Tag Archives: Debt

Disposable Americans: The Numbers are Growing

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By Paul Buchheit

Source: Information Clearing House

As often noted in the passionate writings of Henry Giroux, poor Americans are becoming increasingly ‘disposable’ in our winner-take-all society. After 35 years of wealth distribution to the super-rich, inequality has forced much of the middle class towards the bottom, to near-poverty levels, and to a state of helplessness in which they find themselves being blamed for their own misfortunes.

The evidence keeps accumulating: income and wealth — and health — are declining for middle-class America. As wealth at the top grows, the super-rich feel they have little need for the rest of society.

Income Plummets for the Middle Class

According to Pew Research, in 1970 three of every ten income dollars went to upper-income households. Now five of every ten dollars goes to them.

The Social Security Administration reports that over half of Americans make less than $30,000 per year. That’s less than an appropriate average living wage of $16.87 per hour, as calculated by Alliance for a Just Society.

Wealth Collapses for Half of Us

Numerous sources report that half or more of American families have virtually no savings, and would have to borrow money or sell possessions to cover an emergency expense. Between half and two-thirds of Americans have less than $1,000.

For every $100 owned by a middle-class household in 2001, that household now has just $72.

Not surprisingly, race plays a role in the diminishing of middle America. According to Pew Research, the typical black family has only enough liquid savings to last five days, compared to 12 days for the typical Hispanic household, and 30 days for a white household.

Our Deteriorating Health

In a disgraceful display of high-level disregard for vital health issues, House Republicans are attempting to cut back on lunches for over 3 million kids.

The evidence for the health-related disposability of poor Americans comes from a new study that finds nearly a 15 year difference in life expectancy for 40-year-olds among the richest 1% and poorest 1% (10 years for women). Much of the disparity has arisen in just the past 15 years.

It’s not hard to understand the dramatic decline in life expectancy, as numerous studies have documented the health problems resulting from the inequality-driven levels of stress and worry and anger that make Americans much less optimistic about the future. The growing disparities mean that our children will likely see less opportunities for their own futures.

It May Be Getting Worse

The sense derived from all this is that half of America is severely financially burdened, at risk of falling deeper into debt.

It may be more than half. The Wall Street Journal recently reported on a JP Morgan study’s conclusion that “the bottom 80% of households by income lack sufficient savings to cover the type of volatility observed in income and spending.” Fewer than one in three 25- to 34-year-olds live in their own homes, a 20 percent drop in just the past 15 years.

It may be even worse for renters. The number of families spending more than half their incomes on rent — the ‘severely’ cost-burdened renters — has increased by a stunning 50 percent in just ten years. Billionaire Steve Schwarzman, whose company Blackstone has been buying up tens of thousands of homes at rock-bottom prices and then renting them back while waiting out the housing market, finds the growing anger among voters “astonishing.”

What’s astonishing is the disregard that many of the super-rich have for struggling Americans.

 

Paul Buchheit is a college teacher, an active member of US Uncut Chicago, founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of “American Wars: Illusions and Realities” (Clarity Press). He can be reached at paul@UsAgainstGreed.org.

In a highly indebted world, austerity is a permanent state of affairs

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By Mark Blyth

Source: Aeon

By 2010, everyone had heard the ‘austerity’ rallying cry. Immediately following the 2008 financial crisis, especially in Europe, it resounded: ‘Stimulate no more, now is the time for all to tighten!’ And tighten governments did, cutting public expenditure across continental Europe, and in the United Kingdom and the United States.

The logic behind ‘austerity’ holds that ‘the market’ – which the public had just bailed out – did not like the debt incurred when states everywhere rescued and recapitalised their banking systems. Unsurprisingly, tax revenues fell as the economy slowed and state expenditures rose. And what were once private debts on the balance sheets of banks became public debt on the balance sheet of states. Given this sorry state of affairs, states (policymakers and business leaders argued) had to take action to restore ‘business confidence’ – which is apparently always and everywhere created by cutting government spending. So governments cut.

Public debt, however, grew, because economies got smaller and grew slower the more they cut. The ‘confidence fairy’ as Paul Krugman named the expected effect, simply failed to show up. Why?

The reason is simple – and it is surprising anyone thought that anything else would happen. Imagine an economy as a sum, with a numerator and a denominator. Make total debt 100 and stick that on the top (the numerator). Make Gross Domestic Product (GDP) 100 and stick that on the bottom (the denominator) to give us a 100 per cent debt-to-GDP ratio. If you cut total spending by 20 per cent to restore ‘confidence’, the economy is ‘balanced’ at 100/80. That means the debt-to-GDP ratio of the country just went up to 120 per cent, all without the government issuing a single cent of new debt.

In short, cuts to spending in a recession make the underlying economy contract. After all, government workers have lost jobs or income, and government workers not shopping has the same effect as private sector workers not shopping. So the debt goes up as the economy shrinks further. States respond by cutting spending further. The pattern continues.

Having a common currency among different countries actually aggravates the problem because cuts in one state reverberate through many states, depressing them all. In 2008, euro area government debt as a share of the economy, including the already profligate Greeks, averaged around 65 per cent of GDP. Following budget cuts and monetary tightening (the European Central Bank twice pushed up interest rates in 2011) Euro Area government debt, by 2014, had risen to 92 per cent of GDP.

Greece is the poster child for this ‘denominator effect’. Under the auspices of ‘bailouts’ from the IMF and the EU, Greece cut more than 20 per cent of GDP in spending. It lost nearly 30 per cent in final consumption. Yet its debt increased from 103 per cent in 2006 to more than 180 per cent by 2014. That’s a 57 per cent increase in debt while spending is being cut.

Let’s look at the originating question again: how is destroying a third of the economy supposed to inspire consumer and business confidence? It won’t – unless you are a creditor – and that’s where the politics comes in.

If you are a holder of government debt (a creditor), three things hurt the value of your asset: if the inflation rate goes above the interest rate on your bond; if the exchange rate moves against you so that what the bond is worth vis-à-vis other currencies falls; and, of course, default – if the government takes the money and runs.

In the post-crisis world, despite major central banks putting trillions of dollars into the global money supply, there is almost no inflation anywhere in the developed world. Exchange rates (Brexit effects apart) are comparatively stable and ultimately move against each other relatively, so that’s not a huge worry. If the country whose debt you hold can have elections, and the public dares to vote against more budget cuts, the European Central Bank will shut down their banking system to make them revisit their choices. That’s what they did to Greece in the summer of 2015.

In this world, our present world, creditors will get paid and debtors will get squeezed. Budgets will be cut to make sure that bondholders get their money. And, in a highly indebted world, austerity – introduced as an ‘emergency’ measure to save the economy, to right the fiscal ship – becomes a permanent state of affairs.

As Britain’s former prime minister David Cameron said (standing beside a throne in a white bow-tie and tails) in 2013: ‘We need to do more with less. Not just now, but permanently.’ But here’s the question hidden in that blithe statement – are you and me part of the ‘we’ here?

Let’s go back to the huge jump in public debt that occurred when governments, ie the people, bailed out the banks. That debt was not, and is not, a liability. As difficult as it can be to make this reality part of the political conversation, public debt is an asset. Even at today’s low rates, it earns interest and retains value. No one is forced to invest in public debt, but every time bonds are issued investors show up and buy them by the truckload. By market criteria, public debt is a great investment.

