of gentrification, dispossession and displacement, building innovative social movements and powerful political platforms in the process.

From urban insurrections to defend the last-remaining green space of Istanbul or the favelas and public transport system of Rio, to the local direct action of anti-gentrification activists targeting Google buses in the San Francisco Bay Area and reclaiming housing projects in London, it is already clear that the next major crisis, unlike the last one, will not go uncontested.

Of all the urban struggles that have ignited across the globe in recent years, the radically democratic municipal platforms of Spain are undoubtedly among the most advanced and the most promising. With the left-wing anti-eviction activist Ada Colau now holding the mayoralty of Barcelona, an important sign is being sent to the landlords, gentrifiers and real-estate speculators of the world: even in the deepest crises, there will be a limit to your capacity to evict us from our homes and destroy our cities — and that limit, ultimately, is us.

Jerome Roos is a PhD researcher in International Political Economy at the European University Institute, and founding editor of ROAR Magazine. Follow him on Twitter at @JeromeRoos.

The Fine Edge Between Comedy and Horror: The Millions Interviews Margaret Atwood

Posted on by
Reply

atwood-the_heart_goes_last

By Claire Cameron

Source: The Millions

The Heart Goes Last — Margaret Atwood’s first standalone novel since The Blind Assassin, which won the Man Booker in 2000 — is a novel that teeters on the fine edge between comedy and horror. The writing is full of Atwood’s wry humor, but the dystopian world in which the characters live, whether they are a sleeping in a car and fleeing thugs or under surveillance in a tightly controlled community, is an alternate world that is full of horror.

The novel tells the story of Stan and Charmaine. After a great financial crash, their home is repossessed, their credit is frozen, and they are left to eek out a meager life living in their cramped Honda for shelter. Stan sleeps in the driver’s seat so they can flee quickly during the night if need be. With only Charmaine’s money from a bartending job, they dumpster dive, eat day old doughnuts, and have no viable prospects for their future. When Charmaine sees an ad on TV for Consilience, a suburban utopia and a ‘social experiment,’ she signs them up to take a look. Participants are given a home of their own in exchange for going to prison every other month.

The idea behind Consilience is that a full prison creates full employment and all prosper. While Charmaine and Stan do their month in jail, they swap places with an alternate couple who live their life, drive their scooters, and sleep in their bed until the month is up and they trade places again. In a set up that recalls a Midsummer’s Night Dream-like mix up, unknown to each other both Stan and Charmaine have chance encounters with their alternates. Confusion, obsession, and mistrust turn into revelations about the truth about Consilience.

The more I read, the more I questioned whether I could describe the community of Consilience and the chaos outside its gates as taking place in an alternate world. So much of what happens in this novel, from foreclosed houses to private prisons, is already part of our world. The world of The Heart Goes Last feels more like a twisted version of our current reality. Only small changes would be needed to make it all ‘true.’ Just as Charmaine and Stan’s lives contort when they seek out their alternates, utopian turns dystopian and comedy bends into horror with, as Atwood says, “one small turn of the wrench.”

I interviewed Atwood over the phone from her hotel room in New York. We spoke about not having sex with furniture, Pepper the greeting robot, themes in Victorian literature, and quotas in private prisons.

The Millions: The Heart Goes Last has your trademark humor, but the circumstances that Stan and Charmaine find themselves in are horrifying.

Margaret Atwood: A lot of things are funny to those watching them, but not to the person undergoing them. The person who slips on the banana peel doesn’t think it’s funny as a rule.

TM: Charmaine says near the beginning of the book that, “comedy is so cold and heartless, it makes fun of people’s sadness.”

MA: It does, unfortunately. Sometimes people make fun of themselves, but if you dig down there’s a bit of that too. On the other hand, where would we be if we couldn’t laugh? I think they’ve always been joined at the hip.

TM: At the beginning of the novel, you quote Ovid, William Shakespeare, and a blog post by writer Adam Frucci[1] — who sets out to test an ottoman with a fake vagina. I have to ask: Did you have sex with furniture to research this novel?

MA: I think that piece of furniture is intended only for men?

TM: Frucci warned that it was, “no Kleenex clean up, my friends.” Actually, what he endured to test the ottoman is a good example of something that is funny for the reader, but not so for the person going through the experience.