But who pays for it? That would be the taxpayer. More generally, those who contribute to the payment of debts by not consuming government-produced services that have been cut. Basically, in most countries, this means that the bottom 70 per cent of the income distribution bears the cost of paying for public debt.

Over the past 25 years, to make up for chronically low wage growth, that same 70 per cent of the population has increased its personal indebtedness. Massively. Which means that in an economy deformed by austerity, they are the ones paying out – twice. With stagnant or declining wages, they have to service both the massive private debt they have accumulated to live and the public debt issued in their name.

Meanwhile, those whose assets the public bailed out – those with investible wealth, those who hold ‘all that debt’ and make money from it – do not suffer from the decline in public spending. Since they are net lenders, the hike in personal indebtedness does not trouble them either.

The result, and the situation in which we find ourselves, is a classic bad equilibrium. Those who can’t pay, and don’t earn enough, are being asked to pay the most to service debt, from which they do not and will not benefit. Those who can pay, and earn almost all the income, both contribute the least and benefit the most from ‘all that debt’.

Strip away all the electoral politics at the moment in the US, the UK, Italy, Spain and elsewhere, and that’s the underlying political economy. It’s a creditor/debtor stand-off where the creditors have the whip hand.

And yet, the more they crack the whip, the more the backlash against austerity, in all its forms, gains strength. Donald Trump, Jeremy Corbyn, Marine Le Pen, Pablo Iglesias: Left or Right, they are all riding debtor anger against creditor strength. It might be expressed as anger against, variously, ‘trade’ or ‘the elite’ or the ‘EU’. But what’s underneath all that is the politics of debt.

This is the ‘new normal’. It’s not about flat interest rates or anaemic growth rates. They are the consequences of austerity, not its causes. The new normal is the new politics of debtors versus creditors. It’s here to stay. As we already can see, it’s going to be anything but normal.

Either Reverse All the Perverse Incentives or the System Will Implode

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By Charles Hugh Smith

Source: Of Two Minds

Every perverse incentive is the cash cow for a vested interest or cartel.

I hope it’s not a great shock to discover all the incentives in our status quo are perverse: those who rig the financial system while creating zero real value, jobs, goods or services reap all the big profits; those who take near-zero responsibility for their own health are subsidized by those who take responsibility for their own health; those who try to start enterprises and hire workers are saddled with endless regulations, junk fees and taxes while those who game the system to get welfare (household or corporate) skim the cream for doing nothing for their community or for the nation.

Systems in which all the incentives are perverse implode under their own weight. Those who struggle to pay the mounting costs of Imperial Over-Reach, crony-capitalism and all the skimmers and scammers eventually go bankrupt or quit in disgust, while the army of state dependents and cronies explodes higher.

It has taken decades for the incentives to become so perverse, so we no longer notice the perversity or the pathological consequences.

High-frequency traders and financiers with the ready ear of well-paid political lackeys, stooges, toadies and sycophants run never-lose skimming operations and pay lower tax rates than self-employed and small business owners.

Corporations have increased their share prices not by earning more money by producing more goods and services but by borrowing cheap money from the Federal Reserve and buying back outstanding shares.

Corporations pay less tax if they move production overseas and keep their profits in other countries.

If I wreck one vehicle after another due to reckless irresponsibility, what happens to my insurance premiums? They skyrocket, of course, reflecting the higher risks that result from my behavior and poor choices. Nobody thinks safe drivers should subsidize irresponsible drivers.

But if I wreck my health by recklessly pursuing risky behaviors, I pay the same as people who are careful “drivers” of their health. What sort of incentives does this system generate?

If I want to buy an over-priced home, the system is loaded with incentives to encourage that potentially poor financial decision. But if I want to launch a small enterprise, the incentives are all perverse: steep upfront fees, taxes from the first dollar, and in many cases, fees and taxes on revenues, regardless of whether I am making a profit or losing my shirt.

Corporate profits have soared as financialization and rigging the system have paid much higher returns than risking capital in new goods and services.

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The incentives for home ownership have turned the bottom 90% into debt-serfs in servitude to banks while the top 5% own income-producing assets and businesses.

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Larded with the most perverse incentives possible, the U.S. healthcare system in the final stages of maximum costs, just before it implodes:

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It’s not hard to design positive incentives. For example:

1. Make preventative care essentially free to everyone ($5 co-pay) but weight the risks and costs created by irresponsible behaviors that ruin health. Reward those who take responsibility for their health by reducing the premiums they pay.

2. Tax all profits on securities held less than a day at 95%. Raise corporate taxes generated by financial activities to 50%, and lower the corporate tax rate on profits earned from producing domestic goods and services to zero.

3. Lower the tax for the first $25,000 earned by small enterprises to zero. Limit total government fees to 5% of revenues for all businesses up to $10 million in annual revenues.

4. Phase out the mortgage interest deduction. Limit mortgage interest deductions to the first $100,000 of mortgage debt.

5. Eliminate the personal income tax (and the need to file a return) for every household with income of $100,000 or less.

6. Automatically sunset every government regulation. Make city, county, state and federal governments renew every regulation every few years via a majority vote or it vanishes from the law books.

7. Make every politician wear a NASCAR-style jacket plastered with the names and logos of their corporate, union and financier contributors. The California Initiative to make this a reality is seeking signatures of registered California voters. Since politicians are owned, let’s make the ownership transparent.

8. Treat drug abuse and addiction as medical conditions rather than crimes.

9. Eliminate the Federal Reserve and its free-money for financiers perverse incentives for debt-serfdom and financial plundering.

10. Eliminate all student loans and debts. Make colleges compete for students on a cash-only basis.

As you no doubt noticed, every perverse incentive is the cash cow for a vested interest or cartel. That’s why the perverse incentives will endure until the system implodes under their pathological weight.

Neoliberalism: Serving the Interests of the International Business Elitists

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By Edward S. Herman

Source: Dissident Voice

Mark Weisbrot, a co-director with Dean Baker of the Center for Economic and Policy Research (CEPR), has written an enlightening book that pulls together many of the analyses that CEPR has been producing over the past several decades. The book, Failed: What the “Experts” Got Wrong about the Global Economy, is important and useful because it provides an alternative framework of analysis to the one used by establishment experts, media and policy-makers. What is more, this alternative framework and description of reality is well supported by empirical evidence and is convincing. It is marginalized in the mainstream because it runs counter to the interests of the powerful, who over the past three decades, have successfully pushed for a neoliberal world order that scales back the earlier welfare state advances and pursues trickle-down economics and the well-being of the affluent.

In fact, an important feature of Weisbrot’s analysis is his recognition of the extent to which policy failures have flowed from biased analyses that serve a small elite and punish the majority, and that policy successes have often followed the loss of power by those serving elite interests. His first chapter is entitled “Troubles in Euroland: When the Cures Worsen the Disease,” whose central theme is that the long crisis and malperformance of Europe’s economies, and especially the weaker ones of Greece, Portugal, Spain and to a lesser extent, Italy, were in large measure the result of poor policy choices. The crisis, which dates back to 2008, was not due to high sovereign debt, which was only threateningly high in Greece, but rather the refusal of the policy-making “troika,” the European Central Bank (ECB), European Community and IMF, to carry out expansionary policies that would allow the poor countries to grow out of their deficit position.

The Fed met the U.S. crisis with an easy money program which, when combined with modest fiscal expansion efforts, quickly mitigated this crisis (although the fiscal actions fell short of what was needed for a full recovery). But the ECB refused to carry out a comparable expansion policy, and there was no Europe-wide fiscal program in the EU system. So the poor countries were forced to depend for recovery on an “internal devaluation” of cutbacks in mainly social budgets, given that external devaluations for individual countries were ruled out by the use of a common currency, the euro. This didn’t do the job, so the eurozone remained in a depressed state, even up to the present.

Weisbrot shows that this policy failure was deliberate, with the troika leaders–mainly the ECB–taking advantage of the weaker countries’ vulnerability to force on them structural and policy changes that served the interests of the international business elite. These changes, including cutbacks on public outlays for education, health care, social security, and poverty alleviation, mainly harmed ordinary citizens. So did the enforced pro-cyclical monetary and fiscal policies themselves, which produced a eurozone crisis of unemployment and foregone output that extended for six years and is still ongoing. Weisbrot points out that this policy and process was a notable application of Naomi Klein’s “shock doctrine,” according to which elites take advantage of painful developments (here macro-distress) to force policy changes that could not be obtained through a democratic process like a national political vote of approval. Weisbrot shows that the troika leaders were quite conscious of the fact that they were pursuing “reforms” that the public wouldn’t support outside of shock conditions.

This process rested on the undemocratic structure of macro-policy-making in the European community. One of neoliberalism’s instruments is an “independent” central bank, where independent means not subject to democratic control. The ECB meets that standard well, more so than the Fed; and in its statute the ECB is only required to meet a price stability objective, so it is free to ignore unemployment and even deliberately increase it. Neoliberal practice is also encouraged by the 1992 Maastricht Treaty, which placed ceilings on the size of budget deficits and total public debt (3 and 60 percent respectively). These unnecessary ceilings are often breached, but provide levers to put pressure on weaker countries.

The countries victimized by the ECB’s pressure for painful internal devaluation could in theory exit from the euro and rely on expansion via currency devaluation and newly feasible monetary and fiscal expansion. But the risks in the cutoff of aid and money market access and the turmoil in any transition are severe, and although Syriza was voted into power in Greece on an anti-austerity program and pledge, it did not see fit to exit. In this connection Weisbrot discusses the case of Argentina, which, in the midst of a calamitous recession in 2001-2002 did default on its large external debt, ended its peg of the peso to the dollar, froze bank deposit accounts, and installed controls over capital movements. This caused immediate chaos and a worsened crisis, but as Weisbrot stresses, after only a single quarter of further GDP decline (5 percent), freed of its externally imposed constraints, Argentina began its recovery, taking three and a half years to regain its pre-recession level of output, but with real growth of some 100 percent over the next 11 years. Greece, which had a peak GDP loss of 25 percent, and which is still mired in a badly depressed economy, could hardly have fared worse than Argentina if it had exited years ago. Whether that option should still be taken is debatable, and Weisbrot discusses the pros and cons without coming to a definite conclusion, but that an exit might well have a positive result is suggested by the Argentinian experience.

A major theme of Failed is the negative impact of neoliberalism on the growth of low and middle-income countries and the welfare of their people. A major chapter on “The Latin American Spring” features evidence that the triumph of neoliberalism in the years from 1980 to the end of the 1990s was a dismal economic and welfare failure, Per capita GDP growth fell from 3.3. percent per year, 1960-1980 to 0.4 percent 1980-2000, rising again to 1.8 percent in the years 2000-2014. The earlier period (1960-1980) was one of widespread government intervention in the interest of rapid economic development; the middle years were dominated by the triumph of neoliberalism, with widespread imposition of structural adjustment programs under IMF and World Bank auspices, lowering trade and investment barriers, and ruthlessly cutting back development and welfare state programs. The years 2000-2014 saw a resurgence of economic growth, but not up to the pre-Reagan years.

Weisbrot shows that the new spurt in economic growth was closely associated with the victory of leftist governments in quite a few Latin American states, starting in 1998, He also presents a great deal of evidence showing that the growth spurt resulted in major improvements in a range of human welfare indicators, like reduced infant mortality, poverty reduction, more widepread schooling, enlarged pensions, and greater income equality. Thus, for example, the Brazilian poverty rate, which had remained virtually unchanged in the eight neoliberal years before the victory of the Workers Party, saw a 55 percent drop in that rate during the years 2002-2013. Similar changes in this and other welfare measures took place in Ecuador, Bolivia and other Latin states that escaped the neoliberal trap. Although these changes brought improved lives and prospects to millions, Weisbrot points out that the U.S. mainstream has played dumb, refusing to feature and reflect on the significance of this widespread improvement in human welfare and its strange efflorescence associated with the decline in U.S. and IMF-World Bank influence in Latin America.

Weisbrot stresses the importance of democratization and policy space in these growth and welfare improvements. The ECB narrowed that policy space in the eurozone, making it difficult for national leaders to expand or otherwise help improve social conditions. This reflected the weakening of democracy in the eurozone, with the ECB, EC and IMF able to make decisions that local democratic governments would not be able to make. Similarly, the loss of power over Latin governments by the U.S. and IMF following the left political triumphs from 1998, and their record of anti-people actions and other policy failures, made for policy space. So also did the rise of China as an economic power, providing a market for Latin products and loans without political conditions. Weisbrot notes that the common orthodox position that the democratic West would be more likely to help poorer countries develop democracies as compared with what authoritarian China would likely do is fallacious. China lends widely without intervening politically. The United States has a long record of support of undemocratic regimes that will serve as its political instruments and/or provide a “favorable climate of investment.” (This writer’s The Real Terror Network was a dossier of U.S. support of National Security States in Latin America and of its active involvement in many counter-revolutionary “regime changes.”)

It is arguable that an unrecognized benefit of the Iraq and Afghanistan wars was their distracting U.S. officials from major efforts to halt the trend toward democratic government in Latin America, although their participation in the attempts at regime change in Venezuela and their successful support of an undemocratic coup in Honduras in 2009 shows that the longstanding anti-democratic policy thrust of the U.S. leadership is not dead. (Mrs. Clinton, of course, fully supported the Honduras coup. So we may see a more energetic pursuit of the traditional U.S. policy of hostility to democracy in Latin America with her election.)

Weisbrot stresses throughout the importance of per capita growth for improving the human condition. A problem with this premise is that the human race may be growing too fast for ecological survival. Weisbrot confronts this issue, arguing that while population growth is a definite negative productivity growth may on balance be a means of coping by increasing food output and lowering the cost of wind turbines, solar panels and other improvements. However, increases in incomes tend to increase the preference for meat, larger houses, and other resource depleters, so that productivity improvements may, on balance, place even more pressure on the environment.