MA: One of the headlines of that post is “I did this so you don’t have to.” Frucci has probably woken to find himself strangely famous. A lot of people are reading that blog post.

The other thing that has to trouble your mind is — who had this idea for this piece of furniture? And would you have this in your living room? I have many questions.

TM: Maybe you’ve given the ottoman maker a little sales bump?

MA: I have a feeling that a piece of furniture with a sex thing built into it came and went fairly swiftly. If that blog post was written in 2009, the furniture has fairly quickly been superseded by the advances in robotics.

Do you know about Pepper the robot? Pepper is not a sex robot. In fact, Pepper comes with instructions that say explicitly that you are not supposed to use it for sex, though I don’t know how you could.

Pepper is a greeting robot, like one that Stan, the main character in The Heart Goes Last, is working on before he gets fired at Dimple Robotics. Except that Stan’s is a grocery bagging robot. It is supposed to smile at you.

Pepper is supposed to be able to read your emotions. They were installing Pepper as a greeting robot in Japan where greeting is a social custom. And then they put him/her on for private sale and he/she sold out very quickly. Apparently we want someone who can read our emotions.

TM: At Dimple Robotics, Stan’s job, before he looses it, was working on the empathy module of his robot.

MA: Personally, I don’t want someone who can read my emotions, because then you can’t dissimulate, can you? If somebody asks if you are having a nice day and you say yes, but you’re actually not…it spoils your act.

TM: It’s the white lies that get us through.

MA: I’m afraid that’s correct. They do. “That’s a lovely dress! You look wonderful!”

TM: The novel is filled with this kind of joke — your humor is always close to hand. I love a line on writing from Sheila Heti’s How Should a Person Be?: “You have to know where the funny is, and if you know where the funny is, you know everything.” Do you agree?

MA: No, but it’s a good hint. You don’t know everything if you know that, but you know some things. It’s true in a negative way. If something is unintentionally funny, you ought to know. If you intended it to be very serious and dramatic, but actually it’s funny, then you are in trouble.

There is a wonderful book called The Stuffed Owl. It’s an anthology of good, but bad, verse. It’s well worth reading. It is full of writers who were aiming for the heights and tripped on the banana peel.

TM: As I was reading The Heart Goes Last, I kept thinking back to Survival, your thematic guide to Canadian literature that was published in 1972. In it you said: “I read then primarily to be entertained.” Do you still?

MA: Go back to what the ancients used to say, that art should entertain and instruct. They didn’t say to what degree. If it doesn’t entertain, and by entertain I don’t mean just frivolous, I mean engage your attention and keep you going. If that doesn’t happen, you’re not going to turn the page. So there has to be something engaging enough to keep you reading.

That is why first chapters are so important. If you can’t get the reader through the first chapter, they are never going to get to your pithy piece of wisdom on page 85.

On the other hand, if there is nothing serious in it, you may be entertained on a superficial level and it’s a one time read. Or it’s what we call a “beach read.” Or what I sometimes call a “hotel room drawer read.” I leave them there for others to enjoy. I did that in Hong Kong once and they were so screamingly honest that they collected the books and mailed them back to me. I thought that was so sweet.

TM: The Heart Goes Last is about characters who give up their freedom for comfort. When Stan and Charmaine tour Consilience for the first time they both feel reason to worry about how it runs. However, after experiencing the discomfort and fright of life in a car, they opt for comfort, “the bath towels clinched the deal.”

MA: Yes. It’s also about how circumstances cause people to do things that they would otherwise not do. That is a human universal truth. Stan and Charmaine give up their freedom, but of what does their freedom consist? They don’t have a lot of money, they are living in their car, they are subject to every thug and criminal that stumbles across them, so that is maybe “freedom,” but of a very limited kind.

TM: Can we expect a scared or thirsty human to make good decisions?

MA: You can’t. Self-preservation kicks in. A person will make the decision that you think gives him or her the best chance of getting through.

TM: In that way, is The Heart Goes Last a survival story?

MA: A lot of people lived that, or something close to it, when the 2008 crash happened. They were thrown out onto their front lawn or living in their cars. That is ongoing.

There’s a movie that just came out that I must go and see called 99 Homes — it’s the story of a man who evicts people from their houses because they couldn’t pay their mortgages. As I said, the situation is ongoing.