Weisbrot is possibly over-optimistic on this front. But his book is rich in compelling analyses and data that show how the mainstream live in an Alice-In-Wonderland economic world and the important things we may do to escape that Wonderland.

 

Edward S. Herman is an economist and media analyst with a specialty in corporate and regulatory issues as well as political economy and the media. Read other articles by Edward.

The real Hunger Games: the Capitalist recipe to maximise profits while ‘having fun’

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peacekeeper

By Sky Wanderer

Source: Investment Watch

Introduce a political economy upon the arbitrary axiom that Capitalism is the one and only economic system for mankind, and introduce a narcissistic moral philosophy that you as a Capitalist represent unsurpassable objective moral virtues.

You as a Capitalist hire politicians to implement policy as per your moral and economic philosophy and redefine ‘democracy’ as the political system to sustain Capitalism. Then from such position of self-established authority, abolish unions and all labour-representation, thus force your employees into a race-to-the-bottom contest to compete for jobs by accepting lower and lower wages.

Give decent jobs and benefits to only those who belong to your noble circles. For everyone else reintroduce slavery in the form of “workfare”. The goal is that you pay the lowest wages for jobs done by the fittest slaves, who will survive the contest. If you wish, you can call the contest “real Hunger Games”.

To speed up the process, extend the race-to-the-bottom into global scope so that you will have access to the cheapest and fittest labour everywhere on the planet. Never mind that your slaves will have to live out of a suitcase and every time when you lay them off and labour demand calls them elsewhere, they will have to relocate to yet another continent.

To further accelerate the process, make good use of your 3rd-world colonies, your Mideast colonising wars and your secretly sponsored mercenaries (ISIS). Via your “leftist” assistants, organise a massive refugee crisis to import the cheapest possible workforce via your war-refugees and economic migrants. These migrants are the fittest contestants who – glad just to escape your bombs – will worship you as their saviours and will work for you for literally zero payment. The migrants will not only boost your profits to sky-high levels but will rapidly pull down the overall wages of your domestic employees.

Meanwhile keep increasing the prices so your slaves can’t pay for food, energy, heat and shelter from their next-to-zero incomes. If some of them attempt to survive by taking bank-loans to acquire shelter, education and meet other basic needs, but they can’t repay the loans from their low incomes, you can just evict them from their homes via your banks.

When you made them homeless this way, make sure their ugly presence won’t spoil the beauty of your city. Install pretty anti-homeless spikes, so when they crush onto the pavement they will die, and you can just collect their bodies. To project your capitalist moral virtues into eternity, incorporate the beauty of your anti-homeless spikes into the modern concept of art and beauty.

Introduce private banking to enable yourself to creating new money when you wish. This way you can easily indebt the entire society, soon you can even purchase the whole planet.

Meanwhile dismantle public healthcare, so those of your slaves who are still alive but get sick, will die without treatment. Eliminate (privatise) all affordable public services, destroy the public sphere, abolish all public spaces and welfare benefits. To have a dandy excuse for such policy, make sure to keep the country in ever increasing debt by taking countless £ billions of government loans, and transfer the responsibility of these odious debts onto your slaves. Refer to these debts as the reason for the crisis, then refer to the crisis as the reason for these debts, then refer to the debts and the crisis as the reason for austerity and spending cuts. Then you can increase the public debt again and continue the same loop ad infinitum.

Make sure your very own mainstream media and academia would never reveal the truth that the never-ending crisis and mass-unemployment are due to your private banking and debt- and profit-mongering dysfunctional capitalist system, and keep the real disastrous indicators of the state of economy in secret.

Instead of admitting the truth, use the divide et impera strategy to make your victims blame themselves and one another. To increase the fun, produce reality shows where the still active part of your slaves will blame the disabled and the unemployed, meanwhile make the local poor blame the immigrant poor for the overall misery that you inflicted. Then establish offices where the local poor dressed as fancy clerks will evict the immigrant poor, meanwhile watch how all of them are begging for their lives until they give up and commit suicide.

Enjoy!

The Odor of Desperation

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By James Howard Kunstler

Source: Kunstler.com

It must be obvious even to nine-year-old casual observers of the scene that the US national election is hacking itself. It doesn’t require hacking assistance from any other entity. The two major parties could not have found worse candidates for president, and the struggle between them has turned into the most sordid public spectacle in US electoral history.

Of course, the Russian hacking blame-game story emanates from the security apparatus controlled by a Democratic Party executive establishment desperate to preserve its perks and privileges . (I write as a still-registered-but-disaffected Democrat). The reams of released emails from Clinton campaign chairman John Podesta, and other figures in HRC’s employ, depict a record of tactical mendacity, a gleeful eagerness to lie to the public, and a disregard for the world’s opinion that are plenty bad enough on their own. And Trump’s own fantastic gift for blunder could hardly be improved on by a meddling foreign power. The US political system is blowing itself to pieces.

I say this with the understanding that political systems are emergent phenomena with the primary goal of maintaining their control on the agencies of power at all costs. That is, it’s natural for a polity to fight for its own survival. But the fact that the US polity now so desperately has to fight for survival shows how frail its legitimacy is. It wouldn’t take much to shove it off a precipice into a new kind of civil war much more confusing and irresolvable than the one we went through in the 1860s.

Events and circumstances are driving the US insane literally. We can’t construct a coherent consensus about what is happening to us and therefore we can’t form a set of coherent plans for doing anything about it. The main event is that our debt has far exceeded our ability to produce enough new wealth to service the debt, and our attempts to work around it with Federal Reserve accounting fraud only makes the problem worse day by day and hour by hour. All of it tends to undermine both national morale and living standards, while it shoves us into the crisis I call the long emergency.

It’s hard to see how Russia benefits from America becoming the Mad Bull of a floundering global economy. Rather, the Evil Russia meme seems a projection of our country’s own insecurities and contradictions. For instance, we seem to think that keeping Syria viciously destabilized is preferable to allowing its legitimate government to restore some kind of order there. Russia has been on the scene attempting to prop up the Assad government while we are on the scene there doing everything possible to keep a variety of contestants in a state of incessant war. US policy in Syria has been both incoherent and tragically damaging to the Syrians.

The Russians stood aside while the US smashed up Iraq, Afghanistan, and Libya. We demonstrated adequately that shoving sovereign nations into civic failure is not the best way to resolve geopolitical tensions. Why would it be such a bad thing for the US to stand aside in Syria and see if the Russians can rescue that country from failure? Because they might keep a naval base there on the Mediterranean? We have scores of military bases around the region.

It’s actually pretty easy to understand why the Russians might be paranoid about America’s intentions. We use NATO to run threatening military maneuvers near Russia’s borders. We provoked Ukraine — formerly a province of the Soviet state — to become a nearly failed state, and then we complained foolishly about the Russian annexation of Crimea — also a former territory of the Soviet state and of imperial Russia going back centuries. We slapped sanctions on Russia, making it difficult for them to participate in international banking and commerce.

What’s really comical is the idea that Russia is using the Internet to mess with our affairs — as if the USA has no cyber-warfare ambitions or ongoing operations against them (and others, such as hacking Angela Merkel’s personal phone). News flash: every country with access to the Internet is in full hacking mode around the clock against every other country so engaged. Everybody’s doing it. It is perhaps a projection of America’s ongoing rape hysteria that we think we’re special victims of this universal activity.