I was listening to the radio in London, England, and there was a show about people who had moved back into their parents’ houses, or parents who have had their kids move back in, because they could not afford to either rent or buy in London. It was too expensive.

TM: The set up of your novel felt so real.

MA: It is real.

TM: But it’s not necessarily your reality. David Mitchell wrote about how he imagines the far past or the far future, that to get in the right mindset he thinks about the things that the characters might take for granted in life.

MA: We did a lot of car travel when I was a child. We also did a lot of camping out. So that wasn’t under duress, but I know what it’s like to sleep in a car.

TM: There are other parts of the book that could be taken as speculative fiction, but aren’t, like private prisons.

MA: There are private prisons in the U.S. The Atlantic just did a huge piece on this. There is nothing in the U.S. constitution that says you can’t make people do enforced labor if they are convicted criminals.

There’s a history of that kind of prison as enterprise. The Australian penal colony was one of them. They would send people to work off their sentence. Someone was making money out of it.

TM: I also read that in Arizona there are three private prisons that require 100 percent inmate occupancy.

MA: You have to keep them full to make them profitable and that is a recipe for creating more prisoners.

TM: In 2008, when you published Payback, a book of non-fiction about the nature of debt, it almost felt like the world of finance had collapsed at your feet. The timing was quite something. Tell me about your crystal ball?

MA: I don’t actually have a crystal ball, but I do read advertisements when I’m sitting on the subway. I was seeing a lot of them that said “let us help you get out of debt.” I thought, boy, if there are all these enterprises doing that, there must be an awful lot of people in debt.

The other thing is that, if you are a student of Victorian literature, as once I was, debt is a big theme. Not only with Dickens, but a number of other writers as well. So is the prison system.

TM: In Survival you wrote, “Literature is not only a mirror; it is also a map.” Can The Heart Goes Last be read as a map?

MA: Maybe a map, but also a door. Open the door and what’s inside? Stan and Charmaine are in a planned prison system, a for-profit enterprise. What they don’t know when they go in is how the enterprise is making its money. The thing to ask about private prisons is who is making the profit? And how much are they making. Maybe it’s time to rethink. What should we have instead?

__

[1] I contacted Adam Frucci, author of “I Had Sex with Furniture: The Shameful (NSFW) Fleshlight Motion Review,” to comment about the honor of becoming an Atwood epigraph: “I didn’t really believe it at first — Ovid, Shakespeare, and my goofy blog post from 2009. I can’t say that of all of the things I’ve ever written that this is the one I want people to remember and attach to my name, but what can you do? All I can really do is be honored and assume that Margaret Atwood is a huge fan of all of my work and looks to me for inspiration all the time. That’s about accurate, right?”

 

 

Saturday Matinee: Casshern

Posted on by
2

Casshern_movie

“Casshern” (2004) is a live-action adaptation of the anime of the same name written and directed by Kazuaki Kiriya. The story takes place during a period after a 50 year war in which a resistance movement regularly clashes with the military. When scientist Azuma’s soldier son Tetsuya is killed in battle, Azuma uses his research to bring him back to life. After learning the truth about supposed terrorists he was once ordered to kill, Tetsuya fights against the military with the aid of a prototype cyborg suit. The film is notable for strikingly anime-like special effects and action set pieces, atmospheric score, and poignant conclusion with a clearly pacifist message.

Watch the full movie with English subtitles here.

The glorification of Antonin Scalia

Posted on by
3

supreme_corporate_justice_180

By Tom Carter

Source: WSWS.org

The sickening tributes across the official US political and media spectrum to Supreme Court Justice Antonin Scalia, who died suddenly on Saturday at the age of 79, are a barometer of the putrefaction of American democracy.

The universal deference towards Scalia from what passes for the “liberal” faction of the establishment is particularly repulsive. The statements of the Democratic presidential candidates, the supposed “socialist” Bernie Sanders no less than Hillary Clinton—echoing similarly sycophantic drivel from the likes of the New York Times—are monuments to political cowardice.

One would say these people lack the courage of their convictions if they had any convictions to lack!

They have sprung into action to join their Republican counterparts in hailing Scalia as a towering figure in American jurisprudence. Virtually every description of the deceased justice includes the words “brilliant” and “intellectual.” One is reminded of the programmed acclamation of Sergeant Raymond Shaw recited by his brainwashed fellow soldiers in the film The Manchurian Candidate: “Raymond Shaw is the kindest, bravest, warmest, most wonderful human being I’ve ever known in my life.”