 

Related Article:

Update from Craig Murray: “I can tell you with 100% certainty that it is not any Russian state actor or proxy that gave the Democratic National Committee and Podesta material to WikiLeaks.”

The Great Ponzi Scheme of the Global Economy

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FollowTheMoney-Bank-Pyramid

By Michael Hudson and Chris Hedges

Source: CounterPunch

CHRIS HEDGES: We’re going to be discussing a great Ponzi scheme that not only defines not only the U.S. but the global economy, how we got there and where we’re going. And with me to discuss this issue is the economist Michael Hudson, author of Killing the Host: How Financial Parasites and Debt Destroy the Global Economy. A professor of economics who worked for many years on Wall Street, where you don’t succeed if you don’t grasp Marx’s dictum that capitalism is about exploitation. And he is also, I should mention, the godson of Leon Trotsky.

I want to open this discussion by reading a passage from your book, which I admire very much, which I think gets to the core of what you discuss. You write,

“Adam Smith long ago remarked that profits often are highest in nations going fastest to ruin. There are many ways to create economic suicide on a national level. The major way through history has been through indebting the economy. Debt always expands to reach a point where it cannot be paid by a large swathe of the economy. This is the point where austerity is imposed and ownership of wealth polarizes between the One Percent and the 99 Percent. Today is not the first time this has occurred in history. But it is the first time that running into debt has occurred deliberately.” Applauded. “As if most debtors can get rich by borrowing, not reduced to a condition of debt peonage.”

So let’s start with the classical economists, who certainly understood this. They were reacting of course to feudalism. And what happened to the study of economics so that it became gamed by ideologues?

HUDSON: The essence of classical economics was to reform industrial capitalism, to streamline it, and to free the European economies from the legacy of feudalism. The legacy of feudalism was landlords extracting land-rent, and living as a class that took income without producing anything. Also, banks that were not funding industry. The leading industrialists from James Watt, with his steam engine, to the railroads …

HEDGES: From your book you make the point that banks almost never funded industry.

HUDSON: That’s the point: They never have. By the time you got to Marx later in the 19th century, you had a discussion, largely in Germany, over how to make banks do something they did not do under feudalism. Right now we’re having the economic surplus being drained not by the landlords but also by banks and bondholders.

Adam Smith was very much against colonialism because that lead to wars, and wars led to public debt. He said the solution to prevent this financial class of bondholders burdening the economy by imposing more and more taxes on consumer goods every time they went to war was to finance wars on a pay-as-you-go basis. Instead of borrowing, you’d tax the people. Then, he thought, if everybody felt the burden of war in the form of paying taxes, they’d be against it. Well, it took all of the 19th century to fight for democracy and to extend the vote so that instead of landlords controlling Parliament and its law-making and tax system through the House of Lords, you’d extend the vote to labor, to women and everybody. The theory was that society as a whole would vote in its self-interest. It would vote for the 99 Percent, not for the One Percent.

By the time Marx wrote in the 1870s, he could see what was happening in Germany. German banks were trying to make money in conjunction with the government, by lending to heavy industry, largely to the military-industrial complex.

HEDGES: This was Bismarck’s kind of social – I don’t know what we’d call it. It was a form of capitalist socialism…

HUDSON: They called it State Capitalism. There was a long discussion by Engels, saying, wait a minute. We’re for Socialism. State Capitalism isn’t what we mean by socialism. There are two kinds of state-oriented–.

HEDGES: I’m going to interject that there was a kind of brilliance behind Bismarck’s policy because he created state pensions, he provided health benefits, and he directed banking toward industry, toward the industrialization of Germany which, as you point out, was very different in Britain and the United States.

HUDSON: German banking was so successful that by the time World War I broke out, there were discussions in English economic journals worrying that Germany and the Axis powers were going to win because their banks were more suited to fund industry. Without industry you can’t have really a military. But British banks only lent for foreign trade and for speculation. Their stock market was a hit-and-run operation. They wanted quick in-and-out profits, while German banks didn’t insist that their clients pay as much in dividends. German banks owned stocks as well as bonds, and there was much more of a mutual partnership.

That’s what most of the 19th century imagined was going to happen – that the world was on the way to socializing banking. And toward moving capitalism beyond the feudal level, getting rid of the landlord class, getting rid of the rent, getting rid of interest. It was going to be labor and capital, profits and wages, with profits being reinvested in more capital. You’d have an expansion of technology. By the early twentieth century most futurists imagined that we’d be living in a leisure economy by now.

HEDGES: Including Karl Marx.

HUDSON: That’s right. A ten-hour workweek. To Marx, socialism was to be an outgrowth of the reformed state of capitalism, as seemed likely at the time – if labor organized in its self-interest.

HEDGES: Isn’t what happened in large part because of the defeat of Germany in World War I? But also, because we took the understanding of economists like Adam Smith and maybe Keynes. I don’t know who you would blame for this, whether Ricardo or others, but we created a fictitious economic theory to praise a rentier or rent-derived, interest-derived capitalism that countered productive forces within the economy. Perhaps you can address that.

HUDSON: Here’s what happened. Marx traumatized classical economics by taking the concepts of Adam Smith and John Stuart Mill and others, and pushing them to their logical conclusion. Progressive capitalist advocates – Ricardian socialists such as John Stuart Mill – wanted to tax away the land or nationalize it. Marx wanted governments to take over heavy industry and build infrastructure to provide low-cost and ultimately free basic services. This was traumatizing the landlord class and the One Percent. And they fought back. They wanted to make everything part of “the market,” which functioned on credit supplied by them and paid rent to them.

None of the classical economists imagined how the feudal interests – these great vested interests that had all the land and money – actually would fight back and succeed. They thought that the future was going to belong to capital and labor. But by the late 19th century, certainly in America, people like John Bates Clark came out with a completely different theory, rejecting the classical economics of Adam Smith, the Physiocrats and John Stuart Mill.

HEDGES: Physiocrats are, you’ve tried to explain, the enlightened French economists.

HUDSON: The common denominator among all these classical economists was the distinction between earned income and unearned income. Unearned income was rent and interest. Earned incomes were wages and profits. But John Bates Clark came and said that there’s no such thing as unearned income. He said that the landlord actually earns his rent by taking the effort to provide a house and land to renters, while banks provide credit to earn their interest. Every kind of income is thus “earned,” and everybody earns their income. So everybody who accumulates wealth, by definition, according to his formulas, get rich by adding to what is now called Gross Domestic Product (GDP).

HEDGES: One of the points you make in Killing the Host which I liked was that in almost all cases, those who had the capacity to make money parasitically off interest and rent had either – if you go back to the origins – looted and seized the land by force, or inherited it.

HUDSON: That’s correct. In other words, their income is unearned. The result of this anti-classical revolution you had just before World War I was that today, almost all the economic growth in the last decade has gone to the One Percent. It’s gone to Wall Street, to real estate …

HEDGES: But you blame this on what you call Junk Economics.

HUDSON: Junk Economics is the anti-classical reaction.

HEDGES: Explain a little bit how, in essence, it’s a fictitious form of measuring the economy.

HUDSON: Well, some time ago I went to a bank, a block away from here – a Chase Manhattan bank – and I took out money from the teller. As I turned around and took a few steps, there were two pickpockets. One pushed me over and the other grabbed the money and ran out. The guard stood there and saw it. So I asked for the money back. I said, look, I was robbed in your bank, right inside. And they said, “Well, we don’t arm our guards because if they shot someone, the thief could sue us and we don’t want that.” They gave me an equivalent amount of money back.

Well, imagine if you count all this crime, all the money that’s taken, as an addition to GDP. Because now the crook has provided the service of not stabbing me. Or suppose somebody’s held up at an ATM machine and the robber says, “Your money or your life.” You say, “Okay, here’s my money.” The crook has given you the choice of your life. In a way that’s how the Gross National Product accounts are put up. It’s not so different from how Wall Street extracts money from the economy. Then also you have landlords extracting …

HEDGES: Let’s go back. They’re extracting money from the economy by debt peonage. By raising …

HUDSON: By not playing a productive role, basically.

HEDGES: Right. So it’s credit card interest, mortgage interest, car loans, student loans. That’s how they make their funds.

HUDSON: That’s right. Money is not a factor of production. But in order to have access to credit, in order to get money, in order to get an education, you have to pay the banks. At New York University here, for instance, they have Citibank. I think Citibank people were on the board of directors at NYU. You get the students, when they come here, to start at the local bank. And once you are in a bank and have monthly funds taken out of your account for electric utilities, or whatever, it’s very cumbersome to change.

So basically you have what the classical economists called the rentier class. The class that lives on economic rents. Landlords, monopolists charging more, and the banks. If you have a pharmaceutical company that raises the price of a drug from $12 a shot to $200 all of a sudden, their profits go up. Their increased price for the drug is counted in the national income accounts as if the economy is producing more. So all this presumed economic growth that has all been taken by the One Percent in the last ten years, and people say the economy is growing. But the economy isn’t growing …

HEDGES: Because it’s not reinvested.

HUDSON: That’s right. It’s not production, it’s not consumption. The wealth of the One Percent is obtained essentially by lending money to the 99 Percent and then charging interest on it, and recycling this interest at an exponentially growing rate.

HEDGES: And why is it important, as I think you point out in your book, that economic theory counts this rentier income as productive income? Explain why that’s important.

HUDSON: If you’re a rentier, you want to say that you earned your income by …

HEDGES: We’re talking about Goldman Sachs, by the way.

HUDSON: Yes, Goldman Sachs. The head of Goldman Sachs came out and said that Goldman Sachs workers are the most productive in the world. That’s why they’re paid what they are. The concept of productivity in America is income divided by labor. So if you’re Goldman Sachs and you pay yourself $20 million a year in salary and bonuses, you’re considered to have added $20 million to GDP, and that’s enormously productive. So we’re talking in a tautology. We’re talking with circular reasoning here.

So the issue is whether Goldman Sachs, Wall Street and predatory pharmaceutical firms, actually add “product” or whether they’re just exploiting other people. That’s why I used the word parasitism in my book’s title. People think of a parasite as simply taking money, taking blood out of a host or taking money out of the economy. But in nature it’s much more complicated. The parasite can’t simply come in and take something. First of all, it needs to numb the host. It has an enzyme so that the host doesn’t realize the parasite’s there. And then the parasites have another enzyme that takes over the host’s brain. It makes the host imagine that the parasite is part of its own body, actually part of itself and hence to be protected.

That’s basically what Wall Street has done. It depicts itself as part of the economy. Not as a wrapping around it, not as external to it, but actually the part that’s helping the body grow, and that actually is responsible for most of the growth. But in fact it’s the parasite that is taking over the growth.

The result is an inversion of classical economics. It turns Adam Smith upside down. It says what the classical economists said was unproductive – parasitism – actually is the real economy. And that the parasites are labor and industry that get in the way of what the parasite wants – which is to reproduce itself, not help the host, that is, labor and capital.

HEDGES: And then the classical economists like Adam Smith were quite clear that unless that rentier income, you know, the money made by things like hedge funds, was heavily taxed and put back into the economy, the economy would ultimately go into a kind of tailspin. And I think the example of that, which you point out in your book, is what’s happened in terms of large corporations with stock dividends and buybacks. And maybe you can explain that.

HUDSON: There’s an idea in superficial textbooks and the public media that if companies make a large profit, they make it by being productive. And with …

HEDGES: Which is still in textbooks, isn’t it?

HUDSON: Yes. And also that if a stock price goes up, you’re just capitalizing the profits – and the stock price reflects the productive role of the company. But that’s not what’s been happening in the last ten years. Just in the last two years, 92 percent of corporate profits in America have been spent either on buying back their own stock, or paid out as dividends to raise the price of the stock.

HEDGES: Explain why they do this.

HUDSON: About 15 years ago at Harvard, Professor Jensen said that the way to ensure that corporations are run most efficiently is to make the managers increase the price of the stock. So if you give the managers stock options, and you pay them not according to how much they’re producing or making the company bigger, or expanding production, but the price of the stock, then you’ll have the corporation run efficiently, financial style.

So the corporate managers find there are two ways that they can increase the price of the stock. The first thing is to cut back long-term investment, and use the money instead to buy back their own stock. But when you buy your own stock, that means you’re not putting the money into capital formation. You’re not building new factories. You’re not hiring more labor. You can actually increase the stock price by firing labor.

HEDGES: That strategy only works temporarily.

HUDSON: Temporarily. By using the income from past investments just to buy back stock, fire the labor force if you can, and work it more intensively. Pay it out as dividends. That basically is the corporate raider’s model. You use the money to pay off the junk bond holders at high interest. And of course, this gets the company in trouble after a while, because there is no new investment.

So markets shrink. You then go to the labor unions and say, gee, this company’s near bankruptcy, and we don’t want to have to fire you. The way that you can keep your job is if we downgrade your pensions. Instead of giving you what we promised, the defined benefit pension, we’ll turn it into a defined contribution plan. You know what you pay every month, but you don’t know what’s going to come out. Or, you wipe out the pension fund, push it on to the government’s Pension Benefit Guarantee Corporation, and use the money that you were going to pay for pensions to pay stock dividends. By then the whole economy is turning down. It’s hollowed out. It shrinks and collapses. But by that time the managers will have left the company. They will have taken their bonuses and salaries and run.

HEDGES: I want to read this quote from your book, written by David Harvey, in A Brief History of Neoliberalism, and have you comment on it.

“The main substantive achievement of neoliberalism has been to redistribute rather than to generate wealth and income. [By] ‘accumulation by dispossession’ I mean … the commodification and privatization of land, and the forceful expulsion of peasant populations; conversion of various forms of property rights (common collective state, etc.) into exclusive private property rights; suppression of rights to the commons; … colonial, neocolonial, and the imperial processes of appropriation of assets (including natural resources); … and usury, the national debt and, most devastating at all, the use of the credit system as a radical means of accumulation by dispossession. … To this list of mechanisms, we may now add a raft of techniques such as the extraction of rents from patents, and intellectual property rights (such as the diminution or erasure of various forms of common property rights, such as state pensions, paid vacations, and access to education, health care) one through a generation or more of class struggle. The proposal to privatize all state pension rights, pioneered in Chile under the dictatorship is, for example, one of the cherished objectives of the Republicans in the US.”