Sanders took time off from his hollow calls for a “political revolution” to demonstrate his political obeisance to the ruling class, declaring, “While I differed with Justice Scalia’s views and jurisprudence, he was a brilliant, colorful and outspoken member of the Supreme Court.”

Clinton praised Scalia as “a dedicated public servant who brought energy and passion to the bench.”

President Obama called Scalia a “towering legal figure.” The New York Times’ Ross Douthat hailed Scalia for “putting originalist principle above a partisan conservatism,” and for his “combination of brilliance, eloquence, and good timing.”

No one dares say what needs to be said. The object of their veneration was a black-robed thug and sadist who used his position on the bench to attack the basic civil liberties laid down in the US Constitution and Bill of Rights—separation of church and state; due process; protection from arbitrary arrest, search and seizure; the right to trial by jury; protection from cruel and unusual punishment; the right to vote.

His supposed juridical brilliance boiled down to starting with the political outcome he desired (invariably reactionary) and then cobbling together pseudo-legal arguments to justify his ruling—often with flagrant disregard for legal precedent and the unambiguous language of statutes and constitutional provisions.

In one case last year, Scalia argued that a police officer did not use “deadly force” when he climbed onto an overpass and used an assault rifle to kill an unarmed man fleeing in a car. According to Scalia’s reasoning, it was not deadly force because the officer claimed to have been aiming at the car, not the person in the car.

Perhaps the most infamous example of this method—absurdly described in the media as “constitutional originalism”—was the 2000 Supreme Court decision Scalia engineered to halt the counting of votes in Florida and hand the White House to the loser of the election, Republican candidate George W. Bush.

The 5-4 decision to steal the election all but acknowledged its own speciousness when it declared that the justifications it advanced could not be applied to any future cases. In his separate concurring opinion, Scalia declared that the Constitution did not give the people the right to elect the president.

At the time of the theft of the 2000 elections, the World Socialist Web Site wrote that the Supreme Court’s decision to stop the counting of votes, and the acceptance of that ruling by the Democrats and the entire political establishment, demonstrated that there was no longer any significant constituency for democratic rights within the American ruling class. The reaction to Scalia’s death is a measure of the further erosion of democratic sentiment in the ruling elite.

Scalia personified the decay of bourgeois democracy in the United States over a protracted period of time. Appointed to the bench by Ronald Reagan, he flourished and exerted increasing influence in the decades of political reaction, militarism and Wall Street criminality that ensued, continuing without a hitch under Obama. Not only in the anti-democratic substance of his rulings, but also in his methods and bearing, he embodied the promotion by the ruling elite of backwardness, prejudice and outright cruelty.

He was corrupt and made no bones about his corruption, proudly voting to remove limits on corporate bribes in elections and flaunting his private outings with Vice President Dick Cheney while the latter was a party in a case before the court. He was a bully, making a practice of baiting and harassing lawyers who came before him.

Throughout his career, Scalia consistently advocated positions that can only be described as barbarous and fascistic. Fittingly, his last judicial act was to deny a stay of execution. He was a figure who relished the power and trappings of the state, openly defending torture and internment camps.

Scalia worked tirelessly to break down constitutional and democratic limits on state power, infiltrating fascistic doctrines into Supreme Court jurisprudence. His theory of executive power, according to which the American president has unlimited and unreviewable powers for the duration of the “war on terror,” resurrects Nazi jurist Carl Schmitt’s “state of exception” doctrine in all but name.

Scalia’s mere presence on the court testified to the advanced decay of American democracy. That decay is linked, on the one hand, to the extreme growth of social inequality, accompanied by the rampant parasitism and criminality of the ruling class, and on the other hand to unending war, which has its domestic reflection in the build up of the repressive state apparatus that Scalia championed.

The bitterness of the disputes over his replacement is a reflection of the importance of his role in American politics over three decades during which the political establishment shifted violently to the right.

The deference shown to such a figure from all quarters of the political establishment should be taken as a warning by the working class. The ruling elite fears above all the growth of social opposition and class struggle. It exalts the legacy of Scalia because it is preparing police state methods to defend its power and property against an insurgent working class.

 

Related Article: Scalia’s Black Beemer by Greg Palast