This explains the denouement. The final end result you speak about in your book is, in essence, allowing what you call the rentier or the speculative class to cannibalize the entire society until it collapses.

HUDSON: A property right is not a factor of production. Look at what happened in Chicago, the city where I grew up. Chicago didn’t want to raise taxes on real estate, especially on its expensive commercial real estate. So its budget ran a deficit. They needed money to pay the bondholders, so they sold off the parking rights to have meters – you know, along the curbs. The result is that they sold to Goldman Sachs 75 years of the right to put up parking meters. So now the cost of living and doing business in Chicago is raised by having to pay the parking meters. If Chicago is going to have a parade and block off traffic, it has to pay Goldman Sachs what the firm would have made if the streets wouldn’t have been closed off for a parade. All of a sudden it’s much more expensive to live in Chicago because of this.

But this added expense of having to pay parking rights to Goldman Sachs – to pay out interest to its bondholders – is counted as an increase in GDP, because you’ve created more product simply by charging more. If you sell off a road, a government or local road, and you put up a toll booth and make it into a toll road, all of a sudden GDP goes up.

If you go to war abroad, and you spend more money on the military-industrial complex, all this is counted as increased production. None of this is really part of the production system of the capital and labor building more factories and producing more things that people need to live and do business. All of this is overhead. But there’s no distinction between wealth and overhead.

Failing to draw that distinction means that the host doesn’t realize that there is a parasite there. The host economy, the industrial economy, doesn’t realize what the industrialists realized in the 19th century: If you want to be an efficient economy and be low-priced and under-sell competitors, you have to cut your prices by having the public sector provide roads freely. Medical care freely. Education freely.

If you charge for all of these, you get to the point that the U.S. economy is in today. What if American factory workers were to get all of their consumer goods for nothing. All their food, transportation, clothing, furniture, everything for nothing. They still couldn’t compete with Asians or other producers, because they have to pay up to 43% of their income for rent or mortgage interest, 10% or more of their income for student loans, credit card debt. 15% of their paycheck is automatic withholding to pay Social Security, to cut taxes on the rich or to pay for medical care.

So Americans built into the economy all this overhead. There’s no distinction between growth and overhead. It’s all made America so high-priced that we’re priced out of the market, regardless of what trade policy we have.

HEDGES: We should add that under this predatory form of economics, you game the system. So you privatize pension funds, you force them into the stock market, an overinflated stock market. But because of the way companies go public, it’s the hedge fund managers who profit. And it’s those citizens whose retirement savings are tied to the stock market who lose. Maybe we can just conclude by talking about how the system is fixed, not only in terms of burdening the citizen with debt peonage, but by forcing them into the market to fleece them again.

HUDSON: Well, we talk about an innovation economy as if that makes money. Suppose you have an innovation and a company goes public. They go to Goldman Sachs and other Wall Street investment banks to underwrite the stock to issue it at $40 a share. What’s considered a successful float is when, immediately, Goldman and the others will go to their insiders and tell them to buy this stock and make a quick killing. A “successful” flotation doubles the price in one day, so that at the end of the day the stock’s selling for $80.

HEDGES: They have the option to buy it before anyone else, knowing that by the end of the day it’ll be inflated, and then they sell it off.

HUDSON: That’s exactly right.

HEDGES: So the pension funds come in and buy it at an inflated price, and then it goes back down.

HUDSON: It may go back down, or it may be that the company just was shortchanged from the very beginning. The important thing is that the Wall Street underwriting firm, and the speculators it rounds up, get more in a single day than all the years it took to put the company together. The company gets $40. And the banks and their crony speculators also get $40.

So basically you have the financial sector ending up with much more of the gains. The name of the game if you’re on Wall Street isn’t profits. It’s capital gains. And that’s something that wasn’t even part of classical economics. They didn’t anticipate that the price of assets would go up for any other reason than earning more money and capitalizing on income. But what you have had in the last 50 years – really since World War II – has been asset-price inflation. Most middle-class families have gotten the wealth that they’ve got since 1945 not really by saving what they’ve earned by working, but by the price of their house going up. They’ve benefited by the price of the house. And they think that that’s made them rich and the whole economy rich.

The reason the price of housing has gone up is that a house is worth whatever a bank is going to lend against it. If banks made easier and easier credit, lower down payments, then you’re going to have a financial bubble. And now, you have real estate having gone up as high as it can. I don’t think it can take more than 43% of somebody’s income to buy it. But now, imagine if you’re joining the labor force. You’re not going to be able to buy a house at today’s prices, putting down a little bit of your money, and then somehow end up getting rich just on the house investment. All of this money you pay the bank is now going to be subtracted from the amount of money that you have available to spend on goods and services.

So we’ve turned the post-war economy that made America prosperous and rich inside out. Somehow most people believed they could get rich by going into debt to borrow assets that were going to rise in price. But you can’t get rich, ultimately, by going into debt. In the end the creditors always win. That’s why every society since Sumer and Babylonia have had to either cancel the debts, or you come to a society like Rome that didn’t cancel the debts, and then you have a dark age. Everything collapses.

 

Michael Hudson’s new book, Killing the Host is published in e-format by CounterPunch Books and in print by Islet. He can be reached via his website, mh@michael-hudson.com. Chris Hedges’s latest book is Days of Destruction, Days of Revolt, illustrated by Joe Sacco.

The Color Counterrevolution Cometh

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By Dmitry Orlov

Source: Club Orlov

Had Sun Tsu co-authored a treatise on the art of sports with Capt. Obvious, a quote from that seminal work would probably read as follows:

If your team keeps playing an offensive game and keeps losing, eventually it will end up playing a defensive game, and will lose that too.

Stands to reason, doesn’t it? The team I have in mind is the neocon-infested Washington régime, which is by now almost universally hated, both within the US and outside of its borders, and the offensive game is the game that has been played by the Color Revolution Syndicate, with George Soros writing the checks and calling the shots. Having lost ground around the world, it is now turning its attention to trying to hold on to its home turf, which is the US.

Behind the Washington régime stands a group of transnational oligarchs, including many of the richest people in the world, and the game they play is as follows:

1. Saddle countries around the world with unrepayable levels of debt, most of which is stolen as soon as it is disbursed, leaving a population perpetually saddled with onerous repayment terms. This used to be done by the US to countries around the world, and has most recently been done to the US itself.

2. This game often results in rebellion, and the well-bribed national leaders in the rebellious countries are expected to put down the rebellion using any means necessary. But if they fail to suppress the rebellion, or if they side with the rebels, then they need to be regime-changed and replaced with a more subservient leadership, and the Color Revolution Syndicate swings into action.

3. The first ploy is to organize young people into a “nonviolent” protest movement (“nonviolent” is in quotes because mobbing the streets, shutting down commerce and blocking access to public buildings are all acts of violence). Their goal is to erode the boundaries of what’s allowed, until law and order break down and chaos and mayhem take over. At that point, the leadership that is to be regime-changed is supposed to jump on a plane never to be heard from again. But if they fail to do so, the next step in the program is…

4. Mass murder. Snipers are flown in and kill lots of people indiscriminately, while Western media blames the deaths on the soon-to-be-overthrown government. At this point most national leaders, sensing that their lives are at risk, choose to flee. This is what happened with the Ukraine’s Yanukovich. But sometimes, as happened with Egypt’s Hosni Mubarak, they simply retreat to a well-defended residence outside the capital and wait things out. And then a magic thing happens: the revolution chokes on itself. Local self-defense units form to protect neighborhoods; out of them emerges a partisan movement to thwart attempts by foreigners to further destabilize the country; and, after much bloodshed, law and order and a legitimate government return. This could have happened in Egypt, if it weren’t for the efforts of traitors within Mubarak’s own government. But then there is always…

5. Political assassination. If mass murder doesn’t work, it’s time to send in the assassins and physically eliminate the leadership. This has happened in Libya. As Hillary Clinton put it, paraphrasing Julius Caesar, “We came, we saw, he died!” Beware the Ides of March, Hillary!

By this time, it generally has to be conceded that the Color Revolution did not go according to plan, and the Washington régime starts doing its best to pretend that the sad country in question doesn’t exist. If someone manages to make it past face control and has the temerity to point out that it does exist, then the point is made doesn’t matter because it isn’t a vital interest. As Obama just pointed out [paraphrased by Jeffrey Goldberg writing for The Atlantic]: “Ukraine is a core Russian interest but not an American one.” This caused one Zbigniew Brzezinski to spit up all over his shirt. To be sure, there is fine comedy to be had when things don’t go according to plan for the Washington régime.

Recently, things have only been going downhill for the Color Revolution Syndicate. George Soros’s NGOs, which have been used to organize Color Revolutions, have been kicked out of both Russia and China; the silly “Umbrella Revolution” in Hong-Kong went nowhere slowly; Russia used its military training budget to rescue the government in Syria and to thrash ISIS and friends, and then moved on to negotiating a political settlement. And when Soros, in a fit of pique, tried to attack the Chinese currency, the Chinese laughed in his face and beat him about the head and shoulders with a printing press until he retreated.

Not only that, but things haven’t been going so well for the Washington régime either. The fake Democrat/Republican duopoly, which it has been using to simulate democracy and to disguise the fact that it’s all made to order for the same bunch of transnational oligarchs, is in trouble: a barbarian is at the gates. His name is Donald Trump, and he’s had the régime in his sights for many years. And now he is moving in for the kill.

Trump isn’t even that good at it, but this is a super-easy job. As I said, the Washington régime is just as hated within the US as it is around the world, if not more. Trump’s slogan of “Make America great again!” may sound overly ambitious, but what if his promise is to make America great again at exactly one thing—throwing members of the Washington régime on the ground and stomping on their heads until they pop? I am pretty sure that he can get this done.

Moreover, Trump doesn’t even try to be that good, although he is certainly very good at causing people to lose their minds. I came across one commentator who bounced off Carl Jung’s proto-new-age woo-woo on Hitler being a reincarnation of the Norse god Wotan and went on to claim that Trump is a reincarnation of Wotan’s brother Loki the Trickster. But here is a much simpler idea: Trump is an epitome of Trump. He enjoys being himself, and the unwashed multitudes find this aspirational because they are sick and tired of being told how they should think and behave by a bunch of clueless puppets.

Lastly, Trump gets a lot of help—from his enemies. All they have to do for him to prevail is to carry on being themselves—saying politically and perhaps even factually correct things, toeing the party line, carefully distancing themselves from Trump, repeating the talking points fed to them by Washington think tanks and generally being as useless and boring as possible. Then all Trump has to do to win is to distinguish himself from them by being rude, crude, vulgar, crass, obnoxious and raucously fun. Can you figure out on your own which one the people will pick—useless and boring or raucously fun—or will I need to summon Capt. Obvious again?

The Washington régime, and the oligarchs that back it and profit from it, have finally groked all of this, which is why they have been huddling and trying to organize a Color Counterrevolution that can stop Trump in his tracks. Soros and the ‘garchs started throwing around big bags of cash to get the counterrevolution on even before the actual Trump revolution happens. They were initially successful, shutting down a venue in Chicago with the help of Soros-owned Moveon.org. But it seems doubtful that they will prevail in the end. Instead, it seems more likely that they will give rise to a partisan movement.

You see, in the US hatred of the Washington régime runs very deep, with millions of people sick and tired of being swindled by various hated bureaucracies—in government, law, medicine, education, the military, banking… They hate those who took away their jobs and gave them to foreigners and immigrants. They hate those who stole their retirement savings and ruined their children’s futures. They hate the smug university types who keep telling them what to think and how to speak, making them feel inadequate simply for being who they are—salt of the earth Americans, racist, bigoted, small-minded, parochial, willfully ignorant, armed to the teeth and proud of it. There is very little that the régime can ask of these people, because the response to every possible ask is “no, because we hate you.”

And when these people, who are already seething with hatred, look at the political landscape, what do they see? They see the Democrats pushing the candidacy of the banker-crony-crook Clinton, and the only alternative is the full-socialistard “I am from the US government and I am here to help” Sanders who seems to be stuck in some sort of Great Society time warp. (There may be governments that get socialism right; the US government will never be one of them.)

They also see that the Republican establishment, previously so full of pseudorevolutionary puffery, is now so afraid of Trump that it would rather throw the election to the Democrats than support their own candidate, and this fills them with anger and disgust. Take all that seething hatred, mix in lots of anger and disgust, knead it, let it rise, and now you can bake a popular insurgency.

And a popular insurgency, or a partisan movement, is exactly what it takes to defeat the Color Revolution Syndicate. You see, the official authorities, be they the police, the army, the secret service or private security, are limited in the things they can do. In some ways, their hands are tied: if they violate law and order in order to defend law and order, they become mired in self-contradiction, and that just makes it more difficult for them to defend it the next time around.

But the partisans can do anything they want. They can infiltrate the protest movement and commit acts of violence in order to provoke the authorities into taking perfectly justifiable action. They can act to misdirect, demoralize and splinter protest groups. They can use social media to “out” the Color Revolution’s leaders and those who finance them (who, to remain effective, must hide in the shadows). They can liaise with the official authorities and trade favors for information.

If the Color Revolution shows signs of proceeding to the point where the tactics of Massacre and Political Assassination are about to be tried, they can form commando units, to make sure that these tactics lead to some massive unintended consequences, preventing their productive use. And if all else fails, they can form a guerrilla movement which, in order to win, simply has to not lose.

If all goes well then, starting next year, tens of thousands of Washington operatives, along with their friends in various politically connected industries, such as banking, defense, medicine and education, will evacuate to a variety of nonextradition countries (which will no doubt respond by raising the prices of their passports) while thousands more will begin their lengthy sojourns at federal penitentiaries. And thus the crisis will be defused.

And if it doesn’t go well, then we’ll probably be looking at a “deteriorating security environment.” How far it will deteriorate is anyone’s guess, but if you are one of the Washington régime’s stooges then you may want to get yourself a second passport before the prices go up and get out ahead of time